Intel Corporation

2200 Mission College Blvd.
P.O. Box 58119
Santa Clara, California 95052-8119
U.S.A.
(408) 765-8080
Fax: (408) 765-1402

Public Company
Incorporated: 1968 as N M Electronics
Employees: 29,500
Sales: $8.87 billion
Stock Exchanges: New York NASDAQ
SICs: 3674 Semiconductors and Related Devices; 3577 Computer Peripheral Equipment, Nee.; 7372 Prepackaged Software; 3571 Electronic Computers

Intel Corporation is the largest semiconductor manufacturer in the world, with major facilities in the United States, Europe, and Asia. Intel has changed the world dramatically since it was founded in 1968; the company invented the microprocessor, the “computer on a chip” that made possible the first handheld calculators and personal computers. By the early 1990s, Intel’s product line included: microcontrollers, memory chips, computer modules, and boards for original equipment manufacturers; network, communications and personal conferencing products for retail sale; and high-performance parallel supercomputers. Intel remained competitive through a combination of clever marketing, well-supported research and development, a vital corporate culture, and legal proficiency. In 1993, the market research firm Dataquest estimated Intel’s chip sales at almost 30 percent higher than those of its closest competitor.

Intel’s founders, Robert Noyce and Gordon Moore, were among the eight founders of Fairchild Semiconductor, established in 1957. While at Fairchild, Noyce and Moore invented the integrated circuit, and, in 1968, they decided to form their own company. They were soon joined by Andrew Grove, a Hungarian refugee who had arrived in America in 1956 and joined Fairchild in 1963. Grove would remain president and CEO of Intel into the 1990s.

To obtain start-up capital, Noyce and Moore approached Arthur Rock, a venture capitalist, with a one-page business plan simply stating their intention of developing large-scale integrated circuits. Rock, who had helped start Fairchild Semiconductor, as well as Teledyne and Scientific Data Systems, had confidence in Noyce and Moore and provided $3 million in capital. The company was incorporated on July 18, 1968 as N M Electronics (the letters standing for Noyce Moore), but quickly changed its name to Intel, formed from the first syllables of “integrated electronics.” Intel gathered another $2 million in capital before going public in 1971.

Noyce and Moore’s scanty business proposal belied a clear plan to produce large-scale integrated (LSI) semiconductor memories. At that time, semiconductor memories were ten times more expensive than standard magnetic core memories. However, costs were falling, and Intel’s founders felt that with the greater speed and efficiency of LSI technology, semiconductors would soon replace magnetic cores. Within a few months of its startup, Intel produced the 3101 Schottky bipolar memory, a high-speed random access memory (RAM). The 3101 proved popular enough to sustain the company until the 1101, a metal oxide semiconductor (MOS) chip, was perfected and introduced in 1969. The following year, Intel introduced the 1103, a 1 Kilobyte (K) dynamic RAM, or DRAM, which was the first chip large enough to store a significant amount of information. With the 1103, Intel finally had a chip that really did begin to replace magnetic cores; DRAMs eventually proved indispensable to the personal computer.

The company’s most dramatic impact on the computer industry involved its 1971 introduction of the 4004, the world’s first microprocessor. Like many of Intel’s innovations, the microprocessor was a byproduct of efforts to develop another technology. When a Japanese calculator manufacturer asked Intel to design cost-effective chips for a series of calculators, Intel engineer Ted Hoff was assigned to the project; during his search for such a design, Hoff conceived a plan for a central processing unit (CPU) on one chip. The 4004, which crammed 2,300 transistors onto a one-eighth- by one-sixth-inch chip, had the power of the old 3,000-cubic-foot ENIAC computer, which depended on 38,000 vacuum tubes.

Although Intel initially focused on the microprocessor as a computer enhancement that would allow users to add more memory to their units, the microprocessor’s great potential— for everything from calculators to cash registers and traffic lights—soon became clear. Their applications were facilitated by Intel’s introduction of the 8008, an 8-bit microprocessor developed along with the 4004 but oriented toward data and character (rather than arithmetic) manipulation. The 8080, introduced in 1974, was the first truly general purpose microprocessor. For $360, Intel sold a whole computer on one chip, while conventional computers sold for thousands of dollars. The response was overwhelming. The 8080 soon became the industry standard and Intel the industry leader in the 8-bit market.

In response to ensuing competition in the manufacture of 8-bit microprocessors, Intel introduced the 8085, a faster chip with more functions. The company was also developing two more advanced projects, the 32-bit 432 and the 16-bit 8086. The 8086 was introduced in 1978 but took two years to achieve wide use, and, during this time, Motorola produced a competing chip (the 68000) that seemed to be selling faster. Intel responded with a massive sales effort to establish its architecture as the standard.

When IBM chose the 8008, the 8086’s 8-bit cousin, for its personal computer in 1980, Intel seemed to have beat out the competition.

During the 1970s, Intel had also developed the erasable programmable read-only memory (EPROM), another revolutionary but unintended research byproduct. Intel physicist Dov Frohman was working on the reliability problems of the silicon gate used in the MOS process when he realized that the disconnected, or “floating,” gates that were causing malfunctions could be used to create a chip that was erasable and reprogrammable. Since conventional ROM chips had to be permanently programmed during manufacture, any change required the manufacture of a whole new chip. With EPROM, however, Intel could offer customers chips that could be erased and repro-grammed with ultraviolet light and electricity. At its introduction in 1971, EPROM was a novelty without much of a market. But the microprocessor, invented at the same time, created a demand for memory; the EPROM offered memory that could be conveniently used to test microprocessors.

Another major development at Intel during this time was that of peripheral controller chips. Streamlined for specific tasks and stripped of unneeded functions, peripheral chips could greatly increase a computer’s abilities without raising software development costs. One of Intel’s most important developments in peripherals was the coprocessor, first introduced in 1980. Coprocessor chips were an extension of the CPU that could handle specific computer-intensive tasks more efficiently than the CPU itself. Once again, innovation kept Intel ahead of its competition.

Intel’s rapid growth, from the 12 employees at its founding in 1968 to 15,000 in 1980, demanded a careful approach to corporate culture. Noyce, Moore, and Grove, who remembered their frustration with Fairchild’s bureaucratic bottlenecks, found that defining a workable management style was important. Informal weekly lunches with employees kept communication lines open while the company was small, but that system had become unwieldy. Thus, the founders installed a carefully outlined program emphasizing openness, decision making on the lowest levels, discipline, and problem solving rather than paper shuffling. Moreover, the company’s top executives eschewed such luxuries as limousines, expense account lunches, and private parking spaces to establish a sense of teamwork with their subordinates.

In an interview with the Harvard Business Review in 1980, Noyce remarked on the company’s hiring policy, stating, “we expect people to work hard. We expect them to be here when they are committed to be here; we measure absolutely everything that we can in terms of performance.” Employee incentives included options on Intel stock, and technological breakthroughs were celebrated with custom-bottled champagne— “Vintage Intel” marked the first $250 million quarter, in 1983—the year sales reached $1 billion for the first time.

During the 1974 recession, Intel was forced to lay off 30 percent of its employees, and morale declined substantially as a result. Thus, in 1981, when economic struggles again surfaced, instead of laying off more employees, Intel accelerated new product development with the “125 Percent Solution,” which asked exempt employees to work two extra hours per day, without pay, for six months. A brief surge in sales the following year didn’t last, and, again, instead of more lay offs, Intel imposed pay cuts of up to ten percent. Such measures weren’t popular among all its work force, but, by June 1983, all cuts had been restored and retroactive raises had been made. Moreover, in December 1982, IBM paid $250 million for a 12 percent share of Intel, giving the company not only a strong capital boost, but also strong ties to the undisputed industry leader. IBM would eventually increased its stake to 20 percent before selling its Intel stock in 1987.

During the early 1980s, Intel began to slip in some of its markets. Fierce competition in DRAMS, static RAMS, and EPROMS left Intel concentrating on microprocessors. While competitors claimed that Intel simply gave away its DRAM market, Moore told Business Week in 1988 that the company deliberately focused on microprocessors as the least cyclical field in which to operate. Customer service, an area Intel had been able to overlook for years as it dominated its markets, became more important as highly-efficient Japanese and other increasingly innovative competitors challenged Intel’s position. In addition, Intel’s manufacturing record, strained in years past by undercapacity, needed fixing. Fab 7, Intel’s seventh wafer-fabrication plant, opened in 1983 only to face two years of troubled operations before reaching full capacity. Between 1984 and 1988, Intel closed eight old plants, and in 1988 it spent some $450 million on new technology to bring its manufacturing capacity into line with its developmental prowess.

Despite these retrenchments, the company continued to excel in the microprocessor market. In 1982, Intel introduced its 80286 microprocessor, the chip that quickly came to dominate the upper-end PC market, when IBM came out with the 286-pow-ered PC/AT. The 286 was followed in 1985 by Intel’s 80386 chip, popularized in 1987 by the Compaq 386, which, despite bugs when it first came out, became one of the most popular chips on the market. While the 286 brought to the personal computer a speed and power that gave larger computers their first real challenge, the 386 offered even greater speed and power together with the ability to run more than one program at a time.

In 1989, Intel introduced the 80486, a chip Business Week heralded as “a veritable mainframe-on-a-chip.” In designing the i486, Intel resisted an industry trend toward RISC (reduced instruction-set computing), a chip design that eliminated rarely used instructions in order to gain speed. Intel argued that what RISC chips gained in speed they lost in flexibility and that, moreover, RISC chips were not compatible with software already on the market, which Intel felt would secure the 486’s position. However, a new chip, the 64-bit i860 announced in early 1989, did make use of RISC technology to offer what Intel claimed would be a “supercomputer on a chip.”

Also in 1989, an important lawsuit that Intel had filed against NEC Corporation five years before was decided. Intel had claimed that NEC violated its copyright on the microcode, or embedded software instructions, of Intel’s 8086 and 8088 chips. Although Intel had licensed NEC to produce the microcode, NEC had subsequently designed a similar chip of its own. At issue was whether microcode could be copyrighted. The court ruled that it could but that NEC had not violated any copyright in the case at hand. The suit made public some issues surrounding Intel’s reputation. Some rivals and consumers, for example, claimed that Intel used its size and power to repress competition through such tactics as filing “meritless” lawsuits and tying microprocessor sales to other chips. Other observers, however, praised Intel’s protection of its intellectual property and, subsequently, its profits. The Federal Trade Commission conducted a two-year investigation of Intel’s practices and did not recommend criminal charges against the company, but two rival companies—Advanced Micro Devices Inc. and Cyrix Corp.—filed antitrust lawsuits against Intel in 1993.

Intel’s annual net income topped $1 billion for the first time in 1992, following a very successful, brand-building, marketing campaign. Intel ads aggressively sought to bolster consumer interest in and demand for computers that featured “Intel Inside.” By late 1993, the company’s brand equity totaled $17.8 billion—more than three times its 1992 sales. Also during this time, Intel began to branch out from chipmaking. In 1992, the company’s Intel Products Group introduced network, communications, and personal conferencing products for retail sale directly to PC users.

In 1993, Intel released its fifth-generation Pentium processor, a trademarked chip capable of executing over 100 million instructions per second and supporting, for example, real-time video communication. The Pentium processor was up to five times more powerful than the 33-megahertz Intel 486 DX microprocessor, but, in an unusual marketing maneuver, the company suggested that “all but the most demanding users” seek out PCs powered by the previous chip.

The company enjoyed a dramatic 50 percent revenue increase in 1993, reaching $8.78 billion from $5.84 billion in 1992. Moreover, Intel’s net income leaped 115 percent to $2.3 billion, repudiating Wall Street’s worries that competition had squeezed profit margins. While Intel faced strong competition both from chip makers like giant Motorola’s PowerPC and former partner IBM, its place at the leading edge of technology was undisputed and expected to continue. As it entered the mid-1990s, Intel looked to address potential challenges in the form of leadership transitions, as founders Moore and Grove neared retirement.

Principal Subsidiaries:

Intel Japan K.K.; Intel Corporation S.A.R.L. (France); Intel Corporation (U.K.) Ltd.; Intel GmbH (Germany); Intel Semiconductor, Ltd. (Hong Kong); Intel Semiconductor of Canada, Ltd.

Further Reading:

Clark, Tim, “Inside Intel’s Marketing Machine,” Business Marketing, October 1992, pp. 14-19.

Defining Intel: 25 Years/25 Events, Santa Clara: Intel Corporation, 1993.

A Revolution in Progress... A History of Intel to Date, Santa Clara: Intel Corporation, 1984.

Ristelhueber, Robert, “Intel: The Company People Love to Hate,” Electronic Business Buyer, September 1993, pp. 58-67.

—updated by April Dougal Gasbarre

Intel Corporation

The Intel Corporation of Santa Clara, California, was founded in 1968 by Robert Noyce (1927–1990), co-inventor of the integrated circuit , and his colleague Gordon Moore (1929–), the originator of "Moore's law." The name Intel was a shortened form of Integrated Electronics. Noyce and Moore were joined by Andy Grove and the three, all formerly from Fairchild Semiconductor, led the firm on its initial mission to produce the world's first semiconductor-based memory chips. The company went on to commercialize the microprocessor, the product that Intel is best known for today.

In 1969 a Japanese manufacturer, Busicom, commissioned Intel engineers to design a set of a dozen custom chips for its new family of scientific calculators. At the time, all logic chips were custom-designed for each customer's product. Logic chips perform calculations and execute programs, unlike memory chips, which store instructions and data.

Intel engineer Marcian "Ted" Hoff improved on Busicom's idea. Instead of designing twelve custom chips, he recommended a set of only four chips for logic and memory, which featured a central processing unit. Although Busicom was satisfied with this alternative approach, Hoff realized its full potential—the design team had created the first general-purpose microprocessor chip, though the term "microprocessor" would not appear for many years.

But, there was a problem. Intel did not own the rights to the new technology—Busicom did. Hoff urged company officials to buy the design from its former client. But others in the company claimed that Intel's future lay in fast and inexpensive memory chips, not in logic chips. Eventually, Hoff's side won by arguing that the success of the new logic chips would enhance the market for memory chips.

Busicom, strapped for cash, agreed to sell the rights for the four-chip set for $60,000. Intel used that agreement as the basis for its microprocessor business, eventually becoming a powerful global corporation. Sales in 2000 reached $33.7 billion.

In 1971, armed with its new technology, Intel engineers introduced the model 4004 microprocessor, which sold for $200 and could perform 60,000 operations per second. It was the size of a thumbnail, featured 2,300 transistors on a sliver of silicon , and could deliver the same amount of computing power as the first electronic computer, ENIAC. In 1972 the model 8008 microprocessor featured 3,500 transistors. Although that was powerful at the time, it was primitive compared to the Pentium IV processor offered in 2000, which had 42 million transistors.

A series of chips followed, each more powerful than the previous one. By 1981 Intel's 16-bit 8086 and 8-bit 8088 processors took the design world by storm, winning an unprecedented 2,500 design awards in a single year. That year, IBM selected the Intel 8088 microprocessor to run its first desktop personal computer, the IBM-PC.

The significance of the IBM alliance was not immediately evident. An Intel sales engineer who worked on the IBM project said, "At the time, a great account was one that generated 10,000 units a year. Nobody comprehended the scale of the PC business would grow to tens of millions of units every year." The success of the IBM-PC helped change the company's direction. In 1986 Intel left the memory-chip market to focus on microprocessors and, under the leadership of Andy Grove who succeeded Moore as CEO in 1987, the company became the world's dominant supplier of microprocessors.

Moore's law, which predicts ever-more complex circuits, drives Intel's designers. By constantly reducing the size of transistors within chips, Intel has reduced their cost. Smaller chips are cheaper because more of them can be made from a single expensive silicon wafer. There are additional benefits. Smaller chips work faster, system reliability is increased, and power requirements are reduced.

To make these tiny chips successfully, Intel's manufacturing technology has had to improve constantly. The earliest chips were made by workers wearing smocks. In 2001 microprocessors are created in a sterile environment, called cleanrooms, which are thousands of times cleaner than those of twenty-five years ago. Robots move the silicon wafers from process to process. Operators working in these cleanrooms wear non-linting, anti-static fabric, called bunny suits, with face masks, safety glasses, gloves, shoe coverings, and even special breathing equipment.

As Intel grew to become the world's largest chipmaker, its dominant market share did not go unnoticed by competitors and the federal government. In 1998 the Federal Trade Commission announced an investigation into allegations of anti-competitive business practices. The company cooperated fully during the nine-month inquiry. The case was settled before it went to court.

Intel continues to explore possible barriers to microprocessor design. In 2000 company engineers demonstrated a 0.13-micron process technology using an ultra tiny transistor gate and the thinnest of thin films. In time, this advance will allow the company to manufacture chips with transistors that are approximately 1/1000th the width of a human hair.

Time magazine named Intel CEO Andy Grove, a Hungarian immigrant born Adras Gróf, as its 1997 Man of the Year as "the person most responsible for the amazing growth in the power and innovative potential of microchips."

see also Apple Computer, Inc.; Bell Labs; Integrated Circuits; Microchip; Microcomputers; Microsoft Corporation.

Ann McIver McHoes

Bibliography

Jackson, Tim. Inside Intel, Andy Grove and the Rise of the World's Most Powerful Chip Company. New York: Dutton, 1997.

Ramo, Joshua. "Man of the Year: Andrew W. Grove—A Survivor's Tale." Time, December 29, 1997: 54.

Yu, Albert. Creating the Digital Future. New York: Free Press, 1998.

Internet Resources

Intel Homepage. <http://www.intel.com>

Intel A US corporation that is a leading manufacturer of integrated circuits (chips), particularly noted for its important range of microprocessor chips. The current range is shown in the table. The Pentium processor, Intel's most highly integrated semiconductor device, together with the previous generations – the Intel486 and Intel386 processors – run most current operating systems and support leading graphical user interfaces. In the Intel486 and Intel386 range, the standard DX suffix is replaced by SX to denote a lower-performance CPU without a built-in mathematics coprocessor, while the SL suffix is for a variant with low power consumption for mobile computers. The DX2 and DX4 ranges have doubled and tripled internal clock speeds respectively. The clock rates indicated (June 1995) are undergoing frequent upward modification.

All Intel486 and Intel386 processors are informally known by the numbers alone, and all used to have an 80 prefix. For instance, 386, 80386, Intel386 (Trademark), and i386 (Trademark) are synonymous. Preceding the 80386 range were the 80286, the 8086, and the 8088. Processors from the 8086 to the i486SX have optional math coprocessors distinguished by having a 7 in their number instead of a 6; hence the i387, i487.

Intel was the first manufacturer of microprocessors with the 4004 and 8008 chip sets. The original IBM PC and its successors and clones all used Intel processors or copies of them. In addition to its processor chips, Intel also sells system products, including both board-level products and the Paragon range of supercomputers. It is ranked number 41 in terms of revenue in the list of the world's top IT suppliers (1993 figures).

Intel A major manufacturer of computer chips.

intel The term used to describe any useful information found when SURFING the WORLD WIDE WEB.