Bob Noyce, a co-founder of Fairchild Semiconductor, recognized the significance of the military and space applications to the company’s early success. However, Noyce also envisioned a much larger civilian market for integrated circuits. To tap into this market, Noyce declined most military research contracts and focused on developing mass-market products from chips used in rockets or satellites. The first integrated circuit produced for commercial markets was designed for a NASA satellite and used in a Zenith hearing aid. Despite the presence of defense contractors, the Pentagon underestimated the speed at which startups like Fairchild would transform electronics due to their agility compared to big bureaucracies.
Gordon Moore, the director of Fairchild R&D, not only devised new technology but opened new civilian markets as well with his prediction of exponential growth in computing power, known as “Moore’s Law.” Moore realized that the integrated circuit would revolutionize society beyond just rockets and radars. The military demand for features in chips that were also useful for business applications led to a surge in civilian chip sales. Robert McNamara’s defense reforms resulted in Fairchild offering off-the-shelf integrated circuits at significantly lower prices, thereby expanding the market for chips.
By 1968, the computer industry was buying as many chips as the military, and Fairchild’s products served 80% of this market due to Bob Noyce’s price cuts. The Apollo 11 mission used a guidance computer powered by Fairchild’s integrated circuits. However, Silicon Valley engineers had become less reliant on defense contracts as the booming chip market became their focus. This financial success fueled the progress of Moore’s Law while employees sought ways to make money from it. Even Noyce himself considered leaving the company at some point.
In conclusion, Fairchild Semiconductor’s journey from military applications to civilian applications was driven by a combination of visionary leaders, market demand, and favorable defense reforms. This shift resulted in the exponential growth of the computer industry and the rise of Silicon Valley as a technology hub.
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