Anthony J. Pennings, PhD


Why AT&T Invented and Shared the Transistor that Started the Digital Revolution

Posted on | March 5, 2011 | No Comments

The invention of the transistor in 1947 provided an extraordinary capability to control an electrical current. It was initially used to amplify electromagnetic frequencies and transistors and transistorthen to switch the 1s and 0s needed for digital computing. An unlikely scenario unfolded in the 1950s when AT&T’s fear of government anti-trust action and regulation sparked sharing this seminal technology with other companies. This self-serving altruism led to the “solid-state” electronics revolution and many silicon semiconductor innovations that rapidly developed computerized information technology.

The transistor emerged from the research efforts of AT&T, the corporate behemoth formed by JP Morgan and guided by US policy to become the nation’s primary telecommunications provider. In 1913, AT&T settled its first federal anti-trust suit with the US government. The agreement established the company, starting with Alexander Graham Bell’s technology, as an officially sanctioned monopoly. A document known as the Kingsbury Commitment spelled out the new structure and interconnection rules in return for AT&T divesting its controlling interest in telegraphy powerhouse Western Union.

Both companies had a history of consolidating their market domination through patent creation or purchase. For example, AT&T purchased the patents for the De Forest vacuum tube amplifier in 1915, giving it control over newly emerging “wireless” technologies such as radio and transatlantic radiotelephony, as well as any other technology that used the innovation to amplify electrical signals. Patents, as government-sanctioned barriers to entry, created huge obstacles for other competitors and effectively barred them from producing and using anything close to the restricted technology.

As AT&T grew more powerful, it established Bell Telephone Laboratories Inc. (Bell Labs) in 1925 as a research and development subsidiary. Fed by AT&T’s monopoly profits, Bell Labs became a virtual “patent factory,” producing thousands of technical innovations and patents a year by the 1930s. One of its major challenges was to find a more efficient successor to the vacuum tube.

A breakthrough occurred when William Shockley, PhD, who was the director of transistor research for Bell Labs worked with fellow PhDs John Bardeen and Walter Brattain to create the “Semiconductor amplifier; Three-electrode circuit element utilizing semiconductive materials.” The transistor’s inception dates to December 23, 1947 at Bell Labs’ facilities in Murray Hill, New Jersey.

At the time, AT&T’s famed research facility employed nearly 6,000 people, with 2,000 being engineering and research professionals.[1] The development of the transistor was not a result of just basic research; it was the result of an all-out attempt to find something to replace the vacuum tube. In any case, the government’s lawsuit meant that AT&T would tread lightly with this new invention lest it raise additional concerns about Ma Bell’s monopoly power.[2]

After World War II, the US Justice Department filed another anti-trust lawsuit against AT&T. In 1949, it sought the divestiture of Western Electric, AT&T’s equipment-manufacturing arm. The action came after, although not necessarily because of the telephone company’s invention of the transistor, an electronic device that regulated the flow of electricity through a small cylinder device. It operated much like the vacuum tube, but the transistor was “solid-state”: easier to use, more reliable, and much smaller. Faster to react, less fragile, less power-hungry, and cooler-running than glass vacuum tubes (which had to “warm up” to operating temperatures), it was ideal for a wide variety of electronic devices.

Unlike its previous history of zealously controlling or acquiring patents (including the vacuum tube) dealing with its telephone network, AT&T decided to liberally license the new technology. It did not want to antagonize the Justice Department over a technology it did not fully understand nor knew how to implement commercially. However, some of the Bell Labs employees were already jumping ship with the technology, and the anti-trust action was an indication that any patent infringement cases would be complex to defend in court.

So in 1951 and 1952, Bell Labs put on two symposiums revealing all their information on the transistor. The first was for government and military officials only, while twenty-five American companies and ten foreign companies attended the second. All were required to put out $25,000 as “a down-payment on a license.” Sensing the potential of the new device, the Department of Defense awarded a number of multi-million dollar contracts for transistor research contracts. General Electric, Raytheon, RCA, and Sylvania, all major vacuum tube makers, began working with their transistor licenses on military applications. AT&T’s Western Electric for example found in the Department of Defense an immediate market for nearly all its transistors.[3] AT&T’s fear of the government’s anti-trust threat resulted in an extraordinary diffusion of the century’s most important technology.

In the mid-1950s, the US government made a fateful decision regarding the semiconductor industry’s future when it ruled on Western Electric’s fate. In 1956, the Justice Department let AT&T hold on to its manufacturing subsidiary under two conditions. First, it restricted the telephone company from computer-related activities except for sales to the military and for their own internal purposes, such as in telephone switching equipment. Second, AT&T was also required to give up its remaining transistor patents.[4] As a consequence of the government’s pressure, the nascent semiconductor industry was released from the control of the monolithic telephone company.

Three licensees, Motorola, Texas Instruments, and Fairchild, in particular, took advantage of AT&T’s transistor technology. Each procured valuable government contracts to refine the electronic switching technology and increase reliability. The government contracts also helped them develop sophisticated manufacturing techniques to mass-produce the transistors. In particular, two political developments, the nuclear arms race with the USSR and the goal to land on the Moon, became essential for advancing the transistor technology that would propel an electronics revolution and lead to significant advances in computer technologies.

In 1956, William Shockley, John Bardeen, and Walter Brattain were awarded the Nobel Prize for their discovery of the transistor.

Citation APA (7th Edition)

Pennings, A.J. (2011, Mar 05). Why AT&T Invented and Shared the Transistor that Started the Digital Revolution.


[1] Braun, E., and MacDonald, S. (1982) Revolution in Miniature: The History and Impact of Semiconductor Electronics. Cambridge, UK, Cambridge University Press. p. 33.
[2] Herbert Kleiman quoted on AT&T and basic research in Braun, E., and MacDonald, S. (1982) Revolution in Miniature: The History and Impact of Semiconductor Electronics. Cambridge, UK, Cambridge University Press. p. 36.
[3] Dirk Hansen’s The New Alchemists. NY: Avon Books provides a good introduction to the beginnings of the transistor market. p. 80-82.
[4] Braun, E., and MacDonald, S. (1982) Revolution in Miniature: The History and Impact of Semiconductor Electronics. Cambridge, UK, Cambridge University Press. p. 34.



Anthony J. Pennings, PhD has been on the NYU faculty since 2001 teaching digital media, information systems management, and global communications.


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