The role of the Department of Defense in the development of integrated circuits

The Department of Defense (DoD) was influential in the introduction of integrated circuits. This paper reviews the role played by DoD in their development and early use, and traces the resulting markets for integrated circuits and for products using integrated circuits. DoD provided R/D support during the early development of integrated circuits. Perhaps even more important was the creation of a market for integrated circuits through their incorporation into military systems. The early military market provided the 'learning curve' effect whereby unit prices decline as production proceeds. Within a few years, the integrated circuit unit price was low enough to penetrate the industrial market, and eventually the consumer market. In 1977, the value of integrated circuits being sold by U.S. firms was about $2.5 billion. However, integrated circuits are not an end product--they are only used in making other equipment. Hence, the value of equipment incorporating integrated circuits is considerably greater.