Pataki Says the Road to the Semiconductor Superhighway Points through New York

Addressed High Tech Symposium at Lake George on Monday

Contact: Vincent Reda (518) 437-4985

New York Governor George Pataki told more than 175 representatives of the semiconductor industry and investment world that "a large part" of the future of the semiconductor industry will take place in New York State.

Delivering the keynote lunch address for the opening day of the Albany Symposium on Global Semiconductor Issues, held at the Sagamore Hotel on Lake George, N.Y., Pataki said that New York "has in place all of the elements that support a robust semiconductor industry." He included among those strengths a "strong economic climate," a social climate with reduced violent crime, and "the workforce to get the job done."

New York's semiconductor opportunities were a recurring message on the first day of the three-day symposium, which is subtitled "A Global Semiconductor Economics Roadmap for the 300 mm and Nanotechnology Era."

Dr. John E. Kelly III, senior vice president and group executive of the IBM Technology Group, based in Hopewell Junction, N.Y., told the opening session that IBM will continue to invest in New York State and the Northeast because of "the great resources the region offers," including a skilled workforce and a government-friendly environment.

Kelly also said, "The challenges presenting themselves to the industry today demand collaboration between industry, universities and government . . . We've had a great history of partnership and a network to work with in New York State. Especially noteworthy has been our investment of $100 million worth of equipment, software, services and technology licenses with the University at Albany."

IBM's gift to UAlbany of $100 million this year will help create a $300 million New York Center for Excellence in Nanoelectronics, which will house the world's first university-based 300 mm chip fabrication facility. As with UAlbany's current 200-mm chip fab facility, plannes believe the 300-mm facility will attract semiconductor research while helping to educate and train workforce for the industry. Gov. Pataki backed IBM's gift for the Center with a $50 million development grant from the state.

Kelly, in assessing the overall semiconductor industry, said that microelectronics firms must continue to invest heavily in R & D "if they want to continue to drive technological breakthroughs in the next two to three years."

George Scalise, president of the Semiconductor Industry Association, the leading trade group representing the microchip manufacturing industry, agreed, saying that "the current economic downturn in the semiconductor industry is largely an inventory correction and also a response to over-investment." He predicted that the industry would begin to see sequential in the quarter beginning in December, "but growth will less robust."

Scalise called for a number of steps that industry and government could take to renew semiconductor competitiveness. The first was to increase the amount of money the federal government invests in basic university research. He noted that government spending on Research and development as a percentage of the budget has been reduced by 60 percent since 1992.

"We need to get research spending by government back on track," said Scalise. "If that does not occur, the seed-to-corn for all of the technology we enjoy today will not be available in the next generation."

His second suggestion was to provide education and incentives for students to pursue engineering degrees. "The number of electrical engineering degrees being produced in this country is far too low to sustain technological innovation," said Scalise.

Thirdly, he said that the U.S. needs to change immigration laws to encourage masters and doctoral students in technology-related fields to remain in this country.

Scalise also noted the impact of the microchip industry upon New York State. "New York has 339,131 I.T. (information technology) jobs statewide, many in the chip industry; and NY is number three behind California and Texas in semiconductor jobs." He also noted that the average I.T. worker's salary in New York is $64,000 - 53% higher than the average of other higher sector workers.

Governor Pataki said that innovative partnerships among the state, research universities and industry were proving successful at refueling the semiconductor industry in New York. He called the $1 billion STAR program, which had funded technology projects at UAlbany, the State Universities of Buffalo and Stony Brook, and the University of Rochester, as "the most exciting technology investment program that the state has initiated in recent years.

"We are committed to the future of the semiconductor industry occurring in New York State," said the Governor.

Dale Jorgenson, economist from Harvard University, rephrased the issue confronting the conference in his talk. "There is a raging debate among economists about the future performance of the semiconductor industry," he said, "with optimists inserting that improvement in U.S. economic performance is still sustainable and a permanent feature of the economic landscape."

While Jorgenson noted that pessimists believe that the boom of the semiconductor industry in the late 1990s was a bubble that has burst, his own view is "that while the boom of the late 1990s was not sustainable, rapid advances in semiconductor technology will continue to drive prices downward.

"The question is, how fast will that technology develop?" The answer depends on the productivity of the industry."

The conference will address that very issue in its four separate sessions on Tuesday and Wednesday.

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September 11, 2001


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