Woodside, CA, 2013
RB: Hello. I’m Robert Blair, standing in for Rob Walker, founder of the Silicon Genesis Project at Stanford University Libraries. Today, April the 9th, 2013, we continue our interviews of semiconductor veterans with Steve Zelencik, who spent over thirty years with AMD and was originally their first outside salesman in 1970. Steve was born in Indiana and attended Purdue University, earning a EE degree in 1970 and a number of excellent awards in the following decades. He spent five years at Fairchild Semiconductor, which is the university of the semiconductor industry, where he earned Salesman of the Year Award in 1966. His thirty year career at AMD alongside Jerry Sanders - who we have already interviewed for these archives, gave him a really exciting and rewarding ride in Silicon Valley as AMD challenged the leaders of the industry. Steve eventually retired from AMD in 2003 and is now primarily involved in the wine industry - a very different business. Steve lives in Woodside, California in the same house he has for over three decades. Let’s now talk to Steve about some of his semiconductor stories over the past three decades. Steve, good morning.
SZ: Good morning, Robert.
RB: Thank you for inviting us to your home. Today, we’re going to talk to you about your experience and history in the semiconductor industry. This video is for the Silicon Genesis Program at Stanford University. So to kick off Steve, tell us a little bit about where you were born and your very early days upbringing.
SZ: I can do that. My father came to this country when he was about ten or eleven years old from Czechoslovakia – so he’s Czechoslovakian. My mother is Hungarian. She was born in this country. I was born in St. Catherine’s Hospital in East Chicago, Indiana. And that’s Lake County, Indiana. That’s up around – against Chicago. So it’s where all the steel mills are, all the foundries are, all – all the oil refineries are and it is where there isn’t a live republican. The [laughs] the rest of Indiana was always republican but Lake County was tied very closely to Cook County in Chicago in that political environment. Anyhow, born there, grew up. My father was a self-taught pattern-maker. He became very – very good at that and the patterns that he made were the wooden patterns for the steel castings. And they would do simple things like ramps and they’d do large things like tanks – military tanks. In fact, he made the castings – the patterns for the castings for the cable saddles for the Golden Gate Bridge. And his initials are on those. And there are four cable saddles and these things just sit like this and the cables run over at the top. And each one has a different twist to it – the land – so they detuned the bridge so that it wouldn’t go into harmonics from the wind. And he made the wooden patterns for each one of those, put his initials on it. Then they made the steel castings. And so when you drive over the Golden Gate Bridge, look up, that’s part of his deal. So anyhow, he became – he was a pattern maker and he was very successful at it. He was the oldest of several children. His father, like many of the Europeans who came here, and his mother, would go back and forth to the old country. Why – why they did that, I don’t know, but they had to do that. And my mother was, you know, from a tight knit Hungarian family and they all suffered through the recession at the – the Depression of ’29. Yeah. So, it was interesting because as I grew up and I can remember back then you lived very close to these places, like the – my father’s – he worked at a place called Hubbard Steel which was a steel foundry. And, you know, we would live within blocks. That’s the way they grew up. They lived – they walked to work. And – and he was a pretty smart guy. And in 1941, he went out and bought a new Plymouth. And he said, “We’re moving to the country.” And he went out – he went – he bought a house in Highland, Indiana, had it built. And that was early 1941. He said it’s going to be a big war and we’re going to get away from the mills because these things are going to – they – they may get bombed. And, we’re going to buy this car. So he did both of those things, not that he was making a lot of money but that was his call. And I remember on the house, I think it was – paid $6,000 for the house. And he could have had a brick house for 500 more but he couldn’t afford that. And, by the way, the next time he bought a new car was in 1951 and he said there’s going to be a war and that was the Korean War. [laughs] And so, he was really closely tied to this – the military efforts even though he was, you know, he – well he was a pattern maker. He – but he did really cool stuff, you know. And so I was – he was – he was technically a very smart guy even though he wasn’t trained – he didn’t finish high school. He trained himself to be this. And he was probably the best pattern maker they had there. And so throughout my period of growing up, you know, the one thing I knew is the stuff he did and that things that he – he handled and, in fact, there’s patterns – I guess there’s – you can pick up one over here and there’s patterns I know of. But you can see these things and they were big and they were small and they all represented handwork – worked wood. And then they would convert into this thing. So.
RB: So – what led you Steve to end up in the electronics industry if you will. You moved to college away from your hometown.
SZ: Yeah, well – no, not too far. We’re going to get there. What happens is I watch all this and – and as a child, I decided, you know, I really wanted to be an engineer because he was as close to one as, you know, I could ever have gotten. I didn’t want to be in the steel mills I didn’t think. I didn’t want to be in the oil refineries. And so I always pined to be an electrical engineer. That was the thing. And I – that was my goal throughout high school. Went to good school – that was my goal. So. Purdue University had – an extension very close to our house because they fed technologists or – or engineering technologists to the mills. And so they had an extension which was kind of like a junior college but weird – really was and it was really an extension of Purdue. So when I graduated from high school, it was very easy. Back then, if you were a good citizen of the state of Indiana and you graduated from high school with a decent set of grades, you got in the university. And I started at the – at the Purdue University extension and went to school there for about a year and a half. Transferred to the campus and then got caught up in the draft. So off I went to the U.S. Army Signal Corps for two years. And wasn’t sure what I was going to do. I didn’t know where I was going to be because one of the things you could do when you were a kid there, at 16 years old, the steel mills would hire you for the summer. So I worked in the steel mills and grey iron foundries and oil refineries from 16 up and – and that was a big summer deal because they wanted you to – if you were especially going to school, the engineering school – they wanted you to come back and go to work there. So, you know, I – I was able to do that. And when I got in the army, I was kind of – wasn’t sure what I wanted to do. I thought oh maybe I’ll just come back and go to work. Couple years in the army I decided that for sure I wasn’t going to stay in the army and for sure I wasn’t going to come back and just go to work. I was going to go back and finish school. In the meantime, I had met Harriet and so I got out of the army and I – got married and went back to Purdue. And got my degree in electrical engineering. Our daughter was born there at Purdue in 19 – I’ll get this thing right now – 1959. Anyhow, I finished school in 1960 and was dead broke. I mean, we had no money. And I looked around at – I did the interviewing process. And the one job, you know, I wasn’t really sure I wanted to be a sit behind a desk engineer. I – that never really appealed to me. And Amphenol which was a connector company, which became pretty famous because they made what they then called a blue ribbon connector, which was used to pull – the telephone company used it. And it was a flat connector that enabled the phone company to pull the lines through conduits. So it was a big deal. They were – and they were a connector company. I knew of them because of my electronics – my electrical background – and they were looking to upgrade their sales force and they were going to hire an engineer. So they made me an offer of $525 a month, which wasn’t bad then. But the hooker was they were going to send me to six weeks of training and they were going to send me out in the field and they were going to give me a car and an expense account. [laughs]
RB: And what car did they give you?
SZ: Well, – I got a 1960 Ford. Whatever it was - a 500 or something like that, Ford, silver one, brand new. But it got rear ended on the freeway. Well I’ll tell a bit of the story. So they were going to give me a car. So I went through their training – six weeks’ training program. And they said we’re going to move you to L.A. I – I’d been on – I’d never been that far west in my life, you know. So they put me on a plane. Flew me out there on a jet plane, you know, and this was in – this was in late 1960 and wintertime in Chicago, blowing and snowing. Get off the plane, and the sun is shining. Rent – rent a Renault Dauphine and head head off to Chatsworth, California where they had a – a complex where they were making umbilical cables for missiles. And the minute man missile program was, you know, in – in its infancy but they were doing a lot of the stuff. Got this Renault Dauphine. The Sepulveda Freeway wasn’t in yet. Took Sepulveda Boulevard. Cut through to Wilshire. Went down Beverly Hills and through Beverly Hills, saw a girl in a bikini walking a dog. I said this is it. [laughs] I said – and – and so wound up working for Amphenol and went through their training program again, a little bit in the field. One thing I found out it was – there’s – nobody was really, first of all, it was a mechanical engineering job. It wasn’t an electrical engineering job in that all you had to knew – know from an electrical standpoint was the equation E=IR, you know. It was all contacts and resistance. The rest of it was all mechanical. It was beams and loading and pressure points and goes into sockets and stuff like that. So I found out very quickly that I could get orders by being smart enough to tell these guys why they wanted to buy my products. I booked a couple of big orders very quickly and they liked that. So they moved me to Seattle. And Seattle was their – one of their big, important business environments because that’s where Boeing was. And all these – cylindrical connectors loaded – these planes were loaded with them. And they – and then they had another program over there that was pretty impressive. It was called “The Dinosaur.” And that was the precursor to the – to the space program – the space flight program. And so I was on The Dinosaur Program. And I was pretty hot, you know, because I was a technical guy. But what happened to me in Seattle was interesting because the guy that I worked for, guy named Ray Overt, was as we would say “as full of shit as a Christmas goose.” He didn’t know anything much about the technology of the products he was selling ever. But what he did teach me was [laughs] one thing, you don’t have to know a heck of a lot but you have to be really good friends with the guys you’re trying to sell stuff to. And [laughs] and so, what this guy would – the guy became so successful it was in – incredible the way he operated. And it wasn’t all about the technology of the products. He let somebody else deal with that. But boy did he make the relationships. And – and the one thing I learned in the three – two or – two years or so that I worked for him was, you know, you – the technology was okay but these guys had to like you or you weren’t going to sell anything. And he was totally successful on that basis. So -
RB: So that was the beginning of your electronics sales career?
SZ: Yeah, this is how – this is how you really sell. You know – don’t give me this stuff. I know all this technology but you – you have to have a personal relationship. He taught me that. Well then Amphenol decided they were going to become a higher end technology company. So they decided we’re going to go into thin films and – if you remember, there were things called WEMs - Welded Electronic Modules. And even Digital Equipment was a module house at one time. So, they were going to make welded electronic module type devices and thin film devices and start to put little transistors on some thin film devices. And – and they had a project – process that allowed for multi-layer, nickel-plated circuit boards so you could weld these things together. Ill conceived because nobody quite understand – the – the mechanics of trying to weld a plated nickel part versus a forged nickel part. Anyway, didn’t work. And it – and it didn’t have the – the attributes that really moved forward in this technology because they were still old-time Chicago thinkers of – connector makers. And actually Amphenol started because it was American Phenolic Corporation and I think the first thing they made were toilet seats or something like that. Classic. So, they had me back in Chicago and I really hated that. I said this is out – this is an awful environment. And they decided to be successful they had to get me back on the West Coast because there – because if there was any hope of them selling this kind of stuff, it had to be on the West Coast. They moved me back to the West Coast and I started, you know, operating again with the same technology – the same electronics product line that they were trying to develop. And all of a sudden, they pulled the plug on it. And I was – there I was. You know, pseudo electronics technology engineer, back in the connector business because they took me back, put me in that job. And I said, man, this is no good. So then they [laughs] this isn’t going to work at all. So I – I said to Harriet, I said, you know, I – I guess I ought to go to school and get a – master’s degree in something. And I started to go back to school and I said this is just boring. I can’t do this. So I started to search for a job. Looked in the newspaper. Kept running through it and there was a – a piece about that wide in the paper “Help wanted Fairchild.” Wants sales engineers, you know, in Hollywood, California, right.
RB: So that was in 1965?
SZ: That was in 1960 – yeah, first of ’64.
SZ: You know, it wasn’t – it was, you know, I hadn’t been moved back probably, you know, six months when I decided I – I had to get out of here. So sixties – late ’64. So I – I see this ad. I trek off and it’s the Fairchild office in Hollywood. And man it is in Hollywood, you know. And, of course, you know, Fairchild – Sanders was cool because he put the office where the Motorola office was so they could go through the Motorola garbage at night [laughs] and fix up the stuff that was in there. So anyhow, I go in there and had a secretary, Helena Jayco. And this way back when and she was as tough as nails. And there he was in his office and above the doorway it says “Yea though I walk through the valley of death, I fear no – no man because I’m the toughest son of a bitch in the valley,” you know. I looked at that. He’s sitting behind the desk. You know, I was severely overweight then having gone through the process of getting married, getting out of the army, working for a different kind of – in a different kind of environment. And so I was a fat little kid with a crew cut. And went in there and I had my resume, threw it down there and he looked at it. And he said, “Okay. I’ll give you the job.” And we negotiated a little bit. It was very quick. I’m going to give you the job. Here’s a bunch of books and here’s a bunch of stuff. And you go home and read this and here’s what we – and here’s the way we work here. We start to work at Sunday evening and we work until Friday night. But, you know, I own you on Sunday and I own you until – till Friday in the evening. The rest of the time is yours. And you go home and you read all this stuff and you come back and – and I’m going to give you an – a really good account, Litton Industries. So I go home and I start to read this stuff. I start to think about the time these guys are putting in. I get a little interplay with them for a couple days. I said to Harriet, these guys are nuts. I’m not going to work for these guys. I mean, they are crazy the way they work, this intensity, this – you’ll kill yourself. So I said no. I took all the books back, [laughs] dropped them off with his secretary. Said I’m out of here. Said you guys are crazy. I can’t do this job. Two days later, I’m somewhere. I was – because I hadn’t quit – quit Amphenol yet. Sanders shows up at the house, knocks on the door, walks in – talks with Harriet and he says – wasn’t two days, maybe two weeks. He’s going to have to come to work for us. And [laughs] she’s blown away, right. So she says well, I – I don’t know. So I come home and he’s – she says, you know, Jerry Sanders was here and he says you’ve got to go to work for him. And I said well, okay. So fortunate thing though because the first shot at it, they were going to give me Litton Industries. That was a big deal. That was, you know, the valley and big money. And, of course, that was – military’s hot. By the time I get around to coming back there which is two months later, then it takes me into ’65, that job was gone. And it was Burroughs. And so we negotiated. I had to come – this time, I had to come and talk to Don Valentine first because, you know, who – who’s this guy that told us no the first time. Came back. Talked to Valentine and they hired me. And I came out a little bit ahead of the game because I made a little bit more money. And, of course, that was a good deal. They gave me Burroughs. And they gave me this stack of stuff and there’s transistors and diodes and ….. And – and I said man, this is – why do I care about this ?. What’s the best thing we’ve got on the docket here and it’s a – was the CTL. And it was, you know, complementary transistor CML logic right - current mode logic. And it was faster than stink. It was – and, you know, it – this, I mean, that was it. It was the hottest integrated circuits. It was literally the hottest. And they would glow at night if you took the tops off. I mean, you could – it would light the room up. But – but I said, I’ve got to know about this stuff. So I really went into this and I took over Burroughs from a guy named Murray Morin who was a classic, early day jerko – these guys were all - there were some really talented people and there were some guys that just fooled around all the time. But didn’t know much – but the industry was so hot then. And the – and Fairchild’s transistors and diodes sold themselves. So I go into Burroughs and the first thing I do is I say well okay. I meet with the engineers. We start talking about they’re going to develop a whole new line of computers. They want these things to be the fastest things in the world and blah, blah, blah, blah, blah. So I say – here we go. This was in ’65. The other thing I did though is – is I realized from what I had learned from this guy, Ray Overt, that just because I had the best product and what they wanted it wasn’t going to get the job done unless they really wanted to do business with me. So I used his technique. I mean, I – I went out of my way to become endeared to these guys personally, mainly to, you know, on – on a personal basis. You’d invite them over to the house and buy them a bottle of booze for Christmas and, you know, and we’d go out to places. And, all of a sudden, we became this clique of top engineers at Burroughs. And I and the purchasing guy became very close friends. And so when the time came to make a decision, you – I had the best product but they also wanted to do business with me, which I still think is important. Some people forget that, you know. They wanted to – and so what happened was they designed this entire new series of computers using CTL in – including the big disk drives. Everything was CTL. And when it came to negotiating the contracts for this is where I made a really big score because in 1966, we negotiated with Burroughs Corporation, then the largest contract ever written in the semiconductor in – industry. It was 25 million bucks. Well Fairchild was what, 125 million or something like that. Some – somewhere like that. So this was a $25 million contract. Diodes, transistors, everything else they needed in CTL. Through the roof, you know. I mean, they couldn’t get enough of this stuff. And it also had in there – and it wasn’t a one-year contract, it was a multi-year contract. It had in there that we had last look at anything we wanted to buy – that they – they wanted to buy from us, we got last look. So this was a big score, right. By this time, you know, Marshall Cox was involved. I was working for him. Bernie Marren – you know, Sanders had left and moved to the Bay – the Bay Area and became military marketing manager. I was working for Ed Turney. What do I – well I just – I got screwed up there a little bit. By this time – yeah, that’s right. I was working for Turney and Sanders was up here but then Cox was running the – I was working for Cox and somehow in this deal because Sanders was doing the military thing. And then Marren was around. And, you know, John Bosch was in Hollywood and – and Gordon Russell was around and some of these high end hitters that eventually went off and did other things. But – so we made the big score. And Turney and I were the heroes. Of course, it was interesting because it was – and Sanders would say you get egalitarian but – but it was kind of we – we take ours first and it kind of filtered down, you know. So with the big score, you would think I would have gotten a really huge bonus but, you know, by the time these guys all took their cut as it came down, I did okay. That was my – but that was my – deal with Fairchild. And – and so from that point on, I became the national account manager for Burroughs. And then – then I took over all the computer accounts. And so I was pretty well into the most important part of the – the industry at that time. You know, there weren’t cell phones and there weren’t PCs – there were computers, you know. Digital Equipment being one of them but they were making smaller computers but, you know, most of these guys were big time stuff; the Burroughs and the CDCs and the IBMs and that.
RB: So did you spend all of your time at Fairchild in Southern California, Steve?
SZ: Yes, I did. And I stayed in Southern California. And I think we talked earlier that towards the end of the time when Fairchild was coming apart and they brought in Hogan’s Heroes, which was the beginning of the coming apart or thereabouts, and Noyce and Moore and a couple other guys went one way. And Hogan’s Heroes came in and everybody realized this – this wasn’t going to be the same company anymore. I started to think I had to go too. Jerry went off and – with the famous eight and started the AMD but I was still at Fairchild. And the guys from Burroughs wanted to do something else, this close knit group. It was Larry Bu – Bewley, Ken Crossa, Arnold Jorgensen were the three guys were key to that. And they wanted to do something else. And they wanted to build computers. And I said no, no, let’s build memories, memory modules, because I thought, you know, what you really need is a solid state memories in these devices, not all these cores because everything was core memory then. And it had all this innate problems. The only thing core was good for at that time, in my opinion, was the rad hard stuff. You could shoot it up there and glow – hit it with radiation. It was pretty impervious but I was already thinking you go to do memory stuff. They didn’t want to do that. They wanted to build computers. And then AMD was formed and Turney having been not – he – he really was the first sales guy even though they tell everybody I was. He needed to – now he was doing a lot of the administrative work and he needed to hire somebody in sales. So Turney hired me after I had given consideration to really going with the Burroughs guys to do computers. But I didn’t want to do that. I thought semiconductors were still the place to be. And if we would have done the solid state memory modules, I’d a been four score behind that.
RB: But by that point in time, you had cemented a personal relationship with Jerry which was to be important.
SZ: Oh yeah, long term. My relationship with Jerry. Yeah, we were – we were literally friends from the day he hired me. And we always stayed close. Why, I don’t know. I mean, it’s just one of those things. Not everybody could stay close to Jerry, you know. But and – and Turney and I were very close. And so off we went. Took a – took a big cut in pay to, you know, back then they didn’t give you a raise. You go into startup, you know, you took a huge cut in pay. They give you a bunch of stock and said good luck.
RB: So how long after AMD was founded were you invited to come across?
SZ: It was – they were founded – AMD was founded in – in May of 1969. And it was early 70 that the – they approached me. And I was – I fiddled around a little bit because of this thing with the Burroughs guys. But then I decided that I had to go to – I really was going to go with AMD because that, you know, my heart was in the semiconductor business. So and that was it. And I became then the regional manager Southern California. They hired Steve Marks. It wasn’t Southern Cal – it was West Coast. So hired Steve Marks and Heast and Chuck Kio and the – in this mid America and there were three of us.
RB: So that was – that was your real first entrée into the startup. So that first twelve months at AMD was a ground zero.
SZ: Oh yeah. There was no – there were no sales when I came on board. Yeah. There – we had sold nothing at that point.
RB: So tell us a little bit about the – the first twelve months the culture of AMD in those very early days with, you know, a dozen guys or -
SZ: Well, you know, all of us were, you know, Marks had – Marks had come out of Fairchild. I was out of Fairchild. All of us were spoiled, you know. I can remember the first, you know, all of a sudden, you were at AMD and you’ve got a – a ragtag bunch of products. No – not – eight – nine – eight or nine linear circuits, eight or nine digital circuits, all second source. And you’ve got to find somebody to buy this stuff. And, you know, it – it was interesting to – to make these calls because you didn’t have much to sell. And there was – there – it was only – we would get lucky when Fairchild would make a mistake on something or, you know, and something didn’t work well. And fortunately AMD was a good second source where we could kind of fill in that niche. But nobody cared about us being out there. We didn’t bring anything to the party except the – second source. But we got lucky. Couple of times Fairchild’s products – their 9300 or equivalent then came apart and they didn’t – they didn’t – they didn’t meet the specs or they failed in the system and so we get to slip in here and slip in there. I can remember though one time we had – well we still tried to get business with Burroughs and that Burroughs got us up to the factory up here and – and we had a big meeting around. And – and – and it’s – and – and – no, this was that – no that wasn’t Burroughs. It was NCR. Art – Art Hollingsworth and – and NCR. They were having this big meeting, tell them what we can do and how we can do it and – and Gifford says, “You know,” he said, “You know, we’re really pretty good at what we’re doing but we’re humble.” And – and – and Hollings said – Hollings said – Hollings said - said, “You got a lot to be humble about.” [laughs] And so, the truth of the matter is all of these guys thought we were just a bunch of ragtag kids. And, of course, Intel was making a lot of smoke with the stuff they were doing. And we were just second sourcing – second sourcing Fairchild. And it was a – it was a long push. We did business with SDS. We did business with NCR. We did business with Burroughs. We – but we did business with a lot of small guys too and we had a little bit of military here and a little bit of – but it was – it was tough. It was really tough pushing.
RB: So what prompted the founding of AMD? What was their vision? What was their thing?
SZ: Sanders got fired. [laughs]
RB: But they took some remarkable people with them, too.
SZ: Well you got to watch that story. You know, the real story is that Gifford is – decides he’s going to start the linear integrated circuit business. So these guys are all in – in turmoil over there because of what’s going on. And Gifford’s going to start a business in linear integrated circuits. And Gifford couldn’t raise any money. And so he kind of nosed around Sanders. He and Sanders weren’t exactly the best of friends. But – but Sanders had the – the flamboyance that Gifford didn’t have. Gifford technically was very good but Sanders had a flamboyance. And so those – there was a lot of pushing and nosing around with Sanders. And then the – the decision that maybe there should be some bipolar in this digital stuff as well as linear. But it was Gifford that started that whole thing when he was pushing around and then he brought Sanders into it. But they couldn’t – not have – and then Sanders kind of pulled together the digital guys in Siemenson and Carey and the linear guys brought that all together. But if it wasn’t for Sanders that – that group wouldn’t have been able to raise any money at all because there was no confidence in anybody in that group. There was very little confidence in anybody in that group, to – truth be known. But they were able to raise, you know, million, million and a half dollars through a couple of – couple of issues, including the Ellis Group which was what Bill Wellings put together, which Noyce was an investor in, by the way. You’ll find that. So Noyce was an early investor at AMD [laughs] and, as well as some of the other Fairchild guys because everybdy – no, Noyce and Moore and these guys like Sanders. He was close to them. So, that’s what happened really. And then Sanders got - Hogan fired him because there was a clash of personalities – no question about it. And so he was without a job but then Gifford was looking to put this other thing together. So that kind of came together.
RB: So that was the beginning then, Steve, of what ended up being a thirty year career -
RB: – at one company, which is -
SZ: Yeah, thirty-three.
RB: - a lot for Silicon Valley and the semiconductor industry. So – so how did that sort of evolve? It was an IPO and -
SZ: Well what - the first two years it was, you know, pushing and struggling. I guess the IPO was in 1962, right. So we – we – it was pretty – pretty fortunate thing. What did I say ’62? Yeah, yeah, ’72. Yeah, that’s wrong. ’72. So 1972. The IPO was – came on pretty early. I mean, we – we grew rapidly and we IPO’d and the – fifteen dollars a share and I think the year later, it was worth a buck. So [laughs] so, if I had – if my memory doesn’t fail me, you know. And so the industry is very volatile. And we were really subject to – we were a second source house and there was not much in – in the way of – of material strength to what we could do. We just had to fight. It was – it was a – it was trench warfare. What do you do during those periods of time? I never once thought that we would fail. I never once thought about doing something else. I – there was a couple times I had an opportunity to leave AMD later on. I didn’t. But it – in – during that period of time if you look at what went on, I mean, we took off, rocketed up, IPO’d fifteen dollars a share and just think, about a year and a half later, stock was a buck twenty or something like that. And it – and then we, you know, recovered from that. And it was – Sanders had a lot – a great deal of vision when it came to directing the company in the products that we were going to make. And we were always going.
RB: So – so how did MOS arrive on the scene, because basically AMD was a bipolar house?
SZ: Oh, he didn’t want any part of that, right.
RB: - Bipolar?
SZ: Yeah, he – he didn’t want any part of that until there was – until it became clearly evident that if you weren’t in the MOS business, you were going to miss the – miss the opportunities. The other thing was – that was interesting with Sanders – there were certain things he didn’t want any part of. Like he was never going to make a plastic part. It was always going to be the ceramic, you know. We will never make a plastic part – this company will never make a plastic part.
RB: I remember that one. Yep.
SZ: Well, you know, that’s the way it was [laughs] until we did. And the same thing with the MOS. The bipolar moved to MOS. And, you know, it – it became very apparent that – that if we didn’t have MOS – MOS product line, we weren’t going to go anywhere. And then, of course, brought in the – some MOS technology. And this – this book is a pretty good book on the table here which you don’t see is a book about AMD, which covers a lot of the details of that fun. Yeah. So anyhow, we got in the MOS business. We got in the memory business. We did a lot of things. We got out of the memory business.
RB: So was the microprocessor the core vision for MOS within AMD or was it – was it memory or – or both?
SZ: I think both. You know, but remember the microprocessor was, first of all, there was still a microprocessor called the – the 2900 bit slice, then the 29000 architecture. And they were bipolar in the beginning and then MOS. But it – the microprocessors that we envisioned weren’t necessarily Intel, right. There was – there was the – the Zilog and the – and the – what was it? The Z8000 and the Z8000 was better and the sign holding up in a crowd, the – you know, that foolish consistency was the hobgoblin of little minds. And why would you go with Intel in this stuff. And – but if - if you remember how that all came about, Intel got the job because Motorola flubbed it with – with IBM. And Motorola has a 68000. That was the processor of choice. Intel was struggling with their offering. IBM wanted certain things from Motorola and they wouldn’t give it to IBM. So IBM just moved over to the Intel side and that was the beginning of what we know as the PC business. And, of course, we know that IBM demanded a second source. So they asked Intel to license us because we had a good business relationship with IBM and we were doing quite a bit of business there and they had – they respected the company as a good second source. And Intel granted that license under IBM’s direction. I guess Intel figured we’d never build the stuff, you know, that we would be a – a – a straw pony. And, in fact, we built it. And, in fact, we built it better than they built it. And our stuff was more reliable and was faster and it caused no end to grief at Intel as you know. And pretty soon Intel tried to abrogate the – the agreements. And that led to all this acrimony that still exists out there. It’s amazing to me. And – and – and whatever. So where do we go from that? I don’t know. [laughs] We go from that – that’s a story that’ll probably never end. And I – I notice that there’s still a contest within AMD to right the losses created by Intel refusing to honor their agreements. And somebody thinks they’re going to recover something from that. I doubt that I’ll be alive before they do. But I don’t know. Intel – that was an interesting thing because Noyce and Moore and Sanders was good friends. And had not Noyce died, I doubt that there would ever been the contest – this – this – this agreement to disagree that – where Intel just tried to force us out of the business. I – I know that that would never happen. But when Noyce died, that changed the metrics and the relationship. And there was a lot of – a lot of bitter feelings that came to the surface.
RB: So but over time, AMD did win a healthy share -
SZ: Very healthy share -
RB: - Of the business.
SZ: - Of the market. One would say we were aggressive. Yeah, we were. We – we did very well in the secondary markets. You know, Intel still was the – the leader. We didn’t have the – they still had the market share. But, you know, there was a time when we garnered the significant amount of market share. And our number would, on average, would be twenty, twenty-five percent, which was – was – was really good. Sometimes we’d have a better product then we’d swing to the – the higher percentages. And sometimes Intel would pass us. But, you know, Intel put the squeeze on the licenses and started to deny us access. We had to do other things to work around that. And we made some mistakes. The K5 was a mistake. The K6 was a – a bit of brilliance by acquiring NexGen, which gave us another leg up and, you know, as we moved through this thing, we were able to continually upgrade and stay in the game. But Intel tried to shut us down with the micro code constantly. And the – and the litigation was – was very expensive for us, not so much expensive for them because of the size of their company. Where do we – so we were very successful.
RB: That acquisition by – of NexGen, I remember that happening because the investor in NexGen was also an investor in the company that I ran at the time. That number sort of blew me away at the time. As I remember it was nine hundred million dollars.
SZ: Seven hundred million. [talking at same time] It was a big – it was a big number.
RB: Big number for that time.
SZ: Yeah, and that was interesting how it came about. You know, you can listen to various stories. But – but Marshall Cox that was a big investor in NexGen and – and knew us well and knew that we were in trouble and knew that NexGen had something. And I guess these guys, Atik Razza and Vin Dham and Marshall kind of conspired to convince us to buy them is the way it went. [laughs] I mean, no matter what they tell you. And so Marshall bought me lunch and he said, you know, you guys got to talk to these guys. I set up a meeting with John Burgoyne and myself and Vin and we talked. And Burgoyne was then responsible for the processor activities. And we listened to what Vin had to say and what – and then Atik had to say. And Atik then met with Jerry. But we – we knew that these guys knew more about what we needed to have than we did. And they had a discipline that – and the ability to make something that we – we hadn’t really been able to do. And the k5 was floundering and we – so this acquisition saved the company. And the day – I remember when we had this – the meeting on whether we should acquire NexGen or not. And it was – it was a – it was a high level meeting and I was in it and I said if we want to stay in the processor business, we have no choice but to buy these guys. That was my position. Either that or we were out of it. And we did.
RB: So was that essentially an internal AMD decision to move away from the x86 architecture to stay in the business?
SZ: No. It was life or death. [laughs] In other words, we knew we were done with the x86 architecture. We couldn’t execute. We were in trouble. And so these guys had a product that could outperform the x86 architecture. And – but it had its pitfalls. You know, had to do a different motherboard. You know, they had – they had junk in the – under the bunk in that company. After we acquired it, we found out that there were a lot of things that were – weren’t properly disclosed like – like, you know, probably a multi-millions dollars’ worth of motherboard that were defective, that needed – you had to have to make these processors work and all that. It didn’t matter. The – the fact is that they had the technology, had the understanding. They had the – the thing that we didn’t have. And they had engineering discipline. Of course, it – that was just the one – that was a one-trick pony as you remember.
SZ: They didn’t stick around very long until they cashed out. And if Vin hadn’t been there – Vin was out of, you know, Vin would claim he was the architect of the Pentium. I don’t know whether he was or not. But he will tell you that he was. But he was just six months out of or seven months out of Intel, eight months, something like that when this merger took place. And he brought with him, you know, a lot of knowledge of what was the right thing to do. But – but Atik was, you know, the – the power behind this at the time. And he was a pretty smart guy too.
RB: But for you in sales, that started a long, new sales cycle obviously because it’s not -
SZ: Oh sure.
RB: It’s not an industry compatible part anymore.
SZ: That’s right.
RB: And so it’s back to the drawing board on design-ins for the sales guys.
SZ: That’s right. And – it – but that was okay because the performance of the product was superior. And so that – and that gave us an opportunity to just move forward with that. There’s a little piece in here that was interesting and that was – I think I talked to you about this earlier. Intel had a Crawford patent. They still do. And it – it was an interface – the patent of how the processor interfaced with the memory and various other components. And – and they tried to force a license to all the motherboard manufacturers, especially in Taiwan on the Crawford – this is ’93-’94, somewhere like that – of the Crawford patent. And they went into Taiwan and they told all these motherboard guys, which were now, you know, that was the – the crux of the industry. Most of the motherboards were coming out of Taiwan at that time. And these – and everybody else was a screwdriver shop. You know, couple of big guys made their own but everybody else bought motherboards, put them together and that’s how they made your computers. And – and Intel went in there and they wanted – they – they told the Taiwanese industry that they would have to sign cross license agreement with Intel or else Intel would not sell the microprocessors. And they convinced a couple small guys to do that. And then we recognized that if this happened certainly we’d be out of business, you know. And so I went in there with a couple legal guys and a couple other technologists and we met with the Taiwanese government and we pointed out that if they signed this agreement with Intel, that Intel would now – would now shut down the whole country infrastructure of motherboards and the – the computers that they were making. And they would, in fact, and they would deny them the processors and they would do whatever they wanted to do. And so, the government people – I won’t say who – but said to Intel, “You’re not going to force our people to sign these agreements. We’re – we will take international action against you.” And Intel backed off. And that was a – it never – that thing never surfaced. Nobody ever talks about that story. But Intel backed off. And that patent’s still around. I don’t know what they’re doing with it but they walked away – and the – and that – that kept alive. In fact, if you talk to certain people that I know very well that are Taiwanese, they will tell – say that AMD – they say me sometimes but I – I’ll take the – I’ll take the credit for that. But they say – saved the Taiwanese computer industry and the motherboard industry.
RB: Now, as time moved on Steve, Jerry obviously became very well known for his famous statement, “Real men have fabs.” And, of course, originally they did.
RB: Today it’s very different. So tell us a little bit about how Jerry and AMD got to this adjustment phase of maybe you don’t have to build everything in your own fab forever.
SZ: Well, I’ll tell you what – that didn’t happen while I was there, not very much of it anyhow. Remember this was – was – when I was there; we still had to have fabs. We had fabs and we had the deals with – with, you know, various subcontractors. But, for the most part – well one of the problems we had is that you realized that nobody could fab an x86 product for us. We had to control that. I mean, there was the – part of the cross license was we had to build it. So, but, you know, all that non control – fab’s not controlled by AMD comes after the fact. While I was there yet - this is through 2003 - let me tell you something, the – the – AMD still had fabs. It, you know, there was some question about the – the efficiency of fabs at the time. The Dresden fab was the last big fab that went down and that was in conjunction with Siemens. But there were fabs and all that stuff was being made in AMD fabs.
RB: But by 2003, TSMC was very legitimate company?
SZ: They were very legitimate company as UMC was a pseudo legitimate company and the – the guys in the Singapore based Charter, you know, and Charter I guess is now part of Global Foundries, right?
SZ: But, you know, that – yeah, that’s true. That – all that – all of that was coming at a later time. And I don’t know how Sanders really rationalized that. I – I remember that – that as we built these fabs, you know, they – they started to cost billions of dollars, right. And – and – and, you know, pretty soon a fab costs what an aircraft carrier costs. And an aircraft carrier then was about three billion dollars plus fit-ups and that. And the fab was three billion dollars in fit-ups. And I – I always – but Sanders was still intent. I mean, he – he had to have the fabs. And – and – and also reminded him that nobody ever commanded the aircraft carrier that wasn’t a pilot. So if you’re going to have a three billion dollar fab, you had better have a guy that knew how to land and take off on the deck to run it. And so – and that was, you know, the way the company was run. Now, [laughs] you know, we, you know, starting up fabs was – wasn’t easy, no matter who did it. And – and a lot of money was spent. I – I don’t – today you look at the industry and you say – somebody just told me the other day, a good friend of mine that’s well very knowledgeable and he says we’re going to see a consolidation of – to three or four big players. And that’s going to be it because that’s it. There’s no room for everybody else anymore. I’d – so I don’t know. Whether Sanders would tell you today that you have to have your own fabs, that you can’t build anything. And Intel’s got their own fabs. Right. They don’t – they don’t rely on much of anything on the outside. I – I think that – I think that there’s a lot of internal design being done now by individual manufacturers. They’re designing their own or circuits – equipment manufacturers – designing their own processors, their own memory systems. Yeah, they’re having them fabbed outside because of the efficacy of TSMC and companies like that to prove that you could actually have things built outside. But I think wasn’t Corrigan one of the first guys that used an outside fab?
RB: Well certainly LSI Logic -
SZ: LSI Logic -
RB: - was, you know, exclusively outside – initially.
SZ: Yeah, outside fab. Well this was early on. I mean, this was – nobody was of that ilk was using an outside fab. And – and so there was a difference of opinion there. And turned out to be pretty successful.
RB: Yeah, the grand – the grand strategy for ASIC was to do outside fab on the sub-layers and only do the metallizations in-house -
SZ: That’s right. Yeah.
RB: – which turned out to be very, very successful.
SZ: Yeah. But, you know, again, Sanders would – would – would never have probably gone for that even today, afford it or not, you know.
RB: So by 2002, 2003, Steve, you were over thirty years at AMD which, of course, is a long time for a non-founder, if you will.
RB: So what – what brought your career to close with AMD? And -
SZ: Just getting old. [laughs] I was, you know, I – in 2000, I was 65. You know, I had a little behind the – behind-the-scenes start before I got to where I was. I was a little late in starting and finishing grade school because I was sick for a while. And then I had two years in the army. So I was about three years late into the game for my age. So in 2000, I turned 65. I was an old guy. Only guy I know older than me in the industry is Bill Welling, I think, you know, that – that we’re contemporaries of and – and Bernie Marren, a young guy like you, you know. So I was – I turned 65 and – in 2000 and I was – time to retire. And Jerry said, you know, you – stick around for a couple more years. I want you to do this and this and that. Well, they had already moved Rob Herb into my position and I was kind of just – a placeholder, just in case somebody got hit by a car, I don’t know. But he liked me around until finally, at 68, they finally decided and Hector was taking over from Jerry at that time. And – and I wasn’t one of Hector’s types because I represented the old school of hard knock selling and, you know, trench – trench warfare and – and I guess Hector and a couple of these other guys that were thinking the Motorola way was still the better way. So it was just as well that I left there at that time. Probably a good thing I left at that time because I caught the ups and downs and up and downs on the stock. And had I gone out in 2000, it would have been good. 2001-2 weren’t too good. Three was a good time to get out again so I just got out and called it even. But really why did I leave? I’d been around there. Now Jerry, you know, stayed around because of his commitment to Hector and – and that became a little acrimonious and eventually Jerry got asked to resign as CEO or – or rather Chairman of the Board. And he resigned the company instead. And that all happened. But, yeah, that’s why I retired anyhow. Thirty-three years and 65 years old and it was time.
RB: But you weren’t quite ready to retire. Like a lot of us, you needed to have something else to do, right?
SZ: Well, you know, what do you do?
RB: So what came after AMD?
SZ: Well let me tell you, it’s a great story. So my - so now I’m out of work and I say oh man, you know, I’m still – I can still fight the fight. And so I decided I’m going to be a consultant. So I printed some cards and said I’ll – I’ll be a consultant. Well I started to talk to these people about that kind of business. And I said this is crazy. I mean, this is a hit or miss game. And – and – and it – you’re a one-man show and so I didn’t really – and I didn’t like sitting on boards. I sat on a couple boards and I said this is, you know, what – they want you on a board for what you know. And – and so okay, but if you don’t have a company that can utilize what you know, then why do you want to be on those boards? So I decided no boards for me and no – no – no consulting. And so I decided to do nothing. And – but I still had a lot of friends. And one of my good friends from Taiwan, we were having dinner one day and she said, you know, I really like wine, good wine. Says do you think we can do a winery in China? And this was like eight years ago now. And I said yeah, I think so. Why not? And so we – I started the process of just finding out what it took to do a winery in China. Well, first of all, I didn’t know anything about wine. I knew – drink it but I didn’t know how to make it. And so – but I did know some people in the business. And – and I do – did know some people at Purdue and I did know some people at Davis. So my – my chore was to move forward and set up a winery in China. And so first I went to the guys at Davis. I said well this is natural. I’ll go see these guys and they said you got to be kidding me. We’re not going to tell you how to do wine. We’re not going to help the Chinese do wine. What do you think, we’re nuts? I mean, we’re Davis, you know. We’re California. We’re not – so I said okay, well that’s – that’s fine. I’ll forget about that. [laughs] So I went to Purdue and, you know, Purdue had an agriculture department but, you know, making wine in Indiana is not exactly a, you know, they raise a lot of pigs there and corn. But this – making wine there wasn’t. But I did hook up with some people and we started to talk. And, in the meantime, it – I knew a couple really big time wine people. And one of them was Jim Niven who owns – his parents put it in place – but owns Edna Valley, not the winery Edna Valley but the whole Edna Valley in San Luis Obispo. And one of their brands was Edna Valley and the other one is Baileyana. And – and they have a production winery that does custom labels for about 43 different wines and it’s called Paragon. So I said to Jim, “Jim, would you like to do wine in China?” And he said, “No.” And two days later, he called me up and he said, “Let’s talk about this some more. So fortunately, he was the guy that really knew about the wine business. And that’s what I needed because I had to have somebody to coalesce this thing. So we started a thing called Eight Cellars, which was a LLC consulting company. And it’s – in fact, you can ping it on the web - eightcellarsholdings.com. And – and we started the process of trying to – to establish a winery in China. And we used the GPS guys at – at Purdue. And one of them happened to be a Chinese national and had a PhD that had access to the kinds of things we needed to map China for where we could put the vineyards. And turns out China has no microclimate like we have because they don’t have a West Coast. And so if you look at China, the – the Oceanside is like the East Coast in the U.S. It’s either cold and freezing or it gets swampy and wet pretty fast. And so you know that you can’t produce good wine grapes when it’s swampy and wet or when it rains when you want to pick the grapes. So what you need is hot and dry at the time of harvest, you know. That’s the first criteria. And then the soil. So we mapped China and we found the places that we thought were the best to make – we were going to make – Peter Michael Lap – Les Pavots – their – their Cab blend was our target. And it was – it, you know, it’s a high end wine. It’s really good stuff and that’s the – that was the target we were going to use. So to do that, we had the right temperature – right soil conditions in that. So we send a team over with the satellite guys and we found this area northeast of Beijing. And what it had was warm, dry end of season for the grapes to mature. There was a lot of things wrong with doing wine in China and there’s a lot of things wrong – lot of things wrong with the Chinese wines that existed at the time. So we attempted – what our goal was to make the best wine in China for the Chinese market. We’ve since determined that we’re going to make the best wine in the world that we – or – as close to the best wine in the world as we can make in China for the market. We – we’re never going to export it out of there but – because the market’s too big in itself. So this has been a process of eight years and acquiring land and – and building a facility and setting up the infrastructure that wasn’t there and bringing contemporary farming practice – now here – here’s a – here’s an electrical engineer, semiconductor guy but be I‘m in China because of the people I met from the business who trusted me because one thing Sanders always say is you don’t – you don’t do anything wrong. You don’t – you don’t lie. You don’t cheat, you don’t steal. You know – you – everything you do has got to be fair and honest. And – and – and so everything we did was fair and honest. And – and so AMD would, you know, one thing every – when – when we made a deal, the deal was a fair and honest deal. And so, these people – I got to be very good friends with people that, you know, because we never did anything but the right thing. And so, they trusted me. And so, when we started this process, I had – I had the ability to do what had to be done to get this thing functioning. And we have probably 3,000 acres. Most of – it’s being planted. We have very – we have an ability to import vines into China which nobody else has. We do our own – we have our own greenhouses. We do our own grafting. We do – we have our own laboratories.
RB: Did you fund this out of China, Steve, or -
SZ: This was funded by our friends.
SZ: Okay. And – and it’s – it’s an interesting thing. But - so that’s my final career. And this should last me through the end of time I guess. But what do you do? I don’t know. It was fun. It’s still fun. It’s ongoing. In fact, I spend about two hours a day while I’m here – I go to China four or five times a year. You don’t have to spend a lot of time there. You know, you go there for a week, week and a half. Trudge through the vineyards. The vineyards there look like the vineyards here. The – it’s interesting because we’ve introduced contemporary farming practices which didn’t exist. We’ve introduced drip irrigation – which didn’t exist. Simple things that you expect to be right anywhere else in the world aren’t there and it’s not because – it’s because they just haven’t done it before. They don’t know. Specifications that you would assume are logical when you look at the spec sheets here aren’t there because it’s really a – there’s – there’s a different method to make the – some of these determinations. We put in plastic pipes for our drip irrigation. Turned on the pumps, they all blew up. So what – this ASTM standard, right? Well, this is the Chinese ASTM standard. What’s the difference? About fifty percent [laughs] you know. I – well you didn’t – you didn’t – and this is another standard now. Smartest Israeli irrigation guys in the world had no clue that there was an ASTM Chinese standard for pipe and an international standard. So they didn’t say we want ASTM international standard. Boom, all the pipes blow up.
RB: So just summarizing -
SZ: Just as a – as an aside there. Go ahead.
RB: Summarizing, Steve – on the semiconductor industry before we – we close out here. Obviously a lot’s changed in our careers. And, you know, in the last ten years, we’ve seen a lot of changes in who’s in the top ten. I was just looking a couple of days ago and, you know, people like Qualcomm and -
SZ: Qualcomm for sure.
RB: - are way up there now. These companies hardly existed, you know, twenty years ago. Some of the big guys have dropped back. So what are your thoughts on – on the next ten years? Who’s going to be big and – and who’s going to fall back do you think?
SZ: Well, you know, it’s pretty interesting because it looks like anybody can design a – a – an integrated circuit now. Anybody can design a microprocessor. Anybody can design a memory. That’s a given. I mean, the tools that are out there to do this are available to everybody. So all you have to do is follow the designer rules from a foundry and it can be built. Foundries are very expensive. They’ve got to – if they don’t make money, they can’t function. I don’t know how – I’m not sure how this all takes place moving forward. But people for – keep forgetting when they turn on their phone or they turn on their computer or they turn on their car, that if you didn’t have that piece of silicon in there, nothing else would work. And [laughs] it is not a software thing. It is there’s a piece of hardware in there that allows all the software to work. And it’s been being discounted. You know, everybody forgets that the phone works and the PC works and the – the refrigerator works and the car works because there’s some silicon in there that makes it work. And the software is adjunct to it. Yeah, it’s a – eases the implementation. But if you didn’t have that – the ones and zeroes or the analogs, the thing – you wouldn’t have it. And that’s the problem I see with today’s industry. Everybody for – forgets that that phone can’t work without the hardware that’s in it. Yeah, they all look at the interface. They all, the software, they think this is the world. I don’t know where we’re going to go. I – I don’t know that the fabs – that – that people can build fabs and make money at it. They’re trying. God love Global Foundries, you know, TSMC. But there’s going to be a consolidation because the big guys that require silicon, that can design it, have to make – have to be able to design a product that the fab can make them profit on. I don’t know, you know, how that gets resolved at – in the future. You know, and – and apparently other than very selective companies like IBM who probably can – and maybe Oracle – HP if they want to get back at it – could afford to have very – they could spend any amount of money they want to on the silicon because it’s just a – it’s – it’s – it’s just a vehicle for them to make the profit off the rest of the system. I don’t know if that’s true for everybody else.
RB: Well, Steve, you’ve been an icon in sales in the semiconductor industry. And I think everybody respects that. Thirty-three years with one company is – is a job well done. And good luck in the wine business and thank you for spending time today with us and with Silicon Genesis. Thank you.
SZ: Thank you.