the story of how AMD was born by shamelessly copying Intel

Today AMD is an absolute giant in the semiconductor segment, and its chips are among the most advanced in the world. Their history of innovation is undeniable, but the company’s origins began in a unique way: they ruthlessly copied an Intel chip.

Leave me that microscope. In the summer of 1973 Ashawna Hailey, Kim Kailey and Jay Kumar left their jobs at Xerox. But before doing so they wanted to say goodbye in style, and on their last day of work they took an Intel 8080they stripped him and then they used a microscope to take 400 photos of the die of that microprocessor.

Reverse engineering. These images allowed the design and architecture of that revolutionary processor to be “deciphered” by reverse engineering, and thanks to them, these three engineers were able to sketch the schematics and logical diagrams that they then offered to Silicon Valley companies to see if any were interested.

The origin: Am9080. AMD was the one that ended up taking advantage of that information. The company had just developed a process called “N-channel MOS” for chip manufacturing. The company was taking its first steps at that time, and had hardly any achievements to its credit. What AMD did was combine this advance in its manufacturing technologies with those schemes and launched its Am9080, which some sources suggest began to be sold in 1974 but which in reality did not begin mass production and sale until 1975, 50 years ago.

They cloned it and improved it. In an interview with Shawn and Kim Hailey conducted in 1997, these engineers explained how that AMD chip was a resounding success because it managed to be 10 times more efficient in production than Intel: the company managed to obtain 100 dies per wafer, but the chip was also four times more powerful than the original 8080.

They made them for 50 cents, they sold them for 700 dollars. That success allowed AMD to begin mass production of a chip that suddenly suffered notable demand, especially in the military and defense industry. In fact, it is estimated that the manufacturing cost of each Am9080 was 50 cents, when the selling price of each one was 700 dollars according to said engineers. The profit margin was absolutely extraordinary.

Intel ended up making a deal. That managed to turn AMD into a reference company in the market, and that gave it an advantageous position. One with which he avoided endless legal disputes and which allowed him to sign a cross-licensing agreement with Intel. That made AMD a “second source” for manufacturing its processors.

Why did Intel allow something like this? It wasn’t for the love of art. At that time, obtaining lucrative contracts with defense agencies required precisely having a “second source” that could manufacture chips if the original supplier had a problem.

Here peace and then glory. That led AMD and Intel to sign an agreement in which AMD paid Intel $25,000 to sign and $75,000 a year for licenses — ridiculous amounts — and that also freed both parties from liability for potential past violations. Everything was forgotten.

And finally, x86. That initial agreement was important in achieving the true agreement that sealed AMD’s future. In 1982 Intel allowed AMD to manufacture its own x86 chips. This meant that the firm could begin producing its own versions of chips that used that architecture, the first of which crystallized with the Am286 in 1982, a chip that was a licensed version of the Intel 80286.

The rest, as they say, is history. That agreement managed to turn AMD into the great alternative to Intel. Although for years it remained in the shadow of its great competitor, AMD managed to expand its business to the graphics card segment and in recent years this has served to raise it well above Intel in market capitalization: today AMD is the 25th company in the world with a capitalization of 410,000 million dollars. Intel, meanwhile, is going through a notable crisis and is currently the 96th company in the world by capitalization: 182 billion dollars.

And it all started (practically) with some microscope photos.

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