Robert Noyce or Ivan Boesky? The Choice Is Really Ours
“Bob Noyce changed your life.”
That’s how an electronics industry executive summed up the contribution of Robert N. Noyce--inventor of the integrated circuit, founder of Intel Corp. and pioneer of the industrial phenomenon known as Silicon Valley--who died a week ago. Noyce, who was chairman of the government-industry electronics consortium Sematech when he died of a heart attack at 62, exemplified enduring values in American business--and also reflected its current difficulties.
He stood in healthy contrast to the false prophets who dominated business news in the last decade--the likes of Ivan “Greed is Good” Boesky, Henry Kravis, Michael Milken, T. Boone Pickens and Donald Trump--as well as corporate chieftains who took millions in salary and bonuses but delivered competitive failure. It was a decade not of sowers but of reapers.
Noyce, by contrast, was a builder. A graduate of Iowa’s Grinnell College and the Massachusetts Institute of Technology, he devised a way to cluster electrical circuits on a wafer of silicon and thereby made possible small computers, moon landings, automatic bank tellers, microwave ovens and a thousand other transformations of our daily lives.
Moreover, he pioneered the modern entrepreneurial company. Noyce founded Fairchild Semiconductor in 1958--when he was 30--and Intel in 1968. He strove for a new kind of company based on individual effort rather than corporate hierarchy. He called the process “empowering from below,” and it proved fruitful. Intel people developed the dynamic random access memory or D-RAM, the most widely used microchip, and the microprocessor, or computer on a chip.
In the 1960s and ‘70s, the Intel example inspired a wave of technological start-ups, attracting venture capital to the personal computer industry, and beyond to biotechnology and other frontiers.
Noyce, the son and grandson of Congregational ministers, showed that the best career choice was to follow your dream.
But there’s more to Noyce’s legacy than past glories. Noyce also reflects the challenge of global competition and poses the question, as he himself put it, “of whether the U.S. financial system is suited to the development of advanced technology to create the industries of the future.”
Intel was bloodied in the 1980s by an assault on the memory chip market by Japanese firms dumping low-priced chips to drive U.S. competitors from the field. “The Japanese semiconductor industry blew $4 billion to get the D-RAM business; we (the U.S. industry) blew $2 billion and gave up,” said Noyce.
Intel was kept alive in 1983 by a $350-million investment from IBM--which Intel, now a $3-billion-sales company, later repaid.
But Noyce saw that the global market was a fight among nations more than companies, and so he sought help for his industry in Washington.
For awhile he got results--the Reagan Administration stopped Japanese dumping with the semiconductor agreement of 1986.
However the Bush Administration lately turned cold to his ideas, holding that market forces alone should decide the fate of U.S. companies. Government shouldn’t interfere. It’s an attitude colored by years of government assistance to the car and steel industries that has done little to benefit U.S. workers or consumers.
But it’s a mistaken attitude on advanced technology, says Alan Patricof, head of a leading venture capital firm.
“Government has to seed technology because start-up costs are high, the payoff is five years or more and capital isn’t coming forward,” says Patricof.
So there’s a standoff, with neither government nor markets aiding U.S. technology. Meanwhile, future jobs, opportunities and U.S. living standards are left hanging in the balance.
Yet Noyce showed a way for government and industry to work together, with Sematech, the 14-company consortium set up with a $200 million annual budget to develop manufacturing techniques for advanced semiconductors. Sematech develops know-how that can then be distributed to U.S. industry--a pattern familiar in Japan, where consortiums are widely used.
The point, of course, is to keep firms working and technology developing in the United States--because if companies drop out, know-how fades and the nation forfeits further development. U.S. makers gave up on television sets, and lost the videocassette recorder.
Now the Bush Administration says no seed money will be given to high-definition television. That’s unfortunate, says one expert, “because it’s abdicating spinoff products for the next decade.”
What is being abdicated, as Noyce knew, is the profit--both in money and opportunity--that comes from innovation. In money alone, Noyce’s Intel returned 50 times its original investment to early investors, such as his alma mater, Grinnell College.
Yet the market didn’t do it alone. Seed money for Noyce’s early developments came from the Gemini and Apollo space programs.
The truth is, left to itself the market’s forces are as likely to give you an Ivan Boesky as a Bob Noyce. If you want to control your own destiny, you have to make choices.