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Present at the Creation: How Pan Wenyuan Connected Silicon Valley and China

Produced in partnership with NewCo Shift.

Hewlett, Packard… and Pan?

In the late 1930s, when Frederick Terman — “the father of Silicon Valley” — was building his powerhouse electrical engineering department at Stanford, he led a graduate seminar that devoted an entire semester to tinkering with the design of an audio oscillator. Two of the participants in that seminar, William Hewlett and David Packard, took the technology out of the university lab and into their Palo Alto garage — “the birthplace of Silicon Valley” — and transformed it into their eponymous company’s first product : the RC 200a oscillator.

A third graduate student, Pan Wenyuan, co-wrote a paper with Hewlett that focused on some of the finer points of the oscillator’s technology. According to Pan’s daughter, Helen Troxel, he was even “invited to join Hewlett and Packard in the garage.” In a memorial written after Pan’s death, a friend recalled that he joked for many years that “if I had $90 to invest in HP then, we [he and his wife] would have owned 25% of the company.”

But Pan had other priorities. He had left his home in mainland China entrusted by his government with a patriotic mission: to help his country catch up with the West’s formidable advantage in science and technology.

He was far from the first of China’s best and brightest to be sent abroad by China’s rulers with such a mandate. But he may ultimately be regarded as the most successful. Pan Wenyuan, who died in 1995, is remembered today throughout the entire Chinese-language speaking world as “the father of Taiwan’s semiconductor industry,” a feat with enormous implications not just for Taiwan, but also mainland China. Pan devised and executed the plan that made Taiwan a major player in one of the modern world’s foundational technologies: the manufacturing of the silicon chips that sit at the root of our digital lives.

The immense turmoil that China and Taiwan endured during Pan’s lifetime makes his success all the more remarkable. The victory of Mao Zedong’s Communists over Chiang Kai-shek’s Nationalists in 1949 prevented Pan from returning to his birthplace until near the end of his life. But he saw an opportunity to fulfill his original mission by helping Taiwan, the island to which Chiang’s army had retreated after losing the civil war, become a significant participant in the world’s high tech economy. In doing so, Pan set an example for mainland China that could not — and was not — ignored.

As the world increasingly looks to China’s smartphone-wielding masses for clues to the digital future, Pan’s life story demands a closer look. The arc of his career connects the humiliation Chinese civilization suffered during the Opium Wars of the 19th century to the prowess it now displays in tech manufacturing and online business models in the 21st, including everything from Taiwan’s Foxconn to China’s Tencent, from drone manufacturers to e-sports.

Pan’s time at Stanford and subsequent career as a top researcher at RCA, one of the great 20th century American technology companies, also calls into question stereotypes of Western technological superiority and Chinese backwardness that persist even today — particularly, the conceit that the West is inherently more innovative and creative than the East. The true East-West relationship is far more complex, full of interchange and cultural cross-fertilization. Pan Wenyuan was present at, and participated in, the creation of the original Silicon Valley. And then he took the lead role in building a second Silicon Valley, in Taiwan. Sure, if he’d had a little more cash as a graduate student at Stanford, he could have been part of building one of America’s most famous technology companies. But what he ended up achieving was even more amazing.

The funny thing is, according to Helen Troxel, Pan Wenyuan was never even supposed to be at Stanford. After studying radio engineering at Shanghai’s Jiaotong University, and then working for two years for the government’s Ministry of Communications setting up radio communications between China and the Philippines, Pan received a government scholarship to attend the University of Michigan. But while traveling by sea from Hong Kong to Seattle, he became friends with a Chinese professor who taught at the University of Washington. As Troxel recounts it, the professor told him that if he really wanted to study electrical engineering, the best place he could go was Stanford, where a man named Frederick Terman was busily recruiting the smartest graduate students he could find.

“So he gets off the boat in Seattle, takes the train from to Palo Alto,” said Troxel, “and walks into the Bursar’s office at Stanford and asks to meet with Terman.”

How exactly Pan talked his way into Terman’s department is lost to history. But there can be little doubt that, for someone whose goal was to leapfrog his entire country to the cutting edge of modern technology, he had found the right place to be. Terman is called the “father of Silicon Valley” not just because he actively encouraged his students to start their own companies and commercialize the technology they were researching in the lab, but also because he personally encapsulated the nexus of academia, entrepreneurship, technology and capital that defines how Silicon Valley came to operate. It’s a model that countless regions and countries have tried to duplicate, but it turns out to be an awfully hard thing to do without the right people. Terman fulfilled the all-important role of central node in an ever-expanding network. It was a function that Pan and his wife Julia, who joined him at Stanford, would both turn out be extraordinarily successful at duplicating in their own lives.

In recent decades, Silicon Valley’s networks have been enriched by the participation of immigrant engineers from all over the world, many of whom eventually return to their own countries while still remaining in close contact with the Valley. In her 2006 book, The New Argonauts, the Berkeley scholar Anna-Lee Saxenian documented the enormous role that such “cross-regional engineering communities” play in fostering continued innovation both in Silicon Valley and abrord. Her work focuses a special spotlight on connections with Taiwan and China that date back to the 1980s. Saxenian was surprised to learn that the true history of such cross-fertilization dates much further back.

“[Pan’s involvement] certainly is a striking addition to our knowledge of the early ties linking Silicon Valley and regions in Asia,” said Saxenian.

But Pan’s stay at Stanford nearly ended before it had properly started. As he recalled in a 1985 speech to a Jiaotong University alumni gathering, midway through his first year, he received a disappointing message from China’s Ministry of Communications. The Japanese invasion of China had forced the government to retreat to the far southwest. There would be no further funds available for his education, and he was told to return to China and report to his superiors in the new wartime capital of Chongqing, in Sichuan. If he remained in the U.S., he would have to fend for himself.

Pan decided to stay. As he tersely wrote in an autobiographical list of “The Profound Decisions by Wen Y. Pan” shown to me by his daughter: “Denied an order by the Ministry of Communications to return for war service in Chungking.”

Pan earned his tuition in part by helping prepare detailed illustrations for Terman’s encyclopedic Radio Engineers Handbook — a tome that was considered the “bible” of the electronic engineering industry for decades.” And Pan, despite his decision not to return to China, still managed to contribute to the war effort. After obtaining his Ph.D, he was one of dozens of Stanford faculty and alumni who followed Terman to work on advanced radar technologies at the top secret wartime “Radio Research Lab” in Boston. At the same time he served as advisor for a Chinese agency that co-ordinated “lend-lease” aid to China from the United States.

At war’s end, he quickly landed a coveted job at RCA — the Radio Corporation of America. He remained there for three decades, securing 30 patents and leading the company’s efforts to integrate UHF — “ultra high frequency” — broadcasting technology into RCA TVs. His title: Group Manager of Signal Circuits Development, Advanced Engineering Development of the Television Division.

In the 1950s and 1960s, David Sarnoff’s RCA was the premier consumer electronics company in the world. The company successfully commercialized both radio and television technology, created the ABC and NBC radio and TV networks, and was a pioneer in numerous other technologies. Its Princeton research laboratory, where Pan worked for decades, ranked with Bell Labs in influence. If any single company can be held responsible for ushering in our modern mix of culture and communications tech, it has to be RCA.

A picture of Pan Wenyuan in RCA Engineer magazine survives from this era. With his slicked-back hair, sharply cut features, and look of sublime, if not arrogant, confidence, Pan looks like someone who knows he’s at the heart of the action. He was right. He was spending his days working with the most advanced technology in the world, as applied to a device — the television — that was as revolutionary then in its implications for world culture as the personal computer and the smartphone would be to their own eras. As much as anyone, this scion of silk merchants from China’s Jiangsu province was helping to create our new world.

Through these years, Pan never lost sight of his original mission. The successful takeover of the Chinese mainland by the Chinese Communist Party cut him off from his homeland. But many of his colleagues from the Ministry of Telecommunications and Jiaotong University ended up in Taiwan. His wife, a mathematician and accomplished educator in her own right, came from a family with strong ties to the upper echelons of Taiwan’s government and served as an important bridge between the community of engineers organized by Pan and the technocrats in the government.

Working together with his counterparts in Taiwan, Pan organized regular gatherings of overseas Chinese engineers, both in New York and Taipei. By 1965, his efforts coalesced in the commencement of a biennial “Modern Engineering and Technology Seminar,” designed as a conduit for informing Taiwanese scientists, engineers, and policy makers of critical technological developments in the United States and elsewhere.

Pan turned out to be the ultimate networked man. Just like his mentor Terman, he was a connecting node — in his case between the overseas Chinese and the Taiwanese, as well as among government, the corporate world, and academia. And when Taiwan’s Minister of Economic Affairs, the farsighted Sun Yunsuan, came to him in the mid-1970s with the question that would determine Taiwan’s future — on what technology should Taiwan’s government place its bet? — Pan had the answer: semiconductors.

Because everything important in Chinese history, one way or another, is connected to food, it should come as no surprise that a key chapter of both Pan Wenyuan’s story and the saga of Taiwan’s modernization unfolded at a restaurant.

On a February morning in 1974, six powerful government officials gathered in the Little Xin Xin Breakfast Shop on Huaining Street in central Taipei to hear Pan Wenyuan propose his plan for modernizing Taiwan’s electronics industry.

As the anecdote, now legendary in Taiwanese accounts of how its “economic miracle” got started, tells it, the minister of economic affairs, Sun Yun-suan, listened to Pan outline his three-phase plan, and then asked two quick questions.

How long would it take? How much would it cost?

Four years, replied Pan. Ten million U.S. dollars.

“Keyi,” said Minister Sun. “OK.”

A 1975 letter from Pan to Frederick Terman fleshes out the story a little further. In it, Pan tells Terman that in July 1974, Minister Sun had asked him do develop a proposal for “a technological development project to help facilitate [Taiwan’s] transition from labor-intensive to technology-intensive industry in the electronics field.”

“To my delight,” Pan told Terman, now Stanford’s retired provost-emeritus, the government had “quickly approved” the proposal. “In this connection, I plan to visit, next week, the ‘Silicon Valley’ of which you almost single-handedly created,” wrote Pan. “During the trip, I would very much like to have the opportunity to see you at Stanford for guidance and directions.”

Premier Sun appointed Pan as head of a Technology Advisory Council (TAC) to steer Taiwan’s efforts to implement his plan. The first step: acquiring the necessary technology to get started. After being rebuffed by a roll-call of U.S. semiconductor companies, Taiwan’s government ended up paying RCA $10 million for a semiconductor technology transfer agreement. By this time, Pan had retired from RCA, specifically to avoid conflict of interest issues, but it seems likely that he had some influence on the decision.

Next, Pan recruited a cadre of 37 twenty-something Taiwanese electrical engineers to engage in an intensive year-long training program at RCA’s U.S. facilities. The so-called RCA 37 returned to Taiwan and built a government-funded chip fabrication facility that immediately started supplying Taiwan’s nascent electronics industry with the vital innards for electric watches and calculators — and, eventually, personal computers. Many of the RCA 37 went on to found their own chip companies, eventually thrusting Taiwan to the front ranks of the world’s semiconductor industry.

The bet paid off. As one member of the RCA 37, Yang Dingyuan, later put it, integrated circuit chip technology “is the most important pillar of human civilization.” Thanks to Pan, Taiwan established itself as a critical part of the global semiconductor supply chain.

This fact did not go unnoticed across the Taiwan Straits in mainland China. While Taiwan was getting its semiconductor project underway, China was still emerging from the Cultural Revolution, a ten-year-period of political chaos that sharply set back the mainland’s efforts at economic growth and technological modernization. But once the twice-purged Deng Xiaoping ascended to power, a concerted effort to duplicate Taiwan’s high tech success got under way. Helen Troxel says the Chinese Communist made several efforts to get Pan Wenyuan to participate in the mainland’s efforts to build their own semiconductor industry, but by the time Pan finally visited China and met with the then premier Li Peng, he was nearly 80, and unwilling to commit to a major undertaking.

But his influence was still felt. The interconnections between Taiwan’s high tech sector and mainland China’s have grown steadily since the 1990s. The example set by Taiwan, wrote Saxenian in The New Argonauts, was highly influential. Taiwan, via Pan’s leadership, showed that catching up in a key technology was possible. China’s establishment as the world’s factory — and, increasingly, a source of innovation in consumer electronics and online business experimentation — didn’t emerge out of nowhere.

From the standpoint of modern Chinese history, the significance of Pan’s achievement is difficult to exaggerate. As Pan said in a speech in Taiwan in 1988, “More than 200 years ago, the United Kingdom, stimulated by the industrial revolution, initiated high-tech development by manufacturing advanced machines to replace manual workers. As a consequence, a booming industry helped to set up a powerful country and a wealthy people. The British Empire thus became a major power in the world.”

And that rise in power had direct consequences for China. The disastrous defeat of the Qing Dynasty by the British Empire in the 19th-century Opium Wars was a devastating psychological blow to a civilization that had considered itself without peer for thousands of years. According to Jing Tsu, a cultural historian of modern China at Yale, and author of Failure, Nationalism, and Literature: The Making of Modern Chinese Identity, 1895–1937, “The deep sense of failure and humiliation from the 19th century influenced an entire generation of young Chinese. The idea of having to redeem China’s image as behind in especially areas of the hard sciences steered much resources into those areas in the early decades of the twentieth century.”

But while members of those first waves of Chinese students to head to the West achieved some great things, they were always chasing a moving target. The West kept advancing and accelerating, and China, beset by dynastic decline, civil war, invasion, and revolution, found it impossible to gain ground.

Until, one could well argue, Pan Wenyuan. He successfully carried out his original mission. He helped Chinese civilization catch up to the West. Present at the creation of the first Silicon Valley, he helped build a second Silicon Valley on the other side of the Pacific.

“We cannot over-emphasize his contribution,” says Hsu Jinn-yuh, a Professor of Geography at National Taiwan University who has written extensively about the history of Taiwan’s semiconductor industry. “He was one of the most important leaders.”

All in all, a pretty good return on investment for that one semester of tuition paid for by the government of China in 1937.