September 29, 2011

More High-Tech Plants Remain Option If State Keeps Money Tap Open

By: James M. Odato and Jimmy Vielkind, Capitol Bureau

Source: Times Union

ALBANY -- The consortium of high-tech firms that unveiled a $4.8 billion computer chip project with the state intends to return to Albany for more deals for more plants in a few years, according to agreements worked out among the parties.

Besides the $4.4 billion in industry investment and $400 million in public dollars for the deal revealed Tuesday focused on the University at Albany's College of Nanoscale Science and Engineering (CNSE), the five big computer chip manufacturers making up the consortium are agreeing to even more spending and jobs in New York if the Cuomo administration continues its support. For instance, a potential additional phase of expansion would be conditional on another contract negotiated around 2013 with state government, according to agreements made in recent weeks, a document obtained by the Times Union shows.

The document, an outline of current and future intentions of the public and private partners provided to the Legislature, says the future deal would involve an additional combined investment of about $3.3 billion. That phase would lead to the creation of "a significant number of additional jobs." The private firms, such as IBM and Intel, would be expecting more state funds to erect another 450 millimeter wafer chip plant seen as the future of the computer chip industry. "It's tentative, kind of like good faith understanding," said CNSE President Alain Kaloyeros. He said the chip manufacturers understood that in accepting public support for the new chip manufacturing plant project at CNSE, just off I-90 at Fuller Road and Washington Avenue Extension in Albany, the consortium would choose New York as a site for any additional plants somewhere in New York.

The pact announced Tuesday calls for the consortium to set up a world headquarters at CNSE and locate management and technical staff there and that the NanoCollege would build a 50,000-square-foot fabricating plant. The consortium would pay for adding 2,500 new jobs paying an average of at least $85,000 in locations upstate and retention of another 2,500 jobs. The members of the "450 Global Consortium" also include Samsung, Global Foundries and TSMC.

A group of a dozen companies known as Sematech was lured from Austin by the Paterson administration with a $300 million grant in 2008 to, among other things, begin the transition to a 450 mm wafer manufacturing process. The largest of the Sematech group formed the new consortium.

The new jobs created by the consortium's project should total 800 in Albany, 950 in the Hudson Valley, 450 in Utica and 300 in Rochester and the $400 million in state funds will pay for state-owned equipment and the state would retain any of the intellectual assets derived.

The state must get a chance to host expansion of fabrication of the 450 mm chips as long as it comes up with some financial support, which is anticipated to be a lesser share of total cost.

"If any consortium member determines, directly or indirectly, to build a 450 plant anywhere in the world that at least one such 450 facility would be built at an appropriate site in New York state reasonably acceptable to NYS and such consortium partner," according to the legislative document. "The commitment of the consortium partners ... would be subject to NYS continued investment but the consortium agrees that in light of the cluster value provided by NYS that the amount of such support as a percentage of the total project cost would be lower than that provided by NYS in prior transactions in this industry."

Given all the infrastructure built at UAlbany since the Pataki administration and the critical mass of computer industry parties in the Empire State, "New York will be the site of choice for 450 fabs," Kaloyeros said. "What we would hope for and what we would drive for is to have multiple fabs and multiple sites in New York."

Josh Vlasto, a spokesman for Gov. Andrew Cuomo, said the state's $400 million in financial commitment would be provided in installments during the next five years, including $250 million borrowed by Empire State Development Corp., $50 million from the Assembly and $100 million in cheap power from the New York Power Authority and energy efficiency credits from the New York State Energy Research and Development Authority.

Assembly Speaker Sheldon Silver said it "still remains to be seen" where the $50 million will come from and that it could be part of next year's budget.