Texas Instruments Incorporated (TXN), Fairchild Semiconductor Intl Inc (FCS), Intel Corporation (INTC): The Chip That Changed the World

On this day in economic and business history…

The foundations of the modern computing industry were laid on Sept. 12, 1958, when newly hired Texas Instruments Incorporated (NASDAQ:TXN) engineer Jack Kilby demonstrated a working integrated circuit for the very first time.

Texas Instruments Incorporated (NASDAQ:TXN)

Kilby had begun working on his prototype through the typical two-week vacation period afforded most TI employees, as his recent hiring meant that he had not yet earned vacation time. Originally, Kilby had been assigned to a project for the U.S. Army Signal Corps — the “Micro-Module” — to develop a standardized electronic component using transistors that could snap together with others like it to create complete circuits. Kilby decided to skip the “snap-together” part and put all the components on the same chip, as TI’s historical documents explain:

[Kilby] didn’t think the Micro-Module was the answer — it didn’t address the basic problem of large quantities of components in elaborate circuits.

So Kilby began searching for an alternative, and in the process decided the only thing a semiconductor house could make cost effectively was a semiconductor. “Further thought led me to the conclusion that semiconductors were all that were really required — that resistors and capacitors [passive devices], in particular, could be made from the same material as the active devices [transistors]. I also realized that, since all of the components could be made of a single material, they could also be made in situ interconnected to form a complete circuit,” Kilby wrote in a 1976 article titled “Invention of the IC.”

Kilby began to write down and sketch out his ideas in July of 1958. By September, he was ready to demonstrate a working integrated circuit built on a piece of semiconductor material. Several executives, including former TI Chairman Mark Shepherd, gathered for the event on September 12, 1958. What they saw was a sliver of germanium, with protruding wires, glued to a glass slide. It was a rough device, but when Kilby pressed the switch, an unending sine curve undulated across the oscilloscope screen. His invention worked — he had solved the problem.

Kilby’s germanium design eventually proved inferior to a silicon chip developed by Fairchild Semiconductor Intl Inc (NYSE:FCS). However, because Kilby both demonstrated his integrated circuit and filed for a patent first, he is generally considered to be the father of this essential technology, while Fairchild Semiconductor Intl Inc (NYSE:FCS)’s Robert Noyce is honored for his work in perfecting the design. Noyce went on to help found Intel Corporation (NASDAQ:INTC) a decade after the development of the first integrated circuit, and three decades after that company’s founding, it became the first (and thus far only) dedicated chipmaker granted a place on the Dow Jones Industrial Average.

Today, integrated circuits power virtually every business operating today in one way or another, but their popularity got a little boost thanks to one big government program that became famous on Sept. 12…