FEATURE STORY: Semiconductor HUBS – Macro Growth from Micro Chips
By Jenny Vickers
From the January/February 2013 issue
The semiconductor industry is responsible for producing integrated circuits or “chips” that have become one of the necessary components for our world to operate. They act as the brains of every electronic device—and are literally found everywhere—inside phones, cars, clothes, computers, home appliances, medical devices, car brakes, weapons, and more. As nanotechnology has advanced, so have the chips. Companies are now able to produce wafers with microchip circuits as small as 28 nanometers—which are barely visible to the human eye. However, with an industry garnering billions of dollars in sales and creating thousands of new jobs, there is certainly nothing “nano” about it.
In 2011, U.S. semiconductor sales alone totaled more than $150 billion, and semiconductors make our trillion dollar electronics industry possible. But the industry produces more than just financial returns. Jobs in this industry are in line with the types of employment opportunities that are sought after: stable, well-paid, semi- and high-skilled labor jobs, as well as managerial, design and engineering positions. In the U.S. semiconductor employment is the biggest job growth sector overall with employment rising nationwide by 3.7 percent to nearly a quarter of a million workers in 2012.
The semiconductor industry is a highly competitive global industry with constant pressure on chip makers to come up with something better and even cheaper than what redefined state-of-the-art only a few months before. New technologies are being developed at an unprecedented pace and our highly mobile world is changing the shape of the semiconductor industry in new ways.
“We are moving away from a market dominated by PCs and into a new era of mobility,” said Jessica Kerley, Communications Specialist for GLOBALFOUNDRIES, one of the world’s leading semiconductor manufacturers. “Over the past 10 years, computing has moved from the desktop to the laptop to the pocket. There are now almost as many cell phone subscriptions as people in the world. ‘Mobile’ is the watchword in today’s landscape.”
The industry stretches across almost every region of the country and into the majority of states from California and Texas to Florida, Massachusetts and New York. However, there are several regions which are developing semiconductor “ecosystems” in order to attract innovation-driven companies and grow the economy. These areas are not only conducting advanced semiconductor manufacturing, design and commercialization, bat are training workers for jobs that can compete on a global scale.
In Upstate NY, GLOBALFOUNDRIES is investing $6.9 billion to establish a new factory on an abandoned rocket-testing site in Malta and just this week announced it is building a new $2 billion technology development center. In Austin, TX, Samsung is already at work in a $4 billion plant expansion in Austin. In Chandler, AZ, Intel is investing more than $300 million to build a new R&D facility. And in Albuquerque, NM, Sandia’s MESA facility is in the midst of groundbreaking R&D work on semiconductor wafers, while emerging technology company Skorpios Technologies is helping spearhead the evolution of the networking industry.
UPSTATE NY’S TECH VALLEY: GLOBAL NANOTECH HUB
The semiconductor industry has been a key driver to the revitalization of upstate New York’s “Tech Valley”—a 19-county region of eastern New York State that spans from just south of Montreal to just north of New York City. Over the past decade, this region has seen billions of dollars of public and private investment, the result of which is the development of a true technology cluster in upstate New York with significant semiconductor and nanotechnology assets, including IBM, GE Global Research, Sematech and the College of Nanoscale Science and Engineering (CNSE).
The region is now a major hub for advanced semiconductor manufacturing and research, attracting big firms, their vendors and suppliers, smaller start-ups, new education and research facilities. Today, more than 1,500 high-tech companies call Tech Valley home.
Recognizing the region’s potential, Forbes recently predicted that “New York’s Tech Valley could become the Silicon Valley of Nanotech and even surpass it in economic importance.”
At the heart of this development is the Global 450 Consortium (G450C), an initiative spearheaded by Gov. Andrew Cuomo to further position New York to become the nanotech capital of the world. In September 2011, Gov. Cuomo announced the consortium, a $4.8 billion, first-of-its-kind collaboration housed at the CNSE’s Albany NanoTech complex. The G450C consists of five leading international companies that are working to create the next generation of computer chip technology: IBM, Intel, GLOBALFOUNDRIES, TSMC and Samsung.
“This unprecedented private investment in New York’s economy will create thousands of new jobs and make the state the epicenter for the next generation of computer chip technology,” said Gov. Cuomo.
IBM has pledged to invest $3.6 billion towards developing 22-nanometer and 14-nanometer process technology for computer chips. IBM will also work on a second project with Intel, TSMC, GLOBALFOUNDRIES and Samsung on moving existing 300mm (12-inch) wafer manufacturing technology to more advanced 450mm (18-inch) technology. 450mm wafers yield roughly twice the number of chips as today’s 300mm wafers, which lowers the cost of making future chips. The project is expected to create and retain nearly 7,000 jobs across New York, including 2,500 new technology jobs.
To support the project, New York State is investing $400 million in CNSE to expand and house the world’s first G450C, adding nearly 500,000 square feet of next-generation infrastructure, an additional 50,000 square feet of Class 1 capable cleanrooms, and more than 1,000 scientists, researchers and engineers from CNSE and global corporations.
CNSE is the world’s most advanced university-driven research enterprise, offering students a one-of-a-kind academic experience and providing over 300 corporate partners with access to an unmatched ecosystem for leading-edge R&D and commercialization of nanoelectronics and nanotech innovations. CNSE’s foot print spans upstate New York, including its Albany NanoTech Complex, an 800,000-square-foot, $14 billion state-of the-art megaplex.
“[CNSE] houses the most advanced clean rooms, tools and equipment, as well as next generation tools that are still several years from making it out into industry,” said Steve Janack, CNSE vice president for marketing and communications. “It is a unique environment unlike any place in the world. You have the world’s leading tech companies doing next generation innovation R&D and commercialization work here on site and doing so in an environment that allows them to mitigate the costs and accelerate their research by pooling their money.”
According to Janack, public and private investments are being leveraged to drive high tech growth opportunities across Upstate New York, including Utica, Rochester, Syracuse, and other areas. In Utica, CNSE has partnered with SUNYIT to build a facility known as Quad C (Computer Chip Commercialization Center) where companies can develop system-on-a-chip technologies. In the Rochester area, CNSE’s Smart System Technology and Commercialization Center (STC) offers state-of-the-art capabilities for MEMS fabrication and packaging.
“If you are a company that needs to be at the cutting edge, you are looking for opportunities to innovate while reigning in costs and to do so in an environment that allows you to accelerate your innovation at a rate where you can beat the competition,” said Janack. “What we are seeing is that increasingly the location of choice for the semiconductor industry to do R&D, commercialization, and advanced manufacturing is New York.”
There’s no question that New York is at the forefront of a nanotechnology revolution. Just last week, GLOBALFOUNDRIES, which is now the second largest computer chip foundry in the world, announced they are going to build a $2 billion Technology Development Center (TDC) to complement their existing computer chip fab in Malta, creating 1,000 new jobs.
The TDC will include 90,000 square feet of flexible cleanroom space that will house a variety of semiconductor development and manufacturing areas to support the transition to new technology nodes. Construction of the TDC is planned to begin in early 2013 with completion targeted for late 2014.
Fab 8 is the most advanced semiconductor foundry campus in the world. Since breaking ground on Fab 8 in 2009, the project has created approximately 2,000 new direct jobs, 9,000 new indirect jobs, and more than 10,000 new construction jobs. The company has been making significant investments in technology development at Fab 8 and today development is underway at the 20nm and 14nm technology nodes. When fully ramped, the total clean-room space will be approximately 300,000 square feet, roughly equivalent to six football fields of state-of-the-art semiconductor wafer manufacturing space, and will be capable of a total output of approximately 60,000 wafers per month.
“The TDC is expected to play a key role in the company’s strategy to develop innovative semiconductor solutions allowing customers to compete at the leading edge of technology,” said Jessica Kerley, Communications Specialist for GLOBALFOUNDRIES.
According to Kerley there were many important reasons that drove GLOBALFOUNDRIES decision to build Fab 8 in upstate NY, but the three primary considerations involve education, ecosystem and economics.
“New York’s investment in the semiconductor industry, including the incentives and tax credits for the Fab 8 project, represents a long-term economic development strategy that is working,” said Kerley. “The State of New York expects to see a return of $2.54 for every $1.00 spent on the Fab 8 project, and the State’s innovative approach to public-private partnerships is reshaping upstate NY’s Tech Valley.”
AUSTIN, TX: CHIP CAPITAL
The mobile technology revolution has swept over the nation and is helping Austin’s semiconductor industry thrive. Some of the fastest-growing tech companies in town—including Apple, Cirrus Logic, Intel, Mutual Mobile and even newcomer Visa Inc. and startup Starmount, which develops software for mobile point of sale—all have mobile aspects to their business.
“Several years ago when the semiconductor industry started declining in the U.S., it hit several areas very hard,” said Adriana Cruz, Vice President of Global Corporate Recruitment at the Austin Chamber of Commerce. “Austin was one of those along with Silicon Valley. However, mobile devices and the technology for those mobile devices have changed the semiconductor industry entirely.”
Texas is now the nation’s No. 2 semiconductor job market after California, according to an analysis of federal data by the Semiconductor Industry Association—and many of those jobs are located in the Austin area. Austin is now one of the nation’s top emerging high-tech cities, with more than 108,000 people employed by around 4,400 technology firms. Semiconductor companies in Austin include chip designers Intel, IBM, and Advanced Micro Devices (AMD) and chip manufacturers Freescale Semiconductor, Samsung and Spansion. Together, they employ thousands.
Samsung Electronics Co., the world’s second largest chip maker, is already at work in a $4 billion plant expansion at their Austin Semiconductor facility. The expansion includes retrofitting their main fab to logic chips to supply mobile and tablet production. Samsung’s overall investment in Austin is one of the largest single investments by a foreign company in the nation and is the largest fab in the U.S. This is Samsung’s only location in the world outside of South Korea that manufactures chips for the electronics giant.
Along with new renovations, Samsung’s Austin Research Center also grew its presence with about 200 engineers dedicated to design and development of the latest technologies for mobile application processors.
“Our ongoing, multi-billion dollar investments in Austin will expand our footprint as a comprehensive semiconductor hub and demonstrate our strong commitment to manufacturing, research and development in the United States,” said Woosung Han, president of SAS.
Austin wouldn’t be a hub or a center for semiconductor development without the presence of the University of Texas (UT) at Austin, which has one of the largest and most diverse university semiconductor research programs in the world, the Microelectronics Research Center (MRC). The MRC offers opportunities for students to participate in cutting-edge R&D, while receiving the training and experience to successfully pursue a rewarding career in microelectronics. The MRC has developed programs which have been utilized by major integrated circuit manufacturers throughout the U.S.
The Optoelectronics Group at MRC has developed novel vertical-cavity, surface-emitting lasers, and radically new photodetectors. MRC has also established active research efforts in GaN and related materials, which is projected to become the dominant material for short-wavelength emitters, ultraviolet photodetectors and high-power electronics.
Austin is also home to California chipmaker Altera Corp., which signed a major lease in June 2011 in Southwest Austin to establish a new R&D center. The company chose the site largely because several major tech companies were located nearby.
Altera develops customizable chips, used mainly for equipment in communications, industrial, broadcast, computer and storage, medical and other markets. It operates in 19 counties and employs 2,600 people. Altera employs over 200 people at its R&D center in Austin.
The company took space previously occupied by GLOBALFOUNDRIES, which left Austin after it spun off from AMD about two years ago.
Altera said it needed to make an Austin footprint because of growth in the smartphone and mobile device market. The company said a result of that growth had been an increased need for back office and communication infrastructure.
“There’s been a lot of activity in Austin over the past couple of years,” said Cruz. “The economy has been incredibly strong. We are one of the areas that went into recession last and came out first.”
ALBUQUERQUE: GROUND ZERO FOR CLEAN ROOMS
Clean rooms, which ensure that dust particles don’t contaminate microchips, are integral to the semiconductor industry. Clean rooms were actually invented in Albuquerque, New Mexico in 1962 when Willis Whitfield pioneered the modern Clean Room at Sandia National Laboratories. Whitfield, who died in November 2012—the same month Sandia celebrated its 50th anniversary—changed the face of electronics, medicine and technology forever.
Today, Sandia is a multibillion-dollar engineering and science complex that continues to pioneer groundbreaking research and innovation in Albuquerque. Sandia is still one of the nation’s major clean rooms and its $500 million Microsystems Engineering Sciences and Applications (MESA) facility is known for its groundbreaking R&D work on semiconductor wafers.
In December 2012, Sandia announced it is investing $16 million to build five regional test centers around the country for solar companies to field-test their hardware before installing multimillion-dollar photovoltaic (PV) systems on buildings. It also just completed a $17.8 million upgrade to its National Solar Thermal Test Facility in Albuquerque, and it’s preparing to commercialize new, breakthrough PV cell technology that could cut manufacturing costs, improve efficiency and provide more applications for photovoltaics in everything from clothing to Mars rovers.
Sandia is part of the Department of Energy’s ‘SunShot Initiative’ to support manufacturers and expand and accelerate installation of PV systems in the U.S. Apart from Albuquerque, centers will be located in Denver; Orlando, Florida; Burlington, Vermont; and Las Vegas.
While the regional test centers will focus on PV systems, which directly convert sunlight to electricity, Sandia’s Solar Thermal Test Facility is working to improve concentrating solar power (CSP) systems that use sunlight to heat liquids to generate steam for turbine generators.
Sandia’s Materials, Devices and Energy Technologies group is also receiving industry accolades for developing micro-scale solar cells called “solar glitter.” The cells, about the width of a human hair, can be mass manufactured with standard semiconductor micro-scale tools and technologies. The tiny, crystalline silicon cells are about 10 times thinner than conventional PV cells, yet they perform at about the same efficiency.
In addition to solar, Sandia is working to advance innovations in communications technology at its Science & Technology Park (SS&TP). Currently 33 companies and organizations and more than 2,000 employees reside in SS&TP’s 340-acre high-tech campus.
In September 2012, Sumitomo Electric Device Innovations USA Inc. (SEDU), which develops products necessary to meet the requirements of high bandwidth, high-speed optical networks, announced it is setting up shop at Sandia’s SS&TP.
SEDU has purchased technology developed by for high-speed data communications from Emcore Corp., which makes compound semiconductor-based components and subsystems for the broadband, fiber, optic, satellite and terrestrial solar power markets. Emcore has 165,000 square feet of manufacturing space at SS&TP. By acquiring Emcore’s next-generation vertical cavity surface emitting lasers and parallel optics technology, the company will continue to advance high-performance computing applications.
Outside of Sandia, emerging technology companies are helping to help spearhead the evolution of the networking industry. Albuquerque’s Skorpios Technologies, an innovator in composite silicon photonic technology, closed on a $19 million Series B round of financing in September 2011 in order to expand its infrastructure and complete the commercialization of its technology.
“We are obviously very pleased to have closed such a substantial funding round and thrilled to have the support of industry leaders from throughout the communication networking ecosystem,” said Stephen Krasulick, President and CEO of Skorpios Technologies. Ericsson, Nokia Siemens Networks and other leaders in the communications ecosystem participated in the funding. Also participating were founding investors Cottonwood Technology Fund and Sun Mountain Capital.
“Skorpios’ large scale silicon photonics technology and integration process is spearheading the evolution of the networking industry,” said Jan Haglund, President of Product Area IP & Broadband at Ericsson. “With this technology we will be able to bring even better solutions to our customers.”
Intel’s Rio Rancho facility, northwest of Albuquerque, makes up the bulk of almost all of New Mexico’s semiconductor industry. Intel began operations in New Mexico in 1980, with 25 employees on a small piece of land previously used as a sod farm. More than three decades later, Intel is the largest industrial employer in the state, with approximately 3,500 employees at its campus and an annual state economic impact of nearly $1 billion. The site is home to Fab 11X, one of Intel’s largest 300-mm semiconductor manufacturing facilities, which has undergone significant expansions since its opening. In 2007, Intel spent $1 billion to retool Fab11X to become Intel’s fourth factory for next generation, 45-nm technology; in 2009, Intel spent $2.5 billion to upgrade Fab11X to speed up deployment of 32-nm manufacturing technology.
More importantly, in 2011 New Mexico approved an update to Intel’s air quality permit which could have the potential to position the plant for the future manufacturing of new technology. Although there are no plans at the moment for expansion and upgrade, it exemplifies State and community commitments to assisting economic development projects.
“This [the permit approval] sends a message that New Mexico should be watched because of how quickly the state acted on this,” said Gary Tonjes, president, Albuquerque Economic Development.
AZ: NO. 4 IN U.S. AND RISING
Arizona, which ranks as the No. 4 state for the number of semiconductor industry jobs, is a hotbed for semiconductor activity. A bulk of the semiconductor activity takes place in Chandler, the southernmost city in metropolitan Phoenix and fourth largest city in Arizona, and Tucson, located about one hour southeast of Chandler.
Chandler has a strong semiconductor presence, the largest of which include Intel, Microchip Technology and Freescale Semiconductor. The city is helping to attract electronic companies due to the cluster of major technology employers and highly-educated, diverse workforce. In addition, Arizona State University (ASU) and the University of Arizona work closely with electronics employers to ensure a strong workforce through an effective public/private partnership. In fact, a significant portion of Intel, a world leader in computing innovation, engineers are ASU graduates.
In August 2012, Intel announced it is investing more than $300 million in the construction of a new R&D facility at its Chandler campus. The facility will create several hundred Intel jobs and nearly 1,000 construction jobs, including positions for military veterans with technical training. Intel is the world’s largest chip maker whose processors are the brains powering Apple’s sleek MacBook laptops and other computers, as well as most of the PCs around the world.
“This significant investment in R&D reflects Intel’s principal role in defining the future of technology,” said Babak Sabi, Intel vice president and director, Assembly and Test Technology Development. “The innovation set to take place within the walls of this new research center will influence technology trends for years to come, and we’re delighted to bring that distinction to the community of Chandler and the State of Arizona.”
Intel’s new Chandler facility will be built to support packaging operations for the company. Construction of the two-story, approximately 285,000-square-foot R&D facility is expected to be completed in the second half of 2013. The building is being designed to enable Leadership in Energy and Environmental Design (LEED) certification.
News of this additional investment comes as Intel forges ahead with construction of Fab 42, its new manufacturing facility in Ocotillo, a Chandler community. Upon its completion this year, Fab 42 will be the most advanced, high-volume semiconductor manufacturing facility in the world.
While more than three-fourths of Intel’s sales come from outside the U.S., Intel manufacturers three-fourths of its microprocessors in the U.S. The addition of Fab 42 will increase the company’s American manufacturing capability. The new fab is being built on the leading-edge 14-nm process, enabling Intel to manufacture more powerful and power efficient computer chips. The nanometer specification refers to the minimum dimensions of transistor technology. A nanometer is one-billionth of a meter or the size one ninety-thousandth the width of an average human hair.
Intel began operations in Chandler in 1980. With about 11,000 employees, Intel Arizona is the company’s second largest site in the U.S., and is the largest employer in Chandler. Overall, Intel’s combined investment in the new Chandler facilities will exceed $5.3 billion.
To keep up with Intel’s expansion, Air Products, an international corporation who sells gases and chemicals for industrial uses, announced in June 2012 it is doubling in size. Intel uses nitrogen gas pumped through underground pipelines from the Air Products plant. The company’s expansion includes laying a pipeline to Intel’s Ocotillo campus and adding distillation columns.
Nitrogen has a wide range of uses, but its largest use is in the electronics industry to flush air from vacuum tubes before the tubes are sealed.
Tucson, Arizona’s second largest city, will soon be home to a new high-tech manufacturing plant. In September 2012, Integrated Technologies Groups (ITC), a California-based maker of magnetic components and related products for high-tech applications, announced it is opening a plant in Tucson that is expected to employ up to 200 people in five years. ITC, which has customers in the semiconductor, medical, energy, industrial automation and aerospace industries, has purchased a 25,000-square-foot building in Butterfield Business Park from Applied Energetics Inc., which is moving to smaller quarters nearby.
The company’s new location in Tucson will focus on product integration and testing, including clean-room assembly.