The Rise, Fall and Revival of AMD

AMD is one of the oldest designers of large scale microprocessors and has been the subject of polarizing debate among technology enthusiasts for nearly 50 years. Its story makes for a thrilling tale — filled with heroic successes, foolhardy errors, and a close shave with rack and ruin. Where other semiconductor firms have come and gone, AMD has weathered many storms and fought numerous battles, in boardrooms, courts, and stores.

In this feature we’ll revisit the company’s past, examine the twists and turns in the path to the present, and wonder at what lies ahead for this Silicon Valley veteran.

The rise to fame and fortune

To begin our story, we need to roll back the years and head for America and the late 1950s. Thriving after the hard years of World War II, this was the time and place to be if you wanted experience the forefront of technological innovation.

Companies such as Bell Laboratories, Texas Instruments, and Fairchild Semiconductor employed the very best engineers, and churned out numerous firsts: the bipolar junction transistor, the integrated circuit, and the MOSFET (metal oxide semiconductor field effect transistor).

Fairchild engineers, circa 1960 — Gordon Moore is far left, Robert Noyce is in the middle foreground.

These young technicians wanted to research and develop ever more exciting products, but with cautious senior managers mindful of the times when the world was fearful and unstable, frustration amongst the engineers build a desire to strike out alone.

And so, in 1968, two employees of Fairchild Semiconductor, Robert Noyce and Gordon Moore, left the company and forged their own path. N M Electronics opened its doors in that summer, to be renamed just weeks later as Integrated Electronics — Intel, for short.

Others followed suit and less than a year later, another 8 people left and together they set up their own electronics design and manufacturing company: Advanced Micro Devices (AMD, naturally).

The group was headed by Jerry Sanders, Fairchild’s former director of marketing, They began by redesigning parts from Fairchild and National Semiconductor rather than trying to compete directly with the likes of Intel, Motorola, and IBM (who spent significant sums of money on research and development of new integrated circuits).

From these humble beginnings, and a quick move from Santa Clara to Sunnyvale (Silicon Valley in California), AMD offered products that boasted increased efficiency, stress tolerances, and speed within a few months. These microchips were designed to comply with US military quality standards, which proved a considerable advantage in the still-young computer industry, where reliability and production consistency varied greatly.

AMD’s first copycat CPU — the Am9080. Image: Wikipedia

By the time Intel released their first 8-bit microprocessor (the 8008) in 1974, AMD was a public company with a portfolio of over 200 products — a quarter of which were their own designs, including RAM chips, logic counters, and bit shifters. The following year saw a raft of new models: their own Am2900 integrated circuit (IC) family and the 2 MHz 8-bit Am9080, a reverse-engineered copy of Intel’s successor to the 8008. The former was a collection of components that are now fully integrated in CPUs and GPUs, but 35 years ago, arithmetic logic units and memory controllers were all separate chips.

The blatant plagiarism of Intel’s design might seem to be somewhat shocking by today’s standards, but it was par for the course in the fledgling days of microchips.

The blatant plagiarism of Intel’s design might seem to be somewhat shocking by today’s standards, but it was par for the course in the fledgling days of microchips. The CPU clone was eventually renamed as the 8080A, after AMD and Intel signed a cross-licensing agreement in 1976. You’d imagine this would cost a pretty penny or two, but it was just $325,000 ($1.65 million in today’s dollars).

The deal allowed AMD and Intel to flood the market with ridiculously profitable chips, retailing at just over $350 or twice that for ‘military’ purchases. The 8085 (3 MHz) processor followed in 1977, and was soon joined by the 8086 (8 MHz). Design and manufacturing improvements led to the 8088 (5 to 10 MHz) appearing in 1979, the same year that also saw production begin at AMD’s Austin, Texas facility.

When IBM began moving from mainframe systems into so-called personal computers (PCs) in 1982, the outfit decided to outsource parts rather than develop processors in-house. Intel’s 8086, the first ever x86 processor, was chosen with the express stipulation that AMD acted as a secondary source to guarantee a constant supply for IBM’s PC/AT.

Any color, as long as it’s beige. IBM’s 5150 PC from 1981

A contract between AMD and Intel was signed in February of that year, with the former producing 8086, 8088, 80186, and 80188 processors — not just for IBM, but for the many IBM clones that proliferated (Compaq being just one of them). AMD also started manufacturing the 16-bit Intel 80286, badged as the Am286, towards the end of 1982.

This was to become the first truly significant desktop PC processor, and while Intel’s models generally ranged from 6 to 10 MHz, AMD’s started at 8 MHz and went as high as 20 MHz. This undoubtedly marked the start of the battle for CPU dominance between the two Silicon Valley powerhouses; what Intel designed, AMD simply tried to make better.

This period represented a huge growth of the fledgling PC market, and noting that AMD had offered the Am286 with a significant speed boost over the 80286, Intel attempted to stop AMD in its tracks. This was done by excluding them from gaining a licence for the next generation 386 processors.

AMD sued, but arbitration took four and a half years to complete, and while the judgment found that Intel was not obligated to transfer every new product to AMD, it was determined that the larger chipmaker had breached an implied covenant of good faith.

Intel’s licence denial occurred during a critical period, right as IBM PC’s market was ballooning from 55% to 84%. Left without access to new processor specifications, AMD took over five years to reverse-engineer the 80386 into the Am386. Once completed, it proved once more to be more than a match for Intel’s model. Where the original 386 debuted at just 12 MHz in 1985, and later managed to reach 33 MHz, the top-end version of the Am386DX launched in 1989 at 40 MHz.

The Am386’s success was followed by the release of 1993’s highly competitive 40 MHz Am486, which offered roughly 20% more performance than Intel’s 33 MHz i486 for the same price. This was to be replicated throughout the entire 486 line up, and while Intel’s 486DX topped out at 100 MHz, AMD offered (somewhat predictably at this stage) a snappier 120 MHz option. To better illustrate AMD’s good fortune in this period, the company’s revenue doubled from just over $1 billion in 1990 to well over $2 billion in 1994.

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