SEMATECH, New York to Invest $600 million in Nanoelectronics

Deal’s Impact on Texas Operations Remains Unclear

If you follow college sports, you know all how strong rivalries can be between certain schools. Bragging rights after a football game spill over into competitions over everything. Those that cross neighboring state borders seem to have even more edge sometimes.

 

Follow the semiconductor industry for long and you will find similar rivalries arising between two states whose capitals are 1,575 miles apart: New York and Texas. Both states’ capitals – Albany and Austin – want to be the global center for nanoelectronics.

 

The trophy is SEMATECH, the semiconductor industry’s research consortium. The consortium is a research partnership that includes the largest commercial producers and consumers of semiconductors, comprising more than 50 percent of the world's microchip market.

 

The New York and Texas state governments have demonstrated over the years that they are willing to pay handsomely for that trophy, too.

 

News last week broke that New York may have pulled a coup – stealing SEMATECH’s headquarters from Austin. The truth appears to be a little less clear at this point.

 

SEMATECH has reached a preliminary deal with the state of New York to begin a $600 million expansion of the semiconductor development consortium's research presence in Albany. The expanded facilities at the University of Albany's College of Nanoscale Science and Engineering will become the new headquarters for International SEMATECH, a subsidiary arm that specializes in nanoelectronics and advanced microchip manufacturing. New York Gov. Eliot Spitzer announced that the state will contribute $300 million over the next five years to match a $300 million commitment by the consortium.

 

The state funding will be used to build the advanced infrastructure and equipment needed at the Albany campus and to support five advanced manufacturing research centers at universities around the state.

 

According to the Austin American-Statesman, last week’s announcement came as a surprise to many in Austin, where SEMATECH began its operations in 1988 after orchestrating a multi-state competition usually reserved for large industrial plants that promise to employ thousands. The Texas bid was reported to be in the neighborhood of $485 million, a recent Albany Times-Union article states.

 

Over the last 20 years, SEMATECH has played a major role in establishing Austin as a hotspot for semiconductor research and manufacturing. The consortium also is a key partner in a number of the state’s advanced manufacturing partnerships and initiatives, including the Texas Alliance for Nanotechnology and the Texas Technology Initiative.

 

The first hint of a shift to New York appeared in 2002, when SEMATECH established a research presence in Albany after receiving a $150-200 million incentive package from the state of New York (see July 19, 2002 issue of the Digest).

 

SEMATECH North became the consortium's first research center outside of Austin, which led to a bidding war between New York and Texas over which state would host the SEMATECH headquarters. In 2003, Texas Gov. Rick Perry managed to entice the consortium into pledging to maintain its headquarters in Austin with a $40 million grant through the state's newly created Enterprise Fund (see “Chip Wars, Part II” in the July 18, 2003 Digest).

 

According to press releases and media coverage, SEMATECH will maintain its current research presence in Austin, including the consortium's headquarters and existing research subsidiaries; however, the Albany facility is expected to overtake Austin as the largest research location for the consortium and host International SEMATECH’s headquarters, a subsidiary of the original SEMATECH. The Albany Times-Union reports that the operating budget for International SEMATECH will be at least $130 million, more than four times the Austin SEMATECH budget. SEMATECH also plans to increase its number of Albany employees from 250 to 700 over the next three years.

 

Round three of the battle appears to belong to New York but the long-term impact on the Austin operations and SEMATECH’s research investment with Texas universities remains unsettled.

 

Read Gov. Eliot Spitzer's announcement about the SEMATECH agreement at: http://www.ny.gov/governor/press/0509074.html