July 14, 2006

AMD Chip Plant Deal Was Years In The Making

By: by Larry Rulison, Business Writer, Times Union


SAN FRANCISCO -- The political and economic development deal that led to Advanced Micro Devices Inc.'s plan to build a $3.2 billion computer chip fabrication plant in Saratoga County was years in the making, says one of the authors of that deal.

AMD of Sunnyvale -- in California's Silicon Valley -- announced plans for the new chip fab in June after the state of New York put together an economic development package in excess of $1 billion. The plant will be built at the Luther Forest Technology Campus in Malta and Stillwater, with construction beginning as early as next year.

But that announcement was really the culmination of four or five years of work, said Ken Green, president of the Saratoga County Economic Development Corp., the group that has been developing Luther Forest in close collaboration with the state.

Green, like other Capital Region economic development leaders, is in San Francisco this week at Semicon West, the largest semiconductor conference of the year for North America.

On Wednesday, while sitting on a couch that is part of the large exhibition booth here for Luther Forest, Green spoke about the significance of the AMD deal to the local economy and about some of the background of the deal.

He said economic development officials from the Capital Region, working with a West Coast consultant, first reached out to AMD during a mission to Silicon Valley four or five years ago.

That mission was facilitated by officials from Glimmerglass Ltd., a business development firm in Menlo Park, Calif., just outside San Francisco. Local officials, including Green, Kelly Lovell, chief executive of the Center for Economic Growth in Albany, and LaMar Hill, a Capital Region consultant who previously was director of development for Albany NanoTech, met with Bill Siegel, a senior executive from AMD.

About two years later, the Capital Region officials met with AMD people at Semicon Europa in Germany. AMD has a large presence in Dresden there, and AMD announced a new $2.5 billion chip fab there just before announcing its New York plans last month.

Green said his group hired M+W Zander, a German construction and engineering firm that has built AMD's chip fabs, to provide an assessment of Luther Forest as a potential site for a plant.

"When M+W Zander speaks, everybody at AMD listens," Green said.

The Capital Region group then visited AMD's plant in Dresden, and met with officials from Silicon Saxony, a consortium of German semiconductor companies, and heard about the economic incentives it takes to attract a chip fab.

It was then that the local officials learned that a $1 billion incentive package was the global standard for a chip fab, but they also learned that one chip fab would pay for itself twice over within 3 years, through the ripple effect of related economic development.

They also were told that for each job in the chip plant, three would be created through vendors or suppliers. AMD's chip fab in Saratoga County is expected to employ 1,200, but officials have said it will create thousands of additional jobs.

About a year ago, Green said, this team of local economic development officials first made the pitch to New York state political leaders, including Empire State Development Corp., New York's economic development arm. And it was during this period that AMD started to take market share away from its largest rival in the computer chip business, Intel Corp. of Santa Clara, Calif. AMD also announced it would start providing chips to personal computer and server giant Dell Inc. of Austin, Texas.

Those market forces made it possible for New York to talk to AMD about expansion.

"We knew the time was right to make the direct pitch to (AMD chief executive) Hector Ruiz," Green said.

The first meeting with Ruiz took place four or five months ago, Green said.

An AMD spokeswoman in Austin declined to reveal details about the negotiations with New York state. She said that after being contacted by economic development officials in late 2005 and early 2006, AMD was contacted by state government officials from New York in March, and direct talks began in late April.

Green said the significance of the chip fab plant for the Capital Region and upstate New York is immense. While New York has pumped millions into Albany NanoTech, the $3 billion nanotechnology research and development center at the University at Albany, those who are trained there will no longer have to leave New York to work in the semiconductor industry.