The military effect on the progress of integrated circuits has been twofold. First, new technology has developed, some through the direct subsidy of military research and development, and much more through the company-sponsored research stimulated by this support. About $100 million of R & D expenditures escalated from an initial Government expenditure of $2 million. The second effect has been the military agencies' interest not only in using integrated circuits but also in providing the market and the motivation for suppliers to complete the development and establish the production capability to supply this waiting market. Military and space applications accounted for essentially the entire integrated circuits market last year, and will use over 95 per cent of the integrated circuits produced this year. Even in 1970, these applications may well be using as high a proportion as 55 per cent of the circuits produced.