High hopes for high tech

ALBANY — If New York state is going to be a major high-tech manufacturing center soon, the future is likely to start in this city.

The state is betting $300 million that a nanotechnology research center on the campus of Albany University, SUNY, will become a world leader in the field, eventually drawing tens of thousands of well-paying jobs to the area.

The payoff has been modest so far, but still promising: Semiconductor firms, IBM and a leading Japanese company have invested $1.6 billion in related projects.

Leaders of the effort say that Albany is well-positioned to beat rivals from Japan, Europe and other parts of the United States to become the pre-eminent center in this burgeoning field, but the issue is far from settled.

"Who is going to be the first to attract a critical mass of R and D (research and development) to attract companies?" asked Alain Kaloyeros, head of the Albany nanotech project. "This is our future. We're betting our name on this."

Meanwhile, the state has also helped to fund similar "centers of excellence," studying other promising disciplines, like biotech and supercomputing, in Buffalo, Rochester, Syracuse and Long Island. But the Albany center, which studies components one one-thousandth the width of a human hair, is the largest and furthest along toward a potential payoff.

Kaloyeros' legacy as a scientist and academic leader is still up in the air, but he has already proved himself to be an adept politician: Republican Gov. George Pataki and Democratic Assembly Speaker Sheldon Silver, adversaries on many issues, are among the center's biggest supporters.

Kaloyeros likens the center to a retail-shopping project.

"First you need anchor tenants," he said. "Then you can attract small and medium-sized spinoffs.

"We need a chip manufacturer to serve as the 'Macy's' — that's IBM," he said, referring to Big Blue's chip-making plant in East Fishkill.

"Then you needed a global R and D consortium — that's Sematech," Kaloyeros said, referring to a group that allows the major chip manufacturers to pool their resources to make chips that are even smaller and faster.

Tokyo Electron, a Japanese company that makes equipment used in the process, is another anchor, as is the State University of New York, which has created a new school — the College of Nanoscale Science and Engineering — that provides faculty and graduate students to help in research. The school has 81 students seeking graduate degrees in the discipline.

So far, the investment has yielded about 500 jobs at the center, a figure that is expected to reach 1,700 by early 2007, Kaloyeros said.

The computer chip-manufacturing companies are attracted to nanotech because to keep making chips that are smaller, they have to get down to devices so small that they qualify as nanostructures — sometimes just a few molecules thick.

The industry has been making smaller and smaller chips for more than three decades, actually doubling the power of the chips every 18 months.

Like the new IBM chip-making plant in East Fishkill, the smaller fabrication facility that has been set up at the nanotech center makes the chips on 12-inch wafers, the next generation after the 8-inch wafers now widely in use.

Although the wafer is bigger, the system is far more efficient: 45 computer chips can be made on each 8-inch disc, compared with 125 on a 12-inch disc.

Each chip contains between 40 million and 50 million transistors — the switches that are the heart of the computing process.

But how to make them even smaller? That's one of the problems being researched.

As the size of the chips has shrunk, it has become more and more expensive to figure out how to make them even smaller. That's why the chip makers pooled some of their R and D resources into Sematech, and why they also sought partnerships with taxpayers and universities.

When Intel created the 386 chip that was introduced in 1986, the development cost was about $15 million, Kaloyeros said. The cost to develop the most recent chip: $16 billion.

One of the reasons the field has attracted so much attention is that it has potential spinoffs that extend beyond the chip-making industry.

"This is not like the dot.com bubble, because this has potential applications in a number of fields," said Michael Fancher, the center's director of economic outreach. Life sciences, drug delivery, aerospace, automotive and sensing devices are among the fields where the technology could develop significant new products.

For example, Fancher mentioned research into trying to figure out a way to test for blood sugar without breaking the skin, a process that could end the need for diabetes patients to endlessly prick themselves to measure how much insulin they need.

"That's the nirvana," Fancher said.

Is this a good investment for the state?

Some had hoped that the center would have already attracted another chip maker — in fact, land in Malta, a nearby community, has already been set aside. But the industry has been in a slump for the past few years because demand for chips has been depressed by the overall downturn in the economy. Few new plants have been built.

"It does have the potential to be the next big thing in the high-tech industry," said Cary Snyder, one of the founders of Semiview, a California company that tracks technology companies.

"Commercial successes might be five or 10 years out," Snyder said. "Nanotech requires a heavy educational investment to commercialize it. We're in the early stages of that particular process."

Snyder was cautious when asked if Albany has a shot at being the industry leader.

"That depends on what breakthroughs happen and where," he said. "You guys are lucky you have IBM. You certainly have the potential to do well in the New York region."

With its heavy taxpayer investment in the field, New York is unlike Massachusetts, said Matthew Laudon, executive director of the Nanoscience and Technical Institute, a consulting firm based in Cambridge, Mass.

"It has great support from the state," Laudon said of the Albany project. In developing its high-tech industry, Massachusetts has instead depended on university and corporate researchers to make discoveries that have spawned new companies, he said.

Other states and countries have gotten into the nanotech game, Kaloyeros said.

The European Union recently invested 300 million euros (almost $400 million) in a Belgium facility that manufactures 12-inch chips. The German state of Saxony reached an agreement with two tenants to build a $450 million facility. The Japanese government has spent $1 billion to bring companies together.

Georgia has launched a nanotech initiative at Georgia Tech University and California recently approved a $1.2 billion bond issue for high-tech initiatives, $300 million of which is to be spent on a nanotech facility at the University of California at Berkeley. Texas has approved spending $395 million for a similar initiative at the state university's Dallas campus.

"The United States cannot compete in low-end manufacturing," Kaloyeros said. "The future has to be in high-end industry," like nanotech-related businesses.