The best example of this was in Japan, where most calculators were built and manufactured. Nearly all of Japan’s semiconductors were foreign-made (over 50% by 1973), mostly due to international semiconductor companies pumping out chips at a loss and sending them overseas. Japan amalgamated most of its semiconductor manufacturing and started a campaign named (you can’t make this up) “*You can’t trust foreigners*” trying to convince SHARP and others to only use domestic components. This focus helped build Japan into a powerhouse of semiconductors: all the Quartz watches and technology from Japan in the 70’s and 80’s started with a focus on making sure the domestic system integrator market used locally sourced chips. And if they didn’t, the government wouldn’t buy anything from them or lend them money. Germany did this to a lesser extent, as did Britain and France.
This hurt Northern Electric’s relationship with MIL because Europe was the primary non-Canadian market for its equipment. Those countries were demanding locally sourced chips for their telecom equipment to the extent that companies opened factories to receive equipment without the semiconductors and then installed the local ones to meet the government demands.
The Canadian government tried initially to do the same. IBM is a clear example: just outside Toronto, IBM built ‘Canadian’ Computers with locally sourced semiconductors to get the government business. Where were those locally sourced semiconductors coming from? Bromont, Quebec, where there is still an IBM Fab (along multiple others). But much of the actual intellectual property was and remained American.
Worse still, MIL’s crowning achievement, the MF711chip was orphaned. Northern Electric introduced the first Computerized Telephone Exchange Switch - it was a game changer and would cement Northern as a global manufacturer. Named the SP-1, it was meant to use the MF711. What chips did it use? Why, of course, the Intel 4004.
How this happened, pardon the pun, is due to a game of telephone.
Northern spec’d a design that it told MIL would meet its needs, and MIL delivered it. But no one told the SP-1 team that it had to use the MIL chips. So when the SP-1 design team saw a chip that was cheaper to integrate, versus the MIL chips, they used that.
Why didn’t the federal government tell Northern to use MIL chips? Well, it did. Remember that licensing agreement with Intel? Intel licensed the 4004 to MIL to make in Canada. But Intel got a royalty off each one, erasing the profit for MIL.
MIL now had a chip with no customers. The company tried to pivot, branding the MF7114 as a calculator chip, but it didn’t work.
During this moment in time,one of the most famous stories of MIL occured, which is how I learned about the company.
Two young British engineers in their 20’s, fed up with the MIL bureaucracy and its inability to make decisions, decided to quit. They knew the chips for SP-1 inside and out and decided to leave MIL to build their own solutions they could sell to SP-1 clients. Their names were Terry Matthews and Michael Cowpland and they founded a company named Mitel.