Traitorous Eight - Resignation

Resignation

In March 1957, Kleiner, who was beyond Shockley's suspicions, asked permission to supposedly visit an exhibition in Los Angeles. Instead he flew to New York to seek investors for a new company, and his parents, New York residents, assisted him. Kleiner was supported by Blank, Grinich, Last, Roberts, Hoernie and Moore. Arthur Rock and Alfred Coyle from Hayden, Stone & Co. became interested in the offer, believing that trainees of a Nobel laureate were destined to succeed.

As a last resort, on May 29, 1957 a group led by Moore presented Arnold Beckman with an ultimatum: solve the "Shockley problem" or they will leave. Moore suggested finding a professor position for Shockley and replacing him in the lab with a professional manager. Beckman refused, believing that Shockley could still improve the situation, but later regretted this decision.

In June 1957, Beckman finally put a manager between Shockley and the team, but by then seven key employees had already made their decision. At the last minute they were joined by Noyce. Roberts persuaded him to attend the meeting of the "California group", as they called themselves in the agreement with Fairchild. The meeting was held at the Clift Hotel in California and was attended by Rock and Coyle. These ten people became the core of a new company.

Coyle, a ruddy-faced Irishman with a fondness for ceremony, pulled out 10 newly minted $1 bills and laid them carefully on the table. "Each of us should sign every bill", he said. These dollar bills, covered with signatures, he explained, would be their contracts with each other.

Finding investors proved to be difficult. The US electronics industry was concentrated in the east, whereas the California group preferred to stay near Palo Alto. In August 1957, by accident, Rock and Coyle met with the inventor and businessman Sherman Fairchild, the founder of Fairchild Aircraft and Fairchild Camera. Fairchild sent Rock to his deputy, Richard Hodgson. Hodgson, risking his reputation accepted the offer and within a few weeks completed all paperwork. The capital of the new company, Fairchild Semiconductor, was divided into 1,325 shares. Each member of the traitorous eight received 100 shares, 225 shares went to Hayden, Stone & Co and 300 shares remained in reserve. Fairchild provided a loan of $1.38 million. To secure the loan, the traitorous eight gave Fairchild the voting rights on their shares, and the right to buy their shares at a fixed total price of $3 million.

On September 18, 1957, Blank, Grinich, Kleiner, Last, Moore, Noyce, Roberts and Hoernie resigned from Shockley Labs. They became known as "traitorous eight", though it is not known who coined the term. Shockley could never understand the reasons for this split. Since then, he never talked to Noyce again, but continued to follow the work of "The Eight". He also went through all the records left by The Eight and patented their important ideas in favor of the Shockley Labs owners. However, he kept the inventor's names in the patents.

In 1960, with the help of a new team, Shockley brought his diode to serial production, but time had been lost, and competitors had already come close to the development of integrated circuits. Beckman sold the unprofitable Shockley Labs to investors from Cleveland. On July 23, 1961, Shockley was seriously injured in a car crash, and after recovery left the company and returned to teaching at Stanford. In 1969, IT&T, the new owners of Shockley Labs moved the company to Florida. The staff refused to move, however, and the lab ceased to exist.