N.Y. pushing for tech leadership despite budget woes

NEW YORK — Set on becoming the world's next high-tech powerhouse, New York state is pushing ahead despite a global financial crisis, a Wall Street meltdown and a looming $8 billion budget deficit.

Political leaders made that clear this week, throwing their weight behind the $1.2 billion in incentives needed to bring a next-generation computer chip factory to the Albany area. The plant is at the heart of a new manufacturing spinoff from Advanced Micro Devices Inc.

"In a time of fiscal crisis, it is critical that New York state position itself as a leader in technologies of the 21st century," Gov. David Paterson said.

Saying that the state can't rely on volatile Wall Street as an economic engine, Paterson called the deal he inherited — New York's largest business incentive package — a wise investment that will create a high-tech hub for attracting industry.

In recent years, New York has unleashed an avalanche of money to entice technology companies.

Besides AMD, the state has offered incentives to IBM Corp., which in 2002 opened a chip factory and lab in East Fishkill, N.Y. about 100 miles south of Albany. Many video game console chips come from there.

State funds also are boosting the New York expansion of the Sematech research consortium. Sematech set up shop in Austin, Texas, in the late 1980s and helped fuel that city's economic growth and status as a technology leader.

New York's "incentives in particular are incredibly strong, which is why a lot of these businesses are finding their way to the East Coast," technology analyst RobEnderle said. "Where we have in the past seen growth in California, then New Mexico, then in Austin, it looks like an awful lot of the activity has shifted over to New York."

The $4.6 billion chip fabrication plant from AMD's spinoff, The Foundry Co., is a big part of the region's strategy to become a global high-tech player, said Alain Kaloyeros, chief administrative officer at the College of Nanoscale Science and Engineering, part of the State University of New York at Albany.

Kaloyeros said more high-tech public-private partnerships of "significant magnitude" are in the works.

Construction of the 180,000-square-foot Foundry plant is to begin next year, with chip production starting in 2012. The facility's focus is producing 22-nanometer chips, whose powerful, densely packed structure is two generations ahead of the current forefront of chip technology.

The chip fab is expected to employ nearly 1,500 people, while creating more than 1,600 construction jobs and 5,000 indirect positions in the local economy. AMD executives and technology analysts said the job numbers are conservative.

The incentives include $650 million in cash from state bonds and $600 million in tax credits.

The deal needs additional government approvals because the arrangement first announced in 2006 has changed. The Malta, N.Y., plant is now being built by the Foundry, which is largely backed by AMD's new partner, an investment firm from oil-richAbu Dhabi in the United Arab Emirates.

Before that investment, Sunnyvale, Calif.-based AMD, the struggling No. 2 chip maker after Intel Corp., had appeared too financially weak to build its proposed New York facility.

Approval of the deal is likely, Enderle said. He said in the current economic climate, opposing the deal would be political suicide.

He said the fab will likely be one of the "most secure places to work in the state."

With carnage on Wall Street and state revenues falling, New York is facing billions of dollars in budget shortfalls and severe spending cuts.

But Paterson and other New York politicians said Tuesday in Albany that the chip plant deal is too good and important in the long term to pass up.

"At a time of general bleak economic news, today's announcement is great news," Sen. Charles Schumer said. "This is the most advanced chip fab manufacturing facility in the world. ... Businesses will flock here and it will mean a real difference to getting good-paying jobs all over the region."

Hector Ruiz, the former AMD chairman who will lead Foundry, said AMD chose New York because of its spirited political and business leaders and strong universities churning out semiconductor experts.

"With the creation of this company, it's going to be the best nanotechnology center in the world," Ruiz said. He said the industry hasn't "done this kind of thing in this country for many, many years."

David Ho is a New York correspondent for Cox Newspapers.