Forbes On AMD:
Forbes Article On AMD (Part I)
by: dew_diligence
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Malone's Musings: Jerry's Kids
By Michael S. Malone
July 7, 1999
When you talk about great Silicon Valley companies, the usual names always come to mind:
Hewlett-Packard for its dignity and decency; Intel for its technical leadership; Apple for its sheer
implausibility; and Sun and Oracle just for getting so damn big.
To that list you might add a few more shooting stars, companies that had their moment in the public's
imagination, then either dimmed out or exploded: Fairchild Semiconductor, Atari, Commodore, Tandem,
Silicon Graphics and National Semiconductor. And, of course, there are the new giants, monarchs of the
Internet, such as Yahoo! and eBay.
But there is one company that rarely gets mentioned, yet to my mind it may be, if not the greatest, then
the quintessential Silicon Valley company: Advanced Micro Devices (AMD). No other chapter in the
Valley story exhibits as many triumphs and tragedies, outrageousness and grinding hard work. Having
grown up here and written the area's history many times, I am convinced that to truly understand why
Silicon Valley is now the pre-eminent business community on Earth, you have to understand the meaning
of AMD. All of the pieces of the Valley myth are there.
AMD was founded in 1969 by Jerry Sanders and a group of engineers out of the legendary Fairchild
Semiconductor. Fairchild was the founding firm of the modern Valley, and when it blew up, more than
100 chip companies emerged from the blast. Sanders was the youngest and most outlandish of the
"Fairchildren." Unlike his fellow Fairchildren, manufacturer Charlie Sporck (National Semi) and
technologists Bob Noyce, Gordon Moore and Andy Grove (Intel), Sanders was merely a salesman. He
not only hadn't run a company, but as Fairchild's Hollywood area salesman, rarely even saw the home
office. Yet, undeterred, this former Chicago street urchin set out to build his own chip company.
It took a year. Where Noyce and company took a matter of days to find the funding for Intel, Sanders
spent months sleeping on a friend's couch by night and pounding the streets for investors by day. Thus,
from the beginning, AMD was reduced to a strategy of catching up to Intel that continues to this day.
And whereas Intel quickly dominated the market, and remains a corporate juggernaut, AMD had to use
every marketing trick it knew to at least appear like a player, when it was never more than an also-ran.
What AMD did have, that Intel did not, was Jerry Sanders himself. The most flamboyant figure in Valley
history, Sanders is legendary for his Bentley convertibles and beautiful women and Rodeo Drive lifestyle.
What was often missed by the public, but well known to his competitors, was that Sanders was also the
cleverest man in Silicon Valley; a marketer as great as Steve Jobs, but without the erratic behavior.
It was Sanders who kept AMD looking successful even when it was hurting, looking clever even when it
was plodding, and most of all, kept it alive when the rest of the chip industry also-rans began to fold.
None of this came without cost. AMD was and is a perpetually troubled company. Every successful year in
its history seems to have been matched by a disastrous one. The place has been at death's door a dozen
times--as it is right now, having just suffered a $200 million quarterly loss. AMD's top management ranks
regularly suffer turnovers. And even Sanders himself has paid the price in a wrecked marriage, lost friends
and fortunes, and public humiliation.
Yet, AMD plugs on, always coming back, always saving itself at the eleventh hour with some clever new
alliance or product or marketing strategy.
Easily the cleverest was Sanders willful misreading of an agreement with Intel to second-source one of that
company's early microprocessors. Sanders simply announced that the agreement covered all Intel
microprocessors, and happily set out to clone Intel's latest model. It led to one of the biggest and most
enduring lawsuits in industry history--but in the end AMD made billions, became a major figure in the
microprocessor business, and positioned itself to compete against Intel for years to come.
AMD is poised to again worry Intel. Next month, the company will announce its new K7 chip, the "Athlon."
Reportedly it is even faster than Intel's current Pentium Plus model (Intel stopped using numbers for its chips
when AMD began copying them--now AMD is mimicking Intel's new nomenclature).
The result will no doubt be one more trip to the top on AMD's endless roller-coaster ride. Sanders may be
pulling away from the day-to-day activities of the firm, but his lieutenants have learned well from the master.
Nearly 30 years on, Advanced Micro Devices still endures.
That's why, to my mind, AMD is the Valley's emblematic company. Too easily we celebrate monopolies
and overnight successes here in Silicon Valley. We know how to play those games well. What we're not so
good at is second acts: few companies here ever grow old, or, having once failed, manage to come back. It
seems to me that in the years to come, that skill will become vital--not just for the Valley, but the whole
technological world.
And no company is better equipped to instruct us than Jerry Sander's AMD.
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