BELL LABS IS BORN

“How do you manage genius?
You don’t.” 

—  Mervin Kelly,
president of Bell Labs (1951–1959)

Bell Labs, a legendary research hub in New Jersey, began as a branch of the Western Electric Company, a subsidiary of the American Telephone and Telegraph Company (AT&T).

Founded in 1925 to meet a growing need for mass communications, Bell Labs hired top engineers, physicists, chemists, and mathematicians to design and patent equipment (including a high-vacuum tube that transmitted telephone signals across North America).

Bell Labs encouraged interdisciplinary collaboration that produced groundbreaking discoveries. The labs were driven by scientific curiosity, flexible deadlines, and — thanks to AT&T’s budget — stable funding. Lab directors adopted a hands-off management style, and innovation flourished.

A REVOLUTIONARY TRANSISTOR

“The legacy of Bell Labs is in every electronic device we use today.” 

—  Jon Gertner, author of
The Idea Factory: Bell Labs and the Great Age of American Innovation

In the post-World War II period, Bell Labs’ Mervin Kelly assembled an all-star team of scientists to develop a replacement for the vacuum tube, which was bulky, fragile, and prone to burning out.

In 1947, John Bardeen and Walter Brattain — supervised by fellow physicist William Shockley — invented the point-contact transistor, a semiconductor device that amplifies sound and switches electrical currents on and off.

In 1948, Shockley designed the junction transistor, a more robust and reliable transistor. Its small size, low power consumption, and durability paved the way for computers, portable radios, cell phones, and other devices.

Eight years later, Bardeen, Brattain, and Shockley would be awarded the Nobel Prize in physics for this breakthrough.

SILICON VALLEY AND MICROCHIPS

“The expertise and the spirit of Bell Labs spread outward, and in that sense, you can say the baton really did pass to Silicon Valley.”

—  Jon Gertner, author of
The Idea Factory: Bell Labs and the Great Age of American Innovation

Bell Labs continued to improve transistor technology during the 1950s, developing the silicon transistor and the metal-oxide-semiconductor field-effect transistor (MOSFET).

The MOSFET proved crucial for building high-density integrated circuits (ICs), or microchips, in the 1960s. Microchips — consisting of billions of tiny transistors crafted from semiconductor materials, commonly silicon — work together to power electronics.

Recognizing the potential for widespread impact and profits, Bell Labs created licensing agreements to share transistor technology with other companies.

In 1955, William Shockley left Bell Labs to establish Shockley Semiconductor Laboratory in Mountain View, California. Within a couple of years, some of his employees — engineers and scientists — formed their own company, Fairchild Semiconductor.

Fairchild is credited with the birth of Silicon Valley. The company became a major player in the growing semiconductor industry, and many Silicon Valley firms — including Intel (founded in 1968) and Apple (in 1976) — have ties to Fairchild alumni to this day.

SEMICONDUCTORS GO GLOBAL

“Every country in the world wants their own version of [semiconductor manufacturing], because it gives you a supply chain and economic and national security.”

—  Thomas Caulfield,
executive chairman of GlobalFoundries

As demand for semiconductors grew, so did the need for manufacturing capabilities.

Throughout the 1980s and 1990s, Japan, South Korea, and Taiwan became players in the industry, with Japanese companies like Toshiba and NEC influencing the data-storage market and South Korea’s Samsung and SK Hynix focusing on memory-chip production.

Meanwhile, the Taiwan Semiconductor Manufacturing Company (TSMC) upended a traditional business model of integrating chip design and manufacturing. It introduced the fabless-foundry model, encouraging firms to specialize in either design (fabless) or fabrication/manufacturing (foundry).

This increased efficiency. What’s more, it allowed many small firms — those lacking resources to open manufacturing plants — to design chips.

THE OFFSHORING ERA

“Three decades ago, the United States led the world in semiconductor manufacturing. The U.S. has a great base of science and technology talent. Now we need to rebuild our manufacturing base … to strengthen our leadership.”

—  Walter Copan,
former under secretary of commerce for standards and technology (2017–2021)

The emergence of the internet, personal computing, and mobile communications drove unprecedented demand for semiconductors.

This demand fueled the expansion of offshore manufacturing — U.S. companies moved production to East Asia, notably Taiwan, to reduce costs. (By 2022, the U.S. share of global chip manufacturing had dropped to 10 percent, down from 37 percent in 1990.)

As internet use increased worldwide and the Y2K computer glitch required attention, U.S. companies offshored software services, particularly to India.

The increasing complexity of microchips and rising fabrication costs led more companies to adopt the fabless (design-only) business model, further expanding offshore operations.

These trends transformed the semiconductor industry into a globalized landscape with complex supply chains. By the 2000s, Asia had become the center of semiconductor manufacturing.

THE U.S. CHIP RENAISSANCE

“Strategic investment in [chip] manufacturing will create 90,000 American jobs and advance the American semiconductor industry.”

—  Sanjay Mehrotra, president and chief executive of Micron Technology

President Trump has long prioritized the return of chip manufacturing.

Boosted by government incentives and private investment, chip manufacturing is projected to significantly strengthen the U.S. semiconductor industry by increasing domestic production, creating tens of thousands of jobs and strengthening national security and economic competitiveness.

A stronger domestic semiconductor industry will ensure a reliable supply of critical chips for defense and other essential sectors, all while fostering innovation.

Industry experts say this shift will help the U.S. lead in strategic technologies such as artificial intelligence (AI), 5G and 6G communications, and quantum computing (harnessing quantum mechanics to solve problems that even the most powerful classical computers cannot).

THE NEXT ERA OF INNOVATION

“Quantum computing is a completely new era of computing. You could almost think of it as a new type of transistor.”

— Walker Steere, engineer at IonQ

Experts predict that quantum computing — with its ability to accelerate AI by overcoming limitations on data size, complexity, and processing speeds — will shape the future.

Quantum AI will develop algorithms that could advance pharmaceutical discoveries, predict financial outcomes, improve manufacturing, and bolster cybersecurity. Quantum/AI partnerships already comprise an active and developing market, with U.S. tech giants like IBM and Nvidia investing in both domains.

U.S. firms GlobalFoundries and IonQ are also pursuing these frontiers.

Through strategic partnerships, GlobalFoundries positions itself as a leading chip manufacturer for the quantum industry.

IonQ invests in advanced trapped-ion quantum computers, while developing hybrid models that combine quantum and classical computing to enhance AI capabilities.

Walker Steere anticipates “massive breakthroughs” in chemical and pharmaceutical research and engineering. Technology is constantly evolving, he says. “I’d much rather contribute to developing that technology than watching from the sidelines as others do.”