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Wall Street’s Fallout on Albany NanoTech
September 24, 2008
The Empire State has invested ~$900M in the Albany NanoTech research complex, while IBM and other private companies have invested $3.5B in Albany. The result is a thriving R&D community, a technically vibrant IBM, and a public-private partnership that is likely to weather the current economic downturn. Money well spent.
The question now is the extent to which the U.S. financial crisis is likely to impact the ambitious growth plans for Albany NanoTech. New York gets fully 20% of its state income tax from the bonuses paid to Wall Street executives, and a third of the state’s overall revenues derive come from taxes on the financial industry. New York has an expected budget shortfall of $6B for the state this year. It gets worse: the expectation is that New York will have a $24B deficit in three years.
The good news for Albany NanoTech and IBM is that the former N.Y. governor, Elliot Spitzer, took a negative attitude toward further outlays for Albany and IBM, calling it “corporate welfare.” Spitzer’s prosecutorial attitude was replaced by a more positive tone from New York Gov. David Paterson, who sees the logic in attracting high tech jobs to New York with state support.
Paterson is calling on New Yorkers to find ways to bring some balance between public outlays and income, an adult attitude that could result in reduced support for Albany’s plans for new bio-electronics labs, a ~$100M building for alternative energy research, and other items on the wish list of Alain Kaloyeros, the CEO of the College of Nanoscale Science and Engineering (CSNE).
During a meeting at CSNE, Kaloyeros was asked if the problems on Wall Street are likely to imperil the funding from the state of New York over the next two or three years. “I hope not,” Kaloyeros said, arguing that “from the governor on down, there is a fundamental understanding of the need for investments to continue. But if Wall Street keeps going south, who knows?” He added that the state of New York “is not going to walk away from its long-term viability.”
Anthony Campagiorni, president of the Hudson Valley Economic Development Corp., said he believes that the state won’t cut the already-announced funding to support IBM’s Fishkill fab buildout. IBM has Fab 323, and a nearby 323 annex which is only half-filled with equipment. The walled-off, empty half of the 323 annex will be equipped for the 32/22 nodes, with a modest level of support from the state.
Campagiorni said that as long as Paterson and the state legislature see the subsidies for Albany NanoTech, Fishkill, and other high tech initiatives as “job creation” investments, then those funds won’t be retracted.
All of this is important, simply because Albany NanoTech itself has become such a key part of the semiconductor R&D effort within the United States. Whatever your thoughts about government subsidies, they are a fact of life in the semiconductor industry. Look at the successes at Dresden, or Singapore, or Hsinchu. While Texas offered loans to Sematech, New York offered Sematech 2:1 matching grants for equipment and salaries. While Tokyo Electron Ltd. was shutting down its track factory in Austin, Albany offered a $75M subsidy to locate its U.S. research center within Albany NanoTech.
Now that a significant part of the U.S. semiconductor R&D brainpower is working in Albany, it would be a cruel irony if the missteps of Wall Street financiers would cripple the ability of the Albany-based researchers to keep the semiconductor industry moving forward. As Kaloyeros said last week, “In all candor, we view ourselves as the last line of defense for the U.S. semiconductor industry. It would be a big mistake if the U.S. were to give up the lead.”
Posted by David Lammers on September 24, 2008 | Comments (4)
