Is N.Y. wooing Apple for an upstate chip plant?

Gov. Cuomo is looking to lure high-tech manufacturing to his state

Although Apple and Samsung claim they can keep their component and manufacturing relationship separate from the patent claims and counterclaims they've filed against each other around the world, it's no secret that Apple is slowly replacing Samsung as a supplier of components for its various products -- most notably the iPad and iPhone.

While Apple has already signed up other companies to make displays, batteries and other components, Samsung remains the only company that produces the A-series chips that power Apple's iOS devices. No doubt, Apple isn't happy about the fact that the most critical component for its most lucrative products comes from its biggest competitor in the mobile market.

All that may be about to change. If you read between the lines of comments New York Gov. Andrew Cuomo made last week, you could infer that Apple is eying a site in upstate New York for a manufacturing plant that would allow it to wean itself from Samsung.

Cuomo has been a driving force behind efforts to lure more high-tech manufacturing to upstate New York. The state already has one major chip manufacturer, Global Foundries, that was lured to the area by a series of tax and development incentives. That operation is based in the town or Malta, about 30 minutes outside Albany.

One major facet of the governor's strategy has been to make upstate New York a global resource for nanoscale technology training and research. His efforts have focused on expanding programs at two colleges that are part of State University of New York (SUNY) system. One of those colleges, the University at Albany, has seen a massive expansion in scientific and computing programs since Cuomo took office two years ago. As part of that process, the school's College of Nanoscale Science and Engineering has just about doubled the size of the university with a series of new facilities and related resources.

The other school, the SUNY Institute of Technology, a four-year college in the city of Utica, will also see a major expansion. A project known as the Computer Chip Commercialization Center (or Quad-C) will add a 165,000-square-foot facility containing clean rooms, offices and laboratories. The site is designed to manufacture System-on-chip (SoC) devices that are developed at SUNY Albany's College of Nanoscale Science and Engineering. Local infrastructure upgrades to support the facility are also designed to serve commercial development at a technology park known as Marcy Nanocenter, a 420-acre parcel adjacent to the SUNY IT campus.

Both the new facility in Utica and the existing Luther Forest Technology Campus that houses the Global Foundries chip factory in Malta, N.Y., are seen as potential sites for new production facilities for Apple's A-series SoC processors, which power all iPhones, iPads, iPod Touches and Apple TV devices.

Recent speculation has focused on reports that Apple is using a consulting firm -- Deloitte -- to scout for potential production facilities. Deloitte will say only that it is representing a major high-tech manufacturer. The scouting process and various pitches to New York officials -- including a project going by the code name Project Azalea -- became public in recent weeks, though very few details have leaked.

The Albany Times Union reported that the project will include a 3.2-million-square-foot production facility that is expected to cost $10 billion. Apple isn't likely to build and operate the facility itself. Instead, it's expected to work with a third party focused solely on chip manufacturing, unlike Samsung, which has technology development and production arms as well as its own consumer electronics division.

The consensus is that Apple could tap Taiwan Semiconductor Manufacturing Co. (TSMC) for the job. TSMC currently doesn't have facilities that meet Apple's production needs, which is why the two could be scouting for a new manufacturing plant. Selecting a U.S. site would be good public relations for Apple, which has come under fire for not having enough of its supply chain in America. Samsung currently produces the A-series chips in Austin, Texas, so moving that work to a different U.S. facility wouldn't be as costly as relocating existing pieces of the supply chain to the U.S. from Asia.

Apple has in the past taken an active role in helping suppliers scale up production facilities to meet its needs. The company could be involved in the planning of the new facility for that reason or simply to ensure that it has significant control over the production of current and future processors.

There's been local speculation that Apple might also work with Global Foundries as a supplier at its current facility. While that seems unlikely, the existing facilities can create ARM-based processors, like the A-series, as well as x86 chips like those commonly used in desktop and notebook computers. Global Foundries currently has the ability to expand and add two more fabrication facilities at the site, though it isn't clear if it could produce enough chips for Apple.

While this talk about Apple has been ongoing in state government circles in Albany, there had been no confirmation from officials until last week. But during a radio interview, Cuomo was asked point blank whether Apple might be the secretive company looking for a site. The governor offered up a non-answer that strongly indicated Apple is indeed looking to set up shop in New York.

"Well," he said, "we're shopping a lot of different companies at any given time. Apple has a lot of competition, obviously, for their location. I don't think that they're anywhere yet in the decision-making."

Both of the potential New York sites provide access to important resources, including trained technicians and college graduates with the education and skills required to staff the facilities. It's also a foregone conclusion that New York state and the local officials would offer a series of incentives to lure Apple, or an Apple supplier, to the area. The Luther Forest Technology Campus and Global Foundries have been a boon to Saratoga County, the city of Saratoga Springs and other towns in the area because they attracted a big influx of well-paid engineers and their families.

It's unclear when a formal announcement might take place. Apple did not return phone calls seeking comments about its plans.

Ryan Faas is a freelance writer and technology consultant specializing in Mac and multiplatform network issues. He has been a Computerworld columnist since 2003 and is a frequent contributor to Peachpit.com. Faas is also the author of iPhone for Work (Apress, 2009). You can find out more about him at RyanFaas.com and follow him on Twitter ( @ryanfaas).

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