Blue Chip Electronics

Blue Chip Electronics, Inc.

File:Blue Chip Electronics logo vertical lockup.svg
Company type	Private
Industry	Computer
Founded	c. 1981 (1981) in Dallas, Texas, United States
Founder	John Rossi
Defunct	Template:End date and age
Fate	Acquired by Capewood Limited; trademark abandoned in 1995
Headquarters	Scottsdale, Arizona (1982–1986) Tempe, Arizona (1986) Chandler, Arizona (1986–1989)
Products	BCD/5.25 Blue Chip PC
Number of employees	30 (1989, peak)

Blue Chip Electronics, Inc., which later operated under the name Blue Chip International, was an American computing enterprise established by John Rossi in 1982. The company initially specialized in peripherals for Commodore home computers before pivoting in 1986 toward offering affordable IBM PC compatible systems.

1982–1986: Origins and Commodore Peripheral Development

A graduate of Arizona State University with a Bachelor of Global Management from Thunderbird School of Global Management, John Rossi founded Blue Chip Electronics following his tenure at GTE Microcircuits and Commodore Business Machines in Europe. Frustrated by frequent CEO turnovers at Commodore leading to management instability, Rossi began Blue Chip as a side venture in Dallas and relocated it to Scottsdale, Arizona by 1982. His wife Rosita joined the firm after completing her business degree at Thunderbird in 1983.

The company’s early offerings (1983) consisted of high-resolution RS-232 serial and HP-IB parallel dot-matrix printers compatible with both the Commodore 64 and IBM PC platforms. Later that year, Blue Chip introduced the BCD-4015 daisy wheel printer capable of handling both cut-sheet and tractor-feed paper. In 1984, they launched the M120/10 dot-matrix printer targeted at the C64 market segment, directly competing against Commodore's own printer models.

By early 1986, after moving operations to Tempe, Arizona, Blue Chip unveiled the BCD/5.25—a direct-drive 5.25-inch floppy disk drive designed as a faster and more compact alternative to Commodore’s 1541 drive for the C64. This drive also supported burst mode when used with the Commodore 128 running in C64 compatibility mode, providing an edge over Commodore’s native drives.

Mid-1986 marked another relocation to Chandler, Arizona. At that time, Blue Chip was valued near US$60 million and planned new hardware including the BCD/128 floppy drive aimed at competing with Commodore’s 1571 and the BCD/3.5 designed for 3.5-inch disks compatible with both C64 and C128 models (though lacking burst mode). Only the BCD/128 reached the market before the company shifted its focus toward IBM PC compatibles.

1986–1987: Collaboration with Hyundai

In July 1986, Blue Chip announced the launch of the Blue Chip Personal Computer—an IBM PC compatible system positioned as the most affordable retail PC available. The design was outsourced to a Japanese firm while manufacturing was handled by Hyundai Electronics, established in 1983 to promote Hyundai Group’s hardware internationally. Unlike many chaebols that relied on white-label OEM arrangements, Hyundai aimed for direct brand presence in the U.S., but eventually partnered with Blue Chip as a reseller. Rossi secured an agreement in February 1986 granting Blue Chip exclusive rights to market Hyundai-built PCs under its own brand within the United States.

The Blue Chip PC incorporated an Intel 8088 processor running at 4.77 MHz, came standard with 512 KB RAM expandable up to 640 KB, offered six expansion slots, included a 5.25-inch floppy drive, Hercules-compatible monochrome graphics, and featured built-in serial and parallel ports. The base unit was priced at US$699—the lowest-cost PC clone available in department stores at that time—with monitors sold separately for US$89. Although initially planned to bundle MS-DOS 3.2, both the operating system and GW-BASIC were sold separately for US$100 upon release.

Blue Chip placed an order for 120,000 units with Hyundai in July 1986 and secured distribution through major retailers such as Target and Caldor. Test marketing revealed that approximately 80% of sales came from small- to medium-sized enterprises seeking affordable retail PCs rather than educational institutions. Encouraged by this demand, production nearly doubled with sales projections reaching up to 200,000 units for the following year; Hyundai anticipated sales could reach as high as 250,000 units.

By October’s official release, Blue Chip PCs were stocked in over 500 department stores nationwide including Sears, Venture, Federated Group, Fedco, Walmart, Save Mart, and Toys "R" Us. The product launch was supported by a radio advertising campaign developed by WFC Advertising. Rossi expressed interest in future initiatives linking Blue Chip’s computer brand with Hyundai’s expanding automotive presence within the U.S.

Between September and November 1986, approximately 27,000 units were sold—only about one-quarter of initial expectations—though Blue Chip remained hopeful of achieving sales near 50,000 by year-end despite limited profitability on early models. The company addressed challenges such as limited repair infrastructure and inexperienced sales staff by organizing training seminars and providing marketing materials for retail partners. In November, Bryan Kerr—a former marketing director at Atari—was appointed vice president of marketing and sales to enhance market positioning.

By late 1986, Blue Chip employed a focused executive team of around twenty personnel based in Chandler. That November saw the introduction of the Blue Chip PC AT featuring an Intel 80286 processor with selectable clock speeds of either 8 or 10 MHz; it included 1 MB RAM expandable up to 16 MB; offered floppy drives plus optional hard drives (40 or 80 MB); supported EGA graphics; came with a monochrome monitor; and carried a starting price of US$1895.

In February 1987 Hyundai acquired a minority ownership stake in Blue Chip. Despite sluggish sales response and subsequent price reductions earlier that year, both companies collaborated on developing the Blue Chip PC Popular—a budget IBM PC compatible priced at US$549 including keyboard and mouse but with monitors sold separately—launched in May. The following month introduced the PC Turbo featuring an enhanced Intel 8088 processor switchable between 4.77 and 8 MHz speeds along with a 30 MB hard drive while maintaining six expansion slots similar to the original model.

1987–1990: Separation from Hyundai and Subsequent Acquisition

By late 1987, Blue Chip had distributed approximately 50,000 computers manufactured by Hyundai but abruptly terminated its partnership with the Korean company in June of that year. Blue Chip alleged that Hyundai failed to fulfill an order of 30,400 units and instead sold those computers to other distributors, which prompted Blue Chip to file a $4.5 million lawsuit. Following this split, Blue Chip collaborated with South Korean electronics manufacturer TriGem Computer to handle production. Meanwhile, Hyundai began marketing its own branded computers in the U.S. starting September 1987.

In November 1987, Blue Chip and TriGem jointly introduced the Master PC 286, which featured a faster clock speed ranging from 10 to 12 MHz and included eight expansion slots. Shortly thereafter, they released the Master PC 386 equipped with an Intel 80386 processor, along with portable versions of both models. Additional product innovations included fax modems and standalone "paper-white" CRT monitors.

To support international growth, Blue Chip founded Blue Chip International in 1988 and subsequently established offices in Hong Kong, Paris, and Amsterdam by 1989. The company expanded its staff to around 30 employees but encountered difficulties due to unsuitable retail partnerships, leading to a strategic shift towards specialty retailers. Their product lineup consisted of the Blue Chip 286 and 386 models, priced at $1,299 and $3,199 respectively, featuring enhanced memory and storage options. A compact laser printer was also launched at a price point of $2,499.

In January 1989, Capewood Limited, a holding company based in Hong Kong, expressed interest in acquiring Blue Chip Electronics along with its international division. The acquisition was finalized in November 1989 with Capewood intending to broaden the product range into the new decade. By this period, Blue Chip's employee count had decreased to about 20. Throughout 1990, Capewood experienced challenges related to quality assurance and dealer relationships, which led to legal disputes such as one initiated by Crown Computers. Ultimately, Blue Chip exited the marketplace by 1992, and its trademark was officially abandoned in 1995. Industry experts observed that Blue Chip's computer offerings had limited influence on the market during their short operational span.