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In 1969, the Japanese corporation Busicom (formerly Nippon Calculating Machine Corporation) approached Intel to produce twelve computer chips for its 141-PF printing calculator. However, Intel was still a small company at the time and did not have the resources to produce twelve different chips. Therefore, Intel engineers Marcian Edward "Ted" Hoff, Jr., and Stanley Mazor counter-proposed a four-chip design in which one of the chips, which was eventually designated the 4004, was to be the central processing unit (CPU). (The "4" in the name indicated that it could process four bits of data at a time.) If successful, the cost of the calculator would be lower than the twelve-chip design and therefore be available to a wider market. However, at that time, no one in the semiconductor industry had ever produced a commercially viable single-chip CPU. In December, 1969, the companies signed an agreement in which they agreed on the architecture and which required Intel to create the prototypes by June, 1970. Busicom then paid Intel $60,000 toward development costs. However by April, 1970, little had been done on the 4004 except for a few diagrams.

Federico Faggin took over the project the very first day he started working for Intel. First, he received permission to move the deadline back to January, 1971. Then he developed the design methodology for random-logic circuits using the silicon-gate technology he had already developed at Fairchild Semiconductor.

His method combined logic and circuit building blocks, including some novel circuits, with layout information, to make the design faster and less error-prone. Faggin made two additional innovations: buried contacts and bootstrap loads. The first innovation allowed him to make direct contact between polysilicon and junctions without having to use metal. The second was a trick widely used with metal-oxide-semiconductor (MOS) circuits but never with silicon-gate ones. Bootstrap loads allowed Faggin to build logic gates with output voltage equal to the supply voltage, simplifying the design by allowing him to use fewer transistors for particular functions.

Unfortunately, Faggin missed his January deadline, but he was finally able to ship samples of the chip to Japan in March, 1971. When he was finished with the prototype, Faggin put his initials on the chip, like a painter signing a canvas. The 4004 measured 3 by 4 millimeters, consisted of 2,300 transistors, and could perform 60,000 operations per second. Nippon eventually sold 100,000 of the calculators using the 4004 chip. In return for a refund of the money Nippon had paid for development, Intel retained the right to sell the chip to other manufacturers, so long as they were not in the calculator business. In November, 1971, Electronic News announced the chip's arrival as the first general-purpose microprocessor on the market.

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