IBM and New York State Kick in $1.64 Billion for Chips

Published: July 24, 2008

by Timothy Prickett Morgan

Newly in charge New York state governor David Paterson announced last week that the state is putting up $140 million in economic development grants to bolster IBM's chip process development and manufacturing capabilities in the Empire State. New York is, of course, IBM's birthing and stomping grounds, and while Big Blue does not employ anywhere near as many employees in the state as it once did (even when it was a much smaller company), the Paterson administration does not want to lose a single IBMer if avoidable.

For its part, IBM is going to spend $1.5 billion over the next three years to upgrade its East Fishkill, New York, chip plant, the one where Power processors of all makes and models as well as the new z10 are manufactured. Those IBM funds will also go into creating a semiconductor packaging and research development center that will be located somewhere in upstate New York, most likely near a State University of New York Campus, if I had my guess. Considering that there is already a nanotechnology chip research operation called the Albany NanoTech center that is operated by the College of Nanoscale Science and Engineering at the University of Albany, the campus of the State University of New York (SUNY) in the state's capital city, it seems unlikely that the new center will be in Albany--despite the proximity of Rensselaer Polytechnic Institute, an IBM partner and arguably the best hard sciences school in the state. RPI is going to be a partner in the new chip packaging center, but I think IBM should go back to its roots a little. I like the city of Binghamton, which is a bit further upstate on the Susquehanna River (rather than at the confluence of the Mohawk and Hudson Rivers as Albany is) and which has a large SUNY campus. And I would lobby for Binghamton for another reason--it is right next to Endicott, the city where IBM was founded nine decades ago. IBM's presence there has long ago been diminished, but it was one of the engineering centers of the 1950s, 1960s, and 1970s for Big Blue. The Thomas Watson School of Engineering and Applied Science at SUNY Binghamton seems like a pretty good place to start doing new research on chip packaging, right? RPI has enough dough, and the governor has to create jobs in a lot of different political districts.

The statement released by Paterson said that the investments would result in the creation of 1,000 new high-tech jobs in the state and the retaining of 1,000 other high-tech jobs. The state is kicking in $50 million toward the creation of a 120,000 square foot semiconductor packaging center, which will be owned by SUNY and operated by IBM; this center is expected to employ 675 people; IBM is kicking in $25 million to expand of the Albany NanoTech center and put the latest chip making gizmos in there, which will add another 325 jobs. IBM needs to perfect 45 nanometer and 32 nanometer chip technologies and push forward with new technologies to get ever-smaller geometries for chip circuits.

All of this private-public partnership stuff means, of course, that IBM can deliver Power8, Power9, and Power10 processors as well as z11, z12m and z13 processors, which is why any of Big Blue's customers should care. And it just might mean--just maybe--that IBM ends up being the fab for Advanced Micro Devices, should AMD go down that path. There has been some talk of AMD getting out of chip making because of the high costs and going to a no-fab model like Sun Microsystems has always had.

Back in October 2000, IBM spent $2.5 billion building a state-of-the-art 300mm chip plant in East Fishkill, which is where all of the current generations of Power and z chips come from, resulting in the creation of 1,000 jobs when it was fully functional. The East Fishkill plant was part of a global $5 billion investment that IBM made to upgrade its chip facilities, including those in Burlington, Vermont, and Yasu, Japan, as well as in a partnership between IBM and Infineon located in Corbeil-Essonnes, France.

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