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I OVERVIEW

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Overview Over the last two decades, a broad partnership of public, academic, and industry leaders in the Albany, New York, region have built “Tech Valley,” a cluster of the most advanced semiconductor manufacturing operations in the world and one of the nation’s preeminent centers of nanotechnology R&D.1 Developed around the nucleus of significant state and private sector investments in nanotechnology research facilities, Tech Valley has already drawn major semiconductor firms and organizations to the New York’s Capital District.2 The impact of this cluster on regional economic development and employment has attracted widespread attention. Forbes magazine has ranked the region as having one of the nation’s highest concentrations of high value jobs.3 As a part of its study of state and regional growth strategies, the National Academies STEP Board convened a conference in Troy, New York to learn more about how New York’s Capital District is renewing its economy. The conference brought together the leading academic institutions and the state’s business and political leaders, along with high-level U.S. government officials and others positioned to help drive innovation, business formation, and growth. These participants brought their own unique perspectives on the 1 Members of the cluster include SUNY-Albany of the State University of New York, and one of its campuses, the new College of Nanoscale Science and Engineering (CNSE); IBM, the initial industry member to engage in the Albany region; the SEmiconductor MAnufacturing TECHnology consortium, of SEMATECH, formed in 1987 as a public-private partnership to strengthen the U.S. semiconductor industry; GlobalFoundries, one of the world’s largest and newest semiconductor production facilities; and Rensselaer Polytechnic Institute (RPI), the country’s oldest technological research institute. 2 “New York's Capital District, also known as the Capital Region, is a region in upstate New York that generally refers to the four counties surrounding Albany, the capital of the state: Albany County, Schenectady County, Rensselaer County, and Saratoga County. Often the other counties of the Albany-Schenectady-Amsterdam Combined Statistical Area and Greene County are included, especially for economic and demographic compilations and regional planning.” Source: Wikipedia. 3 See Forbes, “The Best Cities for Jobs,” May 2, 2011. The Brookings Institution has also recognized the region as having the highest concentration of clean-tech jobs in the nation. See Mark Muro, Jonathan Rothwell, and Devashree Saha, “Sizing the Clean Economy, National and Regional Green Jobs Assessment,” Washington DC: The Brookings Institution, 2011. 3

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4 NEW YORK’S NANOTECHNOLOGY MODEL Box A Albany’s Industrial Tradition The current flurry of activity in and around Albany, NY might not surprise those who view economic development through the lens of history. Albany was first claimed for a European power by Dutch explorer Henry Hudson in 1609, it is the longest continuously chartered city in the United States. Rapid regional growth began during the years after the Revolutionary War, when new residents sought its political stability and the advantages of life on the Hudson River and trade with New York, only a few days’ sail downriver. The city became the state capital in 1797, and in the 19th century a hub of transportation and industry. In his conference keynote address, U.S. Rep. Paul Tonko vividly described “the blue-collar workers of the Erie Canal,” “the capacity for work as part of our DNA,” and “the banks of the canal giving birth to a necklace of mill towns” that became the epicenters of invention and innovation. Joseph Henry, regarded by many as the foremost American scientist of the 19th century, built the first electric motor while teaching at Albany Academy; the corporate headquarters of General Electric has long been located in nearby Schenectady; and Erastus Corning 2nd, member of the famed Corning glass company, was Albany’s longest-serving mayor, 1942 to 1983. “This was the cradle of the industrial revolution,” observed Rex Smith, editor of the Albany Times-Union and moderator of the conference panel on the New York Nanotechnology Cluster. From 1810 until the Civil War, Albany was one of the 10 most populous cities in the country. It had the largest lumber market in the nation in 1865, and the Mohawk and Hudson railroad was the first steam-powered train line in the country to run regular service. In 1908 Albany opened the first municipal airport in the United States, and it was one of the first cities anywhere to install public water, sewer, natural gas, and electricity. As the automobile came to dominate transportation and steel dominated industry, however, Albany’s fortunes declined along with the traffic on its canals and rivers. During the 1950s, ‘60s, and ‘70s, the population dwindled, as it did in other cities of the northeastern “rust belt,” falling from 130,000 to below 100,000. accomplishments and growth of the nanotech cluster in the Capital Region and its contributions to the innovation ecosystem throughout New York, while also identifying future needs, challenges, and opportunities. This volume summarizes the unique presentations from the conference and provides an overview of key issues raised over the course of this event.

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OVERVIEW 5 REVIVING THE REGION The revival of Albany did not begin until the early 1990s, a result of conscious efforts by members of a “triangle of technology”: Rensselaer Polytechnic Institute (RPI) to the north in Troy, the corporate headquarters of General Electric in Schenectady to the northwest, and the R&D center of IBM in Yorktown Heights to the south. New projects were funded at SUNY-Albany’s spacious site near downtown, which gained focus with then-Governor George Pataki’s decision to wager the region’s success on nanotechnology. A key strategy, according to Pradeep Haldar of the College of Nanoscale Science and Engineering (CNSE), was “to partner with industry instead of doing it ourselves.” Recalling how far the region has travelled, Dr. Haldar noted that there was “virtually nothing” on the current CNSE site, and little of interest in Albany at that time. Building the Research Base The development of Albany’s nanotechnology cluster began with the founding in 1993 by researchers at the University at Albany’s Physics Department of the Center for Advanced Thin Film Technology (CATFT). Established to expedite the commercialization of thin-film technologies, CATFT developed a significant network of nanoelectronics, nanotechnology, bioelectronics, and telecom companies in New York. Supported initially by a $1 million grant from the State, CATFT attracted over $200 million by 2001 in funding from federal, state, and private sector partners. Through the leadership of Alain Kalayeros, then a physics professor at the University at Albany and director of CATFT, the School of Nanosciences and Nanoengineering at the University at Albany was established in 2001. In April of that year, New York State selected the University at Albany to host the Center of Excellence in Nanoelectronics and Nanotechnology (CENN), with the requirement that every dollar of the state’s investment be matched by $3 in private sector investments. Using $50 million in funding from the state and $100 million from IBM, CENN built a state of the art 200mm/300mm clean room facility for research, development, and prototype manufacturing. In 2004, the University of Albany launched the College of Nanoscale Science and Engineering (CNSE) to train a specialized nanotechnology work force. Under the leadership of Alain Kaloyeros, CNSE had grown from an initial enrollment of 10 graduate students to over 300 graduate and undergraduate students today studying curricula in NanoBioscience, NanoEconomics, NanoEngineering, and NanoScience. It operates 800,000 square feet of facilities space which will be augmented by another 500,000 square feet: Table 1 lists these and other major milestones in the development of the nanotechnology cluster in the New York Capital Region. It shows that the public

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6 NEW YORK’S NANOTECHNOLOGY MODEL TABLE 1 Major Milestones in the Development of CNSE* Initial Investment (Millions of Year Description Dollars) 2001 Center of Excellence in Nanelectronics and Nanotechnology 150 (CENN) is announced at UAlbany 2002 International SEMATECH Research Center 405 2002 Tokyo Electron (TEL) established the TEL Technology 300 Center America. Its first R&D center outside of Japan. 2004 College of Nanoscale Science and Engineering established, awarded first Ph.D. 2005 ASML established research center for next generation 400 lithography 2005 Multi-partner Center for Semiconductor Research was 500 established to improve next generation chip design, demonstration, and testing. The university-based R&D centers brought new partners to the CNSE including AMD, SONY, Toshiba, and Applied Materials 2005 CNSE established a collaborative center for 600 nanolithography research with AMD, ASML, IBM, and Micron Technologies 2005 Applied Materials establishes a CNSE-based research center 300 2006 Institute for Nanoelectronics Discovery and Exploration 435 (INDEX) is announced. Partners include Harvard, Yale, MIT, CalTech, Columbia, Georgia Tech, RPI, Intel, AMD, IBM, and Texas Instruments 2006 Vistec Lithography Inc relocates its global headquarters and 155 manufacturing from Cambridge, UK to Watervliet Arsenal Campus in neighboring Watervliet, NY and R&D operation to CNSE 2007 CNSE partnered with Einhorn Yaffee Prescott to establish 3.5 the National Institute for Sustainable Energy marking CNSE’s expansion into alternative energy technologies 2007 International SEMATECH announced it will relocate its 760 headquarters from Austin, TX to Albany, NY

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OVERVIEW 7 Initial Investment (Millions of Year Description Dollars) 2008 IBM announces expansion of operations at CNSE and 1,640 throughout upstate NYS 2009 CNSE announced new undergraduate degrees in Nanoscale Science and Engineering 2009 CNSE forms a Computer Chip Hybrid Integration 225 Partnership (CHIP) with SUNY Institute of Technology (Utica, NY) and industrial partners IBM, SEMATECH and Intel. The partnership establishes an incubator to support small and medium sized nanocompanies to support innovation, education, and commercialization of computer chips solutions in Upstate, NY 2010 M+W Group announces it will relocate its U.S. headquarters 250 to the Watervliet Arsenal Campus and expand its R&D operation at CNSE 2010 CG Power, a power transmission company headquartered in 20 India, and CNSE establish the CG Center for Intelligent Power at CNSE for the development of clean energy and smart grid technologies Total 6143.5 Sources: AT Kearny Report. (2007). Delivering on the promise of New York State: A strategy for economic and growth and revitalization. Available at ; Office of the State Comptroller. (2010). Fuller road management corporation and The Research Foundation of the State University of New York: Use of State Funding for Research into Emerging Technologies at the State University of New York at Albany: Nanotechnology. Report Number: 2010-S-4. Available at ; CNSE website (cnse.albany.edu); Playing big role in a tiny world. (2001). Albany times union, Albany, NY 5 Jan. 2001: A1. New York State Newspapers. Web. 24 May 2010; Chip facility bound for Albany: $403M research center expected to attract high- tech firms, jobs. (2002), Albany times union. Albany, NY, 18 July 2002: A1. New York State Newspapers. Web. 24 May 2010; $2.7B boost for Tech Valley. (2005). Albany times union. Albany, NY, 5 Jan. 2005: A1. New York State Newspapers. Web. 24 May 2010; Big hopes pinned on science of small; Planned expansion of UAlbany nanotech venture seen as economic boost. (2007). Albany times union. Albany, NY 11 May 2007: A1. New York State Newspapers. Web. 24 May 2010; A sweet IBM deal; $1.6B expansion could create new jobs upstate. (2008). Albany times union, Albany, NY, 15 July 2008: A1. New York State Newspapers. Web. 24 May 2010. *Reprint of Table 1 from p. 552 of Laura I. Schultz, “Nanotechnology’s triple helix: a case study of the University at Albany’s College of Nanoscale Science and Engineering,” Journal of Technology Transfer, 36(5):546-564, 2011. With kind permission from Springer Science and Business Media.

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8 NEW YORK’S NANOTECHNOLOGY MODEL investments of approximately $900 million over a decade at CNSE have been matched by over $5.2 billion in private investments by industrial partners.4 IBM’s Early Investment IBM, which had a major research facility in Yorktown, NY, played a significant role in the development of the regional cluster. As noted above, IBM was the initial partner for the nanoelectronics center at CNSE. It had just built its own 300 mm wafer fabrication facility in East Fishkill, but saw sufficient potential at Albany to pledge $100 million over three years to help construct the nation’s only university-based facility to design and manufacture ultrathin 300mm wafers, to which the state added $50 million. IBM’s role in this has been absolutely critical,” said Michael Liehr of CNSE. “Without its presence, and its collaborative nature, CNSE would not be what it is, and Global Foundries would not be here. That is a sustainable advantage that has enabled us to be what we are.” Growth of the Cluster Adding to this critical mass, International SEMATECH announced in 2002 the development of a $405 million research center, followed by an announcement by Tokyo Electron Ltd of the development of a $300 million research center in the region. During and after 2005, new investments by microelectronics companies in the Albany area snowballed. In 2005, ASML, one of the world’s largest makers of semiconductor manufacturing equipment, announced a $325 million investment in Albany. IBM, Advanced Micro Devices, Micron Technology and Infineon joined in a $600 million consortium ($180 million provided by the state) to integrate the technical capabilities of the companies to develop lithography, a project dubbed INVENT. In September 2005, IBM and Applied Materials committed to joint new investments of $300 million in nanotechnology research in the Albany area.5 In 2008, IBM concluded a $1.6 billion deal with New York State that included establishment of a 120,000 square foot, 675-employee, R&D center dedicated to semiconductor packaging technology that would be owned and operated by CNSE.6 In 2010, SEMATECH indicated it would move most of its remaining workers from its base in Austin, Texas, to Albany or replace them with new hires.7 4 Laura I. Schultz, “Nanotechnology’s triple helix: a case study of the University at Albany’s College of Nanoscale Science and Engineering,” Journal of Technology Transfer 36(5):546-564, 2011. 5 “U Albany Ready to Organize Itself in Nanotech Research,” The Daily Gazette February 26, 2006. 6 “Region Wins $1.6 Billion IBM Pact,” The Times Union July 16, 2008. 7 “Key SEMATECH Program, Jobs Moving to New York,” Austin American-Statesman October 13, 2010.

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OVERVIEW 9 The Arrival of GLOBALFOUNDRIES The groundbreaking in Malta, NY for GLOBALFOUNDRIES’ large fabrication facility in 2009 was a major development, one that validated and capitalized on a variety of state and private sector investments. The State played a critical role by providing an initial incentive of about $680 million in tax exemptions to offset the expenses of developing the GLOBALFOUNDRIES site. This was followed by the Empire Zone Benefit Program, which complemented additional investments by GLOBALFOUNDRIES. Additional reasons for locating the plant in the United States, observed Mike Russo, included strong intellectual property protection and access to supply chains. The benefits of this strategy include as many as five thousand direct and ancillary jobs. He said that some 200 companies have either located in the Capital Region or have increased their hiring since the arrival of GLOBALFOUNDRIES. Dr. Ajit Manocha, the Chief Executive Officer of GLOBALFOUNDRIES, noted in his keynote address that his company began operations in December 2011 by producing 32 nanometer silicon-on-insulator chips for IBM, with which it has a close working relationship. Within a year it had launched 48 nm, 40 nm, and 14 nm semiconductor chip technology as well. He noted that chip features as small as 14 nm are very difficult to realize, comparing it for illustration with the width of an average human hair, which is about 75,000 nanometers. This ability, he continued, is a result of not only GLOBALFOUNDRIES’ expertise, but also its close relationships with IBM, CNSE, RPI, the community colleges, and other partners. “This is called a true partnership,” he said, “and because of it we have been extremely successful.” The Role of the State’s Leadership The state’s leadership has played a key role in reviving the region’s fortunes. As GLOBALFOUNDRIES’ Mr. Russo observed, “The state made the strategic decision as long ago as the mid-1990s to invest in this [nanotechnology] sector, led by then-Governor Mario Cuomo and State Assembly Speaker Sheldon Silver.” The original investments led to development of CNSE, and under Governor George Pataki and State Senate Majority Leader Joseph Bruno. Subsequent investments grew into the “richest public-private partnership in history” to bring in a big semiconductor fabrication facility. He noted that the political leadership had understood the value of the project to not only the regional economy, but also to national economic security. Current Governor Andrew Cuomo has continued to support this effort, recognizing its long-term benefits for the region, state, and the nation. This willingness by the state to wager the region’s success through substantial and sustained investments is a distinguishing feature of New York’s nanotechnology model. As noted above, IBM and SUNY-Albany cooperated in the early 2000s to create the world’s only 300-mm wafer nanoelectronics R&D and prototyping complex. The state followed up with large-scale grants to

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10 NEW YORK’S NANOTECHNOLOGY MODEL develop research infrastructure for semiconductors, initiatives which were met with a strong matching response from industry and, in some cases, the federal government:  The state provided $85 million of a total public/private commitment of $185 million to create the center of excellence in collaboration with IBM.  The state committed $100 million to a $300 million-total project with Tokyo Electron Limited at the Albany Center of Excellence to develop semiconductor manufacturing technology.  The state invested $35 million to support the Interconnect Focus Center for Hyper-Integration, concentrating on nano-scale interconnect technology, a project co-funded by DARPA and the Microelectronics Advanced Research Corporation (MARCO). THE FOCUS ON NANOTECHNOLOGY The decision by New York’s political, academic, and business leadership to focus on nanotechnology reflected both their vision and a willingness to accept some risk in investing in a rapidly emerging technology. A Platform Technology While activities that fall under the term nanotechnology are many, said Timothy Killeen, vice-chancellor for research at SUNY, the CNSE decided to focus on building structures at the nanoscale. “When you can do that,” he said, “you open up incredible new areas in sensors, photonics, biological systems, and fluidics. The challenge is getting more expensive, but the promise lies in multiple applications.” In retrospect, Nanotechnology was chosen not only for its cross-cutting nature, but also because it reflected the passion and influence of SUNY-Albany’s Alain Kaloyeros, a physicist specializing in materials science who was active in the field and argued tirelessly and persuasively for its adoption. His skill in advocating his vision was a key element in bringing together the state, industry, and university partners. A Growing Market This focus on nanotechnology appears to be paying off. According to Thomas Guevara of the Economic Development Administration, the worldwide market for nanotechnology products in 2009 was about $254 billion, and by 2020 is estimated at about $3.2 trillion. The United States is forecast to hold a little over a third of this share—which could provide an enormous number of

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OVERVIEW 11 Box B The Region as a Focus of Development Early planners of the Albany revival concentrated on building a technology cluster led by business. In this they followed the model of the “legacy innovation hubs” around the country, especially Silicon Valley, Route 128 outside Boston, and Research Triangle Park in North Carolina. Many other regions have also begun to build new clusters, including northeast Ohio, Arkansas, Hawaii, and Evanston, Illinois.a All emphasize strong leadership, shared investments in infrastructure, supply chain growth, public-private partnerships, and links with national research laboratories or other assets. The principle drivers of these clusters, as described by RPI President Shirley Ann Jackson, have been innovation, trained people, and financial capital. Jason Miller, Special Assistant to the President for Manufacturing Policy, stressed the importance of diverse and complementary strengths. “What is most important in building a technology cluster such as Albany’s,” he said, “is that multiple actors join in solving challenges. I am talking about government at all levels, the private sector, the academic institutions, and the organizations.” Fortunately, by the time the cluster in Albany began to take shape, its organizers had many models to draw from, and experienced leaders in both technological innovation and economic development. When Governor Pataki convened a group of stakeholders to formulate a plan for economic resurgence, he had abundant precedent in focusing on an integrated effort in R&D, sustained investment in education, and a commercial strategy built around a Governor’s Center of Excellence. __________________ a See National Research Council, Best Practices in State and Regional Innovation Initiatives: Competing in the 21st Century, C. Wessner, ed., Washington, DC: The National Academies Press, 2013. jobs for those with the required training.8 Recent investments—IBM’s $2.5 billion fab in East Fishkill and now Global Foundries’ $6.6 billion fab in Malta—reflect this growing market. 8 M.C. Roko, C.A. Mirkin, and M.C. Hirsam, eds., Nanotechnology Research Directions for Societal Needs in 2020, National Science Foundation/Word Technology Evaluation report, Springer, 2010.

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26 NEW YORK’S NANOTECHNOLOGY MODEL presence of the “world’s most advanced” fabrication facility as the “anchor tenant” of the Albany technology cluster.27 It also comes with an unusual pedigree, said Mr. Russo, having emerged from a deal in 2009 between Advanced Micro Devices (AMD) and an investment fund owned by the government of Abu Dhabi called Advanced Technology Investment Co. (ATIC). Until then, Abu Dhabi had depended on petroleum reserves for some 70 percent of its revenue, and this agreement grew out its desire to diversify its economy, especially into technology. AMD agreed to transfer its manufacturing operations to ATIC in phases through the creation of GLOBALFOUNDRIES, which would operate as a pure-play foundry, while AMD continued as a “fabless” semiconductor producer. The fab itself has developed rapidly. “Semiconductors are seen as a key component of the future economy,” said Mr. Russo “And we are at the leading edge of this in our collaborations in the 450mm-wafer transition, 3D stacking, and extreme ultraviolet technology. The fab in Malta is right now producing chips at 28- and 14-nanometer sizes, and will soon reach 10-nanometer size.”28 He said that it takes three to four months to make each wafer, and yet Fab 8, as the facility is known, has already reached 60,000 wafer starts per month; the goal is 80,000 starts. He emphasized the flexibility of Fab 8, which easily re-formatted in response to changing development needs or market conditions. Already it has been modified to increased production for the mobile phone and tablet markets. In addition, GLOBALFOUNDRIES has decided to make a $2.2 billion addition to the facility with a new Technology Development Center adjacent to the foundry itself. Mr. Russo emphasized the importance of this “lab-to-fab” arrangement, with engineers, technicians, and researchers able to confer easily and the allowing manufacturing feedback to inform development. The activities of Fab 8 have already strengthened the company’s revenues, which expanded by 31 percent in 2012. Mr. Russo noted that the benefits of joining the Albany cluster the arrangement are already apparent. It has allowed the company to become the “first truly global foundry,” referring to its distributed worldwide presence. GLOBALFOUNDRIES now includes not only the new Malta facility in North America, but also Chartered Semiconductor Manufacturing, a pure-play foundry in Singapore; a 300mm fab in Dresden, Germany; and a planned facility in Abu Dhabi, giving the company proximity to customers in most regions of the world. This geographic dispersal reduces the vulnerability of semiconductor production facilities to disruptions caused by natural disasters. This is especially true for semiconductors, most of which have been produced in the “ring of fire,” 27 Mike Russo, “New York’s Nanotechnology Model,” April 4, 2013, symposium presentation. 28 Mr. Russo said he had calculated that 10 nanometers is “about the distance a fingernail grows in five seconds.”

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OVERVIEW 27 the perimeter of the Pacific Ocean where earthquakes are common.29 A wide manufacturing footprint is also beneficial in regard to issues of trade, control, security, and intellectual property. GLOBALFOUNDRIES’ location in Malta offer physical advantages as well. The site rests on a 120-foot thick cushion of glacial sand which reduces the potential threat of tremors caused by earthquakes or other shocks. This is critical for a modern fab, where even mild vibrations can disrupt delicate operations at the nanoscale. Other basic but important advantages include access to reliable resources of water, natural gas, and electricity, all upgraded to satisfy foundry requirements. Mr. Russo described the broader impact of the fab on the region’s development potential. “To meet its own needs, the company had to bring in natural gas, a 30-mile water line, and electricity upgrades,” he said. “It’s very costly to bring in big infrastructure, but once it’s here, it helps economic development throughout the region. The same effect is being seen for the educational system and the innovation ecosystem as a whole.” Among the region’s advantages, he said, were the rich talent pool at RPI, CNSE and SUNY-Albany; the fiscal support of the state government; the support of the broader community; and the partnership with IBM and other leaders of the industry. In return, he said, the region benefits from some 2,000 direct jobs on the site, soon to grow to 3,000, with an average salary of $87,000; more than 200 companies that have grown or located in the region; and the rapid growth of partners and other members of the supply chain. “A decade ago,” he said, “CNSE was beginning to grow, but we had few companies besides IBM. Today a great many of the world’s leading firms are here.” Mr. Russo expressed particular pride in GLOBALFOUNDRIES’ relationship with the building trades in a region known for strong labor unions. “The trades have been very progressive,” he said. “We’ve laid our cards on the table with them from the beginning and began working with them to develop training curricula for the fab environment. We had to teach them what a clean space it. It’s a totally different animal, building these large fabs. And we have to make sure the labor is available when we need it. We’re very proud that we’ve been able to reach an agreement on the original project which has amounted to the largest private labor agreement in the history of this country.” STRENGTHENING EDUCATION AND WORKFORCE TRAINING Several speakers noted that strengthening the Capital Region’s high- technology labor force is essential to sustain the development of the Albany 29 For example, the Tohoku earthquake and tsunami disrupted Japanese semiconductor production in 2010.

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28 NEW YORK’S NANOTECHNOLOGY MODEL Box E The New Fab Model and the Benefits of Clustering Traditionally, the semiconductor business has been dominated by integrated device manufacturers (IDM), such as Intel, Samsung, Texas Instruments, Micron Devices, and AMD. Initially, many of these firms competed at every point of the business: systems, design, assembly, packaging, chip technology, automation tools. In the 1990s, however, the IDMs began to fragment when it became too expensive for them to undertake every step of the supply process. Today, with a new fab costing as much as $10 billion, a new industry structure has emerged that features many more fab-less semiconductor firms and “fab-lite” firms, which focus on design and stand-alone fabs, or foundries, which focus on manufacturing and other links in supply chain. In his conference presentation, SEMATECH’s Dan Armbrust noted that this fab-lite structure answers the challenge of production, but renders other functions along the supply chain too costly for many firms. These fab-lite firms, along with fab-less and stand-alone fabs can benefit from clustering with other each other to capture their complementary strengths. This clustering accelerates the movement of new products through pre-proprietary development stages, allowing firms to expect revenues earlier and to move ahead more quickly and cheaply to the proprietary stage, rather than going it alone at great expense. The development of such a cluster in the Albany area is attracting and anchoring a range of semiconductor related firms, thereby strengthening the local economy. innovation cluster. According to Darren Suarez of the Business Council of New York, the region faces a skills crisis. He pointed to New York State Department of Labor projection of a 135 percent increase in STEM-related computer electronics manufacturing jobs in the Albany area between 2008 and 2018, which is “driven by the growth in this sector.” A key concern, said Mr. Suarez, is that “We are not educating our kids to be college or career-ready.” He showed a chart indicating that only 34.7 percent of graduates are “calculated college and career ready and said that more than 50 percent of students in two-year institutions of higher education must take at least one remedial course. At the same time, Mr. Suarez noted that the “perception that the U.S. has fallen so far behind that we don’t have the ability to close the gap. We don’t believe that. Models like [Albany] can help us to radically change, bringing innovative ideas directly into our classroom and helping strengthen the next generation.” Building the Technical Workforce Andrew Matonak, the president of Hudson Valley Community College (HVCC), expressed confidence in the region’s ability to “open a path toward

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OVERVIEW 29 these emerging fields” through a host of ongoing programs and fulfillment of the HVCC mission to be “a powerful provider of on-demand workforce training.” As an example, he cited the Northeast Advanced Technological Education Center (NEATEC), which is funded by the National Science Foundation to train people in semiconductor manufacturing. “We want to make sure we meet the need for a skilled workforce, and we work very hard at that. The community colleges can do this only by working with the school districts, business and industry, with support from the state and federal governments.” Dr. Matonak’s comments were welcomed by Ajit Manocha, CEO of GLOBALFOUNDRIES, who called HVCC “a great partner and ally of Global Foundries” and praised it for “bringing the education, infrastructure, and research to prepare people for the countless jobs that Global Foundries is creating.” GLOBALFOUNDRIES’ Mike Russo also drew attention to a significant new worker retraining program, the Tech Valley Connection for Education and Job. The program, which helps train and retrain workers through the community colleges in a 13-county area, was initiated by the Center for Economic Growth, in partnership with SUNY. Mr. Russo, GLOBALFOUNDRIES’ representative in the program, called it “the largest education initiative of its kind in the country.” He called it “basically a very large-scale laboratory to try out the most innovative practices, and to identify roadblocks, and eliminate them.” For its part, SUNY has involved leading educators in the Tech Valley Connection. They have developed a credential for teachers at several levels: those going through certification; furloughed teachers who want to upgrade their skills; and tenured teachers who want to add skills. “For kids who don’t have the benefits of shop courses anymore,” said Mr. Russo, “we started work on an advanced manufacturing pathway for students on an early college high school path. This leverages the trade schools and high school math and science courses.” Dr. Matonak added that HVCC created a program called TEC-SMART, Training and Education Center for Semiconductor Manufacturing and Alternative and Renewable Technologies. This is situated on the Malta site to take direct advantage of GLOBALFOUNDRIES’ expertise. TEC-SMART includes high schools in 12 New York school districts. Current Education and Training Initiatives Conference participants also highlighted a number of other education and training initiatives underway in the region:  Darren Suarez described P-TECH, Pathways to Technology and Early College High School, as a partnership among New York City’s Department of Education, the City University of New York, the New York College of Technology, and IBM Corporation. Participating industries and businesses partner with high schools to improve the

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30 NEW YORK’S NANOTECHNOLOGY MODEL effectiveness of education and raise the number of individuals who meet job market requirements.  Pradeep Haldar drew attention to Tech Valley High School, a new, state-funded initiative to bring high school students to the CNSE campus.  Robert Blackman of the Center for Economic Growth made note of other CNSE outreach programs, such as Nano High and Nano Career Days, which bring students from Albany city school districts.  Don Siegel, Dean of the University at Albany School of Business, referred to his school’s annual statewide business plan competition. “This is designed for students for the purpose of trying to build an entrepreneurial culture.” “It’s all a pipeline,” said U.S. Rep. Paul Tonko, “to make sure we’re educating the next generation of people who are going to be needed. Our workforce, our schools, and our colleges, especially our community colleges, are key ingredients to the success that we now taste.” SUSTAINING THE ALBANY MODEL If there is an “Albany model” for building an innovation cluster, one key feature might be the strength of each of the three legs of its three-legged stool as referred to by RPI President Shirley Ann Jackson. Another would be the large number of participants. Neither of these features is unique, but taken together these features stand out. Industry Leadership Other regions might be able to profit from this strategy as well. But some features of the Albany model are not easy to replicate. In his keynote remarks, Representative Tonko noted that the region has benefited from the long-time presence and leadership of corporate champions like IBM as well as a sustained and bipartisan flow of political support. These advantages have been reinforced, he said, with the arrival of GLOBALFOUNDRIES, which brought to the region thousands of jobs and billions of dollars in investment. Key Challenges While highlighting the unique collaboration that distinguishes the Albany Model, several conference participants also identified some of the challenges ahead in sustaining its success. GLOBALFOUNDRIES’ Mike Russo noted that global competition in nanotechnology is fierce even as the semiconductor business continues to face significant technical and financial challenges. Charles Wessner noted that many

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OVERVIEW 31 countries around the world have targeted the semiconductor industry as a part of their national development strategy. “You have gone around the first lap in the race really well. But it is just the first lap. You also have to make sure you have the support from Washington that you need as you go forward, because you are now playing in the tall grass with the big animals.” RPI’s John Wen identified four major challenges for effective industry- academia collaboration. Number one is control of intellectual property. Number two is maintaining continuity, which he called “extremely challenging.” He emphasized that the State of New York needs to sustain its substantial investments over the long term. Number three, he added, is the difficulty of reconciling the different timelines of academia and industry. The final challenge, he said, is learning how build effective multidisciplinary teams. RPI’s Jonathan Dordick, further warned that the industry’s dominant presence in and around Albany NanoTech may give industry too much power in determining the curricular and research agendas of academic institutions, and may skew activities toward short-term needs instead of the long-term basic knowledge that must guide the industry in the future. Other participants, including CEG’s Michael Tucker and Empire State Development Corporation’s Ken Adams, noted the relatively small number of start-ups that have so far been generated around Albany, the insufficient pool of workers trained for high-technology jobs, and the scarcity of venture capital.30 Supporting Start-ups Even so, a number of conference participants spoke with optimism about the future of the Capital Region. CNSE’s Dr. Haldar drew attention to the growing number of start-ups in the area, and “a network of close to 100 VC firms that are interested in investing in this area.” He also saw value in the business incubator on the CNSE site, supported by NYSERDA, and predicted that the larger companies around CNSE will perform a natural and effective nurturing function for startups. “In the past,” he said, “the successful start-ups would move out of our state and be bought by larger companies on the West Coast or around Boston. Having the entire technology ecosystem here means that our companies can capture that technology.” Building the Value Network Several participants described the Capital District as part of a “new paradigm” of partnerships and collaborations, one that is not only effective but 30 New York companies attract only about 4 percent of the total venture capital, while nearly half of all U.S. VC is invested in California. “Cuomo’s $50M Venture Fund Seeds Startups,” Albany, The Times Union January 23, 2013.

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32 NEW YORK’S NANOTECHNOLOGY MODEL also essential. The most detailed picture is offered by long-time resident Gary Patton of IBM. “This is something we recognized all the way back in 1990,” he said, “when we started our first technology alliance with Siemens in East Fishkill. Eventually Toshiba joined us, and the partnership migrated into our logic alliance and then our partnerships in Albany, where it has spawned other collaborations. We came to the conclusion that it’s not only about collaboration between process companies, like Global Foundries and IBM; it’s collaboration with the equipment suppliers. And we see all of them now moving to Albany NanoTech. They are finding the benefits of shared investment, shared learning, and the ability to accelerate their process, versus going it alone.” The model for collaboration, he continued, is SEMATECH, which was “unthinkable at the time” it began in 1987 given the independent mindset and often fierce competition among its members. Today the model is extended to include not only the process firms and equipment makers, but also materials suppliers, all of which are needed to advance the industry roadmap.31 “These technologies are becoming extremely complex,” said Dr. Patton, “and we have to come together to make them work. The equipment suppliers used to do their research back in their own labs, but they’ve concluded that they can’t make these tools function without a close partnership with the manufacturers and access to leading-edge technology. And that’s what Albany provides.” Developing New Models of Collaboration Collaboration is essential from a design perspective as well, Dr. Patton said, which explains why IBM is not a fabless company that simply buys the technology it needs. The technology IBM develops for its own needs is not available anywhere, he said. Second, the 14-nanometer and 10-nanometer technology is so complex “you have to look at co-optimizing the entire stack, from the atoms to the devices, to the circuits, to the Watson system.” Many of IBM’s fabless partners want to engage with IBM in Albany, he said. “They can’t just wait for us to deliver a technology. They need to get in early, give us their requirements, and work with us hand in hand. I think we’re at the beginning of a new paradigm in how to do this.” CNSE, as well, sees great benefits from collaboration. “Our approach,” said Dr. Haldar, “is to sit down across the table from our industry partners and ask them how we can work with you on your short, medium, and long-term goals. The time frame of this industry is not the same as a typical academic institution, so we have to be very responsive. The buildings that go up on our 31 For a review of the history and future strategies of the International Technology Roadmap for Semiconductors, see Bernd Hoefflinger, “ITRS: The International Technology Roadmap for Semiconductors” in Chips 2020: The Frontiers Collection, Berlin: Springer Verlag, 2012, pp. 161- 174.

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OVERVIEW 33 campus and the research we’re doing are all timed to meet industry goals and standards. Otherwise industry will leave us in the dust.” Building Shared Infrastructure Dr. Armbrust of SEMATECH agreed with the need for collaboration and the value of the cluster. “In Texas,” he said, “SEMATECH pretty much worked on its own. Here the community is pooling its assets to do much more. There’s no way to create what we have here except through shared infrastructure.” New York State’s support for CNSE, he emphasized, has built the infrastructure needed by both academic and industrial researchers. This helps anchor new instrumentation in the region, avoiding the losses that would occur if companies go bankrupt or leave the region. And the private sector has largely accepted this practice, seeing the advantages of so many partners. “By next year, said Dr. Armbrust, “every materials supplier of consequence, most of them from abroad, will be doing significant work in Albany. They choose to invest here to share the infrastructure.” The concentration of research facilities can, in turn, attract manufacturing. Stephan Biller of General Electric remarked that even legacy Box F Investing in the Global 450 Consortium Housed at CNSE’s NanoTech Complex in Albany, NY, the Global 450 Consortium is a $4.8 billion collaboration is made up of five member companies: IBM, Intel, GLOBALFOUNDRIES, Samsung and TSMC. “The goal of the Global 450 Consortium is to support the industry transition from 300mm wafer to 450mm wafer production. The consortium will leverage industry and government investments, and the state-of-the-art infrastructure at CNSE’s NanoTech Complex to demonstrate and deploy 450mm wafer tools and process capabilities.”a Describing New York State’s participation in this consortium, Darren Suarez noted that grants are provided directly to CNSE to build the needed infrastructure. “In a way,” he said, “the state is investing in itself. This is a strategy that provides stability. If the state gave that money directly to a company, and the company did not exist here in a couple of years, the investment would be lost. This way, we know the infrastructure will be here and we can offer it to all companies.” __________________ a CNSE website, .

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34 NEW YORK’S NANOTECHNOLOGY MODEL companies with traditional products like GE find strong advantages in co- locating their R&D with manufacturing.32 By facilitating information sharing, smart manufacturing can complement smart economic development, EXPANDING NANO TO THE PHYSICAL AND LIFE SCIENCES Industrial variety in a region, based on different but complementary technological fields, promotes greater innovation activity and cluster development.33 While early discussions in the conference underscored nanotechnology’s role in semiconductor research, later discussions followed the scope for nanotechnologies to address challenges in biomedical and pharmaceutical research. The Crisis in Pharmaceutical Research The pharmaceutical industry, several speakers noted, is severely squeezed between the twin stresses of rising research costs and declining drug approvals.34 RPI’s Jonathan Dordick, for example, suggested that the industry is facing a developmental crisis. At the same time, he and others speculated that the dangers may be sufficiently dire to spark the kinds of “crisis-driven” efforts at collaboration seen among semiconductor firms. Others voiced agreement with Dr. Dordick’s tone of urgency. Michael Fanter of the CNSE’s Center for Advanced Technology agreed that “pharma is an industry that is screaming for a new public-private partnership. They’re where the semiconductor industry was in the mid-1980s, when those companies came together and said, ‘You know this is nuts. There are too many paths to pursue, and we can’t each do it on our own.’ The industry came together and formed a vision and a roadmap of shared challenges. Many industries are still at the early stage of that, but they have the SEMATECH example to give confidence.” 32 GE recently decided to pull its appliance manufacturing back to Louisville, Kentucky to re-join its research, engineering, and marketing activities. “We can produce appliance products better and cheaper in Louisville than in China,” said Dr. Biller, ”because we can discuss manufacturing principles and market research all in the same room.” 33 Michael Fritsch and Viktor Slavtchev, “How does industry specialization affect the efficiency of regional innovation systems?” The Annals of Regional Science 45(1):87-108, 2010. 34 According to Dordick, between the years 1996 and 2006, a steep upward slope of R&D spending is mirrored almost exactly by the steep decline of new drug approvals over the same period. From 2009 to 2011, he said, fewer than 60 drugs were approved by the FDA, and the cost of approval is now close to $2 billion per drug.

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OVERVIEW 35 The Need for Convergence Larry Nagahara of the National Cancer Institute spoke about his own institute’s attempt to promote collaboration between the physical and life sciences. He reminded the audience of the famous partnership between Salvador Luria, a microbiologist, and Max Delbruck, a physicist, in the 1940s, whose combined perspectives produced new understandings of bacterial mutations and led to their 1969 Nobel Prize in Physiology or Medicine. More recently, the concept of “convergence” between the physical and life sciences has been articulated in a white paper by Phillip Sharp and others at MIT, who described a new generation of discoveries in biomedical science. Their suggestion is based partly on the assertions that “advances in information technology, materials, imaging, nanotechnology, optics, and quantum physics, coupled with advances in computing, modeling, and simulation, have already transformed physical science. They are now beginning to transform life science as well.”35 Dr. Dordick of RPI suggested that the time may be ripe for more efforts to explore convergence. For example, RPI already makes a chip that mimics how the body deals with a drug, and calculates how much to apply. “We need to combine big data with nanotechnology and biotechnology for three areas,” he said: “R&D combinations to improve understanding of therapeutic molecules; new visualization tools for not only the brain-computer interface but also the whole body-computer interface; and networks of sensors that are linked hospital to hospital.” He offered a specific example to show how investments in microelectronics can help to develop new, collaborative biotechnology. “The expertise exists. You go to the doctor where your genetic makeup is known; the data will tell you the nature of your disease. We know how to put the molecules together, how they fit into proteins of your body. We make a drug specifically for you; maybe it’s made by bacteria. You’ll have your own drug within a day.” Adapting the Semiconductor Research Model for Pharma Brian Toohey of the Semiconductor Industry Association addressed the same question: Can a collaborative research model be built for the pharma industry that is similar to those emerging in nanotech, semiconductors, and biotechnology? “The short answer,” he said, “is yes.” Evidence emerges from recent activities, he said, “such as the use of semiconductors in non-invasive instruments or small inserted devices.” He cited breakthroughs already achieved through collaborations, including the first chemical synthesis of polio virus, chip-based high-throughput DNA synthesis, MEMS DNA synthesis, DNA 35 Phillip A. Sharp et al, The Third Revolution: The Convergence of the Life Sciences, Physical Sciences, and Engineering, Cambridge, MA: Massachusetts Institute of Technology, 2011.

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36 NEW YORK’S NANOTECHNOLOGY MODEL “origami,”36 the first synthesis of a bacterial genome, and DNA information storage. He also described hybrid semiconductor/biological circuits in which cellular material provides the intelligent components for electronic circuits. “The crisis,” he said, “may help motivate companies to sit down and have this discussion.” Dr. Dordick agreed in principle, although warning of several “barriers” to such discussions, including the need to secure intellectual property. “We don’t yet have a model for biotech like the one used by the semiconductor industry,” he said. Mr. Russo of GLOBALFOUNDRIES also saw potential difficulties, but urged both sides to make the effort. “In order to move forward and innovate,” he said, “it’s more than risk taking, it’s sometimes getting out of your comfort zone and your vested interest. Medical devices, pharma, and semiconductors can all look at possible collaboration and the benefits they can find.” Even amid signs of progress in semiconductor partnerships, however, several voices cautioned against complacency and emphasized the need to sustain the current high level of investment. Dr. Armbrust, reflecting on his long experiences with IBM in East Fishkill and with SEMATECH in Texas, pointed to likely struggles ahead. “I would caution you about complacency,” he said. “We are where we are, and many people are trying to copy us and get ahead of us. It’s time to double down. We have strengths, but we need to continue to invest in those strengths, so that in 10 years you’ll read every day about a new startup, a new spinoff, more venture capital, and jobs. That can be our future.” IN CLOSING This conference report provides a first-hand account of New York state’s two-decade long effort to transform its Capital Region into a leading center of nanotechnology research and production. It highlights the large-scale investments in university research infrastructure and the collaborative arrangements with the private sector and regional development organizations that have altered the competitive landscape in the semiconductor industry and built a sustainable basis for the region’s economic growth. This overview has highlighted many of the key issues discussed at the conference. The proceedings of the conference, summarized in the next chapter, provides rich detail of speakers’ descriptions and perspectives on the policies, institutions, and initiatives underway in New York State. 36 The folding of DNA to create arbitrary two and three dimensional shapes at the nanoscale. Resulting models are used to explore such phenomena as self-assembly and self-destruction of drug delivery vessels. Paul W. K. Rothemund, "Folding DNA to create nanoscale shapes and patterns," Nature 440(7082):297-302, 2006.