Week of July 22, 2002
Blockbuster Deal of the Week
from Site Selection's exclusive New Plant database
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Upstate New York Gets Nod for Sematech's $403M R&D CenterBy JACK LYNE, Site Selection Executive Editor of Interactive Publishing
Hyperbole is an occupational hazard in politics. But this really could be the start of something big:
International Sematech (ISMT at www.sematech.com), a consortium of the world's biggest computer chipmakers, has picked Albany, N.Y., for a new US$403 million R&D center. The Austin, Texas-based company will site the 16,000-sq.-ft. (1,440-sq.-m.) Sematech North at the Center of Excellence in Nanoelectronics at the University at Albany - part of the State University of New York (SUNY) system.
Sematech's numbers for direct job creation won't be enormous. The Albany center will initially hire 250 researchers, company officials said. Pay levels, though, will be sizeable, with estimated average salaries topping $80,000 a year.
Far, far larger, though, is the spin-off tsunami that Sematech's upstate operation could touch off. Austin, where Sematech opened its first operation in 1988, is the potential prototype.
"We believe International Sematech North will be a magnet to attract the global semiconductor industry to Albany," Pataki said at the project announcement, held at SUNY Albany's Center for Environmental Sciences and Technology Management. The company's upstate presence, Pataki predicted, will have "the same transformational impact on the regional economy" as it did in Austin.
Sematech's transformation of Austin has been striking. Texas' capital city added some 100,000 technology-sector jobs in the decade after the company's arrival, and its population doubled. Economists and semiconductor-industry analysts attribute much of that hyper-growth to the presence of Sematech. The area around the company's Austin headquarters is now known as "Silicon Hills."
Alain Kaloyeros, dean of the School of Nanosciences at SUNY Albany, predicted an even more dramatic effect in upstate New York. "Sematech coming here will make Albany the lead R&D hub in the world for this industry," Kaloyeros said.
Sematech in 1987 considered offers from a whopping 36 U.S. states for its first location project, which featured some very public incentive bidding. The Albany area, one of the contending sites, finished among the final 12 that Sematech identified.
By comparison, this year's high-tech hunt was far more low-key. The company said it considered sites in Europe, "across the United States" and in the Pacific Rim. Sematech, however, didn't reveal any other specific sites.
This year's site search also lacked 1987's open incentives war. Incentives, however, were part of the mix that paved the way to Albany. The state is providing $210 million in funding. Another $193 million is coming from Sematech and its 12 member companies (see accompanying "Sematech in Short").
New York's 2002-2003 budget already includes $50 million of support, earmarked for the SUNY Albany Center of Excellence. (Buffalo, Rochester, Syracuse and Long Island are other cities in which the state has created similar centers, which are designed to directly link university researchers with business and industry.)
New York hasn't yet specified sources for the other $160 million in project support. The state will probably issue bonds, Pataki aides said.
Sematech didn't release specifics on any other incentive offers.
'Unprecedented Opportunity' Incentives, however, may not tell the entire story. Texas in 1988, for example, gave Sematech $62 million in incentives - less than a third of Massachusetts' $200 million offer.
A more intangible incentive was the presence of IBM, part of the Sematech consortium. Armonk, N.Y.-headquartered Big Blue considered leaving the Empire State in 1995. It changed its mind after Pataki personally lobbied the company to stay, offering generous subsidies. That rekindled partnership led to IBM's announcement in October 2000 of a $2.5 billion computer fab in East Fishkill, N.Y.
A similar combination of collaboration and capital drew Sematech to Albany, said company officials, who called the project's synergies "unprecedented."
"The International Sematech North collaboration provides an unprecedented opportunity to maximize the leverage of industry and state government investments," said ISMT President and Chief Executive Officer Robert Helms. "I am indeed overwhelmed . . . at the support and engagement from the governor and SUNY Albany.
"Together, International Sematech and SUNY Albany can help the global semiconductor industry by tackling a key technical challenge - the development of a new infrastructure to support next-generation lithography - and funding that effort for success," Helms added.
New York, Kaloyeros explained, began recruiting Sematech last year, when Pataki met privately on Sept. 10 with Helms, who was attending a Semiconductor Industry Assn. meeting in Bolton Landing, N.Y. The governor talked about the state's linkage with IBM, said Kaloyeros, a member of the team that Pataki appointed to advance the state's case.
SUNY Albany Building Two New 300-Mm. Clean RoomsSematech's decision underscores the Albany area's quietly building high-tech cachet. SUNY Albany's R&D funding has increased 50-fold since 1992, and the university is building two new 300-millimeter clean rooms.
The Albany center will work in developing the use of extreme ultraviolet (EUV) light in lithography, the process of etching tiny patterns into microchips. That work will be part of developing next-generation chips with circuit lines smaller than 0.1 micron - one-thousandth of the width of a human hair. The 0.1-micron chips will be able to store at least 100 times more information than current chips, industry analysts say.
"We'll be able to do critical work on EUV infrastructure faster and better as a result of this alliance," Helms said.
Sematech's impact, however, will likely unfold slower in Albany than it did in Austin. The chip industry has been mired in a slump since the late 1990s. Sematech has reflected that slump. Its 600 employees in Austin are 400 below its peak employment.
SUNY Albany and Sematech officials immediately began negotiations for finalizing the strategic alliance. Officials expect a final agreement by third-quarter 2002.
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