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Making Silicon Valley: Innovation and the Growth of High Tech, 1930-1970

Author: Christophe Lécuyer
Publisher: Cambridge, MA: MIT Press, 2005
Review Published: November 2009

 REVIEW 1: Judith Otto

What accounts for the dominance of the Silicon Valley region in the electronics and computing sectors? As mayors, chambers of commerce, and other boosters around the country have become more sophisticated at marketing their metropolitan regions to attract industry, and as competition to attract those industrial jobs becomes ever fiercer, a look backwards at the story of Silicon Valley is instructive indeed. In Making Silicon Valley: Innovation and the Growth of High Tech, 1930-1970, Christophe Lécuyer, an industrial historian, argues that innovations in product engineering, manufacturing, and management have not been given their due in explaining the rise of Silicon Valley as an industrial district. Lécuyer traces the evolution of the electronics industry in California's Bay Area by delving into the early history and fortunes of four firms that dominated, in turn, entrepreneurship in vacuum tubes, microwave tubes, and finally, semiconductors and integrated circuits.

Others have covered this ground from slightly different perspectives. AnnaLee Saxenian (1994) focused on information flow inside and between firms in the Valley, attributing their success and eventual dominance to flexible organizations with "dense social networks and open labor markets" (2) complemented by "horizontal communication among firm divisions and with outside suppliers and customers" (3). Stuart Leslie (1992) attributed the rise of Silicon Valley to Stanford University's leading role in educating engineers and fostering close ties with the U.S. military. Lécuyer follows a slightly different pathway; he acknowledges his intellectual debt to the nineteenth century economist Alfred Marshall and his concept of industrial districts, in which superior technical skills and specific innovations in manufacturing generate specialty knowledge, attracting suppliers and subcontractors, enabling spinoff businesses, and consequently creating a critical mass of firms that in turn attracts other firms to the locale.

Chapters 1 through 3 trace the growth of the early vacuum tube and microwave tube industries, dominated by such firms as Eitel-McCullough, Litton Industries, and Varian Associates. These industries emerged in the 1930s from a nucleus of radio hobbyists in the Bay Area whose proximity to suppliers for military radio and whose hobby clubs and genial fellowship fostered cooperation and friendly competitiveness. The development of radar technology during World War II and the demand for microwave tubes (for missile systems) during the Korean War and Cold War propelled the growth of these firms, while out of necessity their founders developed new techniques for meeting the manufacturing volumes and quality standards required by the military. Litton, for example, imposed workplace cleanliness standards extraordinary for the time, and tasked workers with inspecting their own work, increasing accountability and discipline in the manufacturing area of the plant and increasing manufacturing yields (80-81).

The firms also pioneered new organizational structures for electronics firms. Varian, for example, was organized cooperatively in accordance with the founders' belief that shared leadership would increase productivity and creativity (99). By 1961, the Bay Area was the center of the American microwave tube industry.

In Chapters 4 and 5, Lécuyer traces the growth of Fairchild Semiconductor, the progenitor of most subsequent semiconductor firms in the Valley. The semiconductor manufacturing process, although developed on the East Coast, benefited from the concentration of precision machining, glass, and ceramics shops that had grown up around the tube industry in the Bay Area. Fairchild's engineers oversaw two key technological breakthroughs -- the planar process and the integrated circuit -- thereby uniquely positioning the firm to meet the high reliability and miniaturization standards required for the avionics and missile guidance systems that were being developed by the Air Force in the 1950s. As the tube firms had done, Fairchild also innovated in management. It was financed with venture capital, another first for the industry, and offered stock options to some of its key engineering staff in order to incentivize performance.

In the early 1960s, defense spending contracted, sending shock waves through the tube and semiconductor industries. After layoffs and consolidations, the firms sought new opportunities, identifying the emergent fields of space, medical and scientific instrumentation, broadcasting, and computer systems as new markets for their products. In Chapter 6, Lécuyer describes how engineers at Fairchild left the firm in order to start their own integrated circuit firms, a technology in which the Fairchild managers had shown limited interest. When Fairchild realized the potential for these new innovations, it promptly began to produce integrated circuits, undercutting prices and using its connections to build market share. Yet Fairchild and its early spinoffs were ultimately eclipsed by a second wave of start-ups (like Intel and National Semiconductor) using metal-oxide semiconductor (MOS) technologies. These new firms operated on a different business model: to develop new products, maximize market share, and go public. Competition between the firms was intense, and the first product to market tended to set the standard for its type. By 1975, the Bay Area dominated American microelectronics. In less than 40 years, a remote rural valley of radio enthusiasts had metamorphosed into one of the nation's leading centers of technology and commerce.

This book is meticulously researched, with a wealth of detail drawn from heretofore unavailable sources, including materials from company archives and personal papers, as well as interviews with the leading figures in the industry. Information from trade journals and company technical notes complements these rich primary sources. Lécuyer's narrative gives the reader an insider's view of the interactions between the players -- the skills, ambitions, rivalries, motivations, and dreams of a brilliant and passionate group of men (yes, they were all men) as they sought not only to solve complicated engineering and manufacturing problems but also to envision and bring into being idealistic, collaborative ways of organizing firms and industries.

A few quibbles: this book would appeal to a wider audience if more care had been taken in explaining the technologies for lay readers. Lécuyer knows his klystrons, N- and P-junctions, and diffused wafers, but the reader unversed in electronics struggles to follow the explanations of the rationales that drove engineering and manufacturing. A brief sample: "...the passive elements -- resistors and capacitors -- were made by the vacuum deposition of metals on a glass or ceramic substrate. Active elements such as transistors and diodes were mounted in chip form on the substrate and connected to the thin film elements by thermal compression bonds" (221). That said, however, the detailed accounts of the challenges of materials science and process engineering that faced these innovators make for a fascinating read, even when the exact details of engineering elude the reader.

I also believe that the book could have been more carefully signposted throughout; the text, which is essentially a chronological account, sometimes skips forward or back in time to pick up a related thread that has already been alluded to elsewhere, disorienting the reader. Likewise, it is sometimes difficult to assess how representative the selected firms were of firms in their time and place. Were they outliers notable for their unprecedented success? Or were other firms following similar trajectories with more modest results? Additional context would help the reader fully appreciate the magnitude of achievement of these entrepreneurs, inventors, and visionaries.

These minor qualifications notwithstanding, this book is a valuable and unique addition to the body of research about Silicon Valley. Its portrait of the engineering and manufacturing challenges of the early industry, innovations in management, and the adaptability of firms to changing military, political, and economic conditions and its careful scholarship ensure that it will long be a useful source in studying this formative period of American industrial history.

Leslie, S. 1992. The Cold War and American Science: The Military-Industrial-Academic Complex at MIT and Stanford. New York: Columbia University Press.

Saxenian, A. 1994. Regional Advantage: Culture and Competition in Silicon Valley and Route 128. Cambridge, MA: Harvard University Press.

Judith Otto:
Judith Otto is Assistant Professor of Geography at Framingham State College, Framingham, MA. Her research interests include the spatial dimensions of economic sector growth and change, place marketing and promotion, and metropolitan governance.  <jotto@framingham.edu>

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