Sematech deal to be closed today

Perry to finalize state's $40 million pledge to chip research program

By Kirk Ladendorf
Monday, March 29, 2004

The agreement has been 10 months in the making, but today Texas Gov. Rick Perry will make good on his pledge of $40 million to bolster the expanded research agenda of Austin's International Sematech Inc. chip consortium.

The money, to be paid from the year-old, $295 million Texas Enterprise Fund, will pay for an Advanced Materials Research Center that will tackle projects involving advanced semiconductor technology and other advanced fields including nanoscience and biotechnology. Researchers at the University of Texas will work closely with Sematech scientists and will share in the state funds. Over time, researchers from other Texas universities will join in the effort.

Ben Streetman, dean of UT's College of Engineering, calls the closer ties with Sematech "really exciting."

"This is going to be a very productive and fertile ground for research collaboration," Streetman said.

The details of the agreement are expected to be announced today, said Austin lawyer Pike Powers, who has been actively involved in keeping Sematech in Central Texas.

The short-term goal is to push ahead on advanced semiconductor research, which is why Sematech was founded in 1987. The long-term goal is to make progress in various advanced technologies that, over the next decade or two, could translate into the creation of many new companies in the state, and potentially, thousands of new jobs.

More immediately, the agreement marks the down payment on a commitment made by Perry to help Sematech secure about $200 million in state and federal government financial assistance to bolster its research programs. Apart from the first $40 million, none of the rest of the money has been secured.

Perry's commitment, which was originally proposed in the fall of 2002 but spent another seven months working its way through the Legislature, was what influenced the 10-company consortium to decide last summer to keep Austin as the headquarters and main base of operations for Sematech. Sematech employs about 500 people in Austin, and much of its $160 million to $170 million annual research budget is spent here.

Perry's commitment was made to ward off the possibility of Sematech's relocation to Albany, N.Y., which landed a Sematech program in 2002.

Powers says the agreement preserves a vital Texas research institution and gives Sematech the potential to play a key role in the next generation of chip making and other advanced technologies.

"The people who decide to make this kind of investment are going to be players and competitors in the future, and those who choose not to do so will be further and further behind," Powers said.

The new state funding already is promoting a tighter partnership between Sematech and UT, whose researchers will receive $10 million of the state's $40 million going to the Advanced Materials Research Center. Sematech will receive the other $30 million, and the consortium's member companies will match that with $30 million of their own.

Sematech and the state began working on the details of the deal in June. Powers said the protracted negotiations leading to the agreement had to do with the newness of the Enterprise Fund and the fact that Sematech is a research consortium. Other Enterprise Fund commitments have been struck with single companies, including Toyota Motor Corp. and Texas Instruments Inc.; 445-3622