"The Rise of Silicon Valley," American Heritage of Invention and Technology, 6 (Spring/Summer 1990). more

I I I Ir THE RISE OF SILICOI{ VALLEY by lames C. Williams alifornia's Santa Clara Valley is an alluvial plain at the southern end of San Francisco Bay. Until the 1960s the valley was home to prune, apricot, and cherry orchards and a world- class canning and packing industry. Today the world knows it as Silicon Valley. Though that name burst into world renown in the past thirty years, the origins of the electronics industry there reach back a whole century. Silicon Valley did not spring out of nothing; its beginnings were nurtured for decades largely by one man, Frederick Terman, an electrical-engineering prof essor at Stanford University, in How a twentyfive-mile stretch of California farmland evolved the course of a century-to become the heart of America's electronics long-distance transmission systems. By l90l they had succeeded, and in the process company engineers and university engineering professors had created a new co- -in industry resource of industrial ener- gy-coal. But four decades of gold mining gave Californians a rich knowledge of hy- draulic engineering. By the 1890s entrepreneurs and en- the heart of the valley. He spent his life helping lay the groundwork for what became Silicon Valley, making it possible for the area to become the capital of American high tech. In the late nineteenth cen- gineers were talking of harnessing waterpower to gener- ate electricity for the state's coastal cities. Regional electric power companies began building hydroelectric plants in the Sier- tury, when electrical industries began everywhere, California seemed almost a colony of the United States. It ra Nevada, using the Pelton waterwheel, developed in San Francisco for the mining industry, and generators produced by Eastern manufactur- lagged behind the East in developing manufacturing industries partly because it had to import the essential 18 II{VENTION & ers. To bring the electricity to San Francisco and other cities, the power companies had to develop high-tension operative style of research and development. Engineers and professors exchanged designs and tests of equipment, and they communicated easily. As one powerindustry representative put it, the professors tore "the mask of ambiguity from electrical theory." They made it possible to avoid "an interminable labyrinth of mathematics [or] catacombs of theory . . . by at once opening up a panorama of results," In 1898, for instance, the Stanford professor Frederic A. C. Perrine, his students, and several power-company engineers together successfully field-tested a new highpotential oil switch that made possible the construction of forty-thousand-volt lines across the state. Perrine took a two-year leave from Stanford to consult with the new Standard Electric Company of California, for which he coordinated tests of aluminum wire, helping introduce it for use in Cal- The Sanh Glara became "Silicon Vallen" seen in 1984. Stanford University had been founded in 1885 by the Central Pacific Railroad magnate Leland Stanford, as a RESEARCHERS ifornia. TECHNOLOGY. SPRING/SIIMMER I99O TOPI CALIFORNIA HISTORY CENTER FOUNDATION, CUP€RTINO; SOTTOMI HANS HATBERSTADT/PHOTO Wdeopen farmland fills the headth of the Santa Clara Ualley eady in the century. memorial to a son who died young; it first accepted students in 1891. Within a decade its electrical-engineering program had become an important element of the California electric-power in- dustry. Its graduates found ready work in the expanding power companies, and its professors worked closely with the industry. In 1905 Harris Ryan, a pioneer in transmission research at Cor- nell, came to Stanford to man was a bright and talenthead the young electrical- ed boy of ten. His father, the engineering department, and psychologist l_ewis M. Ter_ he furthered the idea of uni- man,had justjoinedtheStanversity-industry cooperative ford faculty, bringing his fam_ research and development, ily from Indiana. The elder installing the first high-volt- Terman had a reputation as age laboratory in the West an expert in human intelli_ in l9l3 and the first two-mil- gence, and he soon devel_ lion-volt university laborato- oped the Stanford-Binet intel_ ry in America in 1926. ligence quotient, the basis Meanwhile, shipping inter- for standard Ie testing. Fred_ ests at the growing port of erick Terman hunted rabbits San Francisco became inter- in the hills of the Stanford ested in the wireless commu- campus, fished and swam in nication system developed local lakes, and caught the in Europe by Marconi. Wire- wireless craze. By age six_ less firms had begun to serve teen he had built a transmit_ the coastal region soon after ter with his friend Herbert 1900, and in the words of the' Hoover, Jr. historian Arthur Norberg, Terman graduated from '\,vireless was ripe for innova- Stanford in tgZO with a bach_ tion and excellent for exploi- elor's degree in chemical en_ tation with minimal capital. gineering. He worked briefThe only obstacle for ama- ly at the Federal Telegraph teur and entrepreneur alike lab and then returned to was how to circumvent the Stanford to enroll in Harris Marconi patents." Ryan's electrical_engineering In 1909 Cyril F. Elwell, a program. After graduating graduate of Stanford's elec- from that, in 1g22, he eameJ trical-engineering program, a doctorate at the Massachusolved that problem by pur- setts Institute ofTechnology. chasing rights to the wire- He returned home to ready lesspatentsof theDanishsci- himself for a new career in entist Valdemar Poulsen. He the East but was struck demonstrated the system in down by tuberculosis. Palo Alto, near Stanford, and In 1925 Ryan opened a won financial backing from small radio-communications Stanford's president, David laboratory in the attic of Stan_ Starr Jordan, and several pro- ford's electrical-engineering fessors to organize a com- building and offered his con_ pany. Elwell set up his new valescent former student a firm in San Francisco, and half-time teaching job there. by l9ll it had a manufactur- Terman had already made ing branch called the Feder- up his mind to work in radio al Telegraph Company with and accepted at once. ,.1 took a laboratory in Palo Alto. [over] the course in the the_ Now young university gradu- ory of high voltage lines," he ates had a backyard opportu- recalled years later, ,,and just nity-in what would later modified it into a generalized become Silicon Valley-in a theory of long lines [so it] in_ new branch of the electrical cluded telephone lines, radio frequencytransmission lines, 1910, when his family antennas, artificial lines, fil_ moved into this fruitful envi- ters, and so on." ronment, Frederick E. Ter- Terman felt that Stanford field. ln SPRINC,/SUMMER 1990. II{\iENTION & TECHNOLOGY 19 Staftd Univercity as it looked in about 19fl1. palo Atto lies in the distance. was falling behind other schools in electrical engineer- from these companies come in to give talks to the students." This became especial- ing and needed better research with more backing to ly important after Federal Telegraph relocated to the East in 1932; the company had been the prime local employer for Stanford communications graduates. Federal's departure left "kind of a semidesert out here, and one was catch up. ln lg27 he wrote an article forSclence suggesting that better engineering research was done in corporations than at universities. He tween Palo Alto and Los Angeles, to develop an aircraft navigation and detection system. Russell Varian had been William Hansen's roommate at Stanford, and he suggest- ed that the rhumbatron might be useful for the proj- gave a copy tb Ryan along with a letter asking for support. "With its past reputation as a center of high voltage research, and interested in these [small] companies and helping where they could." Among the remaining firms were Heintz and Kaufmann and Eitel-McCullough in San Francisco and the new Litton En- with the es- tablishment of the Ryan Lab- oratory" he wrote,'Stanford is in an excellent strategic position to initiate a pioneer movement that will make this the national research cen- gineering Laboratories in Redwood City. Both Ralph ter of electrical engineering." Ryan was swayed. Terman got additional money, recruit- Heintz and Charles Litton were Stanford graduates. Terman also sought links with other university depart- ed bright students, and began ambitious research projects in radio-wave propagation and vacuum-tube design. The radio lab soon became a hub for, as Terman put it years later, "electronic nuts, those young men who show as much interest in vac- ect. A collaboration began that brought the rhumbatron to the brothers and the brothers to Stanford. The university agreed to take them on as unpaid research associates and give them laboratory space and a hundred dollars a year in materials in return for a half-interest in any resulting patents. Within a few months they had developed a new electron tube called the klystron, which seemed to be the key to the navigation-and-detection problem. o o o z I o I I E o f, ments. In 1929 he wrote in his annual report on the labo- They quickly sought and received financial support from the Sperry Gyroscope Company in New York, a boost that launched increased microwave research at Stanford. Terman was named head of Stanford's electrical-engineering department in 1937. He soon was trying to bring together two of his former students, William Hewlett and David Packard, who had met on campus and then gone their separate ways after graduating in 1934. Packard had taken a job in New York with General Electric; * Hewlett had continued with 3 Terman for a while and then i ratory, "lt is anticipated that from time to time in the future cooperation from the chemistry, physics, and math- uum tubes, transistors, and computers as in girls." He supervised thirty-three advanced degrees in his first six years, half of the department's total. After Ryan retired, in 1932, more and more electrical-engineering students gravitated to Terman. He was "studious, softspoken, and forever self-effac- ematics departments will be very desirable and perhaps necessary." Such connections were made largely as the result of the work of a Stanford graduate named William W. Hansen, who ioined the physics department in 1934. ing," writes Michael Malone, the author of a history of Sili- I Y I Yansen f wante<i to use rne xyan r-ab- electrons to probe the atom- T:::?f 'JJil; con Valley, "first a brilliant teacher and later a profound visionary." One of the things that attracted students to Terman was his interest in the local electronics industry. He recalled, "l would take the boys out to see . . . what the world off campus was like, and sometimes have people ic nucleus but found that too expensive, so he developed his own cavity resona- gone to MIT for further $ study. In 1936 Terman j f; tor to accelerate electrons and called it the rhumbatron. At the same time, a young pilot named Sigurd Varian and his brother Russell opened a small laboratory near their home in Halcyon, a town about halfway beSPRING/SI.JMMER I99O helped Hewlett get a job and E also brought Pictaia back to Palo Alto with a graduate fellowship. In 1937 Terman encouraged Hewlett and Packard to form a business to commer- Enn's higf'voltage laboratory which opened in 1913. der Terman's guidance. In a tiny shop in Packard's garage, Hewlett perfected the device, a distortion analyzer cialize an audio-oscillator Hewlett had developed un- 20 IIVVENTION & TECHNOLOGY. B,,,0' Stanford was already a major resource for the ing business had nine employees. ltwould expand rapidly during the war years. In addition to helping Hew- state's electricpower industry. e lett and Packard, Terman directed several students to William Hansen's klystron project. On the eve of World War II they were successful in making the klystron apractical microwave radio device with many applications. The Sperry company became an ing tunable radar receivers. He lived across the street from the treasurer of Harvard University, and because his project brought in more than half the money Harvard was receiving for war re- search, the two became z l o important war contractor, and Terman's connection to Hansen's work helped him o z t land ten thousand dollars friendly. On Sundays Terman chatted with his Harvard acquaintance as he worked in his garden. "l asked him what he thought would happen after the war. It seemed to me there'd be a new wave of government support. The scientific war effort had Haris $nn, elestricalengineering pioneer at Stanfurd. from Sperry for klystron re- been so very successful." Tersearch at Stanford. Mean- man's friend agreed. while, Sperry moved Hansen' and his physics team to its s Terman later A long Island research center said. "The war A for the duration. ln Decemhaci macie it obviA ber 1940, before leaving, Hansen taught a special class on L lou, to me that sci- the klystron for Terman's graduate students, preparing ence and technology are more important to national defense than masses of men. The war also showed how es- them for the war work they would be doing with Sperry's support. As the historians Stuart leslie and Bruce Hevly write, "Sperry's support of sential the electron was to our type of civilization." After the war "there would be, for the first time, real money available to support engineer- klystron research back at Stanford trained a new generation of microwave engineers. . . . In just a fewyears Stanford's electrical engineer- ing research and graduate students. This new ballgame would be called sponsored research." When Terman returned to ing program had gone from providing a couple of graduate students for the physics department microwave studies to a full-fledged research Stanford in 1946 and as- sumed leadership as dean of engineering, he moved forward with the view that the university could achieve a position of national importance in electronics. lt already had a strong reputation in highvoltage power transmission, but in Terman's words, the commitment of its own." Terman, too, was swept across the continent by the war. ln 1942 Vannevar Bush, chairman of the federal Of- fice of Scientific Research and Development, that generated signals of different inaudible frequencies and was useful for tasks like testing loudspeakers. He and asked when they had orders for their devices: "lf the car was in the garage there was no backlog. But if the car was parked in the driveway, business was good." By 1940 the him to move to Boston to take over the top-secret Ra- dio Research Laboratory at Harvard. There he managed more than eight hundred peo- were in electronics and things related to electronics." So he launched a simple "newer opportunities, the opportunities of the future, Packard also produced an electronic frequency meter, and Terman was able to tell ple designing jamming devices for radar and develop- two young engineers' grow- plan to attract the brightest faculty to take on the most desirable research proiects & TECHNOLOGY 2I SPRING/SUMMER I99O . IIIVENTION and draw the best graduate students. And that faculty would develop close connec- lions with private industry. He called his approach steeple building, for the way a :hurch traditionally repre;ented the spiritual center of lhe commercial community erman helped former ilH':X"::: :'-;J$":::'il students like San Carlos, not far from Palo HeWlgtt and Alto, joining Hewlett-Pack- h. r r ard, Litton Engin""ring,l-;d PaCkafd Staft _ , but they did follow Terman's lead in building ties outside the universitSr. After the war Russell and Sigurd Varian uound it. Since Stanford already had an edge in micro'vave technology, with its <lystron work, he looked to hat field as the foundation br the future. 'After the first month or :wo I was back at Stanford," :ecalled Terman, "a couple rf boys showed up from the Vavy. The Office of Naval Re- ;earch had just been estabished, and they headed for ny lab first." The ONR had Jovernment money to grant or university research. Ternan talked over some ideas other homegrown electronlOCal COmDanieS. - - --r ics firms. ERL researchers worked informally and sometimes formally with these Bclof,,, Slgud lrcar leftl and and other companies, con- tussell lfrcnt leftl Uarian verting their discoveries into and lilillhm Hensen lrear riglrtl practical hardware, and the display the first kltrstrun. number of innovations com- ing from ERL's fundamental ! research gave Stanford a l position of increasing impor- $ tance to military and com- ! mercial interests. The klys- $ tron became a basic ingredi- f; ent in radar, in atom smash- 3 ing, and in the Stanford Lin- ! ear Accelerator, and the ERL also did a great deal of work I uith the men and landed a 1225,000 annual contract for in microwave tubes and in nuclear magnetic resonance, developing the F-6 flu:aneter rasic research. "We started lff with three projects. The rne in chemistry fizzled. The rhysics project led to the No- for precise magnetic-field measurements. When the Ko- rcl Prize for Dr. Felix Bloch, vho discovered nuclear mag- retic resonance. The project n electrical engineering was r seed that blossomed into rean War began, in 1950, the Office of Naval Research went straight to Terman with an applied-research proposal, and Terman got universi- ty support for it within two weeks. oday's nationally recogrized research program in )ngineering." It also led to he founding of Stanford's ilectronics Research Laboraories (ERL) and the developnent of the Stanford Linear The resulting $450,000a-year applied-electronics research contract consolidated Stanford's position in electronics. Terman became the director of a new Applied Electronics Laboratory (AEL), housed in a new facility built with Navy money and a gift from Hewlett-Packgram, he accepted only proj- \ccelerator Center, which rlso drew on government noney. he ERL carried ard. ln directing the proout fundamental try. And now what Terman described as a "community of interest between the University and local industry" became essential; a stated purpose of the AEL was to prodrrna nrnlnhrna alaa+r^-i^ shrdies in electron- ics. The researchrrs there bristled at the idea hat it might become a devel- rpment laboratory for miliArv .tr crtmmcrciel wcnhrres ects that would strengthen Stanford's basic electronics research and enhance the university's reputation. He also redoubled his efforts to hrrild cfrnnrrar tiec with indrrc- devices and then work with the firms that would manufacture them. The "community of interest" was further encouraged by Stanford's financial probl^*.^''l'L^..-:-,^-^:!-t- Far left, Frcderick Teman, who laid the loundation fior llilicon tlalley. l{ear lGft, lhuid Packard. stration, working after l95l with a faculty committee, concocted several plans for generating income from the land, including agricultural development, a regional shop- ping center, and housing proiects. A forty-acre comer was earmarked for light industry. Most of the planners' energy went into the shopping center and housing. Varian Associates looked at the industrial land and took the first initiative toward developing that. Varian Associates special- ized in developing products klystron and its -like the from research conspin-offsducted at Stanford, and the firm regularly hired university faculty, research associates, and students. By 1949 it had outgrown its San Carlos facilities. Russell Varian and Edward Ginzton, whom Terman had steered into the klystron project as a student before the war and who now was a Varian director as well as a Stanford professor, decided to build a branch research-and-development fa- cility near the university. Varian asked Stanford to lease land to the firm, an arrangement that seemed emi- nently sensible. The firm's research was based on university patents, and Stanford faculty numbered among its important shareholders, directors, and consultants. This move got Terman, also a Varian director, involved in shaping the university's master land-use plan. He strongly favored leasing only to companies with activities connected to the university's programs, but the plan seemed to include other industries, even insurance companies. The second lease, to Eastrnan Kodak for a photo- ment couldn't generate adequate operating or capitalimprovement funds, and its founding grant prevented it from selling off any of its eighty-one hundred acres of land. The university admini- processing plant, stirred Ter- moved in. By 1960 more man to action. By 1953 he than forty firms occupied was on the university's Ad- the 450-acre campus-style visory Committee on Land park, and Terman was being and Development and busy asked to help mastermind converting Alf Brandin, the similar feats in Texas and university's business man- New Jersey. ager, to his way of thinking. The Santa Clara Valley, Terman used several ar- once called by local agriculguments for leasing only to tural boosters the Valley of high-tech businesses. He re- Hearts' Delight, had become stated his steeples-of-excel- a growing center for the eleclence concept. He pointed tronics and aerospace indusout the large gifts Stanford tries. Defense contracts had received from Hewlett- helped drive the boom; the Packard, Varian Associates, NASA-Ames Research Cenand Russell Varian, which ter, in Sunnyvale, which together equaled the univer- opened in 1940, also sity's lease income. He also brought contracts and stimupointed out the important lated industry, and the San matching tuition local firms Jose Chamber of Commerce paid for their employees in a mounted an intense national special honors program for advertising campaign to atoutside engineers. "Brandin tract more companies. Giant was quick on the trigger," he national firms of the tube later recalled. "Very doon era of electronics as well as thereafter, if you weren't a young new entrepreneurs high-technology company, set up shop from Palo Alto you had a hell of a time coax- south to San Jose. The ing him to give you a lease." spreading high-technology community attracted nationn 1955 Terman became al attention. 'Any elebtrical the university provost engineer with ambition ran and turned to building his r6sum6 around the Valup Stanford's chemistry ley circuit in hope of a redepartment as the founda- sponse," notes Michael Mation for a community of inter- lone. est in biotechnology. Soon In 1956 William B. Shockhe could see, his work bear- ley, forty-six, returned to his ing fruit. Stanford was fast beboyhood home in Palo Alto. coming one of the nation's As coinventor of the transisforemost research universi- tor while at Bell Laboratories ties. By 1967 it was receiving in 1947, he had just won a Notwelve million dollars a year bel Prize together with John for corporate- or govern- Bardeen and Walter Brattain. ment-sponsored research. Now Shockley would estabCorporate outright gifts had lish the first semiconductor reached a hallmillion dol- company in the valley. The lars in 1956 and more than brightest young engineers in two million dollars by 1965. the count4r responded to his Meanwhile Hewlett-Packard call, and he hired the best. became the flagship of a Within two years his young new Stanford Industrial Park prot6g6s had brewed a rebelin 1956, and soon both Am- lion. Disagreeing with his repex and lockheed's new search directions and fed up Space and Missile Division with his sometirnes contempSPRINC/SI.JMMER 1990. II{VENTION & TECHNOLOGY 23 support to set up on their own. With almost no ven_ ture-capital resources avail_ able on the West Coast, they ended up getting in touch, through a New york invest_ ment firm, with the Fairchild Camera and Instrument Corporation, of New Jersey. Fairchild seemed interested but was concerned that none of tuous treatment of them, sev_ en of them began looking for Bre6o the valley had become a growing center for electronics and aerospace firms. the researchers possessed clear management skills. So the seven recrqited the only holdout at Shockley who had the needed leadership, the twenty-nine-year-old Robert of computer experts and en_ thusiasts. Its first meeting, in March 1925, drew thirtytwo people to a house in Menlo Park, near palo Alto. Within weeks the meetings were drawing several hun_ dred and were being held at a Stanford auditorium. Ac_ cording to the computer his_ torians Paul Freiberger and Michael Swaine, the Home_ brew Computer Club pro_ vided the "intellectual nutri_ ups and downs of individual companies, the valley's semi_ tronics companies in the rich Silicon Valley environ_ grown up alongside the elec_ conductor, computer hard_ ware, and software indus_ tries have continued to thrive. And firms working in other high-tech fields, such as biotechnology, have The beginningp of the Starfud lndustrial Part, in 1956. Noyce. The eight quit en masse. Fairchild Semiconductor opened in Mountain View, and Silicon Valley was born. vale, fewer than two dozen of the four hundred semiconductor engineers present had not worked for Fairchild, fed. Homebrewers .,thrived in a kind of joyous anarchy'' from which solid engineering and technologies for peo_ ent" on which the valley's mi_ crocomputer companies first ple emerged. Stephen Wozniak, a young employee at Hewlett-pack_ Numerous problems plagued Fairchild from the start, even though it grew rapidly and introduced the first mass-producible inte_ grated circuit. Michael Ma_ lone describes it as a .torporate vocational school" for 2' have surged through Silicon ing 4004 chip launched anothValley ever since. By 196g er explosive wave through the last of the original eight the valley and beyond. By James C. Williams teaches founders, along with many 1975 Intel's third microprochistory at De Anza College, other Fairchild engineers, essor, the 8080, had become Apple's sales topped $1.5 bil_ in Cupertino, California, and had moved on to replicate the heart of the first afford- lion, and Silicon Valley was is executive director of the the founders' experiences in able home computer, the Al- the enry of the world. California History Center and new ventures. Later Robert tair 8800, which cost $49g. Foundation. This article is Noyce remarked that it came Popular Electronics,s anince that time the adapted from ,,Frederick "as a great revelation-and nouncement E. of the Altair, in -\ Terman and the Rise of Sili_ a great motivation, [99_" January 1975, brought into con Valley," a chapter he that a young engineer or sci- existence Silicon Valley's wrote for the second edition entist could get venture capi_ Homebrew Computer CIub, ed. Despite growing competi_ of Technology in America, ed_ tal for a new company. At a an informal monthly gather- tion from Japan and other ited by Carroll pursell, pub1969 conference in Sunnying of the burgeoning crowd parts of the count4r and the lished by MIT press in April. ous repercussions_after all, nobody else knew how the iob was done either_ and learn from their mis_ takes." They did, unleashing the centrifugal forces of entrepreneurial creativity that puter on a chip. Intel's result_ young engineers. fiere they could screw up without seri_ and by the early l970s former Fairchild employees had started forty-one new semiconductor companies, many of them in the valley. At first Fairchild's only ap_ parent direct connection to Terman's Stanford community was the firm's hiring of graduate students as production workers. A closer tie came when Marcian ("Ted") Hoff joined Noyce's new Intel Corporation after receiving his Ph.D. in electrical engineering at Stanford. ln 1969 Hoff developed the microprocessor, the first com_ ard and a gifted computer hobbyist, was a Homebrew_ become the Apple. Meanwhile his friend'steven Jobs suggested they start a com_ pany, and in 1976 Apple Com_ puter was born in Cuper_ tino- like Hewlett-packard, in a garage. Eight years later of his design for what would on which it had all been er from the start. He went built. In 1952 he had ob_ regularly, absorbed the de_ served, "Almost anything signs of the home-built ma_ that one wishes to do in the chines others brought to the world of today is made pos_ meetings, and began to feel sible, or is done better, or he could improve on those is helped by electronics. designs. Within a year he Through its ability to con_ had bought one of the latest trol, to amplify, and to con_ microprocessor chips, built vert between a computer of his own, and electricity,light, sound, electronics shown it off at Homebrew, provides a nervous system and passed out photocopies for our machine-age death, in 1982, his dreams for the valley's central place in that nervous system had been more than fulfilled. * largely disappeared; iobs and businesses have taken their place. Frederick E. Terman, who retired from Stanford in 1965, must have been pleased with this latest chap_ ter in the transformation of the Santa Clara Valley. After all, his vision and life s work had created the foundation ment. Orchards, cheap land, and affordable housing have tion." By the time"irritiruof his D;fxyl:ilqi#fi IT{VENTION & TECHNOLOGY. SPRINGISI.JMMER I99O pAt-o A|-TO HtSTORtCAL ASSOC|AT|oN