UPDATE: It is a microcontroller! Read more.
When people think microprocessors that MOS Technology made, they think of the 6502 and its many derivatives, as one should (which are of course frequent topics on this blog too) — but there might have been another one.
In the nethermists of time when polyester ruled the earth, G-d (or at least Al Alcorn) created the Pong machines. These started out as discrete logic that was hard-wired to play the game, both in the original 1972 Pong cabinet and then miniaturized for the Atari 3659 Pong-in-a-chip that was in the first home Pong console (sold through Sears) in 1975. By greatly reducing the component count Atari's new chip made the console cheaper to produce and assemble, significantly aiding mass production. Here at Floodgap orbiting headquarters we have an original Atari Ultra Pong Doubles with the later C010765, referred to as the "ultimate" Pong with 32 game variations for up to four players, and the last and mightiest of the Atari first-party consoles circa 1977. Still, like the original 1972 Pong, it was nevertheless controlled by hardwired logic; ultimately it just played Pong, and that was it. But that's not what this entry is about.
The Pong console wasn't the first home console; that was of course the 1972 Magnavox Odyssey, developed by Ralph Baer as a side project for defense contractor Sanders Associates, and licensed to Magnavox for sale. (For that matter, it wasn't even the first home Pong console: that was arguably the Universal Research Labs Video Action II, which ran ads for Christmas 1974 in an attempt to sell unused inventory made for ailing Pong licensee Allied Leisure and beat most of the others to market in 1975 by a couple of months.) However, it was the first Pong-in-a-chip, something the other fledgling semiconductor companies had yet to duplicate. Texas Instruments was supposed to be developing a single chip implementation for Magnavox's sequel two-game Odyssey 100, but it wasn't ready until later that year for the Odyssey 200, and the 100 ended up with four chips instead despite its simplified games. But that's also not what this entry is about.
The other thing Magnavox had besides their early market advantage was Ralph Baer's patents, and a plausible legal case. Atari themselves capitulated in 1974, determining they lacked the resources to invalidate his patents, and paying a settlement and licensing them instead. Other vendors followed suit. One of these companies was General Instrument, who devised their own black-and-white Pong-in-a-chip called the AY-3-8500, also in 1975. Ralph Baer was aware of its development from the licensing process and had a previous informal relationship with toy company Coleco's president Arnold Greenberg. This exchange was all business: Baer's patents represented a significant source of income to himself and the company he worked for, and if GI could move a lot of chips there'd be a big piece of the action in it. Coleco became GI's first customer and built the AY-3-8500 into the 1976 Coleco Telstar, which went on to sell roughly a million units. The AY-3-8500 was thus firmly established in the market and even Magnavox used it for subsequent Odyssey consoles to the great chagrin of Texas Instruments, including the 1977 Odyssey 3000 which we also have at Floodgap Orbiting HQ. But that's not what this entry is about either.
The AY-3-8500 naturally had its competitors, and Magnavox-Sanders-et amis got a piece of them too, though the design was so cheap and easy to work with that General Instruments crowded most of them out of the market. Besides TI, National Semiconductor introduced the colour MM-57100N, but despite its capabilities was too expensive to dislodge the market leader (and even its graphics advantage was eroded by the AY-3-8515, which was a bolt-on colour encoder for the 8500 and incorporated into later chips). However, there was one company at that time that was very good at making cheap chips cheaply, and it needed money fast. That company was MOS Technology, and finally that's what this entry is about.