EDITOR'S PAGE

Schussing the Silicon Alps

When I think of Austria, snow-skiing, waltzes, and past imperial exploits—not high-technology industries—come to mind. Yet one region in the central European nation has marshaled the resources of government, private industry, and academia to woo more semiconductor manufacturers, equipment and materials suppliers, and software developers to its glowing hills and valleys, shimmering lakes, and epic mountain peaks. If quality of life and natural beauty determined the winners in securing new site selection investment, Carinthia would be among the front-runners.

The southern Austrian state launched the "Silicon Alps" initiative about a year and a half ago. The program, overseen by the state's Center for Technology Development, seeks to promote the existing infrastructure as well as to recruit more companies to the area. Rather than try to compete in the near term with more established areas for new megafabs, the Austrians would like to attract smaller fabs and foundries as well as additional tool and materials suppliers, help the existing companies become more global, and maximize the intellectual and research resources available in the academic community, according to Robert Gattereder, managing director of the initiative. As for the project's employment goals, "we are not looking so much for job creation," he explained during my mid-April visit to the area—"we want to add or create new value for the local economy."

Following the examples of other regional attempts to lure new semiconductor industry investment in Europe and elsewhere, the Carinthian and Austrian governments have sweetened the pot with healthy government subsidies for R&D and technology start-up companies, fast-track permitting, labor training programs, competitive corporate taxes, and other incentives. The Silicon Alps annual program budget is $40 million, said Gattereder, with plans for continuing the effort for 5 to 10 years. He noted that the initiative has the potential to eventually expand to neighboring areas in northern Italy and Slovenia, something philosophically in line with the multinational region's bid to become the site of the 2006 Winter Olympics.

There are already semiconductor assets in place in Carinthia. Siemens opened its first chipmaking facility outside Germany in Villach in 1970. Today the company (recently renamed Infineon Technologies) headquarters its power semiconductor competence center there, employing nearly 2000 workers in the wafer fab and R&D design center. The fab is converting most of its lines to 200 mm, with production scheduled to begin later this year. On the equipment side, up-and-coming surface conditioning tool supplier SEZ is based near the Infineon campus. These two international players are served by scores of local components and subassembly suppliers and subcontractors which are laying the foundation for a comprehensive regional infrastructure. Some of these companies, such as Dolinschek (which makes chemical and slurry delivery and recovery systems and equipment) and Ortner (which custom manufactures cleanroom furniture), have begun making moves to expand their businesses to the rest of Europe and beyond.

One question that comes to mind is, what if the Silicon Alps program succeeds too well and the well-educated local workforce, more than 50% of which is already employed in high tech, is tapped out? Gattereder responded that although there might be local or temporary labor shortages, he believes the area's high quality of life will attract new hires and that the restructured educational system's emphasis on technology skills should offset any shortfall.

Silicon Alps faces some tough competition in Europe alone—the Dresden area of eastern Germany, Flanders in Belgium, Silicon Glen in Scotland, among others. But with their central location (23 fabs and wafer houses within a 350-miles radius) and appealing vacation-spot surroundings backing up the usual lucrative economic inducements, the techno-Carinthians have a good shot at success. (For more information on the Silicon Alps initiative, check the Web site, http://www.siliconalps.com)

Tom Cheyney
Editor
tom.cheyney@cancom.com