The only problem was that Intel’s approach was too successful to be
sustainable. IBM and AT&T profited so little from their research investments
that eventually they had to scale them back dramatically.
AT&T’s semiconductor business ran into problems in the 1980s, and
the company cut back significantly on its work with equipment suppliers
on next-generation semiconductor equipment technology. In 1993,
Lou Gerstner joined IBM as CEO and mandated that IBM’s semiconductor
division become cash-positive. With this new mandate, IBM cut
back on its pioneering research and its sponsorship funding with the
equipment industry. The cutbacks noticeably reduced the amount of
basic research funding in the semiconductor industry.