Interview with Richard Hodgson
September 19, 1995
Atherton, California

RW: We're here today with Dick Hodgson, the fellow that allowed Fairchild Semiconductor to get started. The instigator - the one that tied Fairchild and the group from Shockley together and incidentally he also came up with the name Planar - welcome Dick.

RH: Thank you. Thank you.

RW: Can you tell us about your early background?

RH: Yes, I was - going way back I was born Northern British Columbia in a town that doesn't exist anymore, it was a mining camp. My family is basically sort of from Colorado. And I went to early school in Denver and then the family moved to Palo Alto and I went to Palo Alto High School, Stanford University. Couldn't get a job in 1937 around here so I managed to get a scholarship to Harvard Business School and graduated from there and came back out here and worked for Standard Oil Company in San Francisco for a couple of years. Then the war came along and I was recruited by Fred Terman to go back to work at MIT in the radiation laboratory. And I worked there through 1945, late '45. Then the opportunity came I thought I wanted to stay in science and went to work for Atomic Energy Commission - was the general manager and engineering manager at Brookhaven Laboratories out on Long Island, but I decided I was not cut out to be a physicist and ended up starting a company that turned out to develop a color tube, which we ultimately sold to Sony. The tube's concept was originated with Ernest Lawrence from Berkeley in Lawrence Laboratories - it's a sideline and a hobby of his. And about that time Sherman Fairchild who was a very wealthy man in New York, his father seldom recognized, started IBM and hired Tom Watson, though people don't give him that recognition. And Sherman with all his wealth was a great enthusiast - enthusiastic about new developments and things of that sort. He wanted to get this small company, Fairchild Camera and Instrument into the electronics world. And he came across my background and hired me in 1955. And for immediate work with him, I worked on developing satellite cameras that were used in the early days in the satellite reconnaissance business under the staff I had there, but I was continually looking for an opportunity in the electronics field and through a set of odd circumstances, Sherman heard about the group out here in California through some contacts at Hadyn Stone, which was a small but successful investment banking firm in New York. So I came out to San Francisco and met with Bob Noyce and Gordon and I think Gene Kleiner. We talked about what they wanted to do and eventually hammered out an agreement where we would advance up to three million dollars and buy them out and if it were successful. And we set up this small laboratory in Palo Alto, it still exists - the building still exists down there and there's a very nice, I guess California historical monument there honoring Bob Noyce's invention of the integrated circuit and the commencement of Fairchild semiconductor.

RW: Let's go back a little bit - what was Terman like? He's a famous name.

RH: Yeah, Fred Terman at that time was the Dean of the Engineering School at Stanford, before he became provost at Stanford. He was a very aggressive, brilliant guy and organizer, as you probably know, he was the one who gave stimulus to Dave Packard and Bill Hewlett in the late 30's to start their company. But he was not really knowledgeable at that time in the semiconductor world. He was primarily interested in electronics and communications things and that sort of thing. But he I don't think had any influence in bringing Shockley here as I think we discussed earlier that Shockley was from Palo Alto originally or nearby, and was attracted to the environments and being close to the university. And Terman played little or no part in what we now know as Silicon Valley. When I grew up here, and you probably did too, it was Santa Clara Valley.

RW: Absolutely and it was orchards.

RH: Apricots and almonds and peaches.

RW: Except we didn't call them apricots, what did we call them?

RH: Cots?

RW: Cots! You got that right. Now this color television tube that you talked about that Lawrence did in his spare time, what is that called today?

RH: It's called the Trinitron used by Sony completely and the difference between it and the RCA tube is that it's a cylindrical faceplate and not a spherical faceplate. And it makes a great picture and we had a laboratory over in Emeryville where we made the tubes on a pilot basis. One out of twenty might be satisfactory and the others would implode.

RW: How much was this sold to Sony for?

RH: I have forgotten - it was on a licensing basis. Not a lot of money.

RW: It wasn't a lot of money.

RH: No, no.

RW: No, well Gordon Moore told us that they had approached the group - the senior group at Shockley Labs had approached many companies and they had been turned down and somehow you didn't turn them down. What was the reason for that?

RH: Well, I think the larger companies; they all thought they knew more than the group did. I mean the GE's and the Westinghouse's and companies like who were in the component business, tube business, and this would just have been an adjunct - Western Electric, they had all the answers at Bell Labs. We at Fairchild were looking for an opportunity and recognized the talent that was there - just if you looked at the pedigrees, at least the top four of five of them from a technical point of view. And I had some years before been able to attend one of the Bell Labs seminars on the early transistor and was intrigued on what this could do. You know, I saw a television set that was run completely with transistors in the early 50's and this seemed to me an opportunity for Fairchild to get into a new business without any pre-conceived ideas as to how to run it or how to go about it.

RW: And there was no internal group doing that?

RH: No, none at all.

RW: So that probably made the difference.

RH: And I think it's interesting to note that every one of these major companies has never made a success - from RCA, Westinghouse, GE, in the semiconductor business. They've been in it and out of it.

RW: Yes, I interviewed Bernie Vonderschmitt that ran the RCA semiconductor business for a long time, and they gradually siphoned off more and more money from semiconductors and when they bought an insurance company, that's when he knew it was time to leave. And he left and he founded Xilinx and they're now doing very well.

RH: Very successful.

RW: Very successful, but these companies didn't understand the sort of - number one the culture, but also number two, the kind of capital investments that you need to continually make.

RH: Well certainly not till now. I mean, there's nothing like it today. I mean it used to be, I would think, that the color tube business, the investment that had to be made to make the bulbs, the Corning did, was considered one of the most extremely costly ventures - these big automatic plants - it's peanuts compared to putting in a process line today for semiconductors.

RW: Plus they would last a long time. I mean the light bulbs still look the same…

RH: The light bulbs ...

RW: …when we were kids.

RH: …but the color tubes, you had this continued problem of size changes, so you did have an obsolescence going on in the bulb business.

RW: Well we're still doing that. Well anyway so Fairchild Semiconductor was set up first as an independent subsidiary and then bought out for three million dollars. That was - oh you have something there…

RH: Yes, I thought it would be sort of interesting, I went through some old records when I knew this was coming up and I have a copy of a letter dated October 2nd, 1957 to Bob Noyce, his home in Los Altos, from me in which I sent him a check for three thousand dollars "as an advance to you to cover necessary expenditures in setting up the semiconductor operation until such time as your corporation is formally organized," and I admonished him, "Please keep a record of the expenditures so that Fairchild can eventually be reimbursed by Fairchild Semiconductor Corporation," - three thousand dollars.

RW: Three thousand dollars that was quite a buy.

RH: And from then on we started with the little laboratory in Palo Alto…

RW: Well, and you bought the company out then for three million. Now at some point in time, John Carter was the president of Fairchild Camera and Instrument, reporting to Sherman Fairchild and what happened with him?

RH: Well Carter was a man who was primarily a financial man. He'd been hired about the same time I was by Fairchild from Corning Glass. A very affable guy but liked to live the high life and didn't pay much attention to the semiconductor business, he came out here maybe once or twice a year to see the group, to - we'd open a new plan or something like that, but his main interest was to build a company up and other activities, in printing, in graphic arts and instrumentation. He bought - wanted to buy Dumont Laboratories at the time when it was on the way down. And so eventually the board decided that his actions were not compatible with where they saw the company going and the semiconductor operation based here in California was really the tail wagging the dog with the entire company at that time.

RW: What percent of the profits of the company were coming…

RH: Well I would guess seventy - five to eighty - percent was coming from the semiconductor company.

RW: And yet it was being run from the East Coast?

RH: Well essentially it was being run here, but I was the liaison if you will. I spent, you know, weeks out here at a time essentially growing and expansion and I enjoyed that part of it, but because Sherman Fairchild was in the east, at that time I was depressed and it seemed proper - he wanted the administrative headquarters to stay in the New York area. That changed of course when Les Hogan was brought in. Hogan was the westerner wanted to, at least he was becoming a westerner and he wanted to move the headquarters out here and that's how that all started.

RW: He did. By the way I have interviewed Les and he's told me his story. Now how long were you president?

RH: I was President till - about eight years - I was there thirteen, it was probably the last eight. I was CEO the last year and a half.

RW: And then when you left, they decided to run the company with ...

RH: With a committee.

RW: With a troika of three.

RH: One was a lawyer, one was a banker, and then there was Sherman Fairchild and he was quite ill in those days and he was not able to pay much attention to the business. He was a very interesting but very vague man. I mean it was very hard to get Sherman to make a decision on anything. But he did make the right decision on the semiconductor investment, that was certainly true.

RW: Well he had done so much in his youth. I mean he was like a Howard Hughes.

RH: Right, right. Sherman was a very interesting person. He had the company, it was called Fairchild Aircraft Company and this was - the company included the camera company, included an airplane manufacturing company in Maryland, included a sound system recording company, which he was very fond of. He was one of the founders of Pan American Airways and was a director of that for years and was their largest stockholder in IBM and was Chairman of the Executive Committee of IBM.

RW: So in his later years he got a little vague but you shouldn't sell him short.

RH: Not sell him short at all. He was a real pioneer in that respect - never married, loved the beautiful girls, and would be seen at all the fancy nightclubs in New York, but never got married, he always managed to step aside just at the right time. I have an interesting story about him.

RW: Yeah.

RH: That when we opened the Fairchild Research Laboratory on the Stanford Campus, Sherman came out for that. And Gordon and Bob Noyce and I took Sherman to dinner at a restaurant down here in Atherton on El Camino Real and in came Jerry Sanders with - who was at that time the sales manager responsible for the IBM account, which was one of our major customers - Fairchild's major customers. And Jerry being his usual ebullient self thought, "Gee, it would be nice if these two salesmen or purchasing people met Sherman Fairchild," after all, he was the director and ...

RW: Yeah, living legend.

RH: Yeah right. So I said, "Sure Jerry, come on over and join us for dinner." And so they did and Jerry Sanders had never met Sherman Fairchild before, but that didn't stop him. He said, "Sherm," he said, "I think we're dating the same girl." So these two IBM fellows wanted to crawl under the table. And Noyce and Moore sort of looked at me but Sherman brought out his little black book and said, "Oh the secretary out at Republic Aviation." "Reception-that's the one," talked about her and then we got back talking about IBM. But that's the kind of - he was that easy man to get along with, Sherman Fairchild was.

RW: That had to have shocked - how old was he at that time?

RH: Who?

RW: Sherman.

RH: Seventies - early seventies I guess, yeah.

RW: That had to have shocked the IBM people.

RH: Well they just didn't know what to do. I mean they were in classical black suits ... white and Jerry Sanders has heard me tell this tale before and he's not always very fond of it but anyway it's a true story.

RW: That is fantastic. Now when you left the presidency and they decided to run this with a troika; they did not offer the job to Bob Noyce.

RH: He had left before. They left in July of '68 and I left in September, having failed to find anyone interested in buying Sherman Fairchild's stock. In the meantime concurrently, they had been looking for someone to come in and run the semiconductor division and got hold of Les Hogan and his group and came shortly there after to Palo Alto, Mountain View.

RW: Well Les told me that he'd been approached by the board, turned down the board - Fairchild Board, and then Bob Noyce approached him and Bob Noyce actually recruited him to take over Fairchild.

RH: Really, I hadn't heard that - it must have been after Intel was started though.

RW: Yeah, it was after Intel. Well any rate, more incompetence started in the company.

RH: But the interesting thing was the - how this group of eight worked together during the first few years, very successfully, particularly in the small operation - the research lab you might say. And then we moved and built this plant in Mountain View, hired Charlie Sporck from GE who was just a marvelous person to add to this group, he was not part of the original eight, but in terms of his leadership in manufacturing and understanding what it was like to manufacture components - have you talked to Charlie?

RW: He's writing his own book…

RH: I know he is, yeah…

RW: …so he doesn't want to talk to me.

RH: Okay. But he recognized things that the group did not recognize in terms of inventory control and better statistical methods of analysis - analyzing quality that sort of thing, which was great. And Tom Bay, who was the only Fairchild camera employee that I had recommended to the group as the marketing manager, came out here, he was an MIT graduate, very smart, and really set the style, right or wrong, for marketing of the semiconductor industry.

RW: Which produced many CEO's, Jerry Sanders the most prominent, but many, many, very aggressive, very young, probably the hottest sales group in semiconductor…

RH: It was fantastic. I mean the sales meetings, I used to go to every one - one would be in Hawaii and one would be in Puerto Rico, one would be in Bermuda, and they were - in Acapulco - and they were just marvelous. There was a lot of business done and camaraderie, but at the same time, they were a hard playing crowd of people, let me tell you.

RW: But they were largely in their twenties.

RH: Yeah, yeah. And just incredible. But when it came to getting the order and keeping the customer at bay, they were tough, they were professionals.

RW: Well, you named Planar, Planar.

RH: Yes.

RW: How did that happen?

RH: Well, it happened that we felt we ought to have a name for the product and up to that time, the general name for transistors were called a mesa transistor because the actual configuration would look like a mesa in the desert. And the Planar was quite the opposite; it was just a complete, flat top device. And so it just sort of came out of the blue talking to the advertising agents - advertising manager, why don't we call it Planar and Noyce and the group thought that was fine, decided we're not going to copyright it, we'd make it this more generic name for that type of device and that just, it stuck.

RW: Yes, but it was licensed and it became a great source of revenue.

RH: Well the patents did but not the name. Oh yeah, oh we licensed; we made millions of dollars out of licensing. The most important one from a cash point of view was the license with NEC, the Japanese company who approached me in New York and said they wanted to license, not no - how but the license that they felt this was the right way to go and they had had a GE license and they'd had a RCA license and obviously a Western Electric, Bell Laboratory license. But they didn't think that was the right way to go for their own technology. And so Noyce and I spent oh I guess six months literally going back and forth negotiating an exclusive license with NEC for the Fairchild Planar patents - process patents, design patents that included a mandatory requirement that they sublicense after a certain period, to other people in the industry which Miti was not very happy about but the - they agreed, the Japanese Minister of Industry. And that was a big source of revenue for Fairchild. And starting with that, then we licensed practically every major semiconductor manufacturer from General Electric or Westinghouse, TI, some of whom were cross - licenses, IBM, and the one we had the most trouble with was Motorola, who had a very tough patent position of their own and we didn't ever get into litigation, but it took - they were the last ones to sign a license which had - was royalty bearing. And it was interesting for me to note that in the later years Fairchild, when they were losing a lot of money, their only income was from licensing - only income.

RW: And in fact, when the Schlumberger takeover coincided with the end of that patent and licensing agreement, so it was panic time...

RH: It was running around ten million dollars a year and more, which was substantial.

RW: Same by the way was true at TI for a number of years. I guess they're healthier now, but the difference between profit and loss was their intellectual property.

RH: And now they've lost one of their major cases, TI has.

RW: Ah yes. Well I think they're a bunch of jerks actually. In my dealings with them, I found them to be unreliable, I don't know about yourself but ...

RH: Well I got to know them pretty well down there during this license and just in general, you know, the industry was pretty friendly in certain ways. But they had a different attitude at TI, they had to make everything, they made their own wafers, they made their own packaging, they did the whole operation but it didn't make them any more money. The thing that's always aggravated me a little bit, perhaps me more than Bob Noyce is that they still continued to say that they really invented the integrated circuit and with Kilby and what they invented was compared to what Noyce had conceived was just - there's nothing - nothing like it was my opinion.

RW: No nothing like it, but even to the degree on the microprocessor at Intel - Intel never patented the microprocessor but through a common customer, TI had access to that technology and they went ahead and patented those devices so they - that they had gotten from Fairchild. So in my business dealings with them, I've always found them to be not somebody good to do business with.

RH: Right, right. Yeah. But they never really made it in the big time in the microprocessor world either.

RW: Probably because of that.

RH: Yes.

RW: Well in terms of Hoerni, he developed Planar, which was really the heart of the integrated circuits, what kind of a guy is he?

RH: Very interesting. He was French, Swiss from Geneva - I forgot where he went to school - and charming, very quiet person, but was unhappy with the Fairchild situation as it got bigger. I mean he loved it when it was down in Palo Alto, the little laboratory, literally we worked, and he had a charming wife and then she'd help him out and but he worked very much by himself. Jean was a person as the company got bigger felt that he should also be responsible for introducing the new designs into the pilot production as well. And this was a very difficult thing to do because he was continually wanting to change something as it started going down the production line; he wanted to make a change in it. Well you can't run a business like that. And so he eventually took his stock and left and started one of several companies, one of which was Intersil, which was quite successful and he sold that and he started one in Europe, a version of Intersil and he now lives up in Idaho I think, retired. I saw him where, we had a - I guess it was this last Fairchild dinner, he was down and it was pretty pleasant. Brilliant guy, but very, very much by himself.

RW: Fairchild's wake I think we called it - incredible that one company contributed so much to the world. I mean you can argue more than Bell Labs.

RH: I think so, yeah, in terms of really getting something out that was useful. Bell Labs certainly conceived the idea that you could get junctions and working with germanium, but they never got into the silicon to any extent and - they don't understand how to promote a product today, I mean this is...

RW: I know.

RH: ...it hasn't changed a bit.

RW: It's too bad and what - we were talking to Bernie Vonderschmitt about Sarnoff Labs that had CMOS early on and had so much and then just threw it away. So, I think it's part of the vitality of Silicon Valley that I guess all big companies eventually become - get into trouble, but because here when that happens, they start another company and...

RH: Well the proliferation here wasn't necessarily where we got into trouble, but the situation always was you would hire somebody, I remember one particularly hired Bob, I don't remember that name, oh yeah...

RW: AMI.

RH: AMI. The only reason AMI started was that Howard was a salesman for Tom Bay, ex-marine, and very this way - and he came to see me one day when I was out here and said, "Dick, you know, I'm just as smart as any one of those eight fellows and I would like to have a similar opportunity to," - within Fairchild to start to work in whatever products they were thinking about which eventually went AMI. I said, "Howard, you can't do that, it is impossible." To provide that incentive because everybody down the line is going to want the same thing. Well he didn't understand that so he left and started AMI and it started out to be a fairly successful company but between him and I forget a couple of his partners, they just ran out of steam and were fighting with each other and so forth.

RW: Let's take a break now. Do you have any other - you were just talking about Jean Hoerni and about Planar, do you have any other stories - did you know Bob Widlar?

RH: I knew him, yes - a very interesting equally strange fellow for - lived up in the hills behind the campus I think someplace for a while when he was working for National and did the outback designs for them and he'd come back out of his cabin and whatever and go to work for Charlie Sporck for a while and then disappear back again either there or down in Mexico as far I knew. So I haven't seen him for years.

RW: What other early stories of the Fairchild days?

RH: Well, some of these sales meetings were pretty wild if I must say. If you're interested in some of that. I mean, one in Bermuda, it came sort of off - season, it took over as one of the Mid - Ocean Club or something down there, it had a beautiful eighteen hole golf course. These guys go on these mopeds and started racing up and down the greens actually ripping them to hell, thought it was fun. The one in Acapulco, we stayed at a hotel called Las Brisas in Acapulco where we had these little villas and a little pool in each one of those you had - were given a pink jeep to get back and forth. Four jeeps never showed up after the Fairchild Semiconductor - we don't know what happened to them, they just disappeared.

RW: Well I understand after several of these that they were told they were not invited back.

RH: Well they were never invited back to the same hotel, that's right, absolutely. But, the Acapulco - how you can lose four jeeps, completely lost, not wrecked, lost. Anyway, but I think sometime maybe you ought to interview Tom Bay.

RW: Yes, he's on my list. He's a great guy.

RH: And Marshall Cox, people like that.

RW: Yeah. Marshall doesn't want to be interviewed - there's a number of people. Well now you're on the board of Intel and Intel has changed from this little - I guess they started off with three million dollars...

RH: Two and a half...

RW: ...two and a half, this little company, to being one of the largest corporations in the world and one of the most profitable. Can you say a few words about Intel?

RH: Yeah. I would have probably gone with Intel at the time it started except I was living in the East Coast, my family was in the East Coast, and they made an investment - each of the eight, as I recall, each of the original eight Fairchild people made an investment in Intel where they were no longer working with Fairchild or not. And they kept - all did them very well. But the work that was done at Intel initially was something - the thing that they wanted to start doing at Fairchild and couldn't get to convince - I couldn't convince the board to spend that money for this type of development. And as I said earlier, I think that the group also resented having this overseeing function from a group of non - technical people, excluding myself, in New York and so that's really - they just said enough and stared Intel and it was easy to get the money - Arthur Rock coordinated the fundraising very successfully.

RW: Now he had started out as a junior guy with you.

RH: Who, Arthur?

RW: Yes.

RH: No Arthur never worked for Fairchild.

RW: No, but with...

RH: Oh, with Hadyn Stone.

RW: Yes, with Hadyn Stone. He was involved...

RH: In the initial thing he assigned by the management of Haden Stone to try and drum up support - national support for the group and the thirty - five people that we mentioned that would turn him down except Fairchild. And Arthur was in the initial discussions that we had out here and - but it was more with Bud Coyle as chairman of Hadyn Stone and they had no interest in Arthur at that time. But he participated in...

RW: But he became like the first venture capitalist, did he not?

RH: One of them, yeah, absolutely. He and, oh what's the guy's name? They had a partnership - oh and Mayfield fund now. And then just Arthur by himself, very, very successful and astute.

RW: But in terms of Intel getting its funding, I understand it was one call to Arthur Rock and we need three million and yes.

RH: Well Fairchild was a financial success, you know, and the people were outstanding and it was easy to do. As I said, everyone of the eight put in - whether it was fifty thousand or twenty - five or a hundred, I don't know, but it all added up to - whether, Isaac put some in, I put some in, this sort of thing. And they were on their way.

RW: And have never looked back.

RH: Pardon?

RW: Have never looked back right?

RH: Never looked back, no.

RW: Intel today is such a power.

RH: Well, there is something I read just coming on the plane today that Intel with this question of how much money it takes now to continue in this business and the monopoly that they have in the microprocessor field and broaden it into a wider range of products, it's going to be very difficult for anybody else to come in and take that place - they may have the profitability as you get into less products - with less margin for example like the board business, but the total profit of the company should continue to grow. But the days of the fifty - five and sixty percent gross margin may be whittling down to fifty and...

RW: When you have a three billion dollar fab with six months of life, it's kind of hard to...

RH: But the company is still cash positive - it generates more cash and runs a very successful treasury operation with just investing the excess cash even apart - it's left over from all these extensive investments and plants in Portland, Beaverton, outside of Phoenix and in Albuquerque and Ireland, there's four plants there that are going to run about four billion dollars just adding the new processing and the bricks and mortar are pretty much there. A new one was announced this week up in Tacoma; it was another billion dollar coming up in the next three years.

RW: If things go right, if you don't screw up, it requires such an investment. For example, let's take Russia today. Suppose they wanted to compete with Intel, they don't have enough money.

RH: No.

RW: I mean, there's very few entities that have the money that can just compete.

RH: And has the marketing capability. Siemens is probably the strongest factor in Europe and they're building two huge plants, but they have a good in - house market demand for the products and which sort of subsidizes their cost to a certain extent. But they still can't put on the kind of prime expansions in Europe that Intel can. Intel waited a long time before going oversees to build a plant because they could have unique products, they went in duty free, and serviced the customer very well. So why put in a plant in one country and then worry about the attitude in another country? The Irish plant has become a great success and both from a productivity point of view, but also from serving an entire so-called common market.

RW: The common market is going to have this very, very high tariff on semiconductors and at LSI Logic we went ahead and built plants in Europe and only to find that the productivity was so low that we had to close them. And when the computer market in Europe went away, that combination was a killer and then the tariffs were subsequently dropped so it is not that difficult to ship. Somehow Intel has made a success of...

RH: Well with a unique product, you didn't have the tariff problem, that was another thing. And - but that could change too as companies in Europe are starting to get a little more advanced, but nobody is making microprocessors.

RW: No, it's telecommunications now, that's all that's left. Well are you at all - do you have any views on Andy Grove?

RH: Andy is one of the top executives I've ever run across in my life.

RW: He is the sparkplug behind...

RH: Absolutely. The harmony is real and exists within that organization of Andy's personality and Gordon's personality and Bob Noyce when he was there; it was the same thing, I mean...

RW: But totally different.

RH: Totally different people and - but worked together extremely well and without saying this is your responsibility and this is mine and it's been an amazing thing to watch - to see, you know, the other comparison is in ITT when I went after Fairchild and you had a very strong leader in Harold Geneen - an incredible corporate executive and builder of companies, but there wasn't anywhere near the sort of unanimity of triumberat that really was running the company jointly on a day to day basis basically. And with Bob gone, the two picked up without skipping a beat and Craig who's come in there now as a third party and very, very strong and probably gets most - should get most of the credit and does for really getting the productivity up for the company and getting the real values out of these expensive fabs that have been going in.

RW: With the capital investment required, a wrong step can just be utter disaster. So, one has to not make a wrong step.

RH: The thing that's amazed me about this business as long as I've been involved in it, is that with the best people and the best plans, you can start a plant, say one of the plants up in Beaverton, process was transferred exactly - supposedly exactly what was being used in Santa Clara or one of the other plant - exactly. They lost the process for about six months. Same people, or certainl, they weren't just completely new people being hired; it's still a very delicate business. Instrumentation is getting better and you learn something all in all, but with your background, you must see the same thing.

RW: Well it requires technical management, you know, you can't bring somebody in from Maiden Form and run Apple, and these people continuously make this mistake. You know, you look at the big companies - a manager is a manager and in fact when it's so fast moving and so technical, you just have to have a technical guy at the top and Andy Grove is sort of the, you know, the ultimate technical guy at the top.

RH: He's also got a style of management, which is unique and is compatible with the kind of people that Intel attracts. In other words, I don't know of any even half major position in Intel the last few years that has not been filled from within the company and they lose very few people at the same time.

RW: It has always been an Intel credo to hire within and also to transfer within - within many big companies if you're transferred from one job to another, it's seen as, is that up, is this an up move or downward, and at Intel, people transfer around all the time and it is considered - it's okay, it's not considered some sort of...

RH: Part of it's the training, the experience available as well.

RW: It's great. It is fantastic. I mean if you look at an American company to emulate, I would think that Intel, there's GE, there's Rubbermaid, there's a few others, but Intel is - in high-tech, seems to be the one...

RH: Well it's certainly getting the credit now. I mean the articles in "Fortune" here the last couple of months ago on Andy were pretty good, pretty decent, but the last one in "Forbes" and Gordon, which I was very glad to see, was an excellent article on Gordon and his philosophy. And, you know, Gordon could retire anytime, but he likes it, he likes it.

RW: I guess he could but so could Bill Gates.

RH: Oh yeah, but large age, big age difference...

RW: So could Wilf Corrigan - that the wealth is in fact great freedom because they're not having to work, that's what Wilf found. He'd always busted his butt and he came up a working man and he had enough, he could do anything he wanted and then he suddenly realized that - and he'd been working, you know, because he needed the money for the family, he suddenly realized he loved the semiconductor industry and that was his deal. And he didn't have to do it and that's such a strong motivation to be in a position where you don't have to work for money, that you're working for self - gratification and companies that are run by places like that. And if you look at Sony, there was a Mr. Sony, I mean you look at General Motors, you look at the great companies, they were typically run by an individual that loved the business.

RH: And they were all pretty much the same cult, you know, that - it's a fascinating business, continually changing environment, that the customers change, the products change, and it's just - and it's exciting, you know.

RW: It really is. It's really kind of fun. Well okay, well thanks so much for taking the time out.

RH: I enjoyed it, sort of reviewing old things in your past.

RW: Those old sales meetings.

RH: Right.