The transistor was successfully demonstrated on December 23, 1947 at Bell Laboratories in Murray Hill, New Jersey. Bell Labs is the research arm of American Telephone and Telegraph (AT&T). The three individuals credited with the invention of the transistor were William Shockley, John Bardeen and Walter Brattain. William Shockley played a quite different role in the invention than the other two. Shockley had been working on the theory of such a device for more than ten years. While he could work out the theory successfully but after eight years of trying he could not build a working model. Bardeen and Brattain were called in to handle the engineering and development, which they did in the relatively short time of two years, to the consternation of Shockley. Shockley, as their supervisor, shared in the glory. What Bardeen and Brattain had created was the "point-contact" transistor. Shockley subsequently designed a new type of transistor called the "bipolar" transistor which was superior to the point- contact type and replaced it. Thus the transitor was, in large part, Shockley's creation.

William Shockley was raised in Palo Alto, the son of a mining engineer and his Stanford-educated wife. He did his undergraduate work at the California Institute of Technology (Cal Tech) in Pasadena and went on for his Ph.D. in physics at M.I.T. When he completed his doctorate, specializing in quantum physics, he went to work for Bell Labs.

Shockley had started working in 1936 on the solid state physics theory that was the basis for the transistor. There was a precedence for this type of device. The early radios had signal detectors which consisted of a fine wire, called a cat's whisker, impinging upon a galena (lead sulfide) crystal. The radio user had to move the cat's whisker around upon the germanium crystal to find a suitable point of contact where a radio signal could be picked up. These early radios worked but only imperfectly. Nevertheless the principle upon which the crystal detector worked was the basis for the "point-contact" transistor. Bardeen and Brattain used germanium instead of galena in that first transistor. They also used the equivalent of cat's whiskers, but two rather than one. Shockley's design, the bipolar transistor, eliminated the delicate, troublesome point contacts. Later transistors were made from silicon, a much more common element and one that was protected from corrosion by a thin layer of silicon dioxide.

Texas Instruments of Dallas, Texas first started commercial production of junction transistors for portable radios in 1954. The Sony Company of Japan soon acquired the right to produce transistors and came to dominate the market. In the 1960's Sony began to manufacture television sets using transistors rather than vacuum tubes. Soon afterwards vacuum tube technology became obsolete.

In 1956 Shockley returned to Palo Alto to founded his own company. He brought talented engineers and scientists to his company but he was a very difficult person to work with and seemed to have bizaar notion of how to manage an enterprise. For one thing, he insisted upon posting of the salaries of all the employees. This produced unnecessary friction among the employees. Ultimately the top staff joined together in leaving the company. They wanted to continue to work together in another company and Steven Fairchild of Fairchild Camera was induced to create Fairchild Semiconductor for the group.