Silicon Valley selected for $4 billion Chip Research Center

Silicon Valley gets its name from computer chips, but 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 manufacturing machinery, said Monday it plans to build a massive research facility near its hometown of Santa Clara, Calif., to allow chipmakers and universities to collaborate on advances to make more powerful chips. Silicon Valley hasn’t seen a comparable semiconductor construction project in more than 30 years, industry analysts say.

The company expects to invest up to $4 billion in the project over seven years, with part of the money coming from federal subsidies, 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 package of subsidies that Congress passed last year to reduce America’s reliance on Asian factories for the critical components. What sets Applied Materials’ move apart is that it focuses on research, rather than manufacturing, and is a significant new commitment to the industry’s original hub.

Chipmakers who grew up in Silicon Valley have long chosen to build new “factories,” the sophisticated factories that produce chips from silicon wafers, in less expensive states and countries. But Applied Materials is betting that technical talent at nearby universities and the local companies that design chips will spur innovation quickly and offset cost differences with other locations.

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

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

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

Politicians from both parties overwhelmingly supported the CHIPS Act, in part out of fear that China will one day exert control over Taiwan and factories there that produce the most advanced chips. Besides encouraging domestic chip manufacturing, the legislation appropriated about $11 billion to stimulate related research and development.

Chip research is now taking place in multiple phases at multiple locations, including university labs and collaborative centers such as the Albany NanoTech Complex in New York. Applied Materials participates with other companies in this center and operates a research factory in Silicon Valley where chipmakers can work on their machines and other tool makers.

But many of the core tasks in developing new manufacturing processes are performed by chip manufacturers in factories equipped with a wide variety of equipment. The proposed center, which Applied Materials calls Epic, will have ultra-clean manufacturing space larger than three football fields and is designed to give university researchers and other engineers 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 flow from the research labs to companies designing new manufacturing equipment, information that is now often delayed as it filters through the chip makers.

“The problem is that these customers need time to figure 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 would be able to reserve space in the center and test new tools before they were commercially available.

The plan depends in part on whether Applied Materials can win subsidies under the CHIPS Act, 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 state funding could affect the scope of the project.

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

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