Silicon Valley gets its name from computer chips, which no longer play a central role in shaping the way they are manufactured. The industry’s leading suppliers want to change this situation.
Semiconductor-machinery giant Applied Materials Inc. announced Monday plans to build a massive research facility near its hometown of Santa Clara, Calif., to help chipmakers and universities work together to make more powerful chips. No comparable semiconductor construction project has existed in Silicon Valley in more than 30 years, according to industry analysts.
The company expects to invest up to $4 billion in the project over seven years, some of which will come from federal grants, and create up to 2,000 engineering jobs.
The plan is the latest in a series of chip-related projects facilitated by the CHIPs Act, a $52 billion grant package passed by Congress last year to reduce America’s reliance on Asian factories for critical components. Applied’s move is characterized by its focus on research rather than manufacturing, and is a substantial new take on the original home of the industry.
Silicon Valley-raised chip makers have long opted to build new “fabs,” or sophisticated factories that make chips from silicon wafers, in cheaper states and countries. But Applied Materials is betting that technical talent at nearby universities and local companies that design chips will spur innovation faster and close the cost gap with other locations.
“We can connect more leaders in this ecosystem here than anywhere else in the world,” said Gary Dickerson, Chief Executive Officer of Applied Materials. “There is no place like this.”
Applied Materials plans to hold an event Monday in Sunnyvale, Calif., with expected guests, including Vice President Kamala Harris, to discuss the project.
Politicians from both parties overwhelmingly supported the CHIPs Act, partly because of concerns that China would one day control Taiwan and its factories that produce cutting-edge chips. In addition to encouraging domestic chip manufacturing, the bill allocated about $11 billion to boost related research and development.
Chip research is currently taking place in several phases in multiple locations, including university labs and collaborative centers such as the Albany Nanotech Complex in New York. Applied Materials joins other companies in the center and operates a research factory in Silicon Valley where chip makers can work with its machines and those of other tool makers.
However, much of the central work in developing new production processes is performed by chipmakers in factories with a wide range of equipment. The proposed center, which Applied Materials calls Epic, will feature an ultra-clean production space larger than three football fields and will provide researchers and other engineers at universities with new materials to create advanced chips. It is designed to provide a comparable resource for experimenting with and technology.
One goal is to reduce the time it takes for new ideas to flow from research institutes to companies that design new manufacturing equipment. Information is now often delayed as it passes through chip manufacturers.
“The problem is that those customers take time to understand what they need,” says H.-S. Philip Wong, professor of electrical engineering at Stanford University, who was briefed on the company’s plans. “There is a big hole there.”
Applied Materials also said chip makers can reserve space in the center to try out new tools before they hit the market.
The plan, which depends in part on Applied’s ability to secure CHIPs subsidies, has already attracted interest from more than 300 companies, according to the Department of Commerce. Dickerson said the company plans to build the center anyway, but government funding could affect the size of the project.
G. Dan Hutchison, vice chairman of market research firm TechInsights, said if the center evolves as planned, it could significantly strengthen Silicon Valley’s role in the evolution of chips.
“This is just a vote of confidence for Valley,” he said.
