Chip Industry’s Founding Leaders Begin Bowing Out
In the clannish, contentious, creative world of Silicon Valley, there’s a small group of men who occupy a special realm, the one reserved for the true patriarchs. They arrived three decades ago, a youthful band of hard-drinking, hard-driving, intelligent engineers and, working first in concert at Fairchild Semiconductor and later in competition at companies they founded, proceeded to build the computer chip industry.
But the beginning of the 1990s marks a changing of the guard.
Robert N. Noyce, co-inventor of the integrated circuit, co-founder of Intel Corp. and patriarch of the patriarchs, died of a heart attack last year. Charles E. Sporck, the tough, cigar-chomping master of manufacturing, is retiring after 23 years at the helm of National Semiconductor. The soft-spoken chairman of Intel, Gordon E. Moore, 62, says he may soon look for ways to reduce his workload.
And slowly, a new group of leaders is emerging to share the mantle with Andrew S. Grove of Intel, W. J. (Jerry) Sanders III of Advanced Micro Devices and Wilfred J. Corrigan of LSI Logic, the younger patriarchs. The skills of both groups--as engineers and businessmen and, perhaps most important, as lobbyists--could well determine whether the vibrant but troubled U.S. chip industry can meet the ever-expanding Japanese challenge.
For a proud, driven man like Charlie Sporck, the chip industry’s predicament--it has steadily lost market share to Japan and now controls only a third of the world market--is a bitter pill. As he sees it, the tremendous accomplishments of those who created the industry in the 1960s and 1970s have been frittered away by ignorant politicians who failed to stop unfair Japanese trade practices.
“I’m not optimistic about the future of industry in general in the U.S.,” he said in a recent interview. “A whole series of Administrations has had us nailed to the cross of free trade, when the competition doesn’t operate that way. All the trends are disastrous. It’s very sad, a goddamn shame. And it’s too bad those bastards won’t have to pay for it in current reputation.”
Sporck and the other patriarchs spent much of the 1980s fighting this political battle, trying to persuade skeptical government officials that Japanese companies were illegally selling chips below cost and that something must be done to enable U.S. firms to invest the exponentially increasing sums needed to compete.
They also concede that some problems were of their own making. Moore recalls that in the early 1980s, Intel didn’t have enough production capacity and chose to cede much of the market for a type of memory chip to Japan.
“Looking back, we could have built more capacity,” he says. “If we had recognized the Japanese as the threat they were, we could have done things differently.”
“We really misjudged the eventual strength of Japanese competition,” says Pierre Lamond, who left Fairchild for National with Sporck and is now a Silicon Valley venture capitalist. “We gave away the technology, and then when we found out they were serious, we didn’t react fast enough, didn’t make the investments soon enough.”
Regis McKenna, the public relations point man for a long list of famous Silicon Valley start-up companies, says the patriarchs were sometimes too obsessed with their own technical breakthroughs. “They were fiercely competitive, but it was very inward, focused on the technology, rather than outward toward the customer,” McKenna says. “There was a certain arrogance: ‘We’ve got the technology; we’ve got the chips.’ ”
Sporck points to the attempts by National and other companies to get into the watch and calculator business. “We thought we were better and brighter than the people in that business, and we had our heads handed to us.”
His biggest regret, though, would sound strange to today’s Silicon Valley entrepreneurs, most of whom would be happy to build a firm a tenth the size of National. “I left Fairchild in 1967, and that’s really one of my regrets,” he said. “Our industry would have been better off to have kept all this talent in one company.”
Rarely has a company been so long on talent as Fairchild. Founded in 1957 by Noyce, Moore and six other engineers who had been working for William Shockley--the brilliant but notorious inventor of the transistor, who dubbed his departing underlings the “traitorous eight”--Fairchild became a hotbed of innovation in the new science of microelectronics.
Noyce invented the integrated circuit in 1959 (contemporaneously with Jack Kilby of Texas Instruments) and also the critical planar process for connecting circuits on a chip. Fairchild grew rapidly--largely on the strength of government contracts for the Minuteman missile and the Apollo space program--and together with Texas Instruments and Motorola laid the groundwork for the chip industry.
But by the late 1960s, the top Fairchild executives were feeling hemmed in by the conservative East Coast management style of parent company Fairchild Camera & Instruments and were eager to reap more of the fruits of their labors. In 1968, Noyce and Moore founded Intel Corp. along with Grove, a young Hungarian emigre.
Sporck left for National, taking much of the technical and manufacturing staff along with him. Jerry Sanders, the ebullient marketing maven, subsequently had differences with the new Fairchild executives, and he left in 1970 to form Advanced Micro Devices.
The companies became fierce rivals. Intel and AMD have for years been involved in a bitter legal wrangle stemming from a technology-sharing agreement that went sour.
The patriarchs continued to work together, however, to defend industry interests, forming the Semiconductor Industry Assn. to push their agenda in Washington and ultimately gaining government backing for a trade agreement with Japan and a chip-research consortium called Sematech.
They also share a certain satisfaction in having been part of an exceptional generation. True, they were in the right place at the right time, but they were also bright and hard working. And by their account, at least, they were more high-minded than many of the money-driven executives of today.
“All of the guys came from modest backgrounds,” says Sporck. “My father was a taxi driver. We started our careers being very modest in our definition of financial success. We were very well paid at Fairchild, but the drive to make money was not a consideration.”
Sanders says: “Noyce and his guys started companies so they could pursue what they wanted to work on, not to take a proprietary technology developed at great expense and exploit it for personal gain.”
He and Sporck believe that the continuation of the phenomenon they helped start--leaving an established chip company to start a new one--is damaging to the industry because it deprives the larger companies of the critical mass they need to compete.
Not everyone buys that. Executives at newer chip companies say established firms are too bureaucratic and set in their ways to quickly exploit new ideas and opportunities.
Whatever the case, it will be difficult for the younger generation of executives to achieve the status of the patriarchs. Although there are plenty of start-ups, the business no longer enjoys the limitless growth of the 1970s and early 1980s.
Part of what enabled Noyce, Sporck, Sanders and the rest to gain the prominence they did is that they started so young.
“Sporck (then general manager of Fairchild Semiconductor) came down to interview me in 1962, and I was 23,” recalls Corrigan, who worked at Motorola and Fairchild before launching LSI Logic in 1980.
“He had this big cigar, and he seemed like a very old man. It never occurred to me that he was a little over 30. Noyce was not yet 30. Today you wouldn’t get those jobs until you’re 40 or 50.”
The industry clearly needs new leaders, especially because lobbying is important and depends on visible spokespersons. Sanders intends to remain in the fray--”I’m 54, and I feel 35,” he says--though his influence may depend in part on whether he can turn his struggling company around.
Corrigan is also relatively young at 52, and Grove of Intel is 54, although he has indicated that he might leave his post as chief executive well before retirement age.
Who among younger executives is ready to join the ranks? The first name on everybody’s list is T. J. Rodgers, the brilliant, outspoken Cypress Semiconductor president. Craig Barrett, No. 3 man at Intel, also got a lot of votes in an informal survey, as did John East, president of Actel, and Rodney Smith, chairman of Altera Semiconductor.
“The industry needs leaders, lightning rods,” says Richard Shaffer of New York-based Technologic Partners. “There are still not enough people aware of the semiconductor industry’s problems.”
