Silicon Valley selected for $4 billion chip research center

Silicon Valley gets its name from computer chips, but it no longer plays a central role in shaping how they are made. A major supplier to the industry hopes to change that.

Applied Materials, the largest maker of semiconductor production machinery, said Monday that it plans to build a massive research facility near its hometown, Santa Clara, California, to allow chipmakers and universities to collaborate on advances to make more powerful chips. Industry analysts say Silicon Valley has not seen a similar semiconductor construction project in more than 30 years.

The company expects to invest up to $4 billion in the project over seven years, with a portion of that money coming from federal subsidies, with up to 2,000 engineering jobs being created.

The plan is the latest in a series of chip-related projects spurred by the CHIPS Act, a $52 billion relief package passed by Congress last year to reduce US reliance on Asian factories for critical components. What sets Applied Materials apart is that it focuses on research, rather than manufacturing, and is a fundamentally new commitment to the original center of manufacturing.

Chipmakers that grew up in Silicon Valley have long opted to build new “fabs,” the high-end factories that make chips out of silicon wafers, in less expensive states and countries. But Applied Materials is betting that technical talent at nearby universities and local companies that design the chips will quickly spur innovation, offsetting cost differences with other locations.

“You can connect more leaders in this ecosystem here than anywhere in the world,” said Gary Dickerson, CEO of Applied Materials. “There is no place like this.”

Applied Materials hosted an event Monday in Sunnyvale, Calif., to discuss the project, drawing a large audience that included employees, customers, city officials, and Vice President Kamala Harris.

The company said it would use a 150-pound piece of silicon, which one executive described as “easily the largest piece of silicon in Silicon Valley,” as a cornerstone for the new center.

Politicians of both parties supported the potato chip law, in part because of fears that China would one day exercise control over Taiwan and the factories there that make the most advanced chips. Besides encouraging domestic chip manufacturing, the legislation has set aside about $11 billion to stimulate related research and development.

Chip research is now taking place in several phases at multiple locations, including university labs and collaborative centers such as the Albany NanoTech Park in New York. Applied Materials partners with other companies in this hub and operates a research plant in Silicon Valley where chipmakers can work with its devices and those of other toolmakers.

But much of the fundamental work in developing new production processes is carried out by chip manufacturers in FAPS, which are equipped with a wide range of equipment. The proposed center, which Applied Materials calls Epic, is set on an ultra-thin production space larger than three football fields and is designed to give university researchers and other engineers similar resources to experiment with new materials and technologies to create advanced chips.

One goal is to reduce the time it takes for new ideas to trickle from research labs to companies designing new manufacturing equipment, information that is often delayed now as it is filtered through chipmakers.

H. -S. Philip Wong, a professor of electrical engineering at Stanford University who was briefed on the company’s plans. “There is a huge gap there.”

Applied Materials also said that chip makers will be able to reserve space at the center and try out new tools before they are commercially available.

The plan hinges in part on whether Applied Materials can win under CHIPS’ law, which the Commerce Department says has already attracted expressions of interest from more than 300 companies. Mr. Dickerson said the company planned to build the center anyway, but that government funding could affect the scale of the project.

Assuming the hub develops as planned, it could significantly enhance Silicon Valley’s role in chip development, said J. Dan Hutchison, vice president of market research firm TechInsights.

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