Open Research Online The Open University’s repository of research publications and other research outputs The growth and decline of the semiconductor industry within the U.K. 1950-1985 Thesis How to cite: Morris, P. R. (1994). The growth and decline of the semiconductor industry within the U.K. 1950-1985. PhD thesis The Open University. For guidance on citations see FAQs. c 1994 The Author https://creativecommons.org/licenses/by-nc-nd/4.0/ Version: Version of Record Link(s) to article on publisher’s website: http://dx.doi.org/doi:10.21954/ou.ro.0000e065 Copyright and Moral Rights for the articles on this site are retained by the individual authors and/or other copyright owners. For more information on Open Research Online’s data policy on reuse of materials please consult the policies page. oro.open.ac.uk The Growth and Decline of the Semiconductor Industry within the U.K. 1950-1985 Offered for the degree of Doctor of Philosophy within the discipline of histoiy of science & technology by P.R. Morris BA(Hons), M.Phil, C.Eng., M.I.E.E., M.I.E.E.E. Submitted December 1 994 Abstract This thesis reviews the history of the semiconductor industry during the period 1950 to 1985 and identifies the major factors governing its development. It also analyses the rea- sons for the failure of British manufacturing companies to develop on a more competitive scale. The development of the British semiconductor industry, almost from the start, took place within an environment dominated by large foreign multinational companies. Operat- ing under conditions of technical lag and with increasing penetration of its markets, it con- centrated, aided by funding from the Ministry of Defence, on producing specialised solid-state components for the much smaller military market. Because of its size, this mar- ket was not sufficiently large to initiate the pump-priming action which was such an im- portant feature in bringing about the success of its American counterpart. Generous Government inducements, aimed at attracting multinational companies to British shores, did little to assist the development of the indigenous industry, which, un- derfunded, underprotected and increasingly restricted to niche markets by competitors, soon fell into relative decline. Direct Governmental assistance to the ailing commercial sector of the British semiconductor industry came too late substantially to affect the situa- tion. Both inconsistency and lack of continuity in policy towards the industry, under suc- cessive Governments, did not improve the confidence of industrial management, nor encourage a more long-term outlook. It is argued within this thesis that the best chance of industrial success would have been to adopt a national policy towards the industry at an early stage, with substantial funding on a long-term basis, together with adequate import controls. The epilogue concludes that only within a European framework might it now be possible to build a semiconductor manufacturing industry, eventually capable of competing on equal terms with overseas ri- vals. 1 Acknowledgements First and foremost, I would like to thank my three supervisors, Prof. R.A. Buchanan, Dr. D. Gorham and Dr. G.R. Roberts for their advice, encouragement, and support throughout this research project. Because of its nature, this work has relied, to a considerable extent, upon a wide range of information obtained through interviews with those in Government, industry and uni- versity departments. Almost all of those approached were extremely helpful, friendly and informative. This fact undoubtedly lightened my task and added to the enjoyment of the work. Some extent of my indebtedness may be obtained from a glance at the lengthy list of names of those who have assisted me and which I have included as an appendix. More generally, although also importantly, I am indebted to my ex. colleagues for the numerous and often rewarding conversations held through the years, when employed as a semiconductor engineer within the industry. Although it is impossible to properly evaluate their influence, there can be little doubt that my views regarding the industry have been, at the very least, strongly stimulated and tested by their opinions. Last but not least, I would also like to thank my daughter, Siani, for her welcome assis- tance in arranging the printing of the final version of this thesis. In order to conform to Open University regulations concerning previously published work, attention is drawn to the fact that some material contained within chapters 5 & 6 of this thesis has already been published under the title "The role of the Ministry of Defence (MOD) in influencing the commercial performance of the British semiconductor indus- try", History and Technology Vol.11, (1994), pp. 18 1-193. 11 Contents Page Abstract 1 Acknowledgements 11 Table of Contents 111 List of Tables vii Chapter 1 Introduction The Importance of Microelectronics 1 Introductory Theoretical Framework 2 Previous Contributions to the History of Semiconductor Manufacture: a Brief Survey 9 References 18 Chapter 2 A Review of the General Characteristics of the British Thermionic Valve Industry Introduction 21 The Development of the Thermionic Valve: The Initial Phase 1906-20 21 Development of the Valve Industry During the Inter-War Period 26 The UK Valve Manufacturing Industry in World War Two 36 Post-War Developments 41 Economies of Scale in Valve Manufacture 43 The Influence of Mullard Ltd upon Post-War Valve Manufacture 44 Cathode-ray Tube Production 47 Tube Sales and Import/Export Figures 48 Some Factors Affecting the Development of the Industry 50 Valve Manufacture within the United States 53 The Role of Patents 55 References 56 Chapter 3 Aspects of Early Semiconductor Development in the UK and USA Introduction 60 Genesis of the Transistor 60 Transistors versus Valves 66 Replacement of the Thermionic Valve by the Transistor 68 Aspects of Early (Germanium) Transistor Development 70 The Impetus of Military Involvement: Development of the Silicon Transistor 73 Transistor and Integrated Circuit Development 75 Product Innovation and Technical Lag 80 The British Contribution to Semiconductor Device Innovation 85 Infrastructural Factors Contributing to Technical Lag 86 111 Page The Nature of Semiconductor Development and its Contribution to Technical Lag 91 References 93 Chapter 4 Direct Governmental Involvement within the Semiconductor Manufacturing Industry Introduction 97 The Structure of Governmental Industrial Assistance - a Brief Chronological Survey 97 Governmental Policy - Organisations and Attitudes 102 Non-Defence Government Support Policy 109 INMOS 116 The Microelectronics Programme: Support within a Hostile Environment 120 Commercial Exploitation of Defence Contracts 125 Factors Involving Government Policies Directly Inhibiting Industrial Performance 127 Government Funding: A Conflict of Aims? 134 References 139 Chapter 5 Government Involvement within Non-Industrial Semiconductor Research Introduction 146 The Role of the Ministry of Defence 146 MOD Procurement: The Organisational Framework 149 MOD Procurement: The Strategy 151 Government R & D Establishments 153 Technological Innovation: Devices and Materials 155 The Post Office 161 University Involvement in Government Research 162 Government Policy: The Research Establishment View 165 Government Policy: The Industrial Viewpoint 170 References 174 Chapter 6 A Review of the Performance of Semiconductor Firms within theiJK Introduction l 78 Overseas Investment in Semiconductor Manufacture Within the United Kingdom 179 Mullard Ltd. 181 ITT Semiconductors 186 Texas Instruments 188 Overseas Subsidiaries in Scotland 194 The Effect of Foreign Market Penetration on Device Development in Britain 196 Ferranti Ltd. 197 The Plessey Company 205 The General Electric Company (GEC) 212 References 222 lv Page Chapter 7 Factors involving Industrial Performance - a Comparison between Britain and the United States Introduction 230 Research and Development: R & D Resources within America and Britain 231 British and American Public Funding - a Comparison 233 Early Government Involvement in Transistor Manufacture 235 University Research 237 Industrial and Economic Factors: Availability of Venture Capital 239 Wage Rates 240 Cost of Entry into the Industry 241 Technical Spin-off Under Conditions of an Assured Market 244 Skill Clusters 245 Labour Mobility 247 Communications 247 Conditions Governing Market Entry 248 Marketing 250 The Integrated Circuit: The US Circuit Procurement Programme 252 Patents and Licensing 256 References 263 Chapter 8 Technical Innovation and Economic Factors: Their Part in the Cycle of Industrial Growth and Decline Introduction 268 The Concept of Industrial Synergy and its Importance in Semiconductor Manufacture 269 The Manner of Industrial Growth 274 Factors Governing Synergistic Industrial Growth in the Components Industry 276 The Failure of Semiconductor Manufacture in Britain to Establish a Condition of Synergy 278 The Rise of Computer Manufacture and its Consequences for the Development of the British Semiconductor Industry 282 The American Technical Lead in Components: its Consequences for European Equipment Markets 286 Research Programmes and Commercial Spin-offs 289 References 290 Chapter 9 The Influence of Multinational Companies Introduction 294 Multinationals - The Advantages 294 Multinationals - The Costs 298 Multinationals - The Response 301 References 309 V Page Chapter 10 Summary and Conclusions Introduction 312 Industrial Factors 312 Governmental Factors