It’s a story that’s been repeating for decades now. Company creates a new market with new useful tech, run by engineers passionate about the tech, experiences exceptional growth, becomes large corporation, much larger than any competition. Uses relative wealth to keep competition from catching up. Eventually saturates market to the point where market growth doesn’t finance the growing R&D expenses (which were tuned assuming previous rate of growth would just continue). At some point, profit increases start coming from business/marketing side of things more than engineering side, resulting in MBAs and marketers getting more promotions and eventually control of the company. Then tech stagnates because they don’t think investing in R&D is as worthwhile. Also aren’t able to prioritize what R&D is still happening effectively because they don’t really understand the tech as well as engineers. But they tread water and even increase profits because they dominate the market.
Until competition that is engineering focused (often also made up of former engineers from the dominant company) catches up or creates a new market that makes theirs start going obsolete. Suddenly trouble, then they either pivot to quietly supporting businesses that continue using their products, or gets in trouble with the law because of increasingly anticompetitive practices.
Xerox could have owned the PC market but thought they could continue being a household name sticking with copiers. IBM outsourced everything and people eventually realized they didn’t need IBM. Foxconn had two groups of engineers leave and create Intel and AMD when they were dissatisfied with how management was running the company. And now Intel coasted while AMD floundered and was completely unprepared for TSMC and AMD to make large technical leaps and surpass them.
Foxconn had two groups of engineers leave and create Intel and AMD when they were dissatisfied with how management was running the company.
You’re thinking of Fairchild, not Foxconn.
William Shockley led the team that invented the transistor while at Bell Labs, and then went on to move back to his home state of California to found his own company developing silicon transistors, ultimately resulting in the geographical area becoming known as Silicon Valley. Although a brilliant scientist and engineer, he was an abrasive manager, so 8 of his key researchers left the company to form Fairchild Semiconductor, a division of a camera and imaging company with close ties to military contracting.
The researchers at Fairchild developed the silicon integrated circuit (Texas Instruments developed the first integrated circuit with germanium, but it turns out that semiconductor material wasn’t good for scaling and hit a dead end early on), and grew the company into a powerhouse. Infighting between engineers and management (especially east coast based management dictating what the west coast lab was doing) and Fairchild’s policy of not sharing equity with employees, led Gordon Moore and Robert Noyce (who had been 2 of the 8 who left Shockley for Fairchild) to go and found Intel, poaching a talented young engineer named Andy Grove.
Intel originally focused on memory, but Grove recognized that the future value would be in processors, so they bet the company on that transition to logic chips, just in time for the computer memory market to get commoditized and for Japanese competition to crush the profit margins in that sector. By the 90’s, Intel became known as the dominant company in CPUs. Intel survived more than one generation on top because they knew when to pivot.
It’s a story that’s been repeating for decades now. Company creates a new market with new useful tech, run by engineers passionate about the tech, experiences exceptional growth, becomes large corporation, much larger than any competition. Uses relative wealth to keep competition from catching up. Eventually saturates market to the point where market growth doesn’t finance the growing R&D expenses (which were tuned assuming previous rate of growth would just continue). At some point, profit increases start coming from business/marketing side of things more than engineering side, resulting in MBAs and marketers getting more promotions and eventually control of the company. Then tech stagnates because they don’t think investing in R&D is as worthwhile. Also aren’t able to prioritize what R&D is still happening effectively because they don’t really understand the tech as well as engineers. But they tread water and even increase profits because they dominate the market.
Until competition that is engineering focused (often also made up of former engineers from the dominant company) catches up or creates a new market that makes theirs start going obsolete. Suddenly trouble, then they either pivot to quietly supporting businesses that continue using their products, or gets in trouble with the law because of increasingly anticompetitive practices.
Xerox could have owned the PC market but thought they could continue being a household name sticking with copiers. IBM outsourced everything and people eventually realized they didn’t need IBM. Foxconn had two groups of engineers leave and create Intel and AMD when they were dissatisfied with how management was running the company. And now Intel coasted while AMD floundered and was completely unprepared for TSMC and AMD to make large technical leaps and surpass them.
You’re thinking of Fairchild, not Foxconn.
William Shockley led the team that invented the transistor while at Bell Labs, and then went on to move back to his home state of California to found his own company developing silicon transistors, ultimately resulting in the geographical area becoming known as Silicon Valley. Although a brilliant scientist and engineer, he was an abrasive manager, so 8 of his key researchers left the company to form Fairchild Semiconductor, a division of a camera and imaging company with close ties to military contracting.
The researchers at Fairchild developed the silicon integrated circuit (Texas Instruments developed the first integrated circuit with germanium, but it turns out that semiconductor material wasn’t good for scaling and hit a dead end early on), and grew the company into a powerhouse. Infighting between engineers and management (especially east coast based management dictating what the west coast lab was doing) and Fairchild’s policy of not sharing equity with employees, led Gordon Moore and Robert Noyce (who had been 2 of the 8 who left Shockley for Fairchild) to go and found Intel, poaching a talented young engineer named Andy Grove.
Intel originally focused on memory, but Grove recognized that the future value would be in processors, so they bet the company on that transition to logic chips, just in time for the computer memory market to get commoditized and for Japanese competition to crush the profit margins in that sector. By the 90’s, Intel became known as the dominant company in CPUs. Intel survived more than one generation on top because they knew when to pivot.
Ah right, thanks for the correction!