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John McCloud is editor of Net Lease forum, from which this article is excerpted.

New York State’s multibillion dollar commitment to grow the nanotechnology industry is paying dividends. In a move Gov. George Pataki declares will transform the Hudson River Valley into the next Silicon Valley, Advanced Micro Devices Inc. selected a site 20 miles north of Albany for development of a $3.2 billion microchip plant. The Sunnyvale, CA-based semiconductor maker looked at sites in Germany and several Asian countries before settling on the 600-acre Luther Forest Technology Campus near Saratoga Springs. The company expects to invest as much as $5 billion in the facility.

Germany at one point appeared to be winning the project, but NYS pulled through with a package of more than $1 billion in incentives, including at least $500 million toward construction and equipment costs, $250 million in tax credits and a $150 million research and development grant. In addition, federal, state and local governments have pledged $280 million toward road and utility upgrades.

The state has tried to make itself a center for nanotechnology by establishing Albany NanoTech as a major research complex at the Albany campus of the State University of New York. The state recently announced plans for a $435 million Institute for Nanoelectronics Discovery and Exploration there and International Sematech Manufacturing Initiative, an Austin-based program sponsored by a consortium of semiconductor companies, is building a $400 million R&D center there.

Significantly, AMD is active at NanoTech as part of a $600 million research, education and economic development project through SUNY Albany’s College of Nanoscale Science and Engineering. It is also participating in a $100 million project at Rensselaer Polytechnic Institute in Troy, NY to create the Computational Center for Nanotechnology Innovations.

According to AMD CEO Hector Ruiz, those programs played a major role in the company’s decision to build in New York State. He says they underlined the state’s willingness to underwrite high-tech research. The programs will also provide a source of high-level employees. Equally important were the region’s existing industrial infrastructure and large skilled-labor force.

According to Pataki, the AMD project represents the largest single corporate investment in New York State history. State officials believe the company’s action will sway other high-tech companies toward the region, contributing to a major economic resurgence. NYS Senate Majority Leader Joseph Bruno, R-Saratoga Springs, says officials are already negotiating with another large corporation. And almost certainly, the plant will generate additional development as materials and service suppliers angle to locate nearby.

Even before the AMD decision, some people had begun labeling the 150-mile stretch between New York City and Saratoga Springs as Nanotech Valley. IBM Corp., headquartered in Armonk, NY, has a $4.4 billion semiconductor plant in East Fishkill, NY; Phillips Semiconductor, a division of Royal Philips Electronics of Eindhoven, The Netherlands, has a facility in Fishkill, NY and Planar Semiconductor Inc. has a 33,000-sf factory at its headquarters in Kingston, NY.

Anthony Campagiorni, president of the Hudson Valley Economic Development Corp. in New Windsor, NY, says the region has more than 2,600 acres of available greenfield sites with roads, utilities, sewerage and other infrastructure. The sites include 75 available buildings of at least 50,000 sf each and 42 shovel-ready properties, each with a minimum of five acres. In addition, the valley offers an even larger inventory of brownfield sites left over from the heyday of industrial activity in upstate New York.

Construction on the 1.2 million-sf AMD plant is set to begin in July 2007 and finish by July 2009. The plant is expected to reach capacity between Jan. 2012 and Jan. 2014.

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