Hostname: page-component-78c5997874-s2hrs Total loading time: 0 Render date: 2024-11-16T09:23:00.608Z Has data issue: false hasContentIssue false
  • English
  • Français

Confronting the Japanese Challenge: The Revival of Manufacturing at Intel

Published online by Cambridge University Press:  24 July 2019

Christophe Lécuyer
Get access Rights & Permissions [Opens in a new window]

Abstract

Like many other American corporations, Intel was outcompeted in manufacturing by Japanese firms in the late 1970s and the first half of the 1980s. By 1985, it became clear that the corporation's weakness in production endangered its long-term survival. Responding to the Japanese challenge, Intel's upper management instigated a fundamental reform of manufacturing. At their behest, production engineers and managers adopted Japanese manufacturing technologies and operating procedures. They put microchip fabrication on a scientific footing. They developed new ways of transferring processes from development to production and standardized the firm's factories. This major transformation enabled Intel to reach manufacturing parity with Japanese chipmakers by the early 1990s.

Keywords

IntelsemiconductormanufacturingJapanese competitionSilicon Valley
Type
Research Article
Information
Business History Review , Volume 93 , Issue 2 , Summer 2019 , pp. 349 - 373
Copyright
Copyright © The President and Fellows of Harvard College 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The author would like to thank David Hodges, Patrick Fridenson, and three anonymous referees for their insightful comments on previous versions of this article. His thanks also go to the Science History Institute for its support for this project.

References

1 Vogel, Ezra, Japan as Number One (New York, 1979)CrossRefGoogle Scholar; Cusumano, Michael, The Japanese Automobile Industry: Technology and Management at Nissan and Toyota (Boston, 1985)CrossRefGoogle Scholar; Dertouzos, Michael L., Lester, Richard K., and Solow, Robert M., Made in America: Regaining the Productive Edge (New York, 1990)Google Scholar.

2 Jacobson, Gary and Hillkirk, John, Xerox: American Samurai (New York, 1986)Google Scholar; Roos, Daniel, Womack, James, and Jones, Daniel, The Machine That Changed the World (New York, 1991)Google Scholar; Mowery, David, ed., U.S. Industry in 2000: Studies in Competitive Performance (Washington, DC, 1999)Google Scholar; Mowery, David and Nelson, Richard, eds., The Sources of Industrial Leadership (New York, 1999)CrossRefGoogle Scholar.

3 On the crisis and resurgence of the U.S. semiconductor industry, see Richard Langlois and Edward Steinmueller, “The Evolution of Competitive Advantage in the Worldwide Semiconductor Industry, 1947–1996,” in Mowery and Nelson, Sources of Industrial Leadership, 19–78; and Macher, Jeffrey, Mowery, David, and Hodges, David, “Reversal of Fortune? The Recovery of the U.S. Semiconductor Industry,” California Management Review 41, no. 1 (1998): 107–36CrossRefGoogle Scholar. Macher, Mowery, and Hodges explain the industry's comeback through improvements in manufacturing and government intervention, while Langlois and Steinmueller emphasize market changes that favored Intel and other U.S. players.

4 Burgelman, Robert, “Fading Memories: A Process Theory of Strategic Business Exit in Dynamic Environments,” Administrative Science Quarterly 39, no. 1 (1994): 24–56CrossRefGoogle Scholar.

5 Thackray, Arnold, Brock, David, and Jones, Rachel, Moore's Law: The Life of Gordon Moore, Silicon Valley's Quiet Revolutionary (New York, 2015)Google Scholar.

6 Berlin, Leslie, The Man behind the Microchip: Robert Noyce and the Invention of Silicon Valley (New York, 2005)CrossRefGoogle Scholar; Tedlow, Richard, Andy Grove: The Life and Times of an American Business Icon (New York, 2006)Google Scholar.

7 Berlin, Man behind the Microchip; Brock, David and Lécuyer, Christophe, “Digital Foundations: The Making of Silicon-Gate Manufacturing Technology,” Technology and Culture 53, no. 3 (2012): 561–97CrossRefGoogle Scholar; Lécuyer, Christophe, Making Silicon Valley: Innovation and the Growth of High Tech, 1930–1970 (Cambridge, MA, 2006)Google Scholar; Thackray, Brock, and Jones, Moore's Law.

8 Eugene Flath, oral history interview by David Brock, 28 Feb. 2007, Science History Institute, Philadelphia, (hereafter, SHI); Lécuyer, Making Silicon Valley.

9 Eugene Meieran, interview by the author, 23 June 2010; Flath, oral history interview, SHI.

10 Bassett, Ross, To the Digital Age: Research Labs, Start-Up Companies and the Rise of MOS Technology (Baltimore, 2002)Google Scholar; Thackray, Brock, and Jones, Moore's Law.

11 Intel, Annual Reports, (Santa Clara, CA, 1978 and 1979); Meieran, interview.

12 United States General Accounting Office, “SEMATECH's Technological Progress and Proposed R&D Program,” GAO/RCED-92-223BR (Washington, DC, July 1992); Steve Lohr, “Japan's New Test on Chips,” New York Times, 5 June 1983; Gordon Moore, interview by TT, 10 and 17 Aug. 1994, Research Material about Robert Noyce, M1491, box 10, folder 3, Special Collections and University Archives, Stanford University, (hereafter, SCUA); William Finan, “Matching Japan in Quality: How the Leading U.S. Semiconductor Firms Caught Up with the Best in Japan” (Paper 93-01, MIT-Japan Program, 1993); Masao Fukuma, interview by the author, 26 June 2018; Tsugio Makimoto, interview by the author, 28 July 2018.

13 Gordon Moore, oral history interview conducted by Arnold Thackray and David Brock, 2 Oct. 2002, SHI.

14 Moore, oral history interview by Thackray and Brock, SHI.

15 Flath, oral history interview, SHI; Gordon Moore, “State of the Union Assessment,” 2 July 1980, cited in Thackray, Brock, and Jones, Moore's Law, 416–17.

16 Flath, oral history interview, SHI.

17 Andrew Grove, presentation at annual shareholders’ meeting, March 1985, Andrew Grove Papers, M1630, box 7, folder 6, SCUA; Moore, interview by TT, SCUA.

18 Flath, oral history interview, SHI; Finan, “Matching Japan in Quality.”

19 Andrew Grove, “Business Status/SLRP, East Coast Trip, 6/29–7/4/1982,” M1630, box 16, folder 22, SCUA; Intel, Annual Reports, 1984 and 1985; Flath, oral history interview, SHI; John Wilson, “Intel Wakes Up to a Whole New Marketplace in Chips,” BusinessWeek, 2 Sept. 1985; William Arnold, “Nimble Performer Keeps Out of the Trenches,” Financial Times, 6 Dec. 1985.

20 Moore, interview by TT, SCUA; Moore, oral history interview by Thackray and Brock, SHI; David Sanger, “Pushing America Out of Chips,” New York Times, 16 June 1985; Theodore White, “The Danger from Japan,” New York Times, 28 July 1985; Michael Schrage and Sarah Oates, “Tensions Not Soothed in Semiconductor War Efforts by US, Japan,” Washington Post, 4 Aug. 1985.

21 Andrew Grove, presentation to the Japanese press, 19 June 1985, M1630, box 4, folder 7, SCUA; Grove, presentation at the Distribution Presidents’ Conference, 16 Oct. 1986, M1630, box 5, folder 10, SCUA; Intel, Annual Reports, 1985 and 1986; Moore, interview by TT, SCUA; Moore, oral history interview by Thackray and Brock, SHI; Ted Jenkins, oral history history interview by David Brock and Hyungsub Choi, 9 May and 24 July 2007, SHI.

22 Hitachi, “Unbeatable Price Leadership,” n.d., in Andrew Grove, “DeAnza Speech,” 2 Dec. 1987, M1630, box 17, folder 20, SCUA.

23 Andrew Pollack, “Japan Seen as Target of Chip Plea,” New York Times, 28 Sept. 1985; “Silicon Valley Firms Seek Retaliation against Japanese,” San Francisco Chronicle, 1 Oct. 1985.

24 “Intel Raises Prices for Some Chips,” Wall Street Journal, 6 Mar. 1986; Alan Murray, “Japanese Firms Microchip Prices Are Ruled Unfair,” Wall Street Journal, 12 Mar. 1986; “US Accuses Japan Companies of Dumping Semiconductors,” Newsday, 28 Oct. 1986; Kenneth Flamm, Mismanaged Trade? Strategic Policy and the Semiconductor Industry (Washington, DC, 1996); David House, interview by the author, 15 Aug. 2014; Makimoto, interview; Susumu Kohyama, interview by the author, 27 July 2018.

25 Grove, presentation at Distribution Presidents’ Conference, 16 Oct. 1986, SCUA; Grove, presentation at the Distribution Presidents’ Conference, Oct. 1987, M1630, box 5, folder 11, SCUA; Grove, presentation to the Stanford fellows, 6 Feb. 1991, M1630, box 18, folder 14, SCUA; Grove, presentation to the Commonwealth Club of California, 7 May 1993, M1630, box 4, folder 29, SCUA; “The Intel/NEC Lawsuit,” Electronics Weekly, 28 Feb. 1986; Richard Schmitt, “Intel Says Judge Rules Copyright Law Covers the Internal Design of Microchips,” Wall Street Journal, 23 Sept. 1986; Jenkins, oral history interview, SHI. On changing rules regarding intellectual property during this period, see Adam Jaffe and Josh Lerner, Innovation and Its Discontents (Princeton, 2004).

26 Grove, presentation to the Strategic Management Society, 12 Oct. 1989, M1630, box 4, folder 1, SCUA; Moore, interview by TT, SCUA; Moore, oral history interview by Thackray and Brock, SHI; Intel, Annual Report, 1985; Thackray, Brock, and Jones, Moore's Law.

27 Intel, Annual Report, 1986, 2.

28 The Reagan administration's lenient enforcement of antitrust law provided a favorable environment for Intel's sole-sourcing strategy. Moore, oral history interview by Thackray and Brock, SHI; Thackray, Brock, and Jones, Moore's Law.

29 Moore, interview by TT, SCUA; Moore, oral history interview by Thackray and Brock, SHI; Flath, oral history interview, SHI; Craig Barrett, oral history interview by Arnold Thackray and David Brock, 14 Dec. 2005 and 23 Mar. 2006, SHI; Gerhard Parker, oral history interview by David Brock, 2016, Computer History Museum, Mountain View, CA (hereafter, CHM); Wilson, “Intel Wakes Up.”

30 Barrett, oral history interview, SHI.

31 Parker, oral history interview, CHM.

32 Jim Mitchell, “Intel President Describes Chip Woe,” Dallas Morning News, 10 Sept. 1985; Arnold, “Nimble Performer.”

33 Andrew Grove, presentation at Intel's annual shareholders’ meeting, 16 Mar. 1986, M1630, box 7, folder 7, SCUA; Brenton Schendler, “Intel to Close Plant in Barbados, Cut Puerto Rico Staff,” Wall Street Journal, 6 Aug. 1986; Clifford Barney, “How Intel Aims to Regain Momentum,” Electronics, 21 Oct. 1985; Moore, oral history interview by Thackray and Brock, SHI.

34 Barrett, oral history interview, SHI.

35 Meieran, interview; Barrett, oral history interview, SHI; Flath, oral history interview, SHI; Moore, oral history interview by Thackray and Brock, SHI; Intel, Annual Reports, 1985 and 1987; Wilson, “Intel Wakes Up”; Arnold, “Nimble Performer.”

36 Parker, oral history interview, CHM; Barney, “How Intel Aims.”

37 Grove, presentation to Japanese press, 19 June 1985, SCUA; Flath, oral history interview, SHI; Paolo Gargini, oral history interview by Harry Sello, 27 July 2011, CHM.

38 Moore, interview by TT, SCUA.

39 Moore, interview by TT, SCUA.

40 Moore, interview by TT, SCUA; Moore, oral history interview by Thackray and Brock, SHI.

41 Moore, interview by TT, SCUA; Berlin, Man behind the Microchip.

42 Moore, interview by TT, SCUA.

43 Moore, interview by TT, SCUA.

44 Intel, Annual Report, 1985 and 1986; Meieran, interview.

45 Moore, interview by TT, SCUA; Meieran, interview; Flath, oral history interview, SHI.

46 Barrett, oral history interview, SHI.

47 Intel, Annual Report, 1987; Moore, interview by TT, SCUA; Barrett, oral history interview, SHI; Parker, oral history interview by Rob Walker, 6 Oct. 2003, Silicon Genesis collection, SCUA.

48 Gargini, cited in Chesbrough, Henry, Open Innovation: The New Imperative for Creating and Profiting from Technology (Boston, 2006), 118Google Scholar.

49 Chris McDonald, “The Evolution of Intel's Copy Exactly Technology Transfer Method,” Intel Technology Journal, 4th quarter 1998; Barrett, oral history interview, SHI; Parker, oral history interview by Brock, CHM; Parker, oral history interview by Walker, SCUA; Moore, interview by TT, SCUA; Lewis Scarpace, interview conducted by the author, 14 July 2015.

50 McDonald, “The Evolution of Intel's Copy Exactly Technology Transfer Method”; Meieran, interview.

51 Meieran, interview.

52 McDonald, “The Evolution of Intel's Copy Exactly Technology Transfer Method”; Finan, “Matching Japan in Quality”; Barrett, oral history interview, SHI; Meieran, interview; Moore, interview by TT, SCUA; Scarpace, interview; Fukuma, interview.

53 Barrett, oral history interview, SHI; Parker, oral history interview by Walker, SCUA; Fukuma, interview.

54 Intel, Annual Reports, 1986, 1987, 1992, and 1994; Intel, Defining Intel: 25 years/25 events (Santa Clara, CA, 1993).

55 Intel, Annual Reports, 1992 to 1998.