Lobbyist: $1.2 Billion for a Chip Fab is a Steal

By Larry Rulison, Albany Times Union, N.Y.

Sep. 20–COLONIE — A top lobbyist for the U.S. semiconductor industry says the Capital Region doesn’t know how lucky it is to have won the $3.2 billion computer chip factory that Advanced Micro Devices Inc. is planning for Saratoga County.

"This is a battle like winning an Olympics," said W. Patrick Wilson, director of the Semiconductor Industry Association in San Jose, Calif. "Every single possible jurisdiction in the world wants to win a fab. Everybody wants it."

That was accomplished by a $1.2 billion incentive package offered to AMD by the state of New York and years of leadership in developing a nanotechnology industry in the region, Wilson said.

But he and Steve Kester, a lobbyist for AMD, said at a meeting of the Times Union editorial board on Wednesday that the federal government has to move swiftly on a number of issues before Congress to ensure that chip manufacturers like AMD and others can continue to thrive as growing competition comes out of China and elsewhere.

The U.S. is dominating computer chip manufacturing in the world right now, with $114 billion in sales last year, a 46 percent share of the global market, according to SIA.

A stunning 77 percent of those sales occur outside the U.S., although most of the production and employment occurs domestically, providing some of the best-paying manufacturing jobs in the country.

However, that leading position in the world may be in jeopardy if the U.S. doesn’t do more to improve research and education funding along with tax policies that support domestic manufacturing.

Intel Corp. of Santa Clara, Calif., which is AMD’s major rival for making chips used in personal computers and servers, announced plans earlier this year to open a chip fab in China.

"That’s the shot heard around the world," Wilson said.

Specifically, the SIA wants Congress to maintain and increase research and development funding, including $20 million from a Department of Defense program that underwrites university research at the University at Albany, Rensselaer Polytechnic Institute and elsewhere.

The group also wants to improve math and science education in the country and increase the availability of green cards and visas for foreign graduates of U.S universities, especially top scientists who want to work at places like AMD, Intel and IBM Corp., which has significant operations in the area.

The SIA also wants Congress to permanently approve and enhance federal tax credits for research and development, which it says allows U.S. chip makers to keep expanding. Both Wilson and Kester said they have the support of the Capital Region’s congressional delegation but need votes from around the country.

"There is a clock ticking," said Kester, who is senior manager for government relations for AMD. "This is not a local issue. It’s really an idea of competing against other countries."

Kester stressed that there is no connection between the industry’s demands on the federal level and AMD’s plan to build a factory at the Luther Forest Technology Campus in Malta.

AMD has yet to decide to move ahead with the project; it has until July 2009 to break ground and still be eligible for New York’s incentive package, which includes $650 million in cash.

The company, which is based in Sunnyvale, Calif., expects to release a proposed construction timeline by the end of the year, although its board of directors will have the final say about moving ahead.

"Obviously the community’s going to benefit if these (federal initiatives) take place," Kester said. Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.

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