Intel - From Inventors of the CPU to Laughing Stock [Part 1]

this video is brought to you by morning brew hi welcome to another episode of cold fusion since the inception of mainstream computers intel has been instrumental in powering the industry they were the first company to invent the cpu which is the brain of all computers and for decades their chips dominated the market in the 1950s and 60s before intel's groundbreaking chip circuit chips were needed for each application a computer performed in contrast a cpu is a single chip that could be programmed to run anything the impact of the invention of the cpu can't be understated and to this day the technology remains intel's main product but recently intel's performance lead has all but been eaten away by amd and they're also being challenged by apple as we saw in a recent episode to make things worse they've lost the crown of america's most valuable chip manufacturer to nvidia a company known for their graphics chips and more recently ai research in this two-part series we'll take a look at how intel was founded and how they came to dominate the industry and then in the next episode we'll look at how they manage to get into trouble and what lies ahead in the future let's begin you are watching cold fusion tv [Music] first developed in 1947 by john bardeen and walter brettain and under the supervision of william shockley the transistor is perhaps the most revolutionary invention of the 20th century the original purpose of the device was simply to amplify that is strengthen electrical signals but it soon turned into something much greater no one could have expected the revolution that something so physically small would bring to business culture and society today our computers have billions of transistors tucked away in their chips and it's what makes them tick so how does it work in addition to amplifying signals a transistor at its fundamental level can essentially behave as a switch they can control the flow of electrons by being either in an on state or an off state these on off states can be translated into binary code a one or a zero which is how all of our data currently exists by switching between states billions of times a second these little transistors allow data to be processed and manipulated giving us the digital world of today even in the late 1940s transistors held a lot of promise if enough of them could be packed into a sufficiently small space there was potential for some serious computing power this is what intel would eventually do but for the time being there was still a major problem the problem was that these transistors had to be connected by wires these connections could only be so tiny before the system becomes unreliable the dream for scientists was to condense a whole circuit the transistors the wires and everything they needed into a single step a printed circuit board if they could create a miniature circuit in one piece all the parts could be much smaller and also mass-produced the answer was the integrated circuit the idea was to use a chemical etching process to create the transistor connections instead of wires the next step enables us to interconnect the various components and to make contact with them but instead of another diffusion a layer of metal is deposited over the entire surface of the wafer then by using the proper masks the excess metal can be etched away the group that came up with the breakthrough of the integrated circuit was also headed by william shockley the same man in charge of the transistor team as novel as this idea was the technology was impractical at the time more on this later william shockley was not the most pleasant team leader and he had a bad reputation these conflicts that his personality had with others caused him to leave the east coast of the us and travel west to start afresh his latest endeavor would be humbly named shockley semiconductor lab despite his personality flaws he had an eye for talent and managed to recruit eight of the greatest engineers and scientists the united states had to offer some of these recruits in shockley's lab would go on to create intel but before doing so they would first create the most significant company in technology history a company forgotten by most today the way this came to be was an interesting story within itself eight members of shockley's semiconductor lab just grew tired of his erratic and paranoid nature in fact some of you that have read my book will know that william shockley got jealous of his team's discovery of the transistor and wanted to receive all the credit despite not being directly involved in it these eight dissenting members of shockley's lab were sheldon roberts eugene kleiner victor greenwich j last julius blanc robert noyce gordon moore and jean hoenrei they would be given the nickname the traitorous eight one day in a san francisco hotel the group gathered together recognizing all of their talents and despising william shockley they hatched a plan together they all pledged to sign a dollar bill this represented their commitment to starting a new company this meeting at the san francisco hotel would be later called one of the top 10 days that changed history by the new york times the plan was to start a new company that was to be under the reluctant leadership of robert noyce a brilliant mit researcher at first noyce was hesitant to take on such an ambitious project as he had a young family startups like this were a huge risk in the 1950s but after some convincing noyce bit the bullet and signed the dollar bill and with that the traitorous 8 had a new spin-off company and its name was fairchild semiconductor fairchild semiconductor was in essence the origins of silicon valley i personally find it amazing at how influential this company was fairchild semiconductor started silicon valley in both technology and culture the culture was like a college dormitory for competitive geniuses and staff were making big money competing with each other soon fairchild was on a meteoric rise the company operated differently to anything that had been seen before risk over stability innovation over tradition rapid experimentation over slow and steady growth there was a lot of buzz in the media about this new and exciting company they were like the amazon apple or google of their day in both the stock market and technology space out of this company's talent came of course intel but also lsi logic sandisk and advanced micro machines otherwise known as amd the latter would play a big role in the second part of the story it's interesting to note that by the 1980s 100 different companies had sprung from the talent pool of fairchild after securing financial backing the group at fairchild would come together to produce the first practical integrated circuit by using a silicon semiconductor the invention for the first time made it practically possible to tightly pack transistors together but also allow them to function independently despite being made from a single piece steve jobs in 2005 would say that silicon valley is a bit like running a relay race and fairchild semiconductors were the ones that passed the baton to him to bring in the era of personal computing to this day fairchild remains important in samsung's supply chain so fairchild semiconductor had invented the practical integrated circuit and birthed silicon valley culture they were flying high and well ahead of established tech titans like ibm and motorola but as time went on staff began to leave fairchild in pursuit of other endeavors companies like texas instruments and motorola started catching up robert noyce realized that he needed to start something new in 1968 he and his fellow employee gordon moore began a new project to make memory chip devices these were to compete with magnetic hard drives noise and more status in the industry coupled with the rise of venture capitalists resulted in 2.5 million dollars being raised in under two days for their new project the pair of them picked the best and brightest minds to join the new company among these was andy grove a hungarian-born chemical engineer that joined fairchild's r d division in 1963 his role was director of operations former employees would state that hiring andy was the best decision noes ever made he was a driven man who wanted everything to be well done and done on time neither noise nor more were stern enough to crack the whip together they called their new company intel an abbreviation of integrated electronics which also happened to conjure the word intelligence it didn't garner a lot of attention from the media at the time but within silicon valley there was a great deal of excitement as intel engineers continued to tinker with the design of their memory chip they decided that they should take on some custom work to make some revenue to further build up the business in the spring of 1969 a simple request came into the intel building altering the course of computer history in 1969 a japanese firm busycom contracted intel to design 12 specialized microchips for its new calculator unfortunately what busycom wanted was going to be way too complicated and expensive for intel to produce a young engineer named ted hoff was in charge of designing the architecture and he raised his concerns he thought intel had bitten off more than they could chew when hoff voiced his concerns to robert noyce noyce replied if you can think of a simpler design you should pursue it noyce always encouraged the people in this lab to run with their ideas and see where they went this next part was the genius of a true inventor you see ted hoff envisioned a single chip that could be programmed for a specific application in this instance it would function like a calculator but it could be programmed to do anything the normal thing to do in the 1960s was to build custom circuit chip boards for each application in this new architecture of hofs the memory calculating processing functions and other aspects of a computer could be combined into one integrated circuit in this case the 12 chips could just be one a unit which could run all programs on its own a system called a cpu when the design of this new type of architecture was done they needed someone who could put it all into silicon thus another talented chip designer federico fagin was brought in to oversee the implementation he arrived at intel in april of 1970 and brought his own experience to bear on the project federico fagin was also from fairchild and he had invented silicon gate technology a fundamental building block for the microprocessor fairchild wasn't taking advantage of his invention and he wanted to use his new technology to design advanced chips he was brought to intel six months late for the project because the company was running behind the very next day after he was hired japanese management from busycom was due to visit and it didn't go well when the day that i joined intel stein mazer showed me a block diagram that was to be the busycom project so shima arrived he said where i'm here to check where is logic and i said uh oh i gave him the what i was given you know this block diagram and this stuff and he said no good this is i had this this only idea i want logic and i said i don't have any logic you bad you bad i said i just arrived here i just i just was hired yesterday you late and so i was i was buffal and of course at that point there were a number of very agitated phone calls and i could tell by the tone of the conversation but they were not very gentle phone calls and uh and basically in the meantime i tried very hard to figure out a time schedule that would really minimize the delay that was incurred by intel but to do that i needed an engineer to help me and also adequate layout and technician support i was by myself i had no engineers no layout people that's it i had to do it by myself federico basically had to do everything himself and just figure it out despite the odds in february of the following year working kits were delivered to the clients and in november of that year the intel 404 made its debut on the market and the error of the cpu microprocessor had begun the whole team's efforts had led to the world's first cpu essentially a whole general purpose computer on a chip ted hof convinced management that they should sell this general purpose chip as a standalone product the result was the intel 4004 cpu it had more than 2 000 transistors and the device was advertised as a quote computer on a chip at 3.2 by 4.2 millimeters the chip that the intel team had unveiled had as much power as one of the first electronic computers the eniac of the 1940s used 18 000 vacuum tubes and was so large it filled an entire room though computers had gotten smaller since those days what intel had done was still a giant leap above what was available at the time the intel 4004 chip took a current day 1969 computer that was the size of a refrigerator and shrunk it down to fit onto a fingertip to give even more perspective the ibm 1620 cost 2 500 a month to rent and had the same performance as the intel 4004 chip which cost just 60 dollars in this moment the digital revolution had officially begun [Music] amazingly some still had reservations when the 4004 cpu was unveiled people couldn't believe it ted hoff would recall one such interaction at a computing conference in las vegas 1971. quote one customer who came in was adamant that we had such nerve to claim that we had a computer on a chip one of our engineers handed him the data sheet and he looked at it and exclaimed oh my god it really is a computer it was something that people did not believe was possible at the time [Music] it's also important to note that personal computers didn't exist it was assumed that there will be no consumer market for it ken oslon chairman of digital equipment corporation famously remarked in the sunday times quote there is no reason anyone would want a computer in their home obviously this was wrong a slightly later version of the chip the intel 8080 would be at the heart of the first widespread personal computer it was in the form of a kit built by the company mit this intel-powered computer was the very same that was on the front of a magazine that bill gates was shown kicking off microsoft and the very same computer that some californian hippies would show off to their friends at the homebrew computer club kicking off apple computer before we continue let's check out a quick news report from our sponsor morningbrew intel's industry competitiveness has been so poor that it was announced last wednesday that its ceo bob swann will be stepping down as of the 15th of february he'll be replaced by vmware's ceo pat gelsinger the news for intel comes after more chip delays competition from amd samsung and also apple breaking ties with them after 15 years intel has been accused of quote failed leadership by investors if you're short on time and want to get all of the news in business and technology morning brew is a great way to do that morning brew makes the latest news fun and easy you can get up to date with all the latest breaking news in just five minutes all in one place without having to trundle through different news sources it's delivered to your email inbox each weekday and saturday click the link below to subscribe to morning brew today it takes just 15 seconds to sign up intel would go on to be a massive player in the 1980s but surprisingly they weren't the leader by 1985 their sales were slipping and they were suffering huge losses and expensive development costs by this time motorola had caught up and was making the best performing chips at the time the motorola 68000 chip proved popular and was being used in graphical computers like the mac commodore amiga and atari st it would take the intel 386 to change all of that the 386 processors from intel transformed the industry in the mid-80s the chip manufacturing industry convention was that when a computer vendor purchased cpus they would require a second source for the chip a legacy business move from military contractors who needed a reliable supply in effect for intel or anyone to sell their chips they would agree to enable a competitor to license their technology so surprisingly in the very early days intel actually helped set up other companies like amd and fujitsu as secondary sources for compatible chips in fact amd began life as a secondary source supplier for companies using intel technology this all changed with intel's 386 it was a very very risky move for the company it took four years of development and cost 100 million dollars but intel decided not to license the technology to competitors ibm intel's biggest client at the time wasn't interested in the 386 for this reason but compaq decided to go all in and became the first computer company to use the new processor the early success of the compact 386 pc played an important role in legitimizing the pc clone industry and de-emphasizing ibm's role within it by this point ibm never again had a leadership position in pcs and for intel the rest was history by 1992 intel had 83 percent of the cpu market and more than one billion dollars in annual profit in 1993 intel would unveil the pentium one at a speed of 60 megahertz it was a decent performer this was followed by the pentium pro in 1995 the pentium 2 in 1997. pentium 3 in 1999 and pentium 4 in 2000 each generation was faster than the previous with ever smaller but more numerous transistors these chips were insanely popular and thanks to some heavy marketing the name pentium became synonymous with pcs in the 90s and early 2000s for intel it seemed like having their manufacturing and chip design all in the one place was really paying off but this vertical integration would later come back to give them grave problems there was a brief challenge to intel by amd in the late 90s but by 2012 amd had lost 1 billion in that year alone and they had a net loss of 7 billion in the past 15 years previous it would take a new ceo by the name of lisa to start turning it all around in 2014. an mit graduate and semiconductor industry veteran she had to make some bold bets to unseat intel and some of these bets wouldn't begin to pay off for another five years but for now intel was still the undisputed king today the microprocessor market is a multi-billion dollar industry intel is still currently the largest cpu manufacturer on the planet and despite falling behind technically in the last few years the impact that they've had in the computing industry is undeniable from a group of eight rebels who decided to revolt against their leader in the 1960s and start one of the greatest technology companies ever known to a few of those members starting intel and deciding to think differently when it came to building chips for a japanese client to eventually end up changing the world and impacting all of our lives it's a fascinating story when you think about it as for ted hoff he would leave intel in the early 1980s to accept a position with atari as vice president of technology robert noyce would leave intel in the late 70s gordon moore would theorize moore's law which still holds true today at 92 years old he currently enjoys fishing federico fagen currently leads philanthropic efforts to promote the study of physics pussycom would suffer financial trouble and go out of business in 1974. in the next installment of this series we'll see how intel got complacent missed the boat on mobile processing and is now under threat by amd and apple as we round out the episode i'd like to thank you for watching a large part of this episode was based on a little bit of my book new thinking i'll leave a link for it in the description below it's a fascinating read on the last 100 years of technology and how it all links together if you did enjoy today's story be sure to subscribe to cold fusion i don't have a large budget or a team like many channels here on youtube it's just me and an editor that helps out from time to time anyway my name is dagogo and you've been watching cold fusion next time we'll take a look at toyota's new solid state battery that's to be revealed later this year until then cheers guys have a good one [Music] cold fusion it's me thinking [Music] you

Channel: ColdFusion

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Id: JH2nXMv6yZI

Length: 23min 9sec (1389 seconds)

Published: Thu Jan 21 2021