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New York drops $400m to lure next-gen wafer bakers

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New York governor Andrew Cuomo wants to make his state a high tech employer – and taxpayer – and has now primed the political pump with $400m in investments to go along with the $4.4bn that five chip companies plan to spend in the state over the next five years as they research 450mm wafer technology.

What Cuomo wants – and has not yet received – is a guarantee from Intel, IBM, GlobalFoundries, Taiwan Semiconductor Manufacturing Corp, and Samsung that they will actually build 450mm fabs in New York.

IBM has a big chip fab in East Fishkill, New York, where it makes its own Power and System z processors as well as a slew of Power chips for game consoles and other consumer and commercial electronics.

GlobalFoundries, the fab operator that was spun out of AMD, is building a 300mm facility in Saratoga County, New York – far enough from the state capital that the governor doesn't have to worry about water pollution, but close enough that he can smell the jobs. This plant, called Fab 8, will cost a whopping $4.2bn and will be operational next year with 28 nanometer processes, then move on down to 22 nanometers after that.

GlobalFoundries' sugar daddy, Advanced Technology Investment Company (ATIC), is an investment arm of the government of Abu Dhabi that is dead serious about turning oil into money so it can convert sand into chips – and thus into even more money. ATIC shelled out $3.9bn in September 2009 to buy Singapore-based Chartered Semiconductor and last June pumped another $2.8bn into modernizing and ramping up its fabs in Germany and Singapore as well as ramping up Fab 8 in New York.

Given the harsh political climate, Cuomo cannot simply give tax breaks to chip makers to get them to invest in chip research, development, and manufacturing in New York state. And given the state of New York's budget, he can't just cut them checks to pay for such work.

But what Cuomo can do is invest in research centers and then get what amounts to matching grants from the chip makers to do the work to move from 300mm to 450mm wafers – and then hope that IBM and GlobalFoundries will continue to make chips in New York, and maybe convince TSMC, Samsung, or Intel to plunk down a new fab in The Empire State, as well.

In a statement put out by Cuomo, there are two projects that are being funded. One, led by IBM and its chip fab partners, will concentrate on developing "the next two generations of computer chips," which means the 22 nanometer and 14 nanometer nodes. The amount of money this development will take was not specified, but the governor said that IBM's aggregate investment in chip technology (including plant upgrades in East Fishkill) was more than $10bn in the past decade. Various industry reports peg IBM and its partners' investments in these 22 and 14 nanometer nodes at $3.6bn, and presumably this actually includes upgrading the East Fishkill fab.

The second effort, dubbed the Global 450 Consortium, will be led by Intel and involves all five chip makers kicking in just under $400m. They will work on the technology needed to upgrade 300mm facilities to 450mm gear. This is something that all five companies will eventually have to do to improve their yields and the economies of their wafer-baking.

A 450mm wafer will be able to hold roughly twice the chips that today's 300mm wafer can, based on shrinking processes as well as the larger wafer size. The only trouble is that a 450mm fab is estimated to cost around $10bn.

The arrangements between New York and the chip makers will see $15m dedicated towards increasing the number of related tech businesses owned by minorities and women, and a private initiative to have a "Made in NY" label slapped on chip making gear that could generate $400m in revenues in the state.

For their part, the chip makers are pumping funds into the SUNY College for Nanoscale and Science Engineering (CNSE) in Albany, which was established 15 years ago and has become a hotbed for chip research. The state is kicking in $400m in addition to this $4.4bn in private investment over the five years.

The effort is expected to create 2,500 new high-tech jobs in the state, with 800 at the Albany NanoTech campus, 950 at IBM facilities in East Fishkill and Yorktown Heights, 450 at the SUNY Institute of Technology in Utica, and 300 at the Smart System Technology and Commercialization Center in Canandaigua. Another 1,900 construction jobs will be needed to build out the 450mm research facilities in the next five years and 2,500 existing jobs will be retained thanks to the investments.

"This unprecedented private investment in New York's economy will create thousands of jobs and make the state the epicenter for the next generation of computer chip technology," Governor Cuomo said in a statement. Perhaps "epicenter" may have been a poor choice of words, given that last month the state had its first decent-sized earthquake in a long time. ®

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