Computer chips are everywhere around us: in automobiles, cellphones, video and music players, televisions, even dishwashers.
They’re a major U.S. export to the rest of the world. Worldwide demand is still growing.
And within a few years, millions of them will be made here, in a state-of-the-art factory at the Luther Forest Technology Campus.
The Advanced Micro Devices computer chip plant, confirmed last week by the company, will take the Capital Region economy away from the old-line manufacturing that has been disappearing for decades.
The $4.5 billion plant is expected to bring in its wake a host of other high-tech companies and hundreds of jobs typically needed to supply such plants.
“These aren’t built every day, but overall what we see and know is that the process and tools used to make the chips need a lot of support,” said Michael Relyea, executive director of the Luther Forest Technology Campus Economic Development Corp.
AMD officials announced Tuesday that a new spinoff called The Foundry Co., with an AMD management team and more than $2 billion in capital support from an Abu Dhabi investment company, will start plant construction next year.
It is expected to be in full operation and employing about 1,465 people by 2014.
The announcement quieted incessant speculation over the past two years about whether the plant would be built.
Doubts had been rampant since shortly after AMD and the state announced in 2006 that there was an intention to build but not a final commitment. At the time, AMD was aggressively taking business from its bigger rival, Intel, but since early 2007 the company suffered a series of quarterly losses totalling billions of dollars.
Under its incentive deal with the state, AMD — or, now, The Foundry Co. — will receive $650 million in state cash and tax breaks and infrastructure support worth $550 million.
Of the $4.5 billion, only about $1 billion goes into building a nearly one-million-square-foot building. The other $3 billion goes into the plant’s equipment, and that’s where many of the support jobs will be created.
“The tool-making industry is going to grow,” Relyea said, using the industry term for the exceedingly complex, delicate and expensive machines that make computer chips. “Gas and chemical companies will also be creating jobs.”
Erecting the building will take about 18 months, and it will be another 18 months after that to install the tools and get them running, said Ward Tisdale, AMD’s director of global community affairs.
“By 2012, we should produce our first chips for sale,” Tisdale said. “Applied Materials, Tokyo Electron, those are the types of companies that would typically set up shop nearby. Without the chip fab, they wouldn’t be there.”
Everett M. Ehrlich, an economist and former U.S. undersecretary of commerce who did an economic impact study for AMD, said three nearby jobs are created for every eight at a chip plant, “in such areas as computer sales and maintenance, fab garment cleaning, delivery services, maintenance, security and others.”
That would be about 550 jobs on top of the 1,465 at the plant, he said. There would also be 1,600 temporary jobs created during the plant’s construction.
The plant is also a major step toward the long-term vision of local economic developers to create a “Tech Valley,” with a concentration of technology companies like those around Silicon Valley in California or Austin, Texas.
“It’s a theory that has legs,” Tisdale said. “The region has done a very good job of salvaging the building blocks you need, in terms of education and colleges and research.”
The nanoscience research programs at the University at Albany and at Rensselaer Polytechnic Institute in Troy were part of AMD’s attraction to the region, Tisdale said.
paying for a vision
The state has invested roughly $100 million since 2000 in making the Luther Forest site attractive. That includes the purchase of the 1,350 acres in Malta and Stillwater for the technology campus, construction of the Round Lake bypass and an internal road system and $30 million in subsidies for the Saratoga County water system.
The road system and water line are under construction, not expected to be done until next year. The plant will be the site’s first tenant.
Residents of the county sewer district, meanwhile, are absorbing another $50 million in plant expansion costs closely tied to the tech campus.
The water and sewer expansions are essential because chip plants use chemicals to etch tiny computer circuits onto silicon wafers, using vast quantities of purified water to clean the chips. The new plant will use 3 million gallons per day.
AMD’s announcement was cheered by backers of the county water system, which has faced the same sort of skepticism as AMD’s plans, with critics saying the system was being built on speculation and AMD would back out. The $67 million system is now under construction, with completion scheduled for fall of 2009.
“AMD wasn’t going to say to build until they had water. It was the chicken and the egg,” said county Water Authority Chairman John E. Lawler, the Waterford town supervisor.
Lawler said the commitment wasn’t a surprise.
“We’ve been talking to AMD behind the scenes for two years,” he said.
The plant will be the authority’s biggest customer.
“In the long term, it eliminates any doubt about our financial stability,” Lawler said.
The zoning approval Malta officials gave in August allows AMD to someday have up to three chip plants — in effect, locking up all the major plants envisioned for Luther Forest.
Relyea said the rest of the property is available to support industries but not other full-blown chip plants.
“Some of those companies will need to provide support nearby, but the bulk of the support will be off-site, out in the community,” Relyea said. “We’re still marketing ourselves to facilities that need a lot of power and water.”
The park is still six months away from being marketed as shovel-ready, Relyea estimated. “My primary target is companies that need lots of water and lots of power, and then companies that need to be close to AMD,” he said.
In addition to the roughly 230 acres zoned for chip fabrication, Relyea said two other sites in the campus are being prepared for industrial use, though without specific tenants.
“I would say in two years, we’ll have a pretty good idea of how the Luther Forest Technology Campus is going to build out,” he said.
Dennis Brobston, president of the Saratoga Economic Development Corp., said his phone isn’t yet ringing with prospects looking to come to the county because of AMD, but he expects it will.
“Two things are going on here: You have this announcement, and then you have the economy on everybody’s mind,” Brobston said. “I believe we will see an influx of companies and of buildings being thought about.”
Tisdale said site clearing should start in the spring. Groundbreaking is expected around mid-year.
The Foundry Co. is renting office space at the nearby Saratoga Technology and Energy Park starting Dec. 1. Tisdale said federal approval of the Abu Dhabi investment, AMD stockholder approval of the venture and transfer of the state incentive package from AMD to The Foundry Co. are hoped for by the end of the year.
Interest in the local business community is high. Over 300 local business leaders attended a Saratoga County Chamber of Commerce presentation by Tisdale Friday afternoon.