Silicon Valley History – Part III

Silicon Valley History – Part III
February 3, 2021 admin
In Podcasts
History of Silicon Valley - Part III

Ray Zinn, the longest serving CEO in Silicon Valley, discusses the history of silicon as only he can, having watched it from Shockley to Facebook.

In Part III, Ray and Goldman Sachs analyst Peter Marchetti cover the shifts from chips, to computers, to software.

Peter Marchetti has spent the past 20 years as an advisor to some of the most significant families and foundations in the country. He joined the Goldman Sachs team  in 2000 after receiving his MBA from the Haas School of Business at the University of California, Berkeley.

Ray Zinn: Hello everyone. And welcome to another very exciting series of podcasts about the history of Silicon Valley. Everybody in the world knows about Silicon Valley, probably one of the most recognizable names in the world is Silicon Valley. In fact, I don’t tell anybody that I’m from the Bay Area. I just tell them I’m Silicon Valley because they know exactly where that is. So anyway, welcome to another of our… This is a third in our series of podcasts regarding the history of Silicon Valley. For those of you are interested in how it started and what it’s led up to and… Because we’re going to cover it all the way from the beginning, which is in 1957, to 2020. We’re going to talk about the history of the Valley for those 60 years, a little over 60 years. So again, thanks for joining us. We’re happy to have you back. And my good friend, Pete Marchetti, who is a financial advisor in the Bay Area is the host of our series. And thanks. Welcome Pete.

Peter Marchetti: Thanks again for having me Ray. Again, looking forward to another exciting podcast and continuing to learn about Silicon Valley.

Ray Zinn: Well, let’s get going. Let’s dive right into it.

Peter Marchetti: The last podcast ended with you talking about Fairchild and the environment there, how it got started, the culture, and you were beginning to talk about some of the incredible employees of Fairchild, not just the founders, but other people that were there. And, we were beginning to branch into why Fairchild was so important in really developing the semiconductor industry and making Silicon Valley what it is today. So maybe a good place to start would be to continue to talk about some of the personalities that were there, what they were like, and then maybe we can branch into some of the things that they ended up doing once they left Fairchild.

Ray Zinn: Sure. Okay. So we’re kind of up to about 1964 in the series. I mean, I’d been with Fairchild for one year and so in that one year, I can’t even tell you how much happened. I mean, it was unbelievable. The dynamics of the industry are changing so rapidly. We were struggling, and had been struggling, for the past three years in developing the first integrated circuit. So as I mentioned earlier, integrated circuit is combining multiple transistors on a single chip, meaning a single piece of silicon. So we had a group called DIC, Digital Integrated Circuits. That was the name of the department at Fairchild, and that was run by a fellow named Jack Gates. Jack is kind of a rough and tumble guy. I mean, I tell you not only is he big, he’s got a deep voice, but he’s also a violinist.

And so it was really funny to see this big guy with his big fingers and playing this violin.. He was an exceptional violinist. But he was a head of the DIC group at Fairchild. In 1964, we had developed the first integrated circuit, a flip-flop, and that was excitement. I mean, that was so exciting I can remember that Jack was standing on his desk, playing his violin, doing a kind of an Irish toe dance, celebrating as we got the first integrated circuit to work. And that was an extremely important day. I am so grateful that I am part of that history, that I could be there on the very day that first integrated circuit was turned on. I can remember that day as clear as I’m sitting here talking to you is to hear Jack doing that Irish toe dance on his desk. I thought he was going to break that desk because he was so big, as we were all singing and dancing around and just cheering when we flipped on the tester and that flip-flop worked. I mean, I’ve never seen so much excitement in my entire life.

Peter Marchetti: Playing a violin on top of the desk is probably not how they would celebrate nowadays, but I imagine that was a pretty exciting and momentous occasion for everybody, not just for the company, but for the world, essentially. Right? In terms of what ended up developing from there.

Ray Zinn: Well, it was exciting. I mean, coming up with that because the integrated circuit allowed us now to really start compacting. Moore’s law began to really take off as people referred to it.

Peter Marchetti: Can you explain what Moore’s law is?

Ray Zinn: The technology will expand to double every so many years. I’ve forgotten now. I think it’s every few years the technology would actually double, meaning we could put double the number of transistors on silicon. It would double every few years and at an exponential rate, that’s what they call Moore’s law. I’m not going to get into the technology because that’s a whole different series that talked about how the technology developed, but we were on a one inch wafers in those days and expanding to three and four inch wafers subsequently.

Peter Marchetti: How about the personalities that were there? In the last podcast, you were talking a lot about Sanders and Noyce and Grove and some of these just iconic names in the semiconductor industry. Can you talk a little bit about the personalities that were there? What they were like? And then, you know…

Ray Zinn: Okay, sure. Well, Bob Noyce of course was a leader of the band, as they say, the traitorous eight. Now things began to happen, and being that people were beginning to be enticed by venture capitalists to go out and form different companies. So you had Dr. Noyce, Robert Noyce, and Gordon Moore and Andy Grove taking off and forming a company called Intel, which I think was formed in 1960… Somewhere between ’65 and ’67, formed Intel. Intel, of course, became probably the most prevalent and most well-known company in the whole industry. So you begin to have the breakup of Fairchild because you had all these brainy and very creative and entrepreneurial guys going off and starting these different companies.

So Charlie Sporck was kind of the general manager at Fairchild, even though Gordon was the president… Not Gordon. I mean, Bob Noyce was the president. Charlie was kind of the manufacturing guy. He’s the one that really got the manufacturing of semiconductors really going well because he was a good operations guy. So you had Charlie Sporck, went often and took a group of guys, a whole slug of guys, because the industry was just growing so fast. I mean, it was almost exponential. In fact, it was exponential. Charlie went off and formed, along with a number of other key players at Fairchild, formed a company called National. National was another company that was not in semiconductors, but they helped fund it, along with some venture capitalists, formed National Semiconductor, which became a large player in the Sunnyvale area.

And then Jean Hoerni went off and formed Intersil. Jerry Sanders went off and formed Advanced Micro Devices. Intersil is basically gone, and National has been acquired by TI a few years ago. So Intel is still around, and AMD, which is Advanced Micro Devices. And that was Jerry Sanders and his guys, and they began to compete with Intel on microprocessors because that was when the name came in about what is these talk about computer chips? Well, computers really became very, very key and very, very important in the late sixties. And so that’s when we got the name computer chip was because most of the ICs, integrated circuits, that were being made were being made for computers.

So it was really interesting to see how the names changed because we call them transistors back up before 1969, and then we started calling them computer chips after 1969. And so, it was primarily in 1969 and mainly because of Intel, that the name was changed from the Bay Area, or just from transistors being manufactured in the Bay Area to the name called Silicon Valley. So I believe history will show that the name Silicon Valley came into play in 1969 because of all these different companies that were being formed in the Bay Area. In fact, I would say probably 75 to 80% of all semiconductors were being made or manufactured in the Bay Area in 1969.

Peter Marchetti: That’s interesting. I think you’re right. That’s about when the name was kind of originated. I mean, all of these employees leaving Fairchild, I think they became termed the fair children, right? All the companies that were created out of Fairchild. I mean, was that normal at the time or was that just kind of an unprecedented situation where you had so many people leaving an established, really successful company to go off and start new businesses?

Ray Zinn: Absolutely. I mean like Jay Last, and he formed Amelco, then it became Amelco Teledyne, but he formed a company called Amelco. As I mentioned, Jean Hoerni did and Victor Grinich did Intersil. There’s just so many… These companies were just springing up almost overnight. I mean, we must have had 25 or 30 semiconductor companies that were formed between 1957 and 1970. There were like 25 or 30 semiconductor companies formed, primarily in the Bay Area. There’s a few of them that were started up outside of the Bay Area, but I would say that the predominance of them, at least 80 to 90% of them, sprung up in the Bay Area.

Peter Marchetti: Actually I just pulled up, it was 1971 that Silicon Valley was officially coined that by a journalist. So it was right in that timeframe. But in terms of the people leaving, I mean, I guess you could, in some ways, say that modern day Silicon Valley culture where employees are very fluid and they move around a lot, that was kind of started back then. Right? Maybe the entrepreneurial spirit that’s become synonymous with Silicon Valley is attributable to the fair children and the people that left Fairchild at that time.

Ray Zinn: Yeah. It was kind of funny because that’s about right. I mean, the industry was doing so well. And, let me back off here and say that semiconductors are the heart of electronics. They are literally the heart and maybe the brains of electronics. So without semiconductors, you wouldn’t have electronics, in my mind. I mean, at least nothing like we have today. So go semiconductor, so go electronic, so go the world because the world is dominated by electronics. Almost everything we touch, everything we have has a semiconductor in it. And so that’s became extremely important, that technology, that industry is so important that now foreign countries now getting involved in semiconductors, Italy, France, England, Germany. Siemens, of course, a big electronics company in Germany. In Finland, Nokia. Then companies like Motorola begin to get involved because that’s another thing is that Motorola was huge in electronics.

So a lot of these big electronics companies began to form their own semiconductor technology like Siemens, like Motorola and so many others. IBM was another one that formed their own electronics semiconductor company. You had the big… Hewlett Packard is another one that they actually started forming semiconductor companies within the bigger companies. That’s why I think it really exploded like it did is because we not only had these startups like AMD and Intel and National and American Microsystems and Amelco and Intersil. It’d take me the rest of the day just talking about all the ones that were springing up. The big electronic companies like IBM, Hewlett Packard, Motorola, all these other large companies… I’m trying to remember all the names of them… Started forming their own semiconductor companies within their electronic companies, like Siemens in Germany or Nokia in Finland and SGS in Italy and another one in France. Right now I can’t remember the name of it.

Peter Marchetti: It’s an exploding space at this point in the late sixties into the early seventies, semiconductors are… Not just the technology is developing, but the number of companies that are proliferating is unprecedented to develop [crosstalk 00:15:12]…

Ray Zinn: Oh yeah. That’s why it became Silicon Valley because, as I said, 80 to 90% of all semiconductors were manufactured in Silicon Valley back in the early seventies and going into the early eighties. So maybe that’s a good place for us to kind of end this particular podcast as we now start talking about the proliferation of semiconductors outside of Silicon Valley.

Thanks again for joining with us today, Pete, and apologize for taking over the microphone on this podcast. But as you said, I’m the one that’s got the history. So…

Peter Marchetti: Yeah, like I mentioned last podcast, it’s not too exciting to hear me talk about the history of Silicon Valley because I don’t have as much experience with it, Ray. So I think everybody benefits much more from you talking and us having a chance to learn from your experiences.

Ray Zinn: Four will be us talking about how the world started capturing and jumping in on semiconductors and how it started moving outside of Silicon Valley. And that’ll be next in our series of the history of Silicon Valley, because Silicon Valley started changing pretty rapidly in the late seventies, early eighties. And we have some exciting things to talk about about that and the formation of Microsoft and some of those companies that actually came out of Silicon Valley and actually the formation of the computer industry, which we will touch on.

So again, thanks Pete for letting me kind of go on and on. I get so excited talking about the industry. Please everyone, join us again for our fourth in our series of podcasts about the history of Silicon Valley. If you like what we’re talking about, please let us know. If you want to hear something different, something more to your liking, please send us a note to Tough Things First. We’d love to hear from you, get your comments. You can find my book, Tough Things First, on Amazon or on your favorite book retailer. Get my book, Zen of Zinn, which is a philosophical book that’ll help you in your daily life. We’re just so happy to give you this important series of podcasts on Tough Things First, that rated as one of the Silicon Valley’s top 10 podcasts. So `please join us again. Thanks again for being with us today.

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