Importance of military funding. Before switching over to the events at Intel, the aspect of military funding is to be dealt with, since it has played an important role in the early days of Silicon Valley. During World War II, after the Japanese attack at Pearl Harbor in 1942, a great deal of the U.S. military forces and of the military production was moved to California. Within a few years, California - formerly an agricultural state - became a booming industrial state and the military center of the USA. After the war, in the time of the Cold War and the arms race, the Korean conflict, the missile gap and the space program, the Pentagon kept ordering high-technology products from the armament factories in California.
Many companies established R D departments and production facilities in Santa Clara County near Stanford University, which provided them with bright engineers and scientists, and were largely supported by the Pentagon s demand for electronic high-tech products.
Examples for such firms are FMC, GTE, Varian Associates, Westinghouse, and finally Lockheed, which opened its R D department in the Stanford Research Park in 1956, and started Lockheed Missiles and Space Company LMSC in Sunnyvale. Lockheed s move to Northern California was crucial for the developments in Santa Clara County today the company is Silicon Valley s largest employer with more than 24,000 people.
Military funding for high-tech products was responsible for the early growth of Silicon Valley in the 1950s and 1960s. The U.S. Department of Defense was the biggest buyer of these products, e.g. its purchases represented about 70 percent of the total production of ICs in 1965. While this share in chip demands has dropped to 8 percent today, the Pentagon remains the biggest supporter of new technologies and accounts for most of the purchases of the latest developments.