Before switching over to the events at Intel, the aspect of military funding is to be dealt with, since it has played an important role in the early days of Silicon Valley.

During World War II, after the Japanese attack at Pearl Harbor in 1942, a great deal of the U.S. military forces and of the military production was moved to California. Within a few years, California - formerly an agricultural state - became a booming industrial state and the military center of the USA.⁾

After the war, in the time of the Cold War and the arms race, the Korean conflict, the "missile gap" and the space program, the Pentagon kept ordering high-technology products from the armament factories in California. Many companies established R&D departments and production facilities in Santa Clara County near Stanford University, which provided them with bright engineers and scientists, and were largely supported by the Pentagon's demand for electronic high-tech products.

Examples for such firms are FMC, GTE, Varian Associates, Westinghouse, and finally Lockheed, which opened its R&D department in the Stanford Research Park in 1956, and started Lockheed Missiles and Space Company (LMSC) in Sunnyvale. Lockheed's move to Northern California was crucial for the developments in Santa Clara County; today the company is Silicon Valley's largest employer with more than 24,000 people.⁾

Military funding for high-tech products was responsible for the early growth of Silicon Valley in the 1950s and 1960s. The U.S. Department of Defense was the biggest buyer of these products, e.g. its purchases represented about 70 percent of the total production of ICs in 1965.⁾

While this share in chip demands has dropped to 8 percent today, the Pentagon remains the biggest supporter of new technologies and accounts for most of the purchases of the latest developments.

Intel Corp.

After the transistor and the integrated circuit, the invention of the microprocessor in the early 1970s represents the next step towards the modern way of computing, providing the basis for the subsequent personal computer revolution.

It was at Intel where the first microprocessor was designed - representing the key to modern personal computers. With its logic and memory chips, the company provides the basic components for microcomputers. Intel is regarded as Silicon Valley's flagship and its most successful semiconductor company, owing its worldwide leading role to a perpetually high spending on research and development (R&D).

Foundation in 1968

It all started in 1968, when Bob Noyce resigned as head of Fairchild Semiconductor taking along Gordon Moore and Andy Grove, to embark on a new venture. They had decided to leave the company, because they wanted "to regain the satisfaction of research and development in a small, growing company,"⁾ since Fairchild had become big with lots of bureaucracy work to be done. Gordon Moore had belonged to the famous Shockley Eight and was in charge of the R&D team at Fairchild. Andy Grove, a young Hungarian émigré, who had earned a doctorate in chemical engineering at U.C. Berkeley, had joined Fairchild in the early 1960s.

Intel (short for Integrated Electronics), a typical Fairchild spin-off, was financially backed by venture capital from Arthur Rock, who had been in contact with Noyce since 1957. The company was founded upon the idea of integrating many transistors on a chip of silicon, after Noyce had developed a new photochemical process. The three engineers initially focused on building the first semiconductor chips used for computer memory, which should replace the dominant memory storage technology at the time, called "magnetic core". Intel's task was to drive down the cost per bit by increasing the capacity of memory chips dramatically.