William Shockley was surpassed by others for promotion to head all
research, so he left Bell Labs. Bell’s top managers felt he was
most effective where he was. Other top physicists such as John
Bardeen had complained of Shockley’s ham-handed management.
Shockley lacked the broader organization skills for directing a wider
variety of work. He sought positions at other businesses and as a
university professor, but then decided to devote his efforts to start
his own company in the semiconductor industry. He finally met with
someone who was willing to back him for the $1 million he sought.
This was Arnold Beckman, both a good scientist and a successful
business man. He was the head of Beckman Instruments, a company that
specialized in making analytical instruments, such as a pH meter, for
controlling production processes.
Shockley flew Los Angeles and met with Beckman for a week to discuss
and then form a business plan. Beckman wanted the new company to be
in the LA area, but Shockley wanted it near San Francisco and
Stanford University. The provost and dean of engineering at Stanford
helped Shockley convince Beckman that being near Stanford would be
the best place for recruiting employees and having contacts for
getting business.
Shockley first tried to recruit people from Bell Labs, but wasn’t
successful. He then sought recruits from other firms such as
Motorola, Philco, Raytheon, and Sylvania. He also sought young PhDs
at top schools like Berkeley, Cal Tech, and MIT. When Beckman
announced the launch of Shockley Semiconductor Laboratory, there were
only four Ph.D. scientists and engineers on board. As the facilities
were being made for the laboratory, he recruited Robert Noyce and
Gordon Moore. Noyce and Moore would later became the co-founder of
Fairchild Semiconductor and Intel.
Beckman paid $25,000 to Western Electric to license patent rights in
the transistor. Shockley’s contacts Bell Labs were helpful in
gaining more info about production techniques. Still the going was
tough. It was one thing to get methods working in the
ultrahigh-technology environment of Bell Labs with its ample supply
of first-rate scientists, engineers, and technicians and high-quality
equipment. It was quite another to achieve the same results in the
primitive surrounding of Shockley’s lab, even with the talent
there.
In November, 1956 Shockley learned he was to be awarded the Nobel
Prize in physics along with Bardeen and Brattain. They all met in
Stockholm to receive their award in December 1956. As 1957 began, his
company was not doing well. It had been in operation more than a
year, but was still struggling to produce anything for sale. Employee defections began. Beckman began to realize that Shockley was a
brilliant physicist but a lousy business manager. Shockley devoted
his efforts to developing one kind of transistor while Noyce, Moore,
and others thought it was a waste of time. Several months later
Noyce, Moore and six other of Shockley’s brightest recruits
resigned to start their own company. They got financing from
Fairchild Camera and Instruments and named their company Fairchild
Semiconductor.