Electronics Newsletter - Integrated Circuit: Is Price War On?
May 18, 1964 Electronics Magazine

May 18, 1964 Electronics [Table of Contents] Wax nostalgic about and learn from the history of early electronics. See articles from Electronics, published 1930 - 1988. All copyrights hereby acknowledged.

When you read about price wars in the integrated circuit (IC) realm, you naturally think of manufacturers in Asian countries, since even the products of American companies are made overseas nowadays (unfortunately). Such was not the case in the early days of ICs when corporations kept their trade secrets within the shores of their home countries, and government technology export laws prohibited practices that would have required processing knowledge and equipment to be located offshore in order to be successful. In the 1960s, it was companies like Fairchild, Clevite, Motorola, Texas Instruments, IBM, Westinghouse, General Electric, et al, who were in fierce competition to dominate the semiconductor markets. Lead design engineers and scientists were offered significant salary and benefit deals to bring their expertise onboard. Magazine articles of the era are full of reports on the trend. There just were not many experts at the time.

"The Clevite Corp., Cleveland, Ohio, has acquired the assets of Shockley Transistor Corp., Palo Alto, Calif., a subsidiary of Beckman Instruments, Inc. The Clevite President, W. G. Laffer, said the acquisition will substantially augment the company's activities in the semiconductor component field. The Shockley unit, headed by Nobel Prize-winning physicist Dr. William Shockley, will become part of Clevite's Transistor Div. in Waltham, Mass. (Electronic Design, April 27, 1960, p. 21).

This sale was the beginning of the end for Shockley Transistor Corp., which was founded in 1954. Shockley attracted top talent to his company, including Robert Noyce and Gordon Moore. But this core group left the company in 1957 to found Fairchild Semiconductor, and Shockley's enterprise was never the same. Clevite was bought by ITT in 1965, and the Palo Alto plant was closed in 1969."

Electronics Newsletter - Integrated Circuit: Is Price War On?

Has a Price War Broken out in Integrated Circuits?

Some observers said "yes" when the semiconductor division of the Fairchild Camera & Instrument Corporation slashed prices - from $25 to $5 apiece for some integrated circuit types.

Robert Noyce, a Fairchild vice president, said: "I think there are too many people in the business. The time has come to put up or shut up." A competitor, the Clevite Semiconductor Corporation of Palo Alto, California, declared, "The war is on."

The Fairchild action caused consternation at one company that had been planning a cut of its own. The Semiconductor division of Motorola, Inc., said, "It would appear that Fairchild has beaten us by about one month." The Motorola spokesman expected no price war, but he predicted the price of integrated circuits would approach that of circuits made with discrete components.

But spokesmen for Texas Instruments Incorporated, and the semiconductor division of the Hughes Aircraft Corporation laid the price cuts to dumping on the market of Fairchild units that can't meet government specifications.

The price war theory is strengthened by an apparent trend of computer makers to build their own microcircuits. The International Business Machines Corporation is making hybrid circuits for its System/360. The semiconductor division of the Sperry Rand Corporation has been licensed by Fairchild to manufacture integrated circuits. Other computer manufacturers with in-house capabilities for making integrated circuits include the Radio Corporation of America, Westinghouse Electric Corporation and the General Electric Company.

The low-priced "industrial" units according to Fairchild, have the same characteristics as their military counterparts, except for the range of operating temperature. The industrial units are for service at 15¢ to 55¢.

Transistors Make TV Color Debut

A nine-inch color television set, the first made with transistor circuits and an improved Lawrence picture tube, was introduced in Japan on May 6 by the Yaou Electric Company. The set, designed to meet U. S. requirements, has room for a UHF tuner. Sales will begin in Japan this fall. Initial price is $375, but the company hopes to cut that to $275 when mass production begins next spring.

The picture tube, which has one gun instead of the conventional three guns, is supplied by the Kobe Kogyo Corp. It differs from the regular Lawrence tube mainly in location of a unipotential focus grid close to the color switching grid, between that grid and the gun. Kobe Kogyo says the focus grid permits low-cost optical fabrication of the color screen and improves the tube's color purity. The set uses a line sequential sys-tem rather than the dot sequential system of U.S. TV sets. This simplified set circuitry. For example, the conventional convergence circuits are not needed.

Anybody Want a Used Computer?

The used-computer market is reportedly nose-diving as a result of the wholesale ordering of new computer models, especially the International Business Machines Corporation's system/360. The Standard Oil Company (N.J.) is said to have just ordered 21 system/360 computers to replace 27 older computers.

Automaker Goes for Thin Films

The first high-volume application of thin-film circuits may be in the auto industry. The Delco Radio division of the General Motors Corp. is now operating a pilot production line and may convert to full-scale production within a year. The initial use of thin films is expected to be in voltage regulators. But Delco's investment is aimed at the probable car radio of the future-a microminiaturized AM-FM model with stereophonic sound and multiplex channels.

The Tables Are Turned

Technograph Printed Electronics, Inc., has been suing about 70 companies, claiming infringement of basic patents for etched circuits [Electronics, June 7, 1963 p. 24]. Its suit against Admiral Corporation was dismissed April 30 by a U.S. District Court in Chicago. Now Technograph will pay Admiral royalties on 14 patents for etched circuits.

3 Cities May Get Phone TV in June

The Bell System hopes to put its Picturephone into public service next month in three cities. The equipment transmits television over regular phone lines [Electronics May 4 1964 p. 29].