Silicon Insider: Battle of the Microchip Giants

March 10, 2006 — -- Once again, it's Intel, AMD and all that Viiv ...

The greatest curse you can put on a company is, May you have only one real competitor. It is a special kind of hell -- the corporate equivalent of being handcuffed for the rest of your life to someone you have a homicidal hatred of, and who, in turn, devotes every hour of every day to figuring out ways to destroy you.

Think Coke and Pepsi, Hertz and Avis. Here in Silicon Valley, we have our share of these lifelong feuds: Apple and Microsoft, Oracle and Microsoft, Netscape and Microsoft … etc.

But the greatest, nastiest, costliest and most enduring feud in Silicon Valley -- and in all of high-tech -- is the 30-year-old fight between Intel Corp. and Advanced Micro Devices. What makes it particularly memorable -- and bitter -- is that it deals not only with products and markets but with friendships, personal animosities, even paternal loyalties.

Over those three decades, the fight between Intel and AMD has been the bloodiest, most vicious -- and ultimately most rewarding for us consumers -- sideshow in tech. Intel versus AMD is the Jarndyce and Jarndyce of electronics. It stretches back so far in time that its origins are largely lost in the mists of history; even many of the original principals are either retired or dead.

Yet even today it is fought as ruthlessly as ever -- perhaps because the stakes are so huge: Intel wants to consolidate its control of the multibillion-dollar microprocessor industry to turn its full attention to a serious new competitive threat from the Far East; and Advanced Micro Devices just wants to survive.

As it happens, I was around for the beginnings of this feud and have known most of the players. So, brief summary of the war to date:

Intel Corp. was founded in 1968 by two senior executives who jumped from troubled Fairchild Semiconductor: Robert Noyce and Gordon Moores, both legendary figures in the history of electronics. They brought with them as their first employee a brilliant and irascible Fairchild exec named Andrew Grove. Given the blue chip nature of the founding team, Intel was fully funded almost overnight and quickly positioned itself as a leader in the memory chip business.

In late 1969, Intel was approached by a failing Japanese calculator company, Busicom, to make a new kind of chip that combined memory, logic and input/output on just four chips, with the goal of ultimately putting it all on one monolithic sliver of silicon. Despite real concerns, Intel took the contract … and ultimately invented the most important product of the modern world, the microprocessor. Ultimately, it abandoned the hugely lucrative memory business to focus exclusively on the microprocessor and turned itself into one of the greatest companies on earth.

Advanced Micro Devices was also formed out of Fairchild, but its pedigree was far different. Jerry Sanders, the leader of the group of eight who founded the company, was a flamboyant salesman who had spent most of his tech career at Fairchild's sales office in Hollywood rather than at headquarters in Mountain View.