No postwar industry has grown faster than electronics, and no electronic devices have paid off more handsomely than semiconductors—the tiny, spiderlike transistors, diodes, rectifiers that perform the functions of vacuum tubes. Though semiconductor technology is scarcely a decade old, industry sales have climbed from $15 million in 1954 to an estimated $195 million this year; electronics experts think they will be $350 million in 1960, more than $1 billion in 1967.
Wall Street is well aware of electronics' rapid growth, pays as much as 40 and 50 times earnings for what it calls "Buck Rogers stocks." Eager buyers this year boosted Texas Instruments from 26¾ to 86, Raytheon from 22 to 62⅝, Fairchild Camera from 18⅞ to 64¾, General Transistor from 17 to 51. But to many Wall Streeters, even such high prices seem cheap when sales and earnings are zooming. Explains one broker: "Current earnings are already past history. If you want to participate in growth, you have to pay for it."
So fast is the field growing that a new development or refinement is announced almost weekly. Last week Texas Instruments began manufacturing a germanium "mesa" transistor; this week General Electric starts full production of a controlled rectifier that can handle a greater power load than a transistor.
New Customers. The growth has been stimulated by the opening of new markets. The first transistors replaced vacuum tubes in consumer devices—hearing aids, portable radios, etc. Now transistors and other semiconductor cousins are manufactured with such precision and close tolerances that a new generation of computers is being designed for them. The circuitry of new missile systems, where space and weight are at a premium, calls for millions of semiconductors. Industrial and military uses account for only one-third of semiconductor units manufactured, but two-thirds of dollar volume. Computer builders are expected to increase their purchase of semiconductors tenfold within the next two years.
Computer builders prefer semiconductors to vacuum tubes because they are 99.9% reliable, v. 80% to 95% in a comparable tube, have a much longer life, take far less space, and require less power. Since a single modern computer may have 25,000 tubes, the repair time saved is immense.