Issue Date: January 22, 2007
Nano Goes Big Time
NEW YORK has made the single largest nanotechnology investment of any U.S. state, but in the race to attract nanotech firms, its efforts are just the tip of the iceberg.
Since 2001, New York has spent $500 million on the Albany NanoTech complex and attracted $2.5 billion worth of industry investments in the research and commercialization of semiconductor advances. Largely because of the presence of Albany NanoTech, headed by physicist Alain E. Kaloyeros, Sunnyvale, Calif.-based Advanced Micro Devices (AMD) plans to build a $3.2 billion computer chip plant in nearby Saratoga County.
Although there is no guarantee that New York's investment will help pick up a moribund manufacturing economy in the upstate region, about 160 miles north of New York City, it's a bet the state was willing to make.
Government has learned its lesson well. Invest in research in a hot new field, provide small-business grants to the little guys, provide infrastructure improvements and tax incentives for the big guys, and voilà, an industry cluster develops and along with it jobs and a new tax base.
Of course, it is not that easy. But regions that have forged coalitions among government, academia, and venture capitalists have successfully ramped up their economies and local quality of life. The embrace of biotechnology, for instance, has added billions of dollars and thousands of jobs to the economy in Southern California, the environs of Boston, and the Research Triangle Park region defined by Raleigh, Durham, and Chapel Hill, N.C.
Now the race is on to embrace and develop techniques to manipulate materials just nanometers-billionths of a meter-wide. Worldwide, governments, corporations, and venture capitalists spent $12.4 billion on nanotechnology R&D in 2006, up 13% from 2005, according to Lux Research, a New York City-based market intelligence firm.
Governments accounted for a little more than half of the 2006 total, or $6.4 billion. In 2004, the last year for which Lux has data, state and local governments in the U.S. invested more than $400 million in nanotechnology research, facilities, and business incubation programs.
With the help of government money, regional coalitions in areas such as Austin, Texas; Northern California; and the Massachusetts Bay Area have already embraced the new techniques and are well along in the effort to develop a commercial hub and snag an economic windfall.
Over a 15-year period, such a nanotech hub could add up to 60,000 jobs and garner $15 billion in capital investments, according to the International Alliance of Nanotechnology Regions. LaMar Hill, the group's founder and chief executive officer, says these nanotech investments would boost a hub region's local population by 5% annually, influence the construction of as many as 50,000 new housing units, and provide an economic boost of up to $10 billion every year.
Hill, a chemist who worked in a business development role for the University of Albany before he started the alliance, says AMD's planned computer chip fabrication facility will have a dramatic impact on the Albany region.
Five years after AMD's project gets under way, Hill expects the company will have hired as many as 1,900 people and generated 1,500 construction and 2,250 supplier jobs for a total of 5,650 jobs.
Adjacent to the site AMD has chosen, land is available to support three more chip manufacturers, Hill says. And if more chip makers come, thousands of additional jobs would be created both within the chip factories and in supporting industries including tool producers, suppliers, and a host of support services.
"New York can't compete with low-cost mass manufacturers," says Kaloyeros, vice president and chief administrative officer at the State University of New York, Albany, College of Nanoscale Science & Engineering (CNSE). "Our future is in leading-edge, high-end innovation," says Kaloyeros, who also is the prime mover behind Albany NanoTech, a 450,000-sq-ft complex at the college.
The futuristic-looking complex of blue and green glass accommodates more than 1,350 scientists, engineers, and technicians from electronics companies such as IBM, AMD, and Sony. Semiconductor toolmakers such as Applied Materials, Tokyo Electron, and ASML are also in residence. Chemical industry stalwarts are here too and include Air Products, Dow Chemical, DuPont, Praxair, and Rohm and Haas.
Even start-up firms can take advantage of the facility. Eric Burnett, CEO of Applied NanoWorks, in Rensselaer, N.Y., says he is working with CNSE scientists to qualify new materials used in the computer chip polishing technique known as chemical mechanical planarization. Richard M. Saburro, CEO of Starfire Systems, says his firm has worked with CNSE to develop nanoceramic composites for computer chip substrates.
CNSE boasts research contracts with more than 250 firms, including SEMATECH, an international consortium of semiconductor makers devoted to commercializing advanced technology. Faculty members, who number more than 35, work on research projects with industry scientists at the site, taking advantage of high-tech equipment that is still under development.
As he takes visitors on a tour of clean rooms filled with advanced equipment and the latest 300-mm semiconductor wafer fabrication devices, Michael M. Fancher, associate professor of nanoeconomics, points out that none of the companies at Albany NanoTech pay a membership fee; they don't have to be New York state or even U.S.-based companies. New York hopes that companies like AMD will ultimately put factories here, he says. "R&D needs to be close to the manufacturer. That is why manufacturers will come to New York state," he says.
According to Kaloyeros, innovation is needed to advance nanotechnology, not only for improved semiconductors, but also for advances in biological materials, medical devices, and energy-saving materials.
"Nanoelectronics is not just about innovation in computer chips. It is about integrating electronics with biological devices and developing reliable manufacturing processes for genetic engineering," he says. He envisions improvements in computer chips that would allow nerve pulses to smoothly move artificial arms and legs.
Because of its capabilities, CNSE is the lead institution in an industry-academic initiative to develop electronic materials to replace the complementary metal oxide semiconductor materials used to make computer chips today.
Partners in the year-old initiative—called the Institute for Nanoelectronics Discovery & Exploration—include Harvard University, Massachusetts Institute of Technology, Yale University, and Rensselear Polytechnic Institute. IBM, Intel, and Micron Technology are also members. It will be yet another training ground for CNSE's growing student body, which now counts 125 graduate students.
Kaloyeros, 50, who has a Ph.D. in physics from the University of Illinois, Urbana-Champaign, came to Albany in 1990. And as he pursued research in areas such as plasma-promoted chemical vapor deposition for computer chip interconnects, he also found the time to develop Albany NanoTech. He still has research projects under way, handled mostly, he says, by his graduate students.
Of Greek heritage, Kaloyeros grew up in Lebanon. He escaped the country as it sank into civil war in the late 1970s and came to study in the U.S. After landing in Albany, he befriended then-governor of New York George E. Pataki and secured the governor's support for Albany NanoTech. Kaloyeros hopes to make a supporter of the newly elected governor, Eliot Spitzer.
SO MANY companies have backed Albany NanoTech, Kaloyeros says, because of the fast pace of change in the industry and the high cost of testing and proving new technology. Without banding together, companies "can't afford to take an early idea and demonstrate commercial success."
But even if companies realize research success in Albany, New York state's high costs may be a deterrent to setting up a business there. Not every firm will secure incentives as generous as the $1.2 billion package New York offered AMD. Though the state provides tax breaks in designated enterprise zones, the cost to operate a business in the state is still very high.
"New York is a prohibitively expensive place to run a company," says John H. Boyd, president of the Boyd Co., a site selection firm. High corporate and property taxes, as well as high costs for health, workmen's compensation, and disability insurance plague state businesses. Boyd characterizes New York as "almost an antibusiness state" because firms must shell out as much as 40% of total labor costs for health-care-related expenses.
But the area around Albany is still attractive for a number of reasons, Boyd says. The cost of living is lower than in other areas attractive to nanotech companies, such as Southern California and the Boston region. Land costs for new high-tech enterprises are also quite reasonable, he says, at about $80,000 an acre near Albany, compared with about $300,000 an acre in the corridor stretching from Washington, D.C., to Boston.
Kaloyeros is counting on the area's good points and technical as well as scientific advances yet to come at Albany NanoTech to boost the local economy. By 2014, he predicts, the biggest market for nanoelectronics will be in the health and medical industry. He foresees nanoelectronic devices so small and sophisticated that they will be able to reconnect severed optical nerves and restore eyesight. And he sees Albany NanoTech continuing to lead the charge to leverage nanotechnology for commercial gain.
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