May 15, 2007

Sematech Is Only Part Of Anticipated Boom

By: by Larry Rulison, Business Writer, Times Union


Those who are looking for the significance of Sematech's expansion at the University at Albany -- either today or 20 years from now -- need only listen to the folks down in Austin, Texas, where Sematech is based.

The announcement last week that New York state is offering $300 million to the Austin-based consortium of computer chip companies to shift its research focus and headquarters toward Albany sent shock waves through the city.

"That created a day of anxiety in Austin," said Brewster McCracken, an Austin City Council member who sits on the city's emerging technology subcommittee. "Sematech is the cornerstone of how we became a global semiconductor cluster."

Sematech members -- including IBM Corp., Advanced Micro Devices Inc. and Intel Corp. -- control half of the worldwide computer chip market. The group was founded in Austin in the late 1980s, helping spur wave after wave of explosive economic growth for the city, particularly in the computer and microelectronics industries.

As it turns out, Sematech is expected to maintain a significant presence in Austin even after it accepts New York's offer, pending state legislative approval of the funding.

Sematech and its member companies plan to invest $410 million in the venture and create 450 new jobs at Albany NanoTech, where 250 people already work through a $400 million Sematech research program that New York state started in 2002.

The immediate impact is that within a few years, if all goes as planned, the Albany NanoTech complex and its College of Nanoscale Science and Engineering will be home to more than 2,500 employees, some of whom pull in more than $100,000 a year in salary and benefits.

That job growth won't bring dramatic economic changes to the Capital Region on its own. For instance, General Electric Co., which has bled thousands of jobs here since the mid-20th century, still employs more than 5,000 people locally, including more than 800 well-paid Ph.D.s at the GE Global Research Center in Niskayuna.

The real growth would come with all the companies and jobs that Sematech's increased profile and stature in the region may attract here.

If you think that sounds too wishy-washy, it has already happened.

Sematech's original joint venture with the state -- International Sematech North -- is where AMD got its first taste of the Capital Region.

AMD sent its first researchers to Albany in 2002. Within four years, the company announced its desire to build a $3.2 billion computer chip factory proposed for Saratoga County.

"Certainly, (International Sematech North) should be recognized as the program that introduced AMD to New York," asserts a confidential UAlbany document about the program.

Glenn West knows all about this. West, a banker in Austin and one-time consultant to the Albany-Colonie Regional Chamber of Commerce, was president of the Greater Austin Chamber of Commerce when that city landed Sematech in the late 1980s. At the time, chip companies and suppliers in California's Silicon Valley were giving the cold shoulder to Austin.

"But the Sematech announcement allowed us to get into the door where we couldn't get in before," he said. "It helps to legitimize your community as a center for technological innovation."

Austin's population doubled to 1.2 million between 1990 and 2002. Between 1990 and 2000, the number of businesses in the city grew from 16,000 to 27,000, according to data compiled by New York state.

Handling that type of growth -- even a fraction of it -- will be the greatest challenge, local planning and business leaders say.

LaMar Hill, president of the International Alliance of Nanotechnology Regions, a trade group based in Albany, says the Sematech announcement should be considered in context with the possibility of AMD's proposed chip fab -- and the 1,200 jobs it would create -- along with the continued growth at Albany NanoTech.

"It's clearly going to change the growth profile of our region," Hill said. "We can either let growth randomly happen, or we can choose to go down a path of sustainable regional development."

The Capital Region hasn't had to handle Austin's pace of growth. Between 1990 and 2000, the net total populations of Albany, Rensselaer, Schenectady and Saratoga counties grew by just 2.1 percent, or 16,000 people, to reach 794,293 residents, according to the Capital District Regional Planning Commission.

With the Capital District Transportation Committee, the commission has sketched out different growth scenarios -- including a hyper-growth one that envisions 1 percent annual population growth that would put extreme pressure on the region's resources with 230,000 new residents by 2030.

The commission is also compiling recommendations on how to deal with a variety of growth patterns, including a more moderate scenario that projects 73,000 new residents by 2030.

"That individual announcement isn't going to result in us going back to the drawing board," said Rocco Ferraro, the planning commission's executive director. "Certainly, it contributes to the opportunity to accelerate growth in the Capital Region. We'll just monitor it."

Even the man behind a lot of Albany NanoTech's success knows that handling the growth created by Sematech could be a challenge.

Alain Kaloyeros, the chief administrative officer at the NanoCollege, says the new Sematech program is expected to generate more than $7 billion in direct investment in the region and state. And he estimates a ripple effect of spinoffs and others flocking to the region could triple that amount.

"We still have quite a bit of homework to do to plan," he said. "What I like is that the growth (to date) has been gradual and systematic. But there is the need for an education."