Silicon Valley Chosen for $4 Billion Chip Research Center

Silicon Valley Chosen for $4 Billion Chip Research Center

Silicon Valley takes its name from computer chips, but no longer plays a central role in their manufacture. A major supplier to the industry is hoping to change that.

Applied Materials, the largest maker of semiconductor manufacturing machinery, announced Monday that it plans to build a massive research facility near its hometown of Santa Clara, California, to allow chipmakers and universities to collaborate on advances in making higher-performance chips to allow. According to industry analysts, there hasn’t been a comparable semiconductor construction project in Silicon Valley for more than 30 years.

The company expects to invest up to $4 billion in the project over seven years, with some of that money coming from federal grants, while creating up to 2,000 engineering jobs.

The plan is the latest in a series of chip-related projects spurred by the CHIPs Act, a $52 billion subsidy package Congress passed last year to reduce US reliance on Asian factories for critical components to reduce. Applied Materials’ move is notable for its focus on research rather than manufacturing, and represents a significant new commitment to the industry’s original center.

Chipmakers who grew up in Silicon Valley have long chosen to build new “fabs,” sophisticated factories that make chips from silicon wafers, in lower-cost states and countries. But Applied Materials is betting that technical talent at nearby universities and the local companies that develop chips will innovate quickly and offset the cost differential to other locations.

“Here you can bring together more leaders in this ecosystem than anywhere else in the world,” said Gary Dickerson, general manager of Applied Materials. “There’s no place like this.”

Applied Materials has scheduled an event to discuss the project Monday in Sunnyvale, Calif. Vice President Kamala Harris is also expected to attend.

Politicians from both parties overwhelmingly backed the CHIPs bill, partly out of fear that China will one day take control of Taiwan and the factories there that make the most advanced chips. In addition to promoting domestic chip manufacturing, the legislation provided around $11 billion to spur related research and development.

Chip research is now happening in multiple phases at multiple locations, including university labs and collaborating centers like the Albany NanoTech Complex in New York. Applied Materials participates with other companies in this center and runs a research factory in Silicon Valley where chip manufacturers can work with their machines and those of other tool manufacturers.

But many of the core tasks involved in developing new production processes are performed by chipmakers in factories equipped with a wide range of equipment. The planned center, which Applied Materials is calling Epic, is said to have an ultra-clean manufacturing space larger than three football fields and provide university researchers and other engineers with comparable resources to experiment with new materials and techniques to make advanced chips.

One goal is to reduce the time it takes for new ideas to get from research labs to companies designing new manufacturing devices—information that is now often filtered through chipmakers with a delay.

“The problem is that these customers need time to find out what they need,” said H.-S. Philip Wong, a Stanford professor of electrical engineering who was briefed on the company’s plans. “There’s a big hole in there.”

Applied Materials also said chipmakers can reserve space at the center and try out new tools before they’re commercially available.

The plan depends in part on Applied Materials’ ability to receive subsidies under the CHIPs Act, which the Commerce Department says has already attracted interest from more than 300 companies. Mr Dickerson said the company certainly had plans to build the center but that government funding could affect the scope of the project.

Assuming the center develops as planned, it could significantly boost Silicon Valley’s role in chip development, said G. Dan Hutcheson, vice chairman of market research firm TechInsights.

“It’s really a vote of confidence in the Valley,” he said.