1960s
Fairchild's Noyce and Texas Instrument's Kilby had independently invented the integrated circuit (IC) based on bipolar technology. In 1960, Noyce invented the planar integrated circuit. The industry preferred Fairchild's invention over Texas Instruments' because the transistors in planar ICs were interconnected by a thin film deposit, whereas Texas Instruments' invention required fine wires to connect the individual circuits. Noyce's invention was enabled by the planar process developed by Jean Hoerni.[11] In turn, Hoerni's planar process was inspired by the surface passivation method developed by Mohamed Atalla at Bell Labs in 1957.[12]
In the early 1960s, Fairchild R&D began experimenting with the MOSFET (metal–oxide–semiconductor field-effect transistor), also known as the MOS transistor. The first MOSFET was invented by Mohamed Atalla and Dawon Kahng at Bell Labs in 1959, and demonstrated in early 1960,[13] but was initially overlooked and ignored by Bell Labs.[14] However, the MOSFET generated significant interest at Fairchild. Inspired by the first MOSFET, Chih-Tang Sah built an MOS-controlled tetrode at Fairchild later that year. MOS devices were later commercialized by Fairchild in 1964, with p-channel devices for logic and switching applications.[13] The experiments led to Fairchild's development of MOS integrated circuits.[15]
In 1963, Fairchild hired Robert Widlar to design analog operational amplifiers using Fairchild's process. Since Fairchild's processes were optimized for digital circuits, Widlar collaborated with process engineer Dave Talbert. The collaboration resulted in two revolutionary products – μA702 and μA709.[16] Hence, Fairchild dominated the analog integrated circuit market, having introduced the first IC operational amplifiers, or "op-amps", Bob Widlar's μA702 (in 1964) and μA709. In 1968, Fairchild introduced David Fullagar's μA741, which became the most popular IC op amp of all time.[17]
By 1965, Fairchild's process improvements had brought low-cost manufacturing to the semiconductor industry – making Fairchild nearly the only profitable semiconductor manufacturer in the United States. Fairchild dominated the market in DTL, op-amps and mainframe computer custom circuits. In 1965, Fairchild opened a semiconductor assembly plant on the Navajo Nation in Shiprock, New Mexico.[18] At its peak, the plant employed over a thousand Navajos, the majority of whom were women. In The Shiprock Dedication Commemorative Brochure released by the Fairchild company, the Diné (Navajo) women circuit makers were celebrated as "culture workers who produced circuits as part of the 'reproductive' labor of expressing Navajo culture, rather than merely for wages." This claim was based on the opinion that circuits of the electronic chips had a mere resemblance with the complex geometric patterns on the Navajo rugs. Paul Driscoll, the Shiprock plant manager, spoke of the "untapped wealth of natural characteristics of the Navajo...the inherent flexibility and dexterity of the Indians." Although highly successful during its operation, the plant was closed in 1975.[19] While the Fairchild corporation claims the Diné women were chosen to work in the Shiprock plant due to their "'nimble fingers'" as previously noted, the women of the Shiprock reservation were actually chosen as the workforce due to a lack of labor rights asserted by the women in addition to "cheap, plentiful workers and tax benefits".[20]
Fairchild had not done well in the digital integrated circuit market. Their first line of ICs was the "micrologic" resistor–transistor logic (RTL) line which was used in the Apollo Guidance Computer. It had the advantage of being extremely simple – each inverter consisted of just one transistor and two resistors. The logic family had many drawbacks that had made it marginal for commercial purposes, and not well suited for military applications: the logic could only tolerate about 100 millivolts of noise – far too low for comfort. It was awhile before Fairchild relied on more robust designs, such as diode–transistor logic (DTL) which had much better noise margins.
Sales due to Fairchild semiconductor division had doubled each year and by the mid-1960s comprised two-thirds of total sales of the parent company. In 1966, Fairchild's sales were second to those of Texas Instruments, followed in third place by Motorola. Noyce was rewarded with the position of corporate vice-president and hence became the de facto head of the semiconductor division.
However, internal trouble at Fairchild began to surface with a drop in earnings in 1967. There was increasing competition from newer start-ups. The semiconductor division, situated in Mountain View and Palo Alto, California, was actually managed by executives from Syosset, New York, who visited the California sites once a year, even though the semiconductor division earned most of the profits of the company. Fairchild's president at that time, John Carter, had used all the profits to fund acquisitions of unprofitable ventures.
Noyce's position on Fairchild's executive staff was consistently compromised by Sherman Fairchild's faction. Charles E. Sporck was Noyce's operations manager. Sporck was reputed to run the tightest operation in the world. Sporck, Pierre Lamond and most managers had grown upset and disillusioned with corporate focus on unprofitable ventures at the expense of the semiconductor division. Executives at the semiconductor division were allotted substantially fewer stock options compared to other divisions. In March 1967, Sporck was hired away by Peter J. Sprague to National Semiconductor. Sporck brought with him four other Fairchild personnel.[21] Actually, Lamond had previously assembled a team of Fairchild managers in preparation to defect to Plessey, a British company. Lamond had recruited Sporck to be his own boss. When negotiations with Plessey broke down over stock options, Lamond and Sporck succumbed to Widlar's and Talbert's (who were already employed at National Semiconductor) suggestion that they look to National Semiconductor.[22] Widlar and Talbert had earlier left Fairchild to join Molectro, which was later acquired by National Semiconductor.[23]
In the fall of 1967, Fairchild suffered a loss for the first time since 1958 and announced write-offs of $4 million due to excess capacity, which contributed to a total loss of $7.6 million. Profits had sunk to $0.50 a share, compared to $3 a share the previous year, while the value of the stock dropped in half. In October 1967, the board ordered Carter to sell off all of Fairchild's unprofitable ventures. Carter responded to the order by resigning abruptly.
Furthermore, Fairchild's DTL technology was being overtaken by Texas Instruments's faster TTL (transistor–transistor logic).
While Noyce was considered the natural successor to Carter, the board decided not to promote him. Sherman Fairchild led the board to choose Richard Hodgson. Within a few months Hodgson was replaced by a management committee led by Noyce, while Sherman Fairchild looked for a new CEO other than Noyce. In response, Noyce discreetly planned a new company with Gordon Moore, the head of R&D. They left Fairchild to found Intel in 1968 and were soon joined by Andrew Grove and Leslie L. Vadász, who took with them the revolutionary MOS Silicon Gate Technology (SGT), recently created in the Fairchild R&D Laboratory by Federico Faggin who also designed the Fairchild 3708, the world’s first commercial MOS integrated circuit using SGT. Fairchild MOS Division was slow in understanding the potential of the SGT which promised not only faster, more reliable, and denser circuits, but also new device types that could enlarge the field of solid state electronics – for example, CCDs for image sensors, dynamic RAMs, and non-volatile memory devices such as EPROM and flash memories. Intel took advantage of the SGT for its memory development. Federico Faggin, frustrated, left Fairchild to join Intel in 1970 and design the first microprocessors using SGT. Among the investors of Intel were Hodgson and five of the founding members of Fairchild.
Sherman Fairchild hired Lester Hogan, who was the head of Motorola semiconductor division. Hogan proceeded to hire another hundred managers from Motorola to entirely displace the management of Fairchild.
The loss of these iconic executives, coupled with Hogan's displacement of Fairchild managers demoralized Fairchild and prompted the entire exodus of employees to found new companies.
Many of the original founders, otherwise known as the "fairchildren", had left Fairchild in the 1960s to form companies that grew to prominence in the 1970s. Robert Noyce and Gordon Moore were among the last of the original founders to leave, at which point the brain-drain of talents that had fueled the growth of the company was complete.
A Fairchild advertisement of the time showed a collage of the logos of Silicon Valley with the annotation "We started it all". It was later, in 1971, Don Hoefler popularized the name "Silicon Valley USA" in Electronic News.[24] He notes he did not invent the name. See also Gregory Gromov[25] and TechCrunch 2014 update[26] of Hoefler's article.[24]
