From memory
to microprocessors.

In the middle of 1985, Andy Grove asked Gordon Moore a question that ended the argument inside Intel. The company had invented the DRAM in 1970. By 1984 its memory market share had collapsed to roughly one percent. Within twelve months, Intel would post a $173M loss, close eight fabs, eliminate 7,200 jobs — and bet itself on a chip a small Houston company named Compaq was willing to buy.

A reconstruction · Sources: Grove, "Only the Paranoid Survive" · Burgelman · Intel annual reports 1985–1995 · Moody's, Computer History Museum

“

If we got kicked out and the board brought in a new CEO, what do you think he would do?

— He would get us out of memories.

Why shouldn't you and I walk out the door, come back, and do it ourselves?

Andy Grove to Gordon Moore · Intel HQ, Santa Clara · summer 1985

One company. Two product lines. The handoff.

Intel revenue mix · 1981 — 1995 · est. $ billions

Memory (DRAM, EPROM, SRAM)

Microprocessors & logic

Other (systems, networking)

1986 net loss

−$173M

"The toughest year in Intel's history." Salaried employees took a 10% pay cut. Grove and Moore took larger ones.

Fabs closed

In Oregon, Puerto Rico, the Philippines, California. The factory base sized for memory was rebuilt for logic.

Jobs eliminated

7,200

Roughly a third of the workforce. Many returned later — to the microprocessor fabs Intel was about to build.

Market cap, 1985 → 1995

×17

From ~$3B to ~$50B. By the late 1990s, Intel was the most valuable semiconductor maker in the world.

The line of succession

Five chips that took Intel from a memory house with a sideline in CPUs to the most profitable architecture franchise in industrial history. The 386 was sole-sourced; AMD was denied the license. Compaq's Deskpro 386, in September 1986, beat IBM's PS/2 to market by ten months and reset who set the PC standard.

OCT 1985

i386 DX

TRANSISTORS

275,000

32-bit. 16 MHz. Compaq beats IBM to market with the Deskpro 386. AMD is denied a license — for the first time, Intel sole-sources.

APR 1989

i486

TRANSISTORS

1.2M

Floating-point unit on-die. The PC market converges around x86. "Intel Inside" branding launches in 1991.

MAR 1993

Pentium

TRANSISTORS

3.1M

Superscalar, dual integer pipelines. Windows 95 launches two years later. Intel is the brand on the box.

NOV 1995

Pentium Pro

TRANSISTORS

5.5M

Out-of-order execution. Servers and workstations. Intel breaks into the high end Sun and DEC had owned.

MAY 1997

Pentium II

TRANSISTORS

7.5M

By now Japan's chip industry is a tenth of the world. The pivot is complete; the next chapter is in Hsinchu.

From memoryto microprocessors.

One company. Two product lines. The handoff.

The line of succession

From memory
to microprocessors.