By Howard Schneider
Washington Post Staff Writer
Tuesday, November 2, 2010; 5:43 PM
ALBANY - The economic downturn has hit upstate New York as hard as anywhere in the country but an unusual, high-tech endeavor is taking shape here that could involve billions of dollars in manufacturing investment and possibly thousands of new jobs.
State and federal officials are aiming to reassert the nation's traditional leadership in semiconductors by providing hundreds of millions of dollars toward a cutting edge research institute and the construction of a $4.5 billion silicon chip manufacturing plant.
The College of Nanoscale Science and Engineering (CNSE) has attracted more than 200 companies to an ever-expanding campus, where competitors work side by side in labs and on the same machines. At an industrial park 20 miles north, the state of New York has contributed $1.3 billion in grants and tax credits to subsidize the semiconductor plant.
This effort involves a degree of government involvement that Americans have long eschewed on the grounds that the public sector should not tilt the commercial playing field toward specific industries or companies.
Economic analysts have often warned that core industries in the United States risk falling behind their foreign competition because companies in China, South Korea and elsewhere benefit from government subsidies and other public support. But around Albany, federal and state governments are adopting a similar approach to an industry central to U.S. technological leadership and important in the Obama administration's efforts to boost U.S. exports.
"We are the last line of defense for the U.S. semiconductor industry," said Alain Kaloyeros, a physicist and head of CNSE.
The college opened at the State University of New York in 2001, and since then has grown to include an industrial-scale, 80,000-square-foot "clean room" - the hyper-hygienic facility needed to manufacture or experiment with silicon chips - as well as a collection of equipment perhaps unique in the world. The latest acquisition is a $65 million tool that uses extreme ultraviolet light to produce the world's smallest integrated circuits, and is one of only two in the world.
Reversing the dominant pattern, overseas companies are relocating here, and construction workers who specialize in building semiconductor plants are preparing to fight winter weather in New York instead of, for instance, Malaysia's tropical heat.
GlobalFoundries, a partnership between AMD and the investment arm of the Middle Eastern emirate Abu Dhabi, embarked on the new $4.5 billion plant at the depths of the recent downturn, shunning alternate locations such as Germany and Singapore - highly advanced manufacturing economies where the enterprise also owns plants.
Despite these positive developments, it's uncertain whether the strategy being pursued in upstate New York offers a model for the wider U.S. economy. Although the Obama administration has provided funding to advance the development of electric-car batteries and other green-energy technologies, policy experts do not suggest that the U.S. government could win back more basic types of manufacturing by simply outspending Asian countries such as China.
But in this case, industry and government officials argue that the approach is helping ensure that the United States keeps its traditional edge in an industry that remains a source of export strength. Intel, a major maker of silicon chips, recently announced major new investments in the United States, while opening its first chip plant in China.
These investments mean jobs not just for PhDs working in labs or engineers developing new gadgets but also for heating contractors who maintain clean rooms and the heavy-equipment operators responsible for sensitive pieces of machinery.
"Nanotechnology, semiconductors alone, can't support 330 million people, but it's a key piece in the economic model," Kaloyeros said.
From the development of the first vacuum tubes to the invention of the transistor and the silicon chip, the United States has long been at the center of the semiconductor industry.
Although semiconductors remain a top U.S. export - and crucial if the Obama administration is to meet its goal of doubling overall U.S. sales abroad - industry officials have noted some worrisome trends. An increasing number of semiconductor plants are being built overseas. Global market share for the United States stalled in the years before the recession, while more semiconductor manufacturing equipment is being sent to foreign factories.
Part of the industry is gone for good. Like blue jeans and plastic toys, lower-end silicon chips can be produced just as well abroad as in the United States.
But higher-end technology requires sophisticated cooperation among those who are doing basic research, developing better manufacturing techniques, and figuring out how to make new gadgets and systems. The CNSE, for example, is part of a national network of universities, companies and federal agencies trying to develop what might be considered a "post-silicon" valley.
With current technology, a single silicon chip can carry billions of atomic switches that use an electron's positive or negative charge to indicate "on" or "off." Combined in large numbers and built into circuits, those switches power modern devices from the most-advanced computers to auto diagnostic systems, home thermostats and the sensors that allow the Wii to make it seem like you're playing tennis.
Measured in nanometers, or billionths of a meter, the scale of the manufacturing has become so small that researchers say they may be within a couple of years of a technological wall - the point at which building smaller or more efficient chips becomes impractical due to power constraints and the physical limits of how close silicon atoms can be placed to each other and still behave as required.
The hunt for a new switch has become an industry priority, and researchers are narrowing their focus to a few possibilities. At places such as CNSE, for example, scientists are experimenting with techniques involving other substances, including a form of carbon called graphene, as well as different ways of using an electron's behavior to transmit information.
That next technology will spawn its own industry, requiring new manufacturing tools and methods. The location where the new switch is devised will become a magnet for investment and jobs.
"This is an opportunity to maintain manufacturing here," said Jeffrey Welser, director of the Nanoelectronics Research Initiative, a public-private effort to develop a new type of semiconductor. "If there is a significant change in technology, the existing fabrication plants cannot just plug it in. If that switch has been discovered here, then we have a head start on the tools and techniques."
It's the access to that type of research, Welser said, that is attracting firms to CNSE. Major companies such as IBM have a presence as do smaller firms.
The decision to put the new chip plant in nearby Saratoga County was driven by the combination of research potential and the subsidies offered by the state of New York, said Travis Bullard, spokesman for GlobalFoundries.
"The state of New York was stepping up to do something that the U.S. was not," Bullard said. "It is not just having to improve what we've got; it's what we do next, beyond silicon."
At the site, hundreds of construction workers are pushing toward a planned 2012 opening. The shell of the building is almost complete. By next summer, the complex process of sterilizing the plant's massive clean room - making it even more hygienic than a hospital operating room - will begin, according to Werner Greyling, site manager for the M+W Group, the German construction firm handling the project.
Greyling's own resume tells part of the story. He has spent the past 10 years building semiconductor plants in Malaysia and China, and the company has moved its North American headquarters to Albany.