The founding of the new company was followed by Sperry Rand filing a lawsuit against National Semiconductor for patent infringement. By 1965, as it was reaching the courts, the preliminaries of the lawsuit had caused the stock value of National to be depressed. The depressed stock values allowed Peter J Sprague to invest heavily in the company with Sprague's family funds. Sprague also relied on further financial backing from a pair of west coast investment firms and a New York underwriter to take control as the Chairman of National Semiconductor. At that time Sprague was 27 years old. Jeffrey S Young characterised the era as the beginning of venture capitalism.
That same year National Semiconductor acquired Molectro. Molectro was founded in 1962, in Santa Clara, California by J. Nall and D. Spittlehouse, who were formerly employed at Fairchild Camera and Instrument Corporation. The acquisition also brought to National Semiconductor two experts in linear semiconductor technologies, Dave Talbert and Robert Widlar (Bob Widlar), who were also formerly employed at Fairchild. The acquisition of Molectro provided National with the technology to launch itself in the fabrication and manufacture of monolithic integrated circuits.
In 1967 Sprague hired five top executives away from Fairchild, among whom were Charles E Sporck and Pierre Lamond. At the time of Sporck's hiring, Robert Noyce was defacto head of semiconductor operations at Fairchild and Sporck was his operations manager.
Charles E Sporck was appointed President and CEO of National. To sweeten the deal for Sporck's hiring and appointment for half his former salary at Fairchild, Sporck was alloted a substantial share of National's stock. In essence, Sporck took four of his personnel from Fairchild with him as well as three others from TI, Perkin-Elmer and Hewlett Packard to form a new eight man team at National Semiconductor. Incidentally, Sporck had been Widlar's superior at Fairchild before Widlar left Fairchild to join Molectro due to a compensation dispute with Sporck.
In 1968, National shifted its headquarters from Danbury, Connecticut to Santa Clara, California. However, not unlike many companies, for legal and financial expediency, National retained its registration as a Delaware corporation.
However, over time National Semiconductor spun off these acquisitions. Fairchild Semiconductor became a separate company again in 1997, the Cyrix microprocessors division was sold to VIA Technologies of Taiwan in 1999.
From 1997 to 2002 National enjoyed a large amount of publicity and awards with the development of the Cyrix Media Center, Cyrix WebPad, WebPad Metro and National Origami PDA concept devices created by National's Conceptual Products Group. Based largely on the success of the WebPad National formed the Information Appliance division (highly integrated processors & "internet gadgets") in 1998. The Information Appliance Division was sold to AMD in 2002.
Other business like digital wireless chipsets, image sensors, PC I/O chipsets have also been recently closed down or sold off as National has reincarnated itself as a high performance analog semiconductor company.
Cost control, overhead reduction and a focus on profits implemented by Sporck was the key element to National surviving the price war and subsequently in 1981 becoming the first semiconductor company to reach the US$1 billion annual sales mark. However, the foundation that made National successful was its expertise in analogue electronics, TTL (transistor-transistor logic) and MOSFET (metal-oxide-semiconductor field-effect transistor) integrated circuit technologies. As they had while employed in Fairchild - Sporck and Lamond directed National Semiconductor towards the growing industrial and commercial markets and to rely less on military and aerospace contracts. Those decisions coupled with inflationary growth in use of computers provided the market for the expansion of National. Meanwhile, sources of funds associated with Sprague coupled with creative structuring of cash flow buffering due to Sporck and Lamond provided the financing required for that expansion. Lamond and Sporck had also managed to attract and extract substantial funds to finance the expansion.
Among Sporck's cost control efforts was his attraction towards low-cost labour and outsourcing of labour. National Semiconductor was among the pioneers in the semiconductor industry to invest in facilities to perform final manufacturing operations of integrated circuits in developing countries, especially in Southeast Asia.
National Semiconductor's manufacturing improvements under Sporck (in collaboration with Lamond) had not been enabled by emphasis on process innovation but on improving and standardising processes already established by other companies like Fairchild and Texas Instruments. As well as, by frequent raiding to hire from Fairchild's pool of talents.
Sporck and Lamond directed the company towards exploiting the growing commercial and industrial applications market, thus lessening dependence on competing for military and aerospace contracts.
It seems that companies like Sony of Japan and Swatch of Switzerland understood that the consumer market is much less a commodities market where low cost of products does not always equal demand for such products.
A few key executives and engineers left the company in 1981. Among them was Pierre Lamond, who had been the chief IC designer (now partner at Sequoia Capital). Robert Swanson's leaving the company in the same year to found Linear Technology was another indication of the appropriateness of organisational strategies of National Semiconductor under Sporck. "For 13 of 14 years at National, I was a gung-ho guy. Then, the company started to get big. I kept looking at all the companies whose butts we'd been kicking. And then National started organizing itself like them. It was frustrating." Swanson said in the May 13, 1991 Business Journal-San Jose.
Sporck's strategy of outsourcing sales to external sources meant National Semiconductor did not have sufficient or responsive resources to respond to requests from innovators, inventors and academic research - which would have been helpful in the technological innovation boom of the 1980s.
National Semiconductor's lack and loss of innovation meant it was producing products that were easily copied and reproducible. It may have been the cheapest manufacturer in the United States, but it was not the cheapest compared to the Asian manufacturers. This weakness in National Semiconductor was evident in its failure to compete during the globalisation of Japanese semiconductor companies in the 1980s, followed by the Taiwanese and South Koreans.
Amelio was faced with a company plagued with over-capacity and shrinking market share. Amelio found that, just prior to his taking helm, despite having spent US$1 billion over the last five years on research and development, National Semiconductor had a disappointing record in new products. The Business section of The New York Times January 11, 1991 reflected the over-capacity generated by Sporck that had to be inherited by Amelio.
Amelio disposed off the non-core products and assets in which National Semiconductor had no market motivation or expertise and turned the company towards its core expertise - analogue semiconductors. National Semiconductor under Amelio emphasized on reduction of cost of sales, improving capacity utilization, scrap reduction and cycle-time reduction. Redundant facilities were sold and consolidated.
With the progress of restructuring, National Semiconductor had revenues increased with each year. In 1994, National Semiconductor under Amelio posted record net revenues of US$2.29 billion. It was also a time when US semiconductor companies had regained market leadership. Amelio introduced benchmarking to evaluate productivity, restructured marketing strategies and reorganised management by introducing modern management practices and workplace environments.
Amelio divided products into two divisions: Standard Products group which comprises low-margin, logic and memory chips - commodity products which were more susceptible to cyclical demands and through which National Semiconductor had matured; and Communications & Computing group which comprises high-margin, value-added analogue and mixed-signal chips. Amelio's thus division of products seemed to prepare National Semiconductor for the eventual disposal of low-margin commodity products, which came to fruition later with the sale of a reconstituted Fairchild.
National Semiconductor under Amelio chose to build a brand new eight inch wafer fabrication plant in South Portland, Maine. It chose to divest itself from its then somewhat new plant in Migdal Ha'Emeq, Israel.
In 1995, Amelio was elected to be the chairman of the board of directors of National Semiconductor.
In 1994, Amelio accepted invitation from Apple Computer, a customer of National Semiconductor, to join its board of directors. Troubles at Apple later prompted its board to invite Amelio be its CEO, which he accepted in February 1996. National Semiconductor announced the resignation of Dr. Gilbert F. Amelio as the company's President, Chairman and Chief Executive Officer on February 2, 1996.
Halla reinforced Amelio's emphasis on the expertise of National Semiconductor in analogue technology. He also was, on occasions, an evangelist for analogue technology. However, he found that National Semiconductor under Amelio had insufficient product offerings. Halla embarked on a diversification into personal computer and graphics business.
He advocated pc-on-a-chip (aka system-on-a-chip) as a business direction for National Semiconductor. During his tenure at LSI, LSI had successfully applied similar concepts. However, LSI had steered clear of getting involved with PC technologies that would make it a competitor with Intel.
Halla held the vision that information appliances (IAs) would succeed the personal computer as a trend. He predicted that IAs would overtake sales of PCs by the year 2000.
To achieve the goal, National Semiconductor started acquiring companies that would provide the technological complements to do so. Among the acquisitions were Cirrus Logic Inc's PicoPower business, for its specialised expertise in small form factor devices; Mediamatics Inc, which makes multimedia connectivity products; Future Integrated Systems Inc, a PC graphics company; Gulbransen Inc, a digital audio technology maker; ComCore Semiconductor Inc, a maker of digital signal processing for LANs; Cyrix Corp, the maker of Intel x86 clones.
On March 11, 1997, National Semiconductor Corporation announced the US$550 million sale of a reconstituted Fairchild to the management of Fairchild with the backing of Sterling LLC, a unit of Citicorp Venture Capital. Fairchild carried with it what was mostly the Standard Products group previously segregated by Amelio. Incidentally, the effective price of acquisition of Cyrix was also US$550 million.
On November 17, 1997 National Semiconductor and Cyrix announced the merger of the companies. Cyrix would become an autonomous wholly owned subsidiary. Halla had earlier emphasized that National was after the low-end CPU market as part of the system-on-a-chip pursuit and therefore would not place emphasis on Cyrix's current development of high-end 6x86MX design. However, Cyrix later announced that its merger with National Semiconductor would not change its development or marketing plans.
The acquisition of an independent-minded Cyrix subsequently turned National Semiconductor from a collaborator into a competitor with Intel. National lost its business with Intel. Intel reinstated the relationship after the sale of Cyrix.
The acquisition of Cyrix also carried with it a business obligation as well as technical constraints to use IBM microelectronics division to fabricate the Cyrix chips, while National Semiconductor had plans to transfer their fabrication to its South Portland fab.
National incurred huge losses due to its processor business and announced the sale of Cyrix to VIA in 1999.
In 1999, National Semiconductor also put out feelers that it would sell, if not the whole then a majority stake of, its fabrication plant in South Portland, Maine. However, that did not come to fruition.
On June 28, 2000, National Semiconductor and TSMC Taiwan signed an agreement that would allow transfer of advanced fabrication technologies from TSMC to the National Semiconductor fabrication plant in South Portland, Maine.
National Semiconductor also had operations in Migdal (tower) Ha'Emeq (valley), Israel. National Semiconductor had six inch wafer fabrication operations there. In 1993, National Semiconductor divested to retain 19% ownership of the plant. The plant in Migdal Ha'Emeq, Israel is now constituted as Tower Semiconductor of Israel.
California County Assessor, Semiconductor Companies Resolve Tax Dispute. (Originated from San Jose Mercury News, Calif.)
Aug 17, 1993; SAN JOSE, CalifAug. 17--After five years of squabbling over an arcane accounting procedure for taxing manufacturing equipment,...