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Intel: Supercharging Silicon Valley


As part of its anniversary celebration, BusinessWeek is presenting a series of weekly profiles of the greatest innovators of the past 75 years. Some made their mark in science or technology; others in management, finance, marketing, or government. In late September, 2004, BusinessWeek will publish a special commemorative issue on Innovation.

Maybe it was a sign of the times. In 1968, with a nation at war and an entire generation questioning authority, two millionaires who should have been settling into content middle-aged lifestyles set off their own revolution. Robert N. Noyce had already co-invented the integrated circuit, the precursor to microprocessors. And Gordon E. Moore had earned a reputation as a tech visionary. But unhappy with edicts handed down by the parent of Fairchild Semiconductor International Inc. (FCS), which they helped found, they quit and took a young chemical engineer, Andrew S. Grove, with them. The shingle under which they would operate? Intel, short for integrated electronics.

Together, the trio changed the world. After IBM (IBM) chose Intel processors to run its new PCs, they set a pace of technological innovation that is nothing short of breathtaking. Consider: While the first microprocessor Intel Corp. turned out in 1971 included 2,250 transistors, the company's chips now can be packed with 1.5 billion transistors each. That's like carmakers going from 23 miles per gallon to 15 million. The geometric surge in computing power has set off a digital revolution. It's what lets spreadsheets crunch numbers, browsers surf the Net, and PCs burn music tracks. Today, more than 80% of the world's 1 billion-plus PCs run on Intel chips.

But their mastery of the art of making chips is only part of the story. A meshing of three complementary minds helped create a remarkably adaptive company and a culture that has been imitated throughout the technology business. "Right from the start, we said we're not going to do it the way the industry does it," says Grove, 68, in an interview with BusinessWeek. "The willingness and confidence to act on an untried approach -- that is the heart of the innovation of Intel as I see it."

Indeed, the troika decided the modus operandi in tech was as antiquated as the vacuum tubes modern chips were replacing. They centralized manufacturing in giant chip fabrication plants. That helped them churn out chips at lower costs than companies that made custom chips in small factories. They dumped corner office rites due them and let arguments run wild. The process, dubbed "disagree and commit," encouraged engineers to constantly think of new ways of doing things faster, cheaper, and more reliably. And marketing later became a competitive weapon: The Intel Inside campaign made it a household name.

Despite those innovations, the chipmaker had its share of struggles. Massive Japanese investment in the chip industry nearly bankrupted the company in the 1980s. To raise money, Intel agreed in 1982 to sell 12% of the company to IBM for $250 million, a stake it later repurchased. And in 1985, Grove and Moore decided to dump a memory business they had been in for nearly 20 years and focus on microprocessors. The decision laid the foundation for Intel's success today.

Noyce died of a heart attack in 1990. Moore, whose prediction that the number of transistors on a chip would double every 24 months earned him fame as the creator of Moore's Law, left Intel's board in 2001. And Grove is preparing to step down as chairman emeritus next year. "If it is hard to make a success out of something, it is an order of magnitude harder to sustain the success," he says. It's a lesson for companies in Silicon Valley and elsewhere.

By Cliff Edwards


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