by T. R. Reid
At first, the movers and shakers of the industry headed off in the same direction as older industries—steel, autos, tires, glass, audio-video, etc.—that had run up against formidable Japanese competitors. The Semiconductor Industry Association, a trade group that Noyce had been instrumental in starting, hired some of the same economists and lobbyists who had worked for other threatened industries. At the urging of these experts, the chip makers ran to Washington for help. As head of the SIA, Noyce appeared before Congress and dutifully read from the standard script, which blamed the problem on the nefarious Asians—“unfair, illegal, or whatever.” The industry pressed the federal government to help, and the Reagan administration responded. In 1986 the Japanese government signed a “voluntary trade agreement,” which was actually not voluntary and not an agreement. It was imposed unilaterally by Washington on threat of closing U.S. markets to Japanese imports in many areas beyond semiconductors. Japanese companies committed to limit their exports of memory chips and many kinds of logic chips. It was a quota system, pure and simple. But it gave the U.S. industry some breathing space and a chance to rebuild.
Bob Noyce, however, was never really comfortable with this protectionist response to the industry’s problems, or with his role in bringing it about. Ever since his days as a junior engineer at Philco, Noyce had nourished a visceral dislike for businesses that got into bed with government. In fact, he believed that sweetheart deals with government were one of the causes of the industry’s malaise: “Price wasn’t much of an object in the American space program, and that may have trained a generation of design engineers to leave cost out of the equation,” he wrote, a rather daring admission for an American semiconductor executive to make in 1988.
The bigger problem for Noyce, though, was a nagging sense that his industry was falling into a rut. All his professional life, Noyce had insisted that the worst way to reach a solution was “to approach the problem the way everybody else has.” And now the semiconductor industry was going down the same road as every other industry that had run up against stiff Japanese competition. Noyce was simply too honest to argue that running to Washington for trade protection could solve the basic problems troubling Silicon Valley. “The problems are primarily of our own making, so we have to make our own solution,” he said. “We need to get back to the leading edge of design, and we need to get better at manufacturing.”
Thus it was that Bob Noyce became the chief architect, and the first CEO, of an industry-wide consortium called Sematech (a name carved out of semiconductor technology). To induce the non-California companies like Texas Instruments (Dallas), Motorola (Phoenix), and IBM (Armonk) to sign on, the founders of Sematech agreed that the new organization would not be located in Silicon Valley. And so in 1987, Noyce left his beloved valley and moved to the less verdant precincts of Austin, Texas, to try to save his industry. Somewhat reluctantly, he agreed that Sematech would take government financial help—about $100 million per year—but he insisted that the corporate members must contribute an even larger figure so that Sematech would be a primarily private undertaking.
From the first, Noyce realized that Sematech need not worry much about American skills in semiconductor physics, circuit design, or innovation. The United States already led the world in those fields. Rather, the consortium focused on the more mundane problem of production. The goal, Noyce said, was to see to it that American chip makers could match or exceed the Japanese in speed and quality of manufacturing. The consortium approach, with companies and universities from all over the country working together, was designed to help the relatively small U.S. firms at the forefront of technology—outfits with names like Cyrix, Xilinx, Micron, and Zilog—compete with behemoths like NEC, Hitachi, and Toshiba in microchip manufacture. And the way to do it, Noyce argued, was to make “manufacturing” a dynamic and indeed glamorous field for bright Americans to pursue. The main thing America needed, Noyce told Fortune magazine, was “mothers who say proudly, ‘My son, the manufacturing engineer.’ ”
While Noyce hunkered down to this significant but not very sexy task, many U.S. experts sneered at the Sematech concept. The real issue, they argued, was not just one or two troubled industries, but rather a broader problem of American “decline” visà-vis the emerging industrial powerhouses of East Asia. In this view, Japan, and its industrial nephews like Taiwan, South Korea, and China, represented the rising sun of a “new economics” while old-fashioned U.S. capitalism was drooping beneath a dark horizon. A distinguished student of Asia, James Fallows, set forth the theory in his treatise Looking at the Sun. Fallows opened the book with a long, disturbing chapter relating how the Japanese had come from far behind to trump American industry in the crucial field of semiconductors. It was a tale, Fallows wrote, of “Japanese triumph and American failure.”
But Fallows and his fellow chroniclers of American decline had not counted on the formidable talents and energy of Bob Noyce. Traveling the country, hectoring his colleagues, constantly pushing researchers, engineers, and corporate chairmen to work harder and faster, Noyce spent four hard years driving the American industry to make up for lost ground. And he succeeded. Early in 1993 (just as Looking at the Sun was hitting the bookstores), the annual figures for global market share in semiconductors were released. For the first time in a dozen years, Japan was number two; the American industry had caught up with and passed its nemesis. The lead wasn’t huge—U.S. companies had 44 percent of the global market in 1992, to 43 percent for the Japanese, 8 percent for European makers, and 5 percent for other Asian countries— but it marked a stunning reversal. “It’s gone from total disaster to an American triumph,” said G. Dan Hutcheson, president of VLSI Research. “This shows that you can turn an industry around with creativity, hard work, and help from the government.”
In the following years, Americans cemented their leadership position. By the turn of the twenty-first century, the United States claimed a comfortable 45 percent of global markets, while Japan dropped to about 40 percent, losing some market share in memory chips to its smaller Asian neighbors. In the late 1990s, in a particular tribute to Sematech’s achievement, U.S. makers of semiconductor manufacturing equipment once again took the lead in global market share.
While the American industry marched forward into the broad, sunlit uplands of world leadership, though, there was one shadow over the achievement. Bob Noyce, the man who was probably more responsible for the U.S. renaissance than anyone else, was not there to see it.
11
THE PATRIARCHS
Robert Noyce’s metamorphosis from corporate manager to industry spokesman had come about as gradually, and as inevitably, as his earlier transition from inventor to manager. The change was not something he had planned; “I just sort of drifted into it,” he said. But then, if Noyce’s life had turned out the way he originally planned, he would have spent most of it in a physics lab somewhere, happily indulging his curiosity about the way things work and turning out monographs explicating interesting phenomena of solid-state physics.
In fact, Noyce’s career had already begun to move out of the lab by January 1959, when he hit upon the monolithic idea. That was his most important engineering breakthough, and it was also, for all practical purposes, his last. There was something about Noyce—a fundamental confidence matched with a compelling sense of presence—that prompted people to look to him for leadership. The physicists, chemists, and engineers working at Shockley Semiconductor in 1956 were required—it was part of William Shockley’s unique management style—to give one another report cards. When the grades were tabulated, Noyce emerged as the consensus choice to be the group’s technical director. Accordingly, when the “traitorous eight” left Shockley in 1957 to found Fairchild Semiconductor, the group turned to Noyce as soon as it became clear that somebody was going to have to act as a manager. His colleague Gordon Moore recalled that “Bob was everybody’s choice. He was the natural leader.”
In any case, it was a satisfying development,
not least because it provided a whole new world of human endeavor to learn about. “Getting into management was just enormously exciting,” Noyce recalled a few years later. “Because, first of all, I didn’t know a damn thing about it, so that your learning rate goes up very, very rapidly. But secondly, management does become the focal point for all the information in the organization. Well, the guy who has the information has the power. . . . It’s a very satisfying thing, particularly coming from a place where you’re looking at a narrow field so you don’t see the forest for the trees. And suddenly you’re sitting in a balloon looking down from branch to branch and . . . for the first time you can see the whole.”
More important, it just felt right—it fitted precisely with Noyce’s evolving theory of corporate leadership—to have a technologist running a high-tech company. “One of the real problems with American business,” he argued, “is this notion that you can be trained in management, in some kind of generic form of management, and then you can manage any operation. But that absolutely does not work in a technical situation. The manager has to have an intuitive gut feel for what ought to be done in a particular situation, and if you don’t have the technical background, if you haven’t participated personally, you don’t have that.”
For the most part, the American semiconductor industry has been built and run by technologists, and to Noyce this was a key reason for its explosive success. “They say we were lucky,” he explained. “Well, you can say you were lucky being up at bat in the World Series with two out in the ninth inning in the final game of the series and you happen to hit the home run. But the real point is that you have to be at bat at that time. Basically, you have to be in there participating and have the gut feel for what can be done.”
Noyce’s first management position at Fairchild Semiconductor was director of research and development, a position considerably more important than it might sound because, for the first year or so, the firm was doing nothing but research and development. As the research developed into important products—the planar process and the integrated circuit—the upstart semiconductor division became one of the leading profit centers in the whole of Fairchild Camera and Instrument Corporation.
Fairchild’s directors back east rewarded Noyce in the traditional ways: he was named general manager of the division, then vice president, which was basically the same job with a fancier title, then group vice president, which was still the same job but even fancier. His salary began to climb toward the exalted levels reserved for athletes, entertainers, and the top management of large corporations. But after 1959, when he and his seven cofounders sold their $500 worth of stock to the parent company for a quarter million dollars each, salary was not so important a concern.
And yet, through the mid-1960s, Noyce was becoming more and more uncomfortable. Fairchild’s directors wanted to run the new profit center their way, and this was something quite removed from what Bob Noyce and Gordon Moore had in mind. The two technologists were, as Noyce put it, “comfortable with risk,” be it technical or financial. The generic managers back east at the home office were comfortable only with security, with the safe business play. Looking back later, Noyce could see that a fissure was inevitable. A bungled turnover among top management back east in 1967 left the California group shaking their heads in disgust. That paved the way for the final break, in 1968, when Noyce and Moore decided—in sharp contrast to contemporary corporate wisdom—that money could be made by building computer memory circuits on a semiconductor chip. With the help of Silicon Valley’s leading venture capitalist, Arthur Rock, the pair left Fairchild and founded Intel Corporation. They arranged things so that technologists would be in control. The firm’s president was Robert Noyce; its chairman was Gordon Moore. Intel was to be governed, Noyce explained, not by market surveys and financial analyses, but rather by “intuitive gut feel.”
Noyce related all this one day in his office at Intel’s headquarters, a sprawling rectangle of nondescript architecture alongside the Central Expressway in Santa Clara, just shouting distance from an enormous amusement park named Great America. To call Noyce’s office an office, though, is to stretch the language. The better term would be “work space.” The founder’s work space, like the spaces allotted to everyone else at Intel, was really just a small cubicle bounded by four white metal partitions. Intel did not, and to this day does not, provide huge executive offices. Noyce’s parking space in the lot outside was whatever space happened to be free when he arrived at work. Intel does not provide reserved parking for the brass. If Noyce arrived at the office later than 8:00 A.M., the official start of the workday, his name went on the late list like all other dawdlers. Intel does not permit exceptions for those at the top. While junior executives of neighboring companies far less successful than Intel routinely rode their limousines to San Francisco for lavish expense-account lunches at exorbitant bistros, Bob Noyce’s routine lunchroom was the Intel cafeteria. “The potato salad’s pretty good,” he told me over his tray.
All of which was a direct reflection of the democratic, meritocratic, and studiously nonhierarchical management style that Noyce, Moore, and another Fairchild refugee, Andrew Grove, custom-designed for their company. They wanted to nurture at Intel a feeling of “nobody here but us engineers”—a sense that the company was just a bunch of technologists working together to solve technical problems and keep two hops ahead of the competition. The thrust was to give each scientist, engineer, and mathematician on the staff the ability—and the responsibility—to work at the leading edge of the industry. This management philosophy, laid out in Andrew Grove’s book Only the Paranoid Survive, was specifically designed for a company full of bright, curious, and driven superachievers—in short, for a company full of Noyces.
It was also a philosophy that worked. “Intel became Silicon Valley’s technology flagship,” The Wall Street Journal reported on the firm’s tenth anniversary, thanks to its pioneering development of semiconductor memory and the microprocessor. Intel struggled through downturns with the rest of the industry, but overall its corporate history has been a story of stupendous growth. A little less than fifteen years after it opened for business with no product and a few dozen employees, Intel became a billion-dollar company. In the year 2000, its sales topped $32 billion and there were 85,000 people on the payroll in four dozen countries around the world.
Intel’s corporate success was accompanied by extraordinary financial success for its founders. In 1969, at the age of forty-one, Noyce had become reasonably well-to-do with the quarter-million-dollar profit on his Fairchild stock. After the birth and rapid growth of Intel, though, he moved into the category of the seriously rich. On the day in 1971 when Intel’s stock went public—at an opening price of $23.50 per share—Noyce’s net worth went into the eight-digit range.
When a man whose self-description included the phrase “comfortable with risk” finds himself dripping with money, it is almost axiomatic that he is going to risk some of it on financial ventures. Robert Noyce, who had gone pleading to venture capitalists when he started Intel, now became one of the more active venture capitalists in the high-tech sector. His portfolio was studded with names like “diasonics” and “monoclonal antibodies.” Naturally, he put a good part of his money into the semiconductor and computer industries. But even when investing in the fields he pioneered, he cheerfully admitted that his investment decisions have not always been the wisest. His wife asked him once about a start-up company down the road in Cupertino that was looking for investors. Noyce studied the prospects and warned her to stay away; no future there. The “no-future” company was Apple Computer, which went on to become the very symbol of financial success in the personal computer industry. (Fortunately, Mrs. Noyce had the good sense to ignore her husband’s advice.) Bob himself put some money into a seemingly solid outfit called Osborne Computer. It had a dynamic product idea—the world’s first portable personal computer. Unfortunately, the Osborne product was so heavy and cumbersome that it
came to be known not as a “portable” but as a “luggable.” The firm lurched into bankruptcy, taking Noyce’s money with it.
There were, however, more Intels than Osbornes in Noyce’s investment record. By the time he left Intel for Austin in 1987, the minister’s son from Denmark, Iowa, was counting his assets in the billions of dollars. (His alma mater, Grinnell, was also in the chips. Noyce had arranged for the school to buy a hunk of stock at Intel’s initial public offering, an investment that made Grinnell one of the richest small colleges in the world.) Noyce used the money to pursue his unbounded appetite for new experiences. He flew his own jet to skiing vacations at his condominium in Aspen. He flew his own seaplane to boating vacations on the lakes of northern California. Comfortable with risk at play as well as work, he took up gliding, hang gliding, paragliding, scuba diving, and assorted other sports, just for the hell of it. At Aspen, he arranged his day so that he worked in the afternoon and spent the mornings racing down Ajax, the toughest slope on the mountain. I asked him once to name his favorite run at Aspen, and he didn’t hesitate a minute: “Face of Bell,” he said. When I trekked over to see this run, it turned out to be a precipitous cliff marked with double black diamonds and a sign in red letters: “Caution: Experts Only.” He bought ever fancier cars and drove them ever faster. He took up fine wines, not surprisingly becoming an expert in enology. As long as he lived in Silicon Valley, he stayed at the comfortable but hardly fancy house in Los Gatos where he and his first wife (he was divorced in 1974 and remarried a year later) raised their four children. But the house was now surrounded by increasingly lavish gardens—in his mid-forties, Noyce became intensely interested in gardening—accoutered with tennis court and swimming pool. When he moved to Austin, he put in a garden and pool at his new home there, and spent what little time he had outside of work developing an expertise in native Texas flora. “He had one helluva life,” wrote Michael Malone, who worked in the semiconductor industry when Noyce was its most famous citizen. “In Silicon Valley, all of us wanted to work for Dave Packard [of Hewlett-Packard], but all of us wanted to be Bob Noyce.”