FAIRCHILD 50TH ANNIVERSARY PANEL

John Hennessy : Welcome everyone. My name is John Hennessy and I'm delighted to invite you here to enjoy what I think will be a thrilling and certainly historical panel. The year is 1957. Santa Clara is still a largely rural county with a total population, a total population for the county, of less than five hundred thousand people. It is known by its nickname, the Valley of Heart 's Delight. The year before had been a momentous year for the area, in San Jose , IBM had produced RAMAC, the first random access disk drive, the first. And in Mountain View in 1956, the first company focused on semiconductors as a business, Shockley Semiconductor had been founded. It was headed by William Shockley, who, earlier at Bell Labs, had been one of the people most responsible for the invention of the solid-state transistor. Now William Shockley was a great scientist and a great theoretician, but it's clear, he was a terrible manager. And it was this latter characteristic that led eight colleagues, now known as the Fairchild Eight, to depart Shockley Semiconductor in 1957 to found Fairchild Semiconductor. Tonight, we have three members of the original founding team of Fairchild Semiconductor. Julius Blank, a native of New York , who received a Bachelor's Degree in mechanical engineering from City College . He ran the Fab at Fairchild. Jay Last, who received his PhD from MIT before coming west, at Fairchild, he directed the group that produced the first integrated circuit. And Gordon Moore, a native of California , who received his Bachelor's from Berkeley and his PhD from Caltech. He ran the Research and Development group at Fairchild. Also joining our panel tonight is Arthur Rock. In 1957, Arthur Rock was a fresh MBA from Harvard working at the East Coast Investment Bank, Hayden Stone. Rock was instrumental in getting Hayden Stone to fund Fairchild Semiconductor. Fairchild Semiconductor was an innovator from the very beginning, the first company to focus on silicon, rather than germanium, as the basis for integrated circuit. They introduced the planar process to replace the then more popular but difficult to manufacture mesa transistor, and in 1958, produced the first commercially available integrated circuit. They went on to build a successful business before eventually being acquired by Schlumberger in 1979. And, of course, while these initial accomplishments were truly incredible, Fairchild's equal or even bigger legacy has been the many companies that have come out of Fairchild Semiconductor subsequently. Jay Last left Fairchild to co-found Amelco Semiconductor in 1961, which became part of Teledyne. Also in 1961, Arthur Rock co-founded one of the first venture capital firms and later became an early stage investor and board member at both Apple and Intel. Gordon Moore left with Bob Noyce to found Intel in 1968. And Julius Blank founded Xicor, now part of Intercell, when he departed. Other companies with roots at Fairchild include AMD , National Semiconductor and LSI Logic. In fact, I could go on listing the grandchildren and great-grandchildren of that Fairchild Semiconductor Company, but you certainly didn't come here to hear me speak. Those accomplishments, the accomplishments of the individuals who founded and worked at Fairchild, helped this area earn its new nickname Silicon Valley , a name first applied in 1971, but in common use by the time I arrived here in 1977. Over time as integrated circuits became the primary building blocks of computers and communication systems, the Valley would become equally well-known for its accomplishments in computer hardware and software. But it was the integrated circuit that enabled that growth in the computer and communications industry and made it the viable and incredibly productive industry that we know today. At Stanford, we've been dedicated for more than twenty years to collecting and preserving the history of Silicon Valley, the Silicon Valley innovators and their inventions, from Hewlett-Packard, Varian and Fairchild, through Intel and Apple, to Yahoo and Google. Tonight's panel is being sponsored by two Stanford organizations, the Bill Lane Center for the Study of the North American West and by the Stanford University Libraries. Our moderator is Dr. Leslie Berlin, a Stanford PhD, biographer of Bob Noyce and project historian for our Silicon Valley archives. Please join me in welcoming our distinguished panel members and our moderator.

 

[applause]

 

Dr. Berlin : Thank you. Uh, so, before I begin, I would like to ask, uh, those of you in the audience who've had a—a connection with Fairchild, if you worked there, if you sold, uh, there, if you were a customer or if your spouse did any of these things, uh, could you stand up please and just let us see all the Fairchild people who are in the audience today. Okay, yeah.

 

[applause]

 

Dr. Berlin : Thank you guys for coming, thank you very much. Um, and everyone who did not stand up, you actually do have a connection to Fairchild Semiconductor and that is via the chips that are in your cell phones, so, um, if you would please turn those off, uh, we'd appreciate it. Uh, there are so many questions that I would love to ask these distinguished panelists and I'm also sensitive to the fact that they have been asked so many questions, so many times. And with the wide range of people we have in the audience today, I'm going to try to take a balanced approach here, uh, in both telling what happened and making sure that our panelists get to tell the bulk of the story. So, uh, let's start at the beginning. I have a visual aid or two for this first part. Let's see. So, here are some of our panelists, uh, in October of 1956, uh, they're celebrating the Nobel Prize that their boss, William Shockley, had just won for his co-invention of the transistor. Um, and if you look carefully in this picture, you will see, uh, Jay Last grinning on your—on the far right, um, with his glasses there. And you'll see Gordon looking like he's about to be burned by a candle, uh, in profile. So, those are two of our panelists. This is October 1956. This is September 1957. This is William Shockley's notebook. Okay. The group that resigned are the Fairchild Eight. Um, most of us have heard about why this group resigned and President Hennessy talked to you about how Shockley was a micromanager, I mean, down to the level of specifying the kind of screw that he wanted used in the crystal puller. Um, he was hard to work with, to say the least, uh, and he focused the company on building four-layered diodes instead of transistors. And I know you guys have talked a lot about this, um, including in a panel at Stanford two years ago. So, I welcome, if you want to talk more about it, we definitely should and if you're tired of talking about it, we can move on to what I really want to ask you about, um, okay, which is this, h—how did you have the nerve to start your own company? Uh, for those of you in the audience who don't know what this is, uh, this—when the group of eight decided to n—get together and see what they could do, two bankers, Arthur Rock and Bud Coyle convinced them that what they wanted to do was start a company together. And as a sign of their commitment to each other, they each signed ten, one dollar bills, so ten guys each one signed his name on—uh, ten times and then each dollar bill has ten signatures on it. Um, this is Julius Blank's dollar bill that he let me photograph. Um, and, uh, when I look at this, this is one of those things that makes your heart go crazy when you're a historian because, if these guys are some of the founding fathers of Silicon Valley and they undoubtedly are, uh, then what you're looking at here is the declaration of independence for Silicon Valley . Um…

 

[applause]

 

Dr. Berlin : …and so, uh, you know, starting your own company was not a normal thing to do in 1957 when people expected to stay at a company for their entire lives. And yet, here you were, um, as my husband put it, telling a Nobel Prize winner to go pound sand, uh, and going off and starting your own company. Uh, I'm wondering how you had the nerve to do that?

 

Gordon Moore : It was easy. Uh, there wasn't much choice. We'd all decided by that time we were going to have to leave Shockley and, uh, go look for a job. And A—Arthur and Bud Coyle came out and gave us an alternative. We all owned our own houses then. We didn't have to move. It was a heck of a lot easier then going out looking for another job frankly. Uh, if it hadn't been though for, uh, the encouragement we got, as well as the financing from New York , uh, I don't think we ever would've done it because there wasn't a venture capital at that time. It was really kind of a novel approach. It wasn't easy either, Arthur, was it?

 

Arthur Rock: Thirty-five turn-downs.

 

Jay Last : My first thought was that it was—we said this was finally a place we could all work together in somebody's laboratory and it was Arthur who pointed out we could start our own. Is this better?

 

Dr. Berlin : Go ahead Jay, I don't think they heard what you were saying.

 

Jay Last : Oh, I was saying that—that the group of us originally thought that—that we would just try to work together, we wanted to—wanted to stay together as a group, than work for some large company again. But, uh, Arthur pointed out to us that we could start our own company. It was completely foreign to us, we didn't know enough to—to be, uh, uh, scared about it, I guess.

 

Arthur Rock : Well, it was really Gene Kleiner's letter that—that the whole thing started.

 

 

Arthur Rock : Uh, sorry. It was—it was really Gene Kleiner's letter, uh, to his father's broker in New York , who then gave the letter to me, uh, that got the whole thing started.

 

Dr. Berlin : And what did you think when you saw that letter? I mean, uh—uh, what—what do you recall it saying and what was your reaction to it?

 

Arthur Rock : Well, the—the letter said that, uh, there was a group of, uh, scientists at, uh, Shockley that, um, didn't get along with Shockley and, uh, were going to leave and could, uh, uh, this investment bank that I was working for Hayden, Stone & Company, uh, find jobs for these fellows to work together. And I—I had some experience with semiconductors because we had financed General Transistor. So I—I—I s—quickly saw the potential and, uh, that's how it got started.

 

Dr. Berlin : Now, Gordon, you said you weren't, uh, I'm sorry, Jay, you said you weren't scared. You didn't know enough to be scared?

 

Jay Last : I—I was a twenty-seven year old, it was my first job. I didn't, uh, I thought, well, I'd go off and do something else if this doesn't work out, I—I didn't have a family. The—the group that had families , uh, I—I think was a different situation. Here—here they had crossed—crossed the country, went to work, they had a good job and all of a sudden they just go and leave and go in this crazy new enterprise, but—so that—that'd be a different thing for me with no—no—nothing to worry about.

 

Dr. Berlin : Yeah.

 

Julius Blank : It sounded to me like a good idea at the time.

 

Dr. Berlin : And how about you Gordon, did you feel any anxiety around this whole prospect?

 

Gordon Moore : Not really, you had the feeling at that age that, uh, nothing too bad can happen, you'd go out and find another job. Uh, I was one of the married ones with family. In fact, my son is sitting up here in the front row. Uh, he was three years old at the time. But, uh, didn't feel any, uh, real potential problem. You figure you can get a job.

 

Jay Last : I—I think the feeling was the opposite. We were excited that we were going to get a chance to do the thing we wanted to do, that had been stifled by Shockley. So it was a feeling of—very positive feeling, that there was excitement, we're going to be able to do this.

 

Julius Blank: I don't there was any fear at all, we were young then and didn't know the difference.

 

Dr. Berlin : Right. Um, and Arthur, you said that it took more than thirty phone calls to, uh, find someone willing to back the group. Why was it so hard?

 

Arthur Rock: Uh, because, uh, th—these companies that we approached had all come to Hayden Stone at one time or another and said that they wanted to do more in technology. So, we contacted each of those companies, uh, and they all liked the idea but they didn't see how setting up a separate subsidiary and giving rewards to, uh, the founders of that subsidiary, uh, could work in their organizations. Uh, uh, the idea of , uh, of options and Founder's Stock, uh, was unknown at that time and we—we really started that process. And, uh, right at the very end, somebody suggested that we might want to talk to, uh, Sherman Fairchild. And Sherman Fairchild, uh, was an inventor himself. He invented the, uh, the aerial camera and, uh, subsequently the Fairchild Airplane to hold the camera. And, uh, and uh, he—he—he was a—a—an intellectual type and he had a lot of money and he said, okay, let's give it a go. So that's how it started. If it hadn't been for Sherman , I think we would've given up and probably there would be no silicon in Silicon Valley .

 

Dr: Berlin: Yeah, did you guys, uh, the—the founders, did you have a back-up plan that you imagined could've kept you here or did you choose this simply because it was the only thing you could imagine keeping you in the area?

 

Gordon Moore: Uh, if we had a back-up plan, it wasn't revealed to me, no. No, it—you know, this was a—a funny negotiation, in that we had one lawyer representing both sides. I am putting together the contract, uh, the—the group of us, uh, hadn't had any experience in this kind of thing. And, uh, Arthur and his colleagues had some more and we got a, uh, a—actually a great attorney in San Francisco who was r—really helpful, I think, in putting it together. What?

 

Julius Blank: Martin Lily?

 

Gordon Moore: Lily, yeah, that was the guy, yeah. But that's where the dollar bills came in, you know, they—they had to pay us something of value so we got, uh, each a dollar.

 

Dr. Berlin : Is that real?

 

Gordon Moore: Yeah, that's really where the dollars came from.

 

Dr. Berlin : Huh, wow, I had no idea. Uh, so, one of the first things you did when you set up Fairchild Semiconductor was to hire yourselves a general manager, um, Ed Baldwin from Hughes. And I'm—I'm curious to know why, uh, you needed to do that, particularly given what you guys went on to do. I mean, there was clearly some managerial ability in there.

 

Gordon Moore: Uh, the experience that we had seen the problems at Shockley, uh, not having experienced managers. And, uh, you know, collectively, I believe we all thought we had to bring in someone from the outside, I certainly did. We interviewed several people and Baldwin seemed to know some things we didn't that sounded important.

 

Jay Last: Wh—wh—wh—which was really true too, I mean…

 

Gordon Moore: I don't know about you, but none of the rest of us had ever seen a business school, let alone had a course in one. You—your background was slightly different. But, uh, none of us had any business knowledge at all. Uh, we'd been the research scientists for the most part, uh, and n—never worked at successful profit making companies, with the exception of Julie and Gene Kleiner to work at Western Electric.

 

Jay Last: We had a little business.

 

Gordon Moore: Yeah. So, uh, bringing in, uh, Ed Baldwin was very valuable. He told us, you know, you really have to set up manufacturing separate from the R&D operation. You got to specify processes, things like that that, uh, weren't intuitively obvious.

 

Jay Last: You had to build a—you—you had to build a reliable product, I think was—was the first step…

 

Gordon Moore: A reproducible product.

 

Julius Blank: Well he, uh, it was a big thing because also, he brought a whole gang of his own people from Hughes, uh, Semiconductor. And, uh, one of the first things he did, he convinced us that we needed a new building, even before we had a product.

 

Jay Last: We started work on the new building before we had shipped any…

 

Gordon Moore: I—I hadn't remembered that.

 

Jay Last: Yeah.

 

Dr. Berlin : And this—this was the building, um, that for a while was the Repo-Depot near San Antonio Road and…

 

Jay Last: Oh, no, no, that was a separate one in Mountain View .

 

Dr. Berlin : A different one. Huh.

 

Gordon Moore: Whitman Road …

 

Dr. Berlin : Oh, on Whitman Road .

 

Gordon Moore: Yeah.

 

Dr. Berlin : Yeah, um, and so you're talk—you're talking about shipping your first, uh, product and I was hoping, um, you could talk a little bit a—about what do you remember about your first sell? I—I believe it was to IBM Owego.

 

Jay Last: Yeah. No, no, we—we had, uh, we were lo—looking for a—a product that—that, uh, somebody wa—definitely wanted and—and IBM wanted this particular product, so that enabled us to focus on that. And we got this order in January and made all our efforts to go along, uh, make—make this specific thing for IBM and so—so a hundred or something like that. We finally shipped it in, uh, August—August.

 

Female: What year?

 

Julius Blank: 1957. 1958

 

Jay Last: '58, '58. We had started in October of '57 obviously and, uh…

 

Julius Blank: Re—remember during all—and we started October '57 and we shipped the first product in August of the following year. In the meantime, we had to build a building, equip a Fab, buy equipment, invent the product, invent the process and learn how to test it and virtually make it and ship it, in what, uh, ten months?

 

Jay Last: Yeah, ten months and at the—at—at—in August when that, uh, when we shipped our first product, we had sixty people.

 

Juilus Blank: You had to move very quickly in those days.

 

Jay Last: Yeah. And, uh, uh, we worked together as a group, uh, and ea—each of us was doing our own part along with the other people we brought in, so, we felt a responsibility to the group. And there were a lot of things that, uh, we didn't know what the solution was and we said if we don't solve this thing, we don't have a company. So, we—we re—we really focused our—that made us really focus our efforts. And, uh, I just look back now and the—the stuff we did in that ten—ten months.

 

Julius Blank: It couldn't happen again.

 

Jay Last: No, it couldn't happen now.

 

Gordon Moore: Yeah, but, uh, that's part of the legacy of Fairchild that maybe doesn't get, uh, the attention it should. Uh, people know the planar transistor and the integrated circuit, but we had to develop all of the basic processes, uh, the things that are still used today. We were the first ones to use lithography for printing semiconductor devices in transistors. Uh, we made the fusion our production process; it'd only been done in the laboratory before that. We had to do all of these things during that time and those are the bits and pieces that all of these spin-offs took as they set up companies around the area. So I think this collection of technology, bits and pieces was one of the most important contributions Fairchild made.

 

Julius Blank: Yeah, we had to invent our own furnaces too.

 

Gordon Moore: Yeah, well, after my aborted attempts at Shockley—at Shockley, uh, I was in charge of this kind of stuff. I made a furnace—I didn't—the temperatures we were operating at were pretty darn high, there weren't many materials we could use. And I decided platinum was the material I ought to use for the linings on this furnace. So, I bought several thousand dollars worth of platinum, at today's prices anyhow, and, uh, made this furnace with platinum linings. Uh, two weeks later it burned out. It turns out that at those temperatures, platinum actually evaporates, it doesn't melt, but it evaporates as condense. So we broke the furnace apart, there little crystals of platinum against the ceramic. So, we had…

 

Julius Blank: When it was working, it was working pretty good, though. You had five zones in there and…

 

Male: Well, yeah, it worked pretty good for two weeks. But—but think of the platinum bill if we'd stayed at that technology. Anyhow, we had an opportunity to start over at Fairchild and got a much more robust material in the furnaces and, uh…

 

Julius Blank: They're still used today.

 

Male: Yeah, darned if I know.

 

Dr. Berlin: And while you guys were working, I'm—I'm—as you were speaking, I was thinking, God, I wonder if the whole concept of, you know, start-up widows who never see their husbands and such, if that got its start at Fairchild too? Um, were—I—were you guys working pretty much around the clock?

 

Gordon Moore: Well, uh…

 

Jay Last: No, I don't think so.

 

Jay Last: I think we were home for dinner every night.

 

Gordon Moore: If you ask Betty, you'll probably get a different answer, but I don't think we were working exceptionally long weeks. You know, uh, you know, maybe sixty hours, but not ninety. Do you remember anything different than that?

 

Julius Blank: Pretty normal hours, but, uh, we got a lot of things done.

Dr. Berlin : And, um, I had one specific question for you Jay. Uh, through out the night I'm going to be asking questions that are sort of the, I've heard this story about Fairchild, is it actually true, uh, one of them is that you s—you found a Brillo box outside of a grocery store and it was in this box that you shipped the first transistors.

 

Jay Last: Yeah.

 

Dr. Berlin : Is that true?

 

Jay Last: Hmm umm. No, what—no we'd—we had solved all these problems tha—and we had all these transistors ready to go, but what are we going to put them in? And—and so—so I went down to the grocery store and got a Brillo box. I thought that looked nicer than any of the other boxes there. And—and, uh, and I realized later that, uh, uh, I—I grew up in, uh, Pittsburgh a—as did An—uh, Andy Warhol, so our careers both depended on a Brillo box to get started.

 

Dr. Berlin : Um, okay, so I'd—I'd like to fast-forward us here a couple years to around 1959, um, and talk about three things that happened that year. Ed Baldwin, uh, the general manager you were—uh, so—speaking so highly of, left, uh, work on the integrated circuit really kicked in and Cameron Instruments e—exercised its option, uh, to buy Fairchild Semiconductor. So, uh, first, I know that, um, Ed Baldwin left, uh, to start Rheem Semiconductor, uh, dismissed by Richard Hodgson with the famous words, I wish you lots of luck, all of it bad. Uh, uh, and Robert Noyce took over as, uh, general manager. And I'm—I'm wondering if that change made a significant difference to the company at that point?

 

Jay Last: Well, I think there were a lot of things happening. We were growing more rapid—so rapidly, we grew from the sixty, uh, when we shipped our first product and had six hundred people a year later. And that's an enormous job of recruiting and assimilating and things. There were just a lot of things that were just happening all at once. And it—so the character of the company was just changing by the size and getting to be…

 

Gordon Moore: Yeah, I don't think the nature of what we were doing changed much. Uh, we obviously lost some key people we had to replace and move around.

 

Julius Blank: But we had pretty good luck at getting re—getting replacements.

 

Jay Last: Yeah, yeah. The—the—the interesting thing was anybody that was working in the field, uh, at other companies saw the technology the—we had and they wanted to be a part of it, so, it was—recruiting was a very easy job as far as persuading people to join us.

 

Dr. Berlin : Yeah, and, um, actually I—I have a picture of one of the things you apparently used to recruit, um, because you were able to use a picture of you under a sun umbrella as your Christmas cards. Um, and I just wanted to, uh, walk you through quickly, who these eight founders were. I'm simply going to say their names, uh, just so you know, because we only have three up here tonight, but, uh, there were eight. So let me just tell you who they were, uh, closest to you, um, is Robert Noyce, um, moving, uh, clockwise, uh, this is Jean Hoerni, directly, uh, behind him with the glasses, then Julius Blank, Victor Grinich, uh, Eugene Kleiner, Gordon Moore, uh, Sheldon Roberts and Jay Last. Uh, and I—I wanted to ask you guys if you had anything, uh, that you wanted to say about how you worked together, um, as a group, uh, or if you have anything specific that you want to be sure people know about the other founders who are not up here tonight?

 

Jay Last: One—one of the interesting things was the fact that we each had s—separate skills. There was no real duplication that—none of us, uh, were sort of an all out with the other guys and the group knew. Uh, so—so, so—so we were, uh, it—it—it wa—it wa—it was—it was a bunch that really complemented each other.

 

Julius Blank: Yes, we only—so Gene, uh, Gene Kleiner and I were both, uh, mechanical engineers so we overlapped, but there was enough work for four of us.

 

Jay Last: Oh, yeah, to put it mildly.

 

Julius Blank: So we were essentially interchangeable. We decided among us what had to be done and we just simply just did it. If you need help, you asked and if you can't get it, you find it somewhe—you find it wherever you can. We had a very informal, uh, relationship.

 

Jay Last: Yeah, and the confidence we had in each other to do their—their—their part of it.

 

Julius Blank: And these guys used to ask for some weird things all the time. We did our best to accommodate them. Like drilling one mil holes in brass shim stock, you remember that? I don't know how many bu—how many bits we broke but we finally did it.

 

Dr. Berlin: Arthur, when you met the group of eight of them, um, did you—is—is this—is that what struck you too, was that their skills were all complementary or did—did you see something else at play there?

 

Arthur Rock: Well, first of all, when we first met, there were seven, uh, uh, uh, Bob Noyce was not part of the group at first. And the seven of them convinced Bob to come along, I guess, was, um, just to set—set that straight. Uh, well, wh—what, eh, interested me was the enthusiasm and, uh, and the intellectual ability of the eight of—these, uh, wh—what were called the—the—the, um, the Treacherous Eight by, uh, William Shockley. Um, and it was pretty obvious that, uh, they could work well together, that they had the intellectual capacity to do what they said they could do and, uh, and had the drive, the, uh, you know, the fire in the belly.

 

Dr. Berlin : Gordon, do you have anything you want to add? No?

 

Gordon Moore: Not especially.

 

Dr. Berlin : Okay, super. Um, so now I want—I want to go, uh, back to 1959 and the integrated circuit. Uh, Jay, you actually—you said something really interesting to me when we were talking on the phone. You said the story of the integrated circuit is not the story of, sort of, giant explosive technical breakthroughs or these great, sort of technological heroes coming up with these ideas. But, you said it was about incremental changes and realizing that the time was right to make them. And I'm—can you say a little bit more about that please?

 

Jay Last: Well, in the whole history of technology, if things are incremental, there's hardly any invention that was just—that just radically, radically new. It depends on the work of people going back se—uh, s—decades or centuries, in some cases. W—and—and there were a lot of people working, uh, at, uh, on the same time there was a big push for miniaturization, uh, wi—with the space program. And there were all—every company was working on this and we realized that Fairchild, that we had the—the technology to really do this right with—with the planar process. There were en—a lot of—enormous number of problems to be solved, but, uh, we felt the time was—was right, uh—uh, and part of it was defensive. Uh, TI had—had—was making some jury-rigged circuits and talking about them a lot and TI had a reputation for getting patents and giving—beating people over the head with them. Uh, and, uh, so—so we felt defensively for no other reason, the first pro—product we made, I remember talking to Bob Noyce and we said we have to show something at—at this particular Westcott Show to show we're in the business. So I jury-rigged some little thing and—and, uh, put it there. It wasn't anything at all, but at least it showed that we were working in this area.

 

Gordon Moore: Well, for that particular thing Jay invented Ticonderoga resistors…He took a pencil and drew a line on a piece of ceramic and if the resistance was too low, he could use the eraser to adjust it. That was the level of the technology that we were demonstrating at Westcott.

 

Jay Last: But—but we—we—we did see that we were in a really unique position to be able to exploit our techknowledge to make these things. An—and it was a—it was a very difficult thing to do, but we did it.

 

Dr. Berlin : Okay, so Gordon and I, uh, oh wait, before I get to you, this is another one of those did this really happen questions. Um, did Jean Hoerni really spit on the first planar transistor to prove its resiliency?

 

Gordon Moore: Uh, I don't know that and, uh, you know, spitting on a transistor, uh, shorts the leads, so I—I would suspect that, uh, it's not a true story. Uh, I don't know, Jay, do you, uh…

 

Jay Last: No, but it was Jean's personality; I would think it's very likely.

 

Gordon Moore: Well, I agree with that. I doubt if it would've demonstrated the advantage of planars.

 

Dr. Berlin : I spit on you transistors!, yes. Um, so, uh, so Gordon, um, you told me a funny story. You said that, um, in one point in about 1960, when you were heading R&D, that you announced to your team—let me get the quote right, okay, we've done tran—we've done integrated circuits, what's next.

 

Gordon Moore: Uh, ye—ye—that is, uh, more or less true. Uh, Jay's group had gotten the first integrated circuits—got it transferred to somebody else. I was director of R&D at the time and we got some of the senior scientists together and said, okay, what'll we do next now that we've done integrated circuits. And we were looking at all different kinds of physical phenomena, uh, that were being published in those days and, uh, I—we didn't find anything better than to continue working on integrated circuits, I'll have to admit.

 

Jay Last: The—the integrated circuits were not a big deal at the time, but the company was just—just thriving making diodes and transistors and all the effort was there, all the sales effort was on that. And the integrated circuits were just sort of to see if we could ma—make the thing.

 

Gordon Moore: There was a lot of customer resistance too.

 

Jay Last: Enormous customer resistance.

 

Gordon Moore: Oh, it was just—you know, they were used to buying transistors and resistors separately, measuring all the parameters and seeing how they behaved over time. And here you gave them a circuit where they couldn't do that, uh, how could they be—know they were reliable. And at that time, they were a lot more expensive than buying the components and sticking them together. That's where Bob Noyce made another one of his major contributions. He said, okay, we'll sell them to you for less than the cost of the sum of the components. It was also significantly less than the cost of making the integrated components. But it kind of started the—the usual trend in the semiconductor business, when everything else fails, cut the price.

 

Jay Last: Uh, it really was five years or so until it really started taking off.

 

Gordon Moore: Well, you know, that was really, uh, the motivation behind the paper I wrote in 1965 that has subsequently been called Moore 's Law. I was trying to get the message across that hey, this is going to be the way to make cheap electronics someday. And, uh, just the curves I plotted were to back up that argument. It wasn't clear in '65 to most of the users that this was going to be inexpensive.

 

Jay Last: This was five years after the fact.

 

Dr. Berlin : Uh, and I—I also wanted to ask you about, um, the acquisition by Fairchild Camera and Instrument. Um, with that acquisition, your shares which you had put in five hundred dollars each, um, to get a hundred shares of Fairchild Semiconductor in the beginning and Hayden Stone—yo—you guys, uh, two hundred shares, um, suddenly, uh, your—these shares, when you were acquired by Camera and Instrument, were suddenly worth about three hundred thousand dollars in 1959 dollars. Um, and I know that this made Bob Noyce really uncomfortable, really happy, um, but very uncomfortable. Uh, he felt that it was somehow strange or almost wrong that he had gotten so much money so quickly. Uh…

 

Gordon Moore: Gee, I never thought that.

 

Dr. Berlin : Well that was my next question.

 

Jay Last: Where'd that come from? That doesn't sound like Bob.

 

Jay Last: No, no.

 

Gordon Moore: That's news to me.

 

Dr. Berlin: Well, I mean, there's this letter that he wrote home were he's fe—yeah, okay, maybe it was dissembling, but he seemed to be—he—he felt like it was creating a really awkward situation between him and his parents, um, and that it seemed to them to be something, um, unusual. And I—I know that Jay, when—I—you showed me a letter that you wrote home where you were saying—this was at the time you were starting Fairchild, you said, our goal in this isn't to get rich, our—our goal in this is to build transistors. Um, and that was—was that the case for all of you, your—your goal was actually to just get the technology launched, just?

 

Gordon Moore: Yeah, yeah, yeah.

 

Jay Last: Oh, yeah.

 

Dr. Berlin : Is that right? Yeah, yeah.

 

Jay Last: A—and the—the other side of venture capital work which seemed to gradually come along later was.

 

Gordon Moore: You know, interesting aside of that five hundred dollars, uh, we saved a equivalent amount for the general manager we were going to hire. But Bob would never put his five hundred dollars into the pot, so he—he didn't get his hundred shares.

 

Dr. Berlin : And Arthur, one thing I was wondering was how this, uh, success of Fairchild Semiconductor compared with, sort of, other things you were seeing about this time? Was it par for the course or unusually successful?

 

Arthur Rock: Well there wasn't a—there really wasn't much else, uh, uh, until, you know, the mid 60's. Uh, this was unique.

 

Dr. Berlin : And how long did you guys, um, how long did Hayden Stone hold onto its shares? Do you remember?

 

Arthur Rock: I think Ha—Hayden Stone, uh—uh, had problems of its own and, uh, uh, it finally, as a matter of fact, uh, almost declared bankruptcy when it merged into Carter, Berlind, Potoma and Weill. So, I think they got rid of their shares as quickly as there was a market.

 

Dr. Berlin : Umm hmm, okay. Um, so, I'd like to fast forward another two years here to 1961. Uh, and this is the year, Jay, that you decided, uh, to leave Fairchild and start the Amelco division of Teledyne with Jean Hoerni. And Arthur, by this time, you had moved out to California and started Davis & Rock, um, with Tommy Davis. And you helped to bring Jay and Henry Singleton together, uh, He—Henry Singleton of Teledyne. So I wa—I was hoping that the two of you could talk a little bit about how this, uh, came about, how—how this is really one of the first really successful, uh, spin-offs out of Fairchild Semiconductor here in 1961, that was sort of a precedent setting experience.

 

Jay Last: Well, from—from my point of view, I could see e—everything happened too fast. Uh, he—here I was—wa—a few years before that, there were eight of us working together as a team, now the company had been bought and I was just another employee in a big comp—big g—growing, uh, company. Uh, the—the thing that, uh, interested me the mo—uh, the most, was making integrated circuits. And, uh, Henry Singleton wanted to build a company, uh, a—assistance company based on the—on the production of very sophisticated integrated circuits. That—that certainly in—intrigued me a lot. And, uh, I also—th—that experience of starting this company and seeing it grow, I—I thought I'd like to do that again, try to—try another whack at it. So, I, uh, s—sold all of my, uh, Fairchild stock that day and put it on the line again wi—with, uh, Teledyne.

 

Arthur Rock: Well, what had happened is that Sherman Chairfi—Sh—Sherman Fairchild had passed away and the management at, uh, Fairchild Camera and Instrument, um, had changed hands and, um, F—Fairchild Semiconductor was making—I don't know whether it was in 1961 or maybe a few years later, but was making a hundred and ten percent of the profits of the combined companies. Um, and gave, oh, uh, practically no recognition to, uh, the semiconductor group and, uh, had the old eastern mentality of, uh, uh, not rewarding their employees wh—uh, the way they did on the East Coas—on the West Coast, with stock options and other benefits. So, uh, uh, th—the—the group here, uh, decided, uh, over the course of the next five years, uh, that, uh, they weren't being adequately appreciated and—and left. And it ended up in 1968 with the—just, um—Gordon and Bob left and, uh, then they decided to leave.

 

Dr. Berlin : Yeah, I actually have a picture of, um, that I think perfectly illustrates the difference between Fairchild Semiconductor and Fairchild Camera and Instrument. Um, so that's Bob Noyce, um, showing, uh, John Carter, who, uh, was running Fairchild and Camera and Instrument, uh, di—a—a diagram labeled, Clean Our Structure. Uh, and, um, John Carter is looking in such a way that Noyce has a look on his face, like, you just don't understand what I'm telling you, do. Uh, and what makes it, for me is, I mean, it's the cla—I mean, down to the cigar, you have, sort of, the—the East Coast, uh, West Coast difference here. Um, so, that was another little visual aid for you. Uh…

 

Arthur Rock: I've got a funny story to tell you about John Carter. When he first visited, uh, Semiconductor, he came out in a limousine and he spent a few hours at, uh, Semiconductor and all the eight of these fellows could think about was that limousine driver is doing nothing but sitting there. Uh, as a result, wh—whenever I went to visit a company and somehow or other I got in a limousine, I made sure that the limousine driver was dismissed.

Dr. Berlin : Uh, so, uh, to pull us forward further, um, by 1965, uh, Fairchild was—I—I mean, it was going gangbusters. It was one of the fastest growing companies in the U.S. , a stock price that had ballooned four hundred and forty-seven percent in ten months, one of the fastest rises on—of any firm on the New York Stock Exchange. Uh, there were all sorts of companies buying licenses for the planar process and the integrated circuit, uh, by this time that was selling pretty well. Uh, yo—as a—the sort of record of innovation that President Hennessy alluded to was—was happening across the board really and you guys were at number three behind only Motorola and Texas Instruments in the number of devices that were sold. And I'm curious to know what you think was behind that—that rate of success for Fairchild Semiconductor?

 

Gordon Moore: Oh, uh, principally, the technology of the products. Um, you know, we got on the right technology direction, uh, y—very early and, uh, we exploited it to a significant level. Now, uh, we had a lot of spin-offs and a lot of new companies being set up, but the reason was the—the technology was so rich, we couldn't pursue all the opportunities. A new idea would come along and a group would say, gee, we can start a company on that and we were losing them right and left. Uh, but, uh, you—you know, and it was just a good opportunity there and we had a chance to exploit a good portion of it.

 

Julius Blank: We were exploiting it as best we could to meet the demand. It was never enough.

 

Jay Last: We—well, one—one thing that hasn't been discussed very much, is, uh, the fact that we—we turned it into a—a batch process, in—instead of individual transistors. We—we were making wafers that have, oh, dozens and then hundreds and then thousands of wafers on it. S—so, we—we were doing, uh, in Silicon Valley, what, uh, Henry Ford did in, uh, Detroit , uh, turning it into a mass production process.

 

Arthur Rock: But the success of any company is really management and not technology or, uh, or any of the things, uh, that management directs the company to do. Um, Fairchild Semiconductor had an excellent management, whereas the other competitors' management, I don—in my opinion, wasn't quite as good.

 

Gordon Moore: Yeah, Arthur, I think, though, good products make up for a lot of bad management.

 

Arthur Rock: Yeah, uh, yeah, Gordon, that's true but, uh, who selects the good products from all the—all of the, uh, available, uh, technologies?

 

Julius Blank: It wasn't guys like John Carter.

 

Arthur Rock: That's my point.

 

Dr. Berlin: And so, uh, you've got Fairchild at the top of the world and then, all of a sudden in 1967, ‘68 period, uh, start-ups start spinning out again, uh, Fairchild's stock price dropped ninety-five percent in a year. Um, by one estimate, two dozen start-ups spun out of Fairchild, just Fairchild, between late 1967 and early '69. Um, Charlie Sporck left to revive National Semiconductor, Jerry Sanders launched AMD, Gordon, you and Bob were leaving to start Intel and Arthur, you were so involved in that s—start-up that you, by all rights, should be considered a third founder of Intel. And so this is, kind of, the opposite of the last question, uh, in the sense of, you know, why—why did things fall apart? I mean, you've just described the—the, uh, forces at play that helped to build the company, so then, what happened to make things really start falling apart a few years later?

 

Gordon Moore: Well, uh, it's hard to account for all of it, uh, you know, I—to think of the ones you mentioned, Charlie Sporck, uh, wanted hi—his own company essentially and saw an opportunity and what was left of National Semiconductor to do something different. Jerry Sanders got fired and had to do something different. Uh, in the case of Bob and me, uh, Bob was being passed over, uh, for CEO of Fairchild Camera and Instrument. They were looking on the outside, while running the company with a three man committee as a board. So Bob decided he was going to leave and I decided he was leaving and they were bringing in somebody from the outside, things were going to change enough that I didn't want to stick around either. So, we said okay, let's—we can just start again, called Arthur and that afternoon he raised funding for us. Maybe that's a little exaggeration…

 

Arthur Rock: I don't—I don't think so. I don't think so. The—the—the—the main reason was the cigar. There—the point being that, uh, Fairchild Camera and Instrument had very poor management.

 

Gordon Moore: Yeah, one interesting thing about the—the formation of Intel is that all of the original eight founders of Fairchild invested in it, even though they weren't there anymore, so. It—it was v—very nice, uh, to have that happen. Worked out well for them, I think.

 

Jay Last: Yeah, our first, uh, Fairchild payoff paid us something like what would—at that time, would be like twenty or thirty years' salary. And that was what we sold the company for. The second one did better.

 

Dr. Berlin: So, then Arthur, are you—are you saying then that you think that if Fairchild Semiconductor had never been acquired, I realize this is a counter intuitive question, but if these eight had been left to run it on their own, it would have—it would have continued some form of a rise. We'd still be talking about it, perhaps in the way we talk about some of the other companies these guys have started?

 

Arthur Rock: I think that's probably true. I—if Fairchild Camera and Instrument had spun off complete—hundred percent of Fairchild Semiconductor, I think Fairchild Semiconductor would still be around and very successful.

 

Dr. Berlin : Do the rest of you agree with that?

 

Gordon Moore: It's hard to know, you know. There's a tremendous advantage to occasionally starting over. Uh, what we did at Intel would have been extremely difficult to do within Fairchild. Uh, it—just the—the nature of things, something that, uh, kind of changes the paradigm is hard to do in an established company that's pretty successful.

 

Julius Blank: We didn't have a lot of old baggage to carry along.

 

Jay Last: Yeah, that's right.

 

Gordon Moore: Yeah, that's right. And starting Fairchild, uh, I got to abandon my platinum furnaces, among other things. We—we all got to start over again, now having an idea of the direction we wanted to go and that was extremely valuable. We would never have been able to do that if we'd stayed at Shockley and I think the same sort of thing happened at some of these other start-ups. We couldn't have done Intel within Fairchild and so forth.

 

Jay Last: An—yo—you can see that, uh—uh, at the same time within the tube manufacturing companies, none of them turned into successful transistor companies. They had the markets and the technology and it just didn't work for them.

 

Julius Blank: Well, they didn't get into the business because there was no market for it. It was just at the time.

 

Jay Last: Yeah.

 

Dr. Berlin : Yeah, well, it's interesting, because just, uh, just this morning my husband and I were talking about this whole question of whether failure is more embraced in the Valley or not. And we—we'd been reading in the article a quote from Jim Morgan, was it Jim Morgan who said, um, oh, “Failure is still bad even here.” Um, it sounds like what you're saying is actually if that company had remained successful, you might not have taken the opportunity to start over and—and get rid of your baggage. So, I mean, it sounds to me like you're in the value of Fair—of failure camp. Yes?

 

Gordon Moore: You know, I think, uh, that, uh, there is little stigma attached to failure in this area. Uh, you're more valuable because of the experiences you've been through under these failures. Uh, you know, nobody wants to fail and, uh, you can't probably get away with it too many times, but, uh, no, I—I think it—it's something that our culture here has accepted, that's been very valuable because of it.

 

Jay Last: You see the troubles that various European firms have had getting into the—this—this business for that reason, couldn't tolerate the product failing. But they couldn't get another opportunity if they failed.

 

Dr. Berlin : Arthur, does that—that, sort of, em—embrace of failure seem distinctive to you in Silicon Valley or was that, sort of, part of tech culture in—in general? What do you think?

 

Arthur Rock: No, I thi—I think it's, uh, it—it—at least at the time, it was strictly West Coast here. I, uh, I don't think failure, e—especially in Japan , where someone might commit suicide because they fail, uh and—and in Europe , where you couldn't probably get another job if you failed and on the East Coast, very little failure was tolerated. But, uh, I—I think that was one of the beauties of the—the West Coast technology.

 

Julius Blank: Well, uh, it—one thing about failure is you learn something from it and go on from it and don't make the same mistake again, that's a positive.

 

Dr. Berlin : Well, why do you think it showed up here and not other places then? I mean, where—where did that acceptance or embrace, even, of—of failure come from?

 

Jay Last: Partly because the technology was moving so fast, you—you weren't repeating the same thing. You were—you were using your experience to get into something completely new and different. And, uh, so, you—you couldn't approach somebody and say, I want to repeat the exact s—failure mode. But, uh, when you say here's what I learned from it, here's the other. The technology was just so unbelievably rich, that you could always come up with some new s—uh, swing on.

 

Dr. Berlin : Okay. Uh, I am going to ask one more question and then I'm going to open it up, um, for the audience to ask some questions. There are microphones on either side that I hope you'll take advantage of. Uh, so, a final question, um, that I had for each of you is, you know, what—what impact would you say that working at Fairchild had on your own careers and also on, um, the shape of the valley? It's really a two-part question I guess.

 

Gordon Moore: Oh, it had big impact on my career, certainly.

 

Dr. Berlin : I—I—I guess I mean, what, you know, what did you—what'd you get out if it? What'd you learn?

 

Gordon Moore: Well, eh, you know, uh, I—I did get a little bit of management training, you know, and I—I've been through three, kind of, start-ups now, Shockley, Fairchild and Intel. Uh, every one of them seemed to be a little better than the previous one, so we learned something along the way. Uh, you know, certainly, uh, that was important, uh, you know, some of the ideas about what you need to make a successful business. The Fairchild was a—uh, certainly a very key part of my whole career as you know. Uh, it just had a big bearing on anything I've done since.

 

Jay Last: No, I'd say the same. And—and the—when we started new companies we realized that re—recognizing the—the employees in the company was an extremely important thing, in the form of options and other things. And that had not been recognized by the Eastern Fairchild management.

 

Dr. Berlin : Arthur, had you seen stock options used, um, in companies before, uh, wh—when was the first time you saw stock options being used?

 

Arthur Rock: Well, th—they were used very, very parsimoniously in a few companies just for the top two or three officers. Uh, but the, uh, the average person working in a company did not get stock options. And, uh, I—I—I think, uh, Intel wh—it may have been the f—first company that gave options to all the employees. Um, I think that was about a year after Intel started, we decided to do that.

 

Dr. Berlin : A—and, uh, Gordon and Arthur, why did you decide to do that at that point?

 

Arthur Rock: Uh, Gordon probably has an entirely different idea than I do, so go ahead, and I'll give my version.

 

Gordon Moore: I'll—I'll let you go first because I, uh, you know, twofold, one you want to keep them and two, you have an opportunity to share and feel part of the whole thing. Uh, I think, uh, some ownership feeling is really transferred by having a stock participation. And it was a valuable—we got more out of our employees as a result.

 

Arthur Rock: In—in addition—I—I agree with everything Gordon just said, but in addition, there is the feeling that I had, that if we were going to make all this money, geez, the guys who worked their tails off should make a little anyway.

 

Gordon Moore: By the way, everybody didn't get options.

 

Arthur Rock: Uh, on—one year, they had to be there one year.

 

Gordon Moore: No, Bob and I never took options.

 

Julius Blank: Over my dead body.

 

Dr. Berlin : How about at, um, Amelco, Jay, did you guys do options?

 

Jay Last: Yes.

 

Dr. Berlin : Yeah.

 

Jay Last: A—a lot of options.

 

Dr: Berlin : Hmm umm. From—from 1961 forward?

 

Jay Last: Yes, when we started the company, we gave options to a lot of the people.

 

Dr. Berlin : And where—I mean, where'd that idea come from?

 

Jay Last: From the fact that I saw what was happening at Fairchild and—and why it was becoming demoralizing to the people there. And Henry Singleton a—also was a very option oriented person. So, uh, it just seemed a natural thing to do and it worked out just fine.

 

Dr. Berlin : And Julius, how about you? What did you learn from the Fairchild experience?

 

Julius Blank: Well, I learned how to move fast especially in an industry where you had to invent everything from scratch. And, uh, it—e—it really exercises just about every part of your brain to do that. An—and again, uh, I agree with the, uh, with the—with the notion that the—one of the biggest issues at Fairchild was the fact that they didn't have enough participation on the, uh, the people that did all the work. And, uh, and, uh, the people ou—out here that worked there, should—should, uh, should've gotten options that—that never happened. And that's why a lot of them left, formed their own companies.

 

Dr. Berlin : And Arthur, how about you, how would you characterize the impact of Fairchild on what you did later?

 

Arthur Rock: My life, I mean, uh, you know, I—I saw what was possible and, uh, and I had more faith in myself and others then had faith in what I was doing and it allowed me to come out to California and, uh, stop being an employee, but, uh, employ others. And, uh, it worked out very well for me. And I also met my wife because of that.

 

Dr. Berlin : Uh, do you guys have anything you want to be sure to say before we go to Q & A from the audience? No? Okay. Uh, so we're go—well, the floor is now open, we'll take, uh, questions. There are, uh, mics on either side, uh, and I would ask you, please, to minimize your preambles so we can take as many, uh, questions as possible. So, uh, yes, somebody already, yeah.

 

Audience member: Yeah, I used to be a customer of Fairchild, uh, wanted to get a bid on some FD200's and I said, what's the price if you buy five thousand, what's the price if you buy ten thousand. So—well, they said, well, for ten thousand it's a nickel, but for five thousand it's a dime. And I always wondered what would've happened if I'd asked for a different quantity.

 

Dr. Berlin : Okay.

 

Gordon Moore: I'm sorry the marketing department isn't represented here tonight.

 

Audience member: Hi, uh, first I want to just quickly, uh, say, Leslie, I—I read your book and I thought it was, uh, for me, it was like a super suspense page turner. Uh, as an engineer, I thought it was really well researched and well written and, uh, it really told the story.

 

Dr. Berlin : Oh, thank you.

 

Audience member: Uh, she didn't pay me to say that, by the way. Um, well, I—I wanted to touch again on one of the points which I think Jay made about technology being incremental. And the things that look like revolutionary new inventions really didn't happen that way. Um, that's something that I think a lot of people don't realize and it's something that takes a long time to learn yourself as an engineer. Can you—can the three of you talk a little bit about any of the details which were essential to the integrated circuit which people now think were developed for the integrated circuit but really came about for a different reason? Because I think that's really fascinating stuff.

 

Jay Last: Well, let's see, well, n—nearly all of the—the technology, uh, in the integrated c—in the—in the—in the—in the Fairchild, had—had its roots in Bell Labs' technology. And—and—and Bell Labs was focused on building things for the telephone system, whereas we were doing—doing it in a broader sense. So that the ideas, uh, the—at Shockley was—was close to Bell Labs and was a fairly free flow of materials though. So the things were moving—i—ne—new ideas were wor—moving from, uh, uh, Bell Labs to Shockley, to us. So—so, uh, s—so from that the s—standpoint, we were using things for a different reason. And al—also Bell would often s—say something was too hard, like they gave up on photo lithography, said this is just an impractical process. An—but—but they had developed the idea and worked on it. So we, uh, were able to—we had to make it work.

 

Audience member: Ca—can you talk a little bit about the planar process and photo m—masking and—and, uh, I don't—I—I—it's probably kind of technical, but.

 

Jay Last: Well, I don't—I don't quite, uh…

 

Audience member: Okay.

 

Jay Last: …what—what you want.

 

Audience member: That's fine.

 

Jay Last: Yeah.

 

Dr. Berlin : Is there someone over at that mic or no? No? Okay, great. Yes, please.

 

Audience member: You mentioned how it took, uh, thirty-five, uh, requests to get funding. I wondered how much money you needed to start Fairchild and then how man—how much money was needed later to—to start Intel?

 

Gordon Moore: A million and a half to start Fairchild and two and a half million to start Intel.

 

Audience member: I‘ve got a loud voice…

 

Dr. Berlin : Yes, okay, go ahead.

 

Audience member: Uh, I'm curious about (inaudible) research and whether government agencies (inaudible). Do you think this could work (inaudible) DARPA?

 

Dr. Berlin : Did everyone in the back hear that question? Did you guys hear that up there? No? Okay, the role of the federal government, uh, DARPA in particular, in, uh, technical development.

 

Gordon Moore: The semiconductor industry, uh, they drove the motivation for miniaturization in the beginning. The military really needed that. Uh, the Minuteman two, uh, program was the first real large user of a large variety of integrated circuits and it held through the early part of the 60's. After that the—the commercial demands took over, the military was, uh, left to do whatever they wanted to do. They had to bring that in-house, and some of the big systems houses you get their special needs. But the commercial stuff has been driving it since the mid 60's.

 

Dr. Berlin : Um, okay, at this mic but someone who hasn't already asked a question. Go ahead.

 

Audience member: I'm from China , I'm a student at this school. Um, a lot of countries have tried to recreate the Silicon—uh, their own Silicon Valley , all—mostly with limited success. And just given the importance of Fairchild to get the ball started, uh, rolling, um, I'm just wondering, uh, what's your perspective on why other countries have had limited success or why Silicon Valley is so successful? Thank you.

 

Gordon Moore: Uh, this is always a difficult question to answer. Uh, I think, uh, w—what happened here was, uh, so near the beginning that it could really blossom and—and it just exploded here and created a culture locally. I don't think you can create that artificially, it just happens to have, uh, been the place, that the right futures came together. The—at this stage of the game, the technology is so complex and so expensive, certainly semiconductor technology is not a good thing to try get another technical group going. Uh, some of the newer things, you know, biotech, uh, is likely to have its big explosion someplace else, although currently this is still the area tha—with the most biotech start-ups. I don't know where the next major technology's going to come along. It might start in some, uh, similar thing to Silicon Valley , but you can't just go out and recreate it. It's been tried and it just hasn't been successful.

 

Arthur Rock: It's also the fear of failure.

 

Audience member: Who would, uh, Jay's comment about how technology is, uh, built up slowly, that is, you always stand of the shoulders of giants and you, eh—eh, you slowly, incrementally add new technology. So, the question has to do with patents, do you think patents hinder that process by blocking out you developing other—other—around other people's ideas for, like, a long period of time? Or do you think they actually promote the advancement of technology? Your experiences with patents, uh, when you went, for example, from Shockley to Fairchild, did you have to do a—did you have to worry about the patents that Shockley held?

 

Dr. Berlin: So—so, the question is about, um, the advantages and disadvantages of patents, to what ex—patents, to what extent do they encourage innovation by making, uh, information known and to what extent do they hinder it by, you know, forcing people to pay to use the patent and it—specifically, what was your experience, uh, with patents in the transition from Shockley to Fairchild?

 

Gordon Moore: Uh, you know, there are as many opinions on this as there are people involved, I think. Uh, and it changes by industry. Uh, in our industry, the patents are pretty broadly distributed and, uh, the process is a long complex chain. So you almost have to trade patents with everybody else. So in the beginning, uh, establishing enough trading material was the—the key objective and so you could get, uh, hopefully no royalty licenses, but at least low royalty licenses. Uh, and that's continued to be the case in the semiconductor industry. It's completely different, for example, than the pharmaceutical industry where a patent is everything once you get it on a particular drug. Uh, I, uh, I would be hard-pressed to say if the patents accelerated technology or inhibited it. I—I think I could argue either side of that, but I can't do the experiment.

 

Jay Last: And you can't generalize either because you set a specific, things are different for different industries.

 

Dr. Berlin : And were there any intellectual property issues around leaving Shockley and starting Fairchild?

 

Gordon Moore: Uh, not really. Uh, the stuff we were doing at Fairchild, uh, really was based directly on the Bell Labs stuff, which we could get licenses to. I don't know of any, you know, nothing at all.

 

Jay Last: No.

 

Julius Blank: We bought a Bell , uh, Weston license right in—right at the beginning.

 

Gordon Moore: Yeah.

 

Dr. Berlin : Okay, yes, over here please.

 

Audience member: Uh, hi, uh, I was just wondering, with the emergence of such technologies like graphing semiconductors, um, diamond semiconducting and, like, hafnium-based transistors, how do you think, uh, your prediction will hold up for the next couple of years? Uh, any changes you might make or want to make?

 

Gordon Moore: Uh, the next couple of years I feel very safe, the next couple of decades, I don't feel nearly as safe. We're approaching some fundamental limits, you know, the atomic structure of matter is going to bite us pretty soon. We get, uh, layers now that are two molecular layers thick, we can't go much thinner that that, like we try to go the other way. Uh, there's been efforts to replace silicon as the material ever since we started with silicon and, uh, the—these have all, uh, you know, they've ended up with those special purpose devices, you know, gallium arsenide in your cell phone or something. But for the run of the mill basic electronics, I don't see anything in the wings that has a chance of replacing silicon as a semiconductor material, silicon germanium alloy maybe, but that's still mostly silicon.

 

Dr. Berlin : Yeah, please.

 

Audience member: Um, you hear a lot about companies developing technologies and not bringing them to market, um, and later other companies taking them to—to become big things. Was there anything early on that you guys developed that you decided not or management decided not to bring to market that you really regretted and later on became the huge new craze?

 

Gordon Moore: Well, uh, I shouldn't take all the airtime here but, uh, one of my real frustrations at Fairchild was the inability to get MOS into manufacturing. Uh, MOS required some special rituals in the Fab area that we couldn't convince the manufacturing people that they had to do. And, uh, we had a spin-off that had a spin-off doing MOS before we got anything moving there. So, uh, that's a case of, uh, at least the company not getting, uh, an important new technology into manufacturing when they should have. It wasn't, uh, uh, a strategy not to get it into manufacturing. It was just the way the organization was working.

 

Julius Blank: It was more a case of neglect than anything else.

 

Gordon Moore: Yeah, the—the, uh, yeah, it was a funny deal. Uh, when there was relatively little technical capability in the manufacturing area, we could transfer processes very easily from the laboratory. The more technically competent they became, the less easy it was to transfer anything, until it finally became almost impossible. Uh, the re—so, with that history, when we set up Intel, we didn't set up the separate R&D facilities, we said we're going to do our R&D right in the manufacturing facility and not have the tra—the technology transfer problem. And we proceeded that way for a long time.

 

Julius Blank: You started up Fairchild the same way, the R&D facility was the same as the…

 

Gordon Moore: It was all R&D in the beginning at Fairchild, yeah. But then we had pre-production engineering set up, which…

 

Julius Blank: That's what Baldwin

 

Gordon Moore: Yeah, Baldwin brought that in, it was very necessary to get, uh, the first products into manufacturing.

 

Jay Last: Otherwise we'd just keep inventing and not produce anything.

 

Gordon Moore: Yeah, you keep these—you don't make ten of the same thing if you just keep it in the laboratory.

 

Dr. Berlin : Um, I—I still want make sure that everyone's had a chance to ask questions, um, before we start going in for seconds. So, yes, please.

 

Audience member: So, uh, Mr. Moore, you partially answered this question by saying that you don't know where the next technological revolution's going to come from. So you're all arguably been at the beginning of computing technology, so microchips leading to PC's, leading to software, leading to the internet and the web. Can—any of you care to comment where you foresee the next technological revolution based on all those inter—incremental steps?

 

Gordon Moore: I won't take a shot, I don't know. Eh, the really revolutionary technologies are the ones you don't predict. And they just grow up to—well, I wouldn't have predicted that—what Google does, for example. It blows my mind that they can do a search like that in a fraction of a second. It's just spectacular.

 

Dr. Berlin : Arthur, you don't have any suggestions for us either on this?

 

Arthur Rock: I'm too old.

 

Dr. Berlin : Yes, please.

 

Audience member: I have a question for Julie, but I—I wanted to, uh, note that I came across the letter form Bob Noyce offering me a position as administration manager in December of '59. I'm Terry Levine, and, uh, it was fifteen thousand dollars a year and I was delighted. And I managed to worm my way into being international and the question, Julie, is I remember coming back from Asia and suggesting that it would be very advantageous to open an assembly plant in Asia. Uh, my memory is that you and Charlie Sporck went to Hong Kong , uh, a month or so after and came back and as a result, I think we multiplied our employment by four or five times and entered new markets. And the question is, what was—what—can you recall what your reaction was when you first went there to Hong Kong and saw what was happening and what was your vision of how it could affect Fairchild. And in retrospect, was this a good thing for the United States or not?

 

Julius Blank: Well, we have to go—we had to go back to 1962 when, um, Bob asked Charlie and I to go to—to Hong Kong because he had—one of his, uh, buddies was a fellow by the name of Warren Simmons, who was a Pan Am Airline pilot who introduced him to Hong Kong. And he met a fellow there by the name of John Baldwin who said he would help us get started if we wanted to do that. Well, when Bob mentioned this to John Carter, uh, the f—first reaction was, what do you want to go to an unstable place like that for and had a whole list of reasons why we shouldn't do it. But we did it anyway. And we went and s—and saw this h—uh, it was Hong Kong in 1962, my God, it was—it was a very, very busy steamy place wi—with people building roads, uh, you know, uh, r—little r—rock by rock and building scaffolding out of bamboo and—but erecting big skyscrapers. And—and there was enormous—a lot of people there, a lot of people available to do work, they were, uh, coming down from, uh, down the Pearl River . And we—we—the pay at that time was something like, uh, oh, a dollar, uh, fifteen cents an hour or something like that and there were plenty of people available. And we were looking at the requirements of building mostly discreet devices, which the prices were dropping through the ro—through the floor and we needed s—we needed some advantage and beside, it was getting difficult to hire people here at—even at a—at high prices. So we decided it was worth, uh, a gamble to go ahead and build an assembly facility there. And, uh, we rented some space in an abandoned rubber factory that was making zorries s—sandals. And, um, we sent a team of engineers out there with some equipment and they slowly started to build it. And I think we were one of the first companies out there that was—that did, uh—uh, semiconductor assembly. Uh, there were—Ampex was there, they had a small facility stringing cores, if anyone remembers what that is. Little, uh, little fer—uh, ferrite donuts, where you have to wire them by hand, that was the early seven—tra, uh, uh, computer memory. And that was labor intensive and that was also an—a—an important issue because assembling semiconductors re—required a lot of manual dexterity. And, uh, there were a lot of females with thin fingers that could handle tweezers and microscopes and things of that sort, so—so that's what we did. And I rem—we eventually built a—a structure out there, a seven or eight story structure, but eventually had six thousand people working, assembling the s—semiconductors.

 

Dr. Berlin : And do any of the panelists want to address the good for America question on that decision? No? Okay. Okay, where am I? I'm on this side, yes?

 

Audience member: Uh, when I arrived at Fairchild in 1960, I looked at some old reports and some literature and it seemed to me that Fairchild had a lot of false tracts that they were pursuing until they found something better. I'm think in terms silvel—silver metallization as opposed to aluminum of the semiautomatic assembly line, some things in dolpinson and—and how to apply them. Did Fairchild have to follow and pursue more of these false tracts that killed them ‘til they got the thing that worked? Or is that typical of later start-ups as well?

 

Gordon Moore: I think a lot of that was typical of the way things started. You mentioned silver metallization, uh, looking for a metal that would make good contact on both N type and P type silicon was a big deal and, I was in—in charge of that program and I was trying all kinds of funny silver gallium alloys and such. Bob Noyce came by one day and said why don't you try aluminum, I said, okay. So I—and aluminum was the standard for the next thirty-five years.

 

Jay Last: I—I—I thought at the time you were just doing it alphabetically.

 

Gordon Moore: There were good theoretical reasons to believe aluminum wouldn't work. And Bob knew the theory better than any of us. But, uh, I was amazed that, uh, at that particular suggestion. But yeah, yo—you go—go up a lot of blind alleys and , uh, when you're exploring new technology.

 

Jay Last: A—and—and you recognize they're a blind alley and quickly you do something else.

 

Dr. Berlin : Yeah, I'm sorry, go ahead please.

 

Julius Blank: Don't make the same mistake too many times.

 

Dr. Berlin : Uh, Mic over here—no, yea, go ahead.

 

Audience member: Yeah, uh, Mark Twain once said that it was—it'd be much better if he could start at eighty and go backwards and get younger. If you could do it all over again, what would you do differently?

 

Gordon Moore: Because really you go all the way back, I probably wouldn't have accepted Shockley's offer.

 

Dr. Berlin : Really?

 

Gordon Moore: And I'd be a professor at some third rate university someplace.

 

Dr. Berlin : You're saying that's a preferable option. Gordon?

 

Gordon Moore: Pardon?

 

Dr. Berlin : You're saying that's preferable, that's what you would do differently if you had it to do all over again?

 

Gordon Moore: No, eh, huh, you know, I—I would've avoided the Shockley experience, uh, uh…

 

Jay Last: The part that I think for—for myself, uh, what I wanted to do with my life and what I've done, I was at the right place at the right time and there's just very little I would've done differently.

 

Julius Blank: I don't think I would've done anything differently.

 

Dr. Berlin : No? Arthur, do you want to…

 

Arthur Rock: Nothing I'd do differently.

 

Dr. Berlin : No? Huh, okay. Um, you get our last question for the evening.

 

Audience member: Uh, yeah Gordon, uh, I have a question, we talked about Fairchild today. So in the early 60's our work horses were as twelve eleven, twelve forty-three, twelve fifty, you remember these types. Uh, now in the late 60's, all that was given away, you know, when we had the change in Fairchild. Now we talk about technology, planar technology, would you think that things would've been different for Fairchild if it would have kept the old recipes?

 

Gordon Moore: It's hard to say, I don't know.

 

Audience member: Well, I mean, uh—uh, all the dice, I mean, the—the way for the dice, we had the—the geometry, you know, which—okay, when you left for Intel, you know, in Fairchild everything was changed. So, would you think that, uh, keeping that—that old original Fairchild technology would've changed things?

 

Gordon Moore: I don't know. You can't go back and play it the other—you need a parallel universe or something to see what's happening. Eh, it—it's hard to speculate on any of these things, what would've happened if you taken the other path.

 

Dr. Berlin : Uh, so, I want to, uh, thank everyone, uh, for a wonderful evening and to move to two housekeeping matters. Um, first of all, uh, I've—my business card is out on the chair as you walk out of here. Um, if any of you have any old papers, memorabilia, things that you think will help the next generation understand what has happened to make Silicon Valley, Silicon Valley . Or if you're a student, uh, who has questions or thinks this is something you want to study, uh, please grab my card and, um, I'd love to talk to you. Uh, second housekeeping matter is I should mention that this conversation is going to continue tomorrow, uh, at the Computer History Museum in Mountain View . Uh, tickets are still available for that, uh, and Judy Horston, her minions are, sort of, out in the lobby. Uh, if you need a ticket, you should please talk to them. So, uh, to end, uh, I'd ask you please to join me in thanking our panelists, not just for their time this evening, but, uh, for everything they've done for this valley and this world. Thanks.

 

[applause]