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Why did the U.S. military’s share of semiconductor sales decline by 1972?

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The decline in the U.S. military’s share of semiconductor sales by 1972 was primarily driven by the rapid growth of consumer applications for semiconductor technology.1

During the early 1960s, the military accounted for more than 50 percent of these sales, but that figure dropped to 12 percent by 1972. This shift occurred as integrated circuit technology became more advanced and affordable, enabling the development of microprocessors and other components that could be mass-produced for commercial and household use. As these technologies became integrated into a wide variety of consumer products—ranging from household appliances to industrial equipment—the market expanded significantly beyond government and military needs. Consequently, by the mid-1970s, venture capital had replaced the U.S. government as the primary source of financing for new firms in the industry.12