ng producers of computer microprocessors. Jerry Sanders was working at Fairchild Camera in Silicon Valley when he was fired, reportedly for wearing a pink shirt while making a sales call at IBM. In 1969, Sanders decided to start up his own semi-conductor company. Sanders had no general management experience and was unable to raise the large amounts of capital required to engage in semiconductor research and development. He therefore built the company by acquiring second-source agreements, or licenses to manufacture products designed by other chip makers. He also employed his flair for marketing to make these agreements pay, and he was successful enough so that Advanced Micro Devices went public in 1972. The company signed a second-source deal with Intel in 1982, which enabled the company to manufacture exact copies of Intel's iAPX86 line of microprocessors which are used to operate IBM-compatible personal computers (Hoover's handbook of American business 1993, p. 93).
The company has managed to achieve a strong market penetration with its 80386-compatible line of microchips, reaching 12 percent of the market for that particular technology. The company hopes to do the same thing with an 80486-compatible line, all based on technology from Intel (Baghdad, 1992, p. 1-2). Advanced Micro Devices had to fight for the right to sell clones of other technology, and the issue was settled in court so that AMD could sell microprocessors that are similar to those of rival Intel. AMD has been so successful that its sales have passed those of Intel. Cyrix is another company producing this technology with its partner Texas Instruments. The court case involved the 386 line, but the victory was seen as pyrrhic because sales of the 386 are expected top decline soon as the 486 enters the market in a big way. Intel was the only supplier of the 486 until recently, though AMD announced in December that it was ready for production. Until AMD re...