The skepticism expressed by Noyce’s soon-to-be niece was an only slightly exaggerated version of the response Intel’s microprocessor provoked in many people who heard Noyce speak about it. Noyce’s early rounds of “missionary work” can best be understood as preparing the soil of public opinion for the planting of the microprocessor. The ground was hard, and the debris to be cleared away was thick. Computers in 1971 had shrunk from room-sized million-dollar behemoths to refrigerator-sized units costing tens of thousands of dollars. But Noyce was trying to make people understand that a computer could be as small as a few chips you could hold in your hand. Bill Davidow, who joined Intel in 1973 as head of microprocessor marketing, says that in most customers’ minds, “the microprocessor was just a toy, and [computers] were these massive machines with massive amounts of storage. And here was Noyce predicting that someday this [microprocessor] would be the central processor for everything. That was a big step.”90
Several people remember a talk Noyce gave to a general business audience in 1970 in which he was asked, “Well, let’s just say my [IBM] 360 computer could be as small as you say. What if it fell through a crack in the floor?” Noyce’s quick response—“You wouldn’t care. It would just cost a few dollars to replace it”—sparked more than a few disbelieving laughs. Ted Hoff recalls a similarly unconvinced audience member asking him about microprocessor repairs—where would you take the chip to have it fixed, and would they do it under a microscope? Hoff explained that you would just throw away the chip and buy a new one.91
“It was a battle of opinion,” Noyce once said of Intel’s bid to foster the microprocessor market. The battle only heightened when several other companies introduced their own microprocessors in 1972.92
In an attempt to raise senior executives’ awareness of the microprocessor, Noyce visited high-level managers at customers that he and Davidow thought might one day become major accounts. This was not particularly easy work. It required promoting a vision of the future that corresponded in only the most tenuous ways to the realities of the available technology. When Noyce suggested to a team of General Motors executives that the company might one day use computers to control the fuel consumption of engines or nonskid brakes, the managers were unconvinced. The last time they had installed computer-controlled, antilock brake equipment in one of their concept cars, the computer had cost nearly twice as much as the car and taken up nearly all of the trunk space. If they filled the trunk of a car with these computers Noyce was promoting, where would the drivers store their grocery bags?93
In other words, the GM executives found it nearly impossible to believe that a slice of silicon could do the work of a computer—and in 1971, Noyce almost certainly told them, their skepticism was well grounded. No one would want the 4004 controlling the brakes in production cars; the device was too slow and too rudimentary for general use. And its successor, the 8008 (introduced in April 1972), was not much better.94
But Noyce was not trying to sell 4004s or 8008s to General Motors. He was starting conversations that he expected would only bear fruit years later. He knew he was contending with entrenched ways of thinking and years-long design cycles. He felt confident that by the time these customers were prepared to experiment with microprocessors, the technology would have caught up to his visions for it. As indeed it did. It was 1974 when automobile manufacturers held their first Conference on Automobile Electronics and around this same date that microprocessors began to make their way into production vehicles. But in 1972, GM would only allow Intel to install a 4004 to serve as a controller for the nonskid brake system in its concept car. Noyce, true to form, celebrated their installation by donning a helmet and racing the car around and around the steeply banked GM track.95
9
The Edge of What’s Barely Possible
Andy Grove spent much of 1972 worrying. In February he wrote, “We are not doing well at all! Momentum broken, refresh [problem with the 1103] still with us, bipolar yield still (or again) nowhere!” He kept detailed tabs on Intel’s competition, noting that the 4,000 1103s ordered by Texas Instruments were not going to their computer group, and announcing how many semiconductor memories had been shipped by TI-spinout Mostek in a given quarter. In December, he was concerned because the comments offered at the executive meeting to review the operations plan he laid out for 1973 were “brief, between long periods of silence and sighs.”1
Noyce, on the other hand, took a wider view and liked what he saw for most of 1972. Intel was building about 100,000 1103s each year and still could not keep up with demand. By year’s end, the 1103 was the best-selling memory chip in the world. It was so terribly difficult to reverse engineer that Intel had almost no competitors, outside of its official second source MIL, for more than a year. When Intel increased the size of its wafers and MIL tried to follow suit, the Canadian company lost the process entirely. This left Intel with a near-monopoly on the 1103. Effectively all of Intel’s $23.4 million revenue in 1972 came from sales of this one device.2
A tentative foray into building complete memory systems for customers was proving very profitable. The microprocessor had brought Intel hundreds of new customers, most of them small firms with small orders, but the trend nonetheless augured well for the future. Noyce expected that once Intel could build a more powerful microprocessor, the market would take off. And Intel had that processor under development. The company was building new facilities on the Santa Clara campus, a fab in Livermore, California, and an assembly operation in Penang, Malaysia. Noyce was considering adding an on-site day care center to the Santa Clara campus as a way to attract the largely female workforce for the fabs, but a series of informal discussions he held with various Intel employees never really went anywhere.3
In July, Intel acquired a six-man digital watch company called Microma for roughly $2 million. Noyce and Moore predicted that in the next five years, some 200 million digital watches would be sold around the world. Every one of them would require elements in which either Microma or Intel was expert: liquid crystal displays, detailed assembly, and a type of MOS chip called CMOS. Intel, true to its unwritten policies, was going to try to capture this market before it attracted attention from anyone else. Noyce expected Intel would, in the next few years, sell some $20 million in watch modules, 20 percent of which would go into Microma watches. The rest would be sold to other watch manufacturers.4
In November, Noyce invited one of the Grinnell trustees, Sam Rosenthal, to tour the new fab and independently assess the merits of the college’s investment. “Boy Noyce showed [us] through the plant at Santa Clara,” Rosenthal wrote to his fellow trustees, using their affectionate nickname for Noyce. “It was a most interesting and baffling experience for me. Interesting, because it is a most complicated and ingenious manufacturing process[,] and baffling, because I didn’t understand very much of it, though Bob did his best to inform me.” Rosenthal was astonished by the manufacturing facilities, parts of which, he said, “reminded me of a hospital operating room, for the employees were dressed in white outfits and hats [to avoid contaminating the chips], but their feet were not protected.” His conclusion: “I was most impressed by the plant and the manufacturing process. [Noyce] is as optimistic as ever about business.”5
By December of 1972, Noyce’s optimism had proven well founded. Intel was entirely debt free and had more than doubled revenues and tripled profits. Just one year later, when Intel’s fifth anniversary coincided with a boom in the industry, the company’s revenues and profits again tripled, and so, too, did the number of its employees and its manufacturing space. Intel’s pretax profit margin was a remarkable 40 percent (25 percent after tax).6
Behind the scenes, Noyce worked carefully to ensure Intel’s financial figures looked good to Wall Street. In 1973, for example, Intel’s profits were so high that the company accelerated its research, starting work on projects originally slated for 1974, in hopes of reducing its net income. “Bob [is] very anxious that the earnings not fluctuate errat
ically up and down and that each quarter make a favorable showing with both the preceding quarter and [the] corresponding quarter of a year ago,” reported Grinnell trustee Joe Rosenfield.7
He added that Noyce had suggested that Grinnell might want to sell some of its Intel stock, while the price it could command was so high. Noyce had himself sold a bit of his stock to buy a small jet shortly after passing his flight test on Valentine’s Day, 1972. Rosenfield disagreed with Noyce’s suggestion to sell and believed, in fact, that Noyce had made it only because he felt a deep “responsibility to the College” to be a bit conservative. Warren Buffett agreed: “While you know much more about electronic widgets than I,” he wrote to Rosenfield, “Intel seems to me to be the best vehicle we have, or are likely to have, to gain a quantum jump in our endowment.” The board decided to keep their position intact.8
When Intel’s stock split three for two in April, Noyce was bombarded with questions from many of the company’s 1,000 employees about the effects of the split on their options. He wrote a careful letter, beginning “just to put your minds at rest,” explaining the split’s implications to this group still largely unfamiliar with the stock options they had nonetheless come to value greatly. By the end of 1973, Intel was worth more than $160 million, and Moore was saying that the only thing that might limit its growth in the future was its ability to hire enough engineers and scientists.9
Noyce, always the “receiver of messages from the outside,” had another concern—not a nagging, panic-inducing worry, but a bit of unpleasant noise that registered on the periphery of his radar screen. In October, OPEC had embargoed exports of oil in the wake of the Yom Kippur War in Israel. Within weeks, the state of California had declared the need to ration electricity and announced plans to ask industrial customers to cut their power consumption to levels 10 percent below those of the corresponding month a year earlier. If the voluntary 10-percent plan did not work, then the utilities companies might resort to rolling blackouts to conserve power.
The prospect of rolling blackouts alarmed Noyce, who readily admitted that the semiconductor industry had designed its processes and equipment “assum[ing] that petrochemicals were free and available and that power was free and available.” The average wafer fab used 30 times as much electricity as a commercial office building of the same size, and consumed large quantities of xylene, acetone, and disopropyl alcohol, all petrochemical derivatives.10
Immediately upon learning of the state’s plans, Noyce had Intel start conservation and recycling efforts in-house. He had the company contribute to a political action committee organized by WEMA, a trade association of West Coast electronics manufacturers. He also joined a contingent of semiconductor executives testifying before the California Public Utilities Commission in December 1973. Noyce told the commissioners that the fast-growing industry needed more, not less, power—and he pointedly reminded them that during the past year, the semiconductor industry accounted for an estimated 40 percent of Santa Clara County’s employment growth. During his presentation, he offered the commissioners a variety of doomsday scenarios: 40 percent layoffs if Intel was forced to slow production to last year’s levels, poisonous gases escaping into the atmosphere if the fabs could not use their ventilation systems due to unannounced power shutdowns, a million dollars’ worth of product lost in less than an hour if electricity were shut off unexpectedly. “After a third power blackout,” he said, “we’d quit and close the factory.” Noyce and the other electronics executives pushed for passage of a bill that would prohibit blackouts and grant electronics companies a high priority in the state-wide hierarchy of users. The bill failed.11
The energy crisis worried Noyce more for its long-term implications about the semiconductor industry’s relationship with the government than for its potential immediate effects on Intel. He had always been sensitive to the need to work in tandem with the government. In 1970 he said, “This really is a controlled society, controlled out of Washington, and if you’re trying to steer around in all the traffic out there, you’d better listen to what the cop is telling people. Go with the tide, not against it. If a company is in the right business at the right time, then the whole society sweeps it along [—] if it is truly providing some useful service to the society. If it’s not, it’s going to be fighting everybody in sight all the way, and eventually will fail.”12
What Noyce had not sufficiently understood until the mid-1970s, however, was that the government traffic cop could decide to block a street midway through rush hour. The threatened electricity rationing awakened him to the reality that he and Moore and everyone else at Intel could build the best possible product and in any number of ways “truly provide some useful service to society”—but ultimately, the government had the power to render such efforts moot. “I think all of us are getting into the position where government is affecting our lives more and more,” Noyce groused to a reporter from an industry trade journal after his testimony. “The things that we used to think were the basic prerequisites of business have been taken over by the government.”13
All in all, however, Noyce said he was ending 1973 feeling “very optimistic.” On New Year’s Eve 1974, he proudly told a reporter that Intel was forever “teetering on the edge of what’s barely possible.” Assuming the energy issue could be resolved, he said, “electronic applications appear to be unlimited.”14
Noyce had other reasons to feel cheerful. By 1973, his Intel holdings alone—he and Moore each still owned 16 percent of Intel’s stock—were valued at $26 million. By the middle of 1974, they were worth double that.15
He and Betty anonymously built a new library for the town near their summer home and gave large sums to libraries and educational television in California. Noyce helped with an effort to build a bank in low-income East Palo Alto. He was acutely aware of his own privileged position, which he did not ascribe simply to the blessings of an unusually capable mind. When one of his children wondered aloud whether her successes came from her own skills or from her status as his daughter, he asked, “Do you think I could do what I’ve done if I had been black or a woman?” The notion that skin color, poverty, or gender deprived people of their potential annoyed him. He felt committed to Grinnell in no small measure because it had not permitted his family’s lack of resources to keep him from an education. He was no radical, but he served on the board of Big Brothers and Big Sisters, and he always took particular pride in a fab that Fairchild built on a Native American reservation in New Mexico, which for a time in the mid-1960s made the company, with 300 Navajo employees, the largest nongovernmental employer of Native Americans in the United States. His actions on what might loosely be termed the “social justice” front bring to mind his comments about good managers “getting the barriers out of the way to let people do the things they do well.”16
In 1973, Noyce involved himself with the most unusual of his charitable efforts. He learned that the Audubon Society had developed a plan to reinvigorate Maine’s nearly extinct population of puffins by flying chicks from Newfoundland to Eastern Egg Island, where it was hoped they would mature to build a colony. The project seemed tailor-made for Noyce. He could see Eastern Egg Island from his home. The plan to resurrect the puffin colony was risky but feasible—Noyce’s preferred type of operation. No one knew if the puffins could even survive an airplane flight, much less establish themselves in a new location, but it seemed possible. Helping the Audubon Society would also provide Noyce with an excuse to fly, for what the group really needed was a private plane to transport an Audubon team to Newfoundland and then fly the team and a few chicks back to Maine.
Noyce was thrilled to offer his new jet and himself as a pilot. True to form, he also asked to join the researchers as they made their way along the 150-foot cliff that jutted over the ocean and served as a home to more than 300 puffins. The Audubon team and Noyce spent several hours searching for puffin chicks in burrows dug by the adult birds, all the while dodging attacks by screaming great black-back gull
s protecting their own nests in the cliff’s ledges.
The puffin airlift to Maine proved a success, and Noyce again volunteered his services in 1974 (when 54 puffin chicks were moved). He paid for the plane flights for the next two years, as well. After this, the colony was well established, and Noyce turned his attentions elsewhere.17
Bob and Betty maintained their reluctance to discuss the family wealth with their children. If they dined out, which they did quite infrequently, Noyce tended to order the lowest-priced dinner specials. Betty Noyce did not indulge in clothes or shopping sprees. Neither of them drove luxury cars. Even when Noyce’s net worth approached $100 million, he once walked several blocks to buy a box of colored pencils at a grocery store to avoid paying what he considered exorbitant prices at a specialty art supplier. He did not think this at all incongruous behavior for someone who bought airplanes with nary a second thought. The young Noyces were paid a pittance for chores, and if they complained, Noyce would say, “You do a little work for a little money. You need to do a lot of work for a lot of money.”18
But Bob and Betty were also quietly preparing their heirs for the responsibility that came with great wealth. They set up a trust to serve as an educational vehicle for the children, who were all now teenagers and who personally reviewed grant applications and determined which projects to fund. The young Noyces were more than up to the task. Bill was on his way to Dartmouth college after a high school career that included a top ranking in a statewide physics exam. Penny had been named one of the “outstanding high school students of English in the country” and was off to France to improve her fluency in la belle langue. Polly was bright, beautiful, and vivacious. Margaret was feisty and daring, on the cusp of adolescence. To all of them Noyce said the same thing: “Money can be used to do lots of things: it can be spent, it can be used to make more money, or it can build a future.”19
The Man Behind the Microchip Page 32