In 1955, William Shockley, co-inventor of the transistor, decided to start his own company, Shockley Semiconductor, to build transistors, after leaving the Bell Labs. The new firm was seated in Palo Alto in Santa Clara County, California, where he had grown up. Shockley man aged to hire eight of the best scientists from the East Coast, who were attracted by his scientific reputation. These talented young men - "the cream of electronics research" - represented the "greatest collection of electronics genius ever assembled". Their names were: Julius Blank, Victor Grinich, Eugene Kleiner, Jean Hoerni, Jay Last, Gordon Moore, Robert Noyce and Sheldon Roberts.)
But however brilliant Shockley was, who was called a "marvelous intuitive problem solver" and a "tremendous generator of ideas" by Robert Noyce, it soon turned out that he was "hard as hell to work with", as his style was "oppressive" and he "didn't have trust and faith in other individuals.")
When Shockley refused the suggestions of his eight engineers who wanted to concentrate on silicon transistors, while their boss pursued research on four-layer diodes, they decided to quit and start their own firm in 1957.
Within several months Shockley had to shut down his firm, since he had lost his engineers, whom he called traitors and they are now known as "the Traitorous Eight".
Although Shockley was not very successful with his firm in Palo Alto, he "deserves credit for starting the entrepreneurial chain-reaction that launched the semiconductor industry in Silicon Valley,") since he had brought together excellent scientists there like Robert Noyce without whom there might never have been a Silicon Valley on the San Francisco Peninsula at all. Or as M. Malone calls it, "Shockley put the last stone in place in the construction of Silicon Valley.")
The father of one of those young men who left Shockley had contacts to a New York investment firm, which sent a young executive named Arthur Rock to secure financing for their new enterprise. Rock asked a lot of companies, if they were interested in backing this project, but has not been successful so far. The concept of investing money in new technology ventures was largely unknown then, and indeed the term "venture capital" itself wouldn't be coined until 1965") - by Arthur Rock, who should become Silicon Valley's first and most famous venture capitalist later on.
Finally, due to Rock's efforts, the "Traitorous Eight" managed to obtain financial support from industrialist Sherman Fairchild to start Fairchild Semiconductor in 1957.
Fairchild Semiconductor was developed by Shockley's firm, and as the "still existing granddaddy of them all") has itself spawned scores of other companies in Silicon Valley: Most semiconductor firms' roots can be traced back to Fairchild. The most famous ones of them are National Semiconductor, Intel, Advanced Micro Devices (AMD); and many well-known Valley leaders have worked at Fairchild, e.g. Charlie Sporck (National Semiconductor), Jerry Sanders (AMD's founder), Jean Hoerni, and last but not least Robert Noyce, who is considered the "Mayor of Silicon Valley") due to his overwhelming success.
Robert Noyce was born in southwestern Iowa in 1927. His father was a preacher in the Congregational Church and thus was "perpetually on the move to new congregations, his family in tow.") When the Noyces decided to stay at the college town of Grinnell, Iowa, for a longer period of time after many years of moving, this place meant stability in young Bob's life and thus would become his first and only real home, which he would later regard as important for his eventual success.
After high school, Robert studied at Grinnell College. His physics professor had been in contact with John Bardeen (one of the three inventors of the transistor) and obtained two of the first transistors in 1948, which he presented his students, including Bob Noyce. This aroused young Robert's interest in semiconductors and transistors, which made him try to learn everything he could get about this fascinating field of solid-state physics.
Having graduated from Grinnell College he continued his studies at "the premier school of science on the East Coast, MIT,") where he met famous scientists like Shockley. He received his doctorate, and decided to work at Philco until 1955, when he was invited by William Shockley to join a new firm named "Shockley Semiconductor" in Santa Clara County - together with seven other splendid scientists.
When the so-called "Shockley Eight" started a new venture with Fairchild Semiconductor, Robert Noyce began "his own transformation from engineer to business manager:") He was chosen to lead the new company as he seemed the best to do this job.
Fairchild Semiconductor focused on building a marketable silicon transistor applying a new manufacturing process called "mesa". Despite being the smallest company in electronics business then, it attracted public attention, particularly in 1958, when "Big Blue" - as dominant IBM is nicknamed - ordered the "first-ever mesa silicon transistors") for memory drivers in its computers.
This order contributed to the early success of Fairchild Semiconductor, and indicated the beginning of a long relationship between IBM and Silicon Valley.
Importance of military funding
Before switching over to the events at Intel, the aspect of military funding is to be dealt with, since it has played an important role in the early days of Silicon Valley.
During World War II, after the Japanese attack at Pearl Harbor in 1942, a great deal of the U.S. military forces and of the military production was moved to California. Within a few years, California - formerly an agricultural state - became a booming industrial state and the military center of the USA.)
After the war, in the time of the Cold War and the arms race, the Korean conflict, the "missile gap" and the space program, the Pentagon kept ordering high-technology products from the armament factories in California. Many companies established R&D departments and production facilities in Santa Clara County near Stanford University, which provided them with bright engineers and scientists, and were largely supported by the Pentagon's demand for electronic high-tech products.
Examples for such firms are FMC, GTE, Varian Associates, Westinghouse, and finally Lockheed, which opened its R&D department in the Stanford Research Park in 1956, and started Lockheed Missiles and Space Company (LMSC) in Sunnyvale. Lockheed's move to Northern California was crucial for the developments in Santa Clara County; today the company is Silicon Valley's largest employer with more than 24,000 people.)
Military funding for high-tech products was responsible for the early growth of Silicon Valley in the 1950s and 1960s. The U.S. Department of Defense was the biggest buyer of these products, e.g. its purchases represented about 70 percent of the total production of ICs in 1965.)
While this share in chip demands has dropped to 8 percent today, the Pentagon remains the biggest supporter of new technologies and accounts for most of the purchases of the latest developments.
After the transistor and the integrated circuit, the invention of the microprocessor in the early 1970s represents the next step towards the modern way of computing, providing the basis for the subsequent personal computer revolution.
It was at Intel where the first microprocessor was designed - representing the key to modern personal computers. With its logic and memory chips, the company provides the basic components for microcomputers. Intel is regarded as Silicon Valley's flagship and its most successful semiconductor company, owing its worldwide leading role to a perpetually high spending on research and development (R&D).
Foundation in 1968
It all started in 1968, when Bob Noyce resigned as head of Fairchild Semiconductor taking along Gordon Moore and Andy Grove, to embark on a new venture. They had decided to leave the company, because they wanted "to regain the satisfaction of research and development in a small, growing company,") since Fairchild had become big with lots of bureaucracy work to be done. Gordon Moore had belonged to the famous Shockley Eight and was in charge of the R&D team at Fairchild. Andy Grove, a young Hungarian migr, who had earned a doctorate in chemical engineering at U.C. Berkeley, had joined Fairchild in the early 1960s.
Intel (short for Integrated Electronics), a typical Fairchild spin-off, was financially backed by venture capital from Arthur Rock, who had been in contact with Noyce since 1957. The company was founded upon the idea of integrating many transistors on a chip of silicon, after Noyce had developed a new photochemical process. The three engineers initially focused on building the first semiconductor chips used for computer memory, which should replace the dominant memory storage technology at the time, called "magnetic core". Intel's task was to drive down the cost per bit by increasing the capacity of memory chips dramatically.