Texas Electronics Industry - Greg Abbott

OVERVIEWTexas EnterpriseFundApple Doubles Size of Texas Corporate CampusIn March 2012, Apple unveiled plans for a 300 million expansion of its corporate campus in Austin, Texas,where the company expects to add over 3,600 jobs in accounting, customer support, and sales operations.The project, supported by 21 million from the Texas Enterprise Fund and an estimated 15 million fromthe City of Austin and Travis County, will roughly double Apple’s Austin workforce and establish the Texascapital as the company’s largest employment base.Elsewhere in Austin, Apple also employs approximately 100 workers at a microchipdesign center, which became part of the company in 2010 when Apple acquiredAustin-based Intrinsity. Apple’s Austin network furtherextends to multiple component suppliers based in the city,including Samsung Austin Semiconductor and Cirrus Logic,which both provide chips for use in Apple’s iPhone and iPadmobile devices. Beyond Austin, Dallas-area semiconductorfirms Texas Instruments and Diodes Inc. also supply Applewith components for its mobile devices.more Texas students in STEM fields critical for maintaining a skilled and competitive state workforce.T-STEM is part of the Texas High School Project andaims to more closely align high school curriculumswith admission requirements for competitive colleges.Under the initiative, 51 T-STEM academies have beencreated, serving approximately 15,000 students annually. The Legislature most recently reauthorized theprogram in 2011.Texas EmergingTechnology FundCalxeda Serves Data Center EfficiencyFounded in Austin in 2008, Calxeda is focused onbringing more efficient system-on-chip designsinto servers and cloud services. The company haspartnered with major server manufacturers,including Dell, to commercialize this technology.Calxeda received 1 million in funding from theTexas Emerging Technology Fund (TETF) in 2009.Tax LegislationState sales and use tax exemptions are available to allmanufacturers in Texas. The exemptions apply to thepurchase or rental of manufacturing machinery, inputs& raw materials, safety equipment, pollution controlequipment, semiconductor & biotech clean rooms,and chemicals used in the manufacturing process.Sales tax exemptions are especially useful to hightech electronics manufacturers such as semiconductorfoundries, who typically have large outlays on manufacturing equipment.Molecular Imprints AdvancesSemiconductors at the NanoscaleMolecular Imprints is an Austin-based provider ofadvanced lithography equipment which enablessemiconductor manufacturers to create microchipfeatures at the nanoscale level. The companymade its first commercial delivery in 2011 and iscurrently ramping up to full production. The TETFinvested 3 million in Molecular Imprints in 2006.9

OVERVIEWTexas: A Long History of High-Tech Innovation1954: Texas Instruments (TI)1962: TI sells firstcommercializes the first silicontransistor and transistor radiointegrated circuit systemsto the U.S. Air Force1940s: GeophysicalService Inc, the forerunner to TexasInstruments, makessubmarine detectiondevices for U.S. Navyduring WWII1957: Collins Radio locates1958: TI engineer Jackin Richardson, Texas,planting seeds of the NorthTexas telecom clusterKilby invents theintegrated circuit inDallas, Texas1967: The handheld calculatorinvented by TI1982: The Microelectronics and1982: Compaq, the global PCsales leader for much of the1990s, founded in HoustonComputer Consortium (MCC), thecountry’s first computer industryR&D consortium, locates inAustin, Texas1971: TI patents the1984: Michael Dellfounds a computercompany out of hisdorm room in Austin1984: Dallas Semiconductorfounded (now part of MaximIntegrated Products)microprocessor, the firstdevice to combine all computingcomponents onto a single chip1985: Three professors atRice Univ. in Houstondiscover the moleculethat launches the fieldof nanotechnologyfounded in Austin as spin-offfrom Motorola1987: U.S. semiconductormanufacturers form theSEMATECH consortium inAustin102004: Freescale Semiconductor1996: In Austin, Samsung2009: TI opens RFAB, a state-of-opens its first and onlysemiconductor fab outsideof South Koreathe-art, 12-inch semiconductorfoundry, in Richardson

SemiconductorsTexas has been a global leader in semiconductors from the industry’s beginnings. In 1958,Texas Instruments (TI) engineer Jack Kilbyinvented the breakthrough integrated circuit in Dallas,an invention which would go on to earn him the NobelPrize in Physics in 2000. In the meantime, the technology developed at TI helped Texas become a globalelectronics powerhouse.printed circuit boards (PCBs), printed circuit assemblies (PCAs) and other electronic components—eachemploys between 3,000 and 5,000 additional workersat companies including Celestica and Sanmina-SCI.Elsewhere, at companies likeTT Electronics, another 2,000Texas’work in the electronic coil,semiconductortransformer, and connectorworkforce is thesecondlargest insubsectors. Lastly, semiconducthenationtor machinery manufacturing,another related subsector thatproduces equipment for semiconductor fabs, employsmore than 600. Applied Materials leads this subsector,both globally and in Texas. Major companies acrossthe Texas semiconductor industry are listed on pages14-15.The semiconductor industry evolves constantly andcutting-edge technology can become obsolete in amatter of years. The rapid progress observed in thesemiconductor industry is embodied in Moore’s Law,a rule of thumb which states that the amount ofToday, Texas’ semiconductor and electronic component workforce is the second largest in the nation, with370 firms employing nearly 44,000workers. Semiconductors, also calledSamsung Continues 4 Billion Expansion in Austinmicrochips or integrated circuits(ICs), contain millions of microscopicSamsung made headlines in 1996 when the company selected Austin,transistors connected together to formTexas for the company’s first and only semiconductor foundry in thethe brains of computers, smartphones,U.S. Samsung Austin Semiconductor expanded in 2003, 2006, 2010,and televisions. This is the secondand 2012, with a cumulative capital investment of over 13 billion. A 10.8 million Texas Enterprise Fund award supported the 2006 exlargest electronics industry sector inpansion, which resulted in a 2.5 billion investment and 900 newTexas, accounting for 22% of thejobs.state’s electronics employment.The company’s latest expansion in 2012 amounted to 4 billion,Within the Texas semiconductor andwhich is one of the single largest foreign direct investment in Texaselectronic component manufacturinghistory. Including a chip design center established in 2010 in Austin,sector (NAICS 3344), 29,000 workersSamsung now employs approximately 2,500 in Central Texas.are employed at semiconductorcompanies such as TI, Freescale,Samsung, and others. Three relatedmanufacturingsubsectors—bare11

SEMICONDUCTORStransistors contained in a microchip will double every2 years. In 1971, the first commercial microchipcontained 2,300 transistors. In 2012, popular computerchips had around 1.4 billion transistors crammed ontotheir surface. As transistors on each microchip havegotten smaller and more numerous, the size of state-of-the-art silicon wafers has grown from 5 inches in1985 to 12 inches today. This leads to enormousefficiencies in production, but at a vastly greaterexpense. For example, a 6-inch semiconductor fab in1985 cost around 100 million, while in 2012 a 12inch fab requires an investment of over 5 billion. Thetrend of separating design and manufacturing is likelyto continue, as the industry transitions to 18-inchsilicon wafers in the next five to ten years.From 2007-2011, employment in the semiconductorand electronic components industry in Texas de-Semiconductor CompaniesBuild New CorporateFacilities in TexasMaxim Integrated Products, a California-basedsemiconductor firm, celebrated the opening of itsexpanded Farmers Branchcampus in March 2012. Thecompany invested 22million in the project.Following several years ofrapid growth, chip designfirm Cirrus Logic movedinto its newly constructedheadquarters and circuittesting facility in downtown Austin in July 2012.12creased by 19%. Industry trends have led to consolidation in manufacturing around semiconductor foundriesand a proliferation of fabless semiconductor companies that design microchipsbutoutsourceTexas semiconductorproduction. As a result ofcompanies receivedthis consolidation, the 1.2 billion in venturemost advanced semicon- capital from 2002-2012ductor foundries todayare much larger and more capital intensive, so fewercompanies can afford to operate them profitably. Aprofile of semiconductor foundries in Texas isfeatured on pages 16-17.Although semiconductor manufacturing is on aconsolidation trend, other industry subcategories haveadded jobs in recent years. Electronic coil & transformer, semiconductor machinery, and printed circuitassemblies manufacturers all addedjobs in Texas between 2007 and2011 (see chart on page 13).The Texas semiconductorindustry has continued toattract strong venturecapital (VC) interest.From 2002 through 2012,VC firms invested nearly 1.2 billion in Texassemiconductorcompanies, according to PricewaterhouseCoopers.Furthermore, the state’sTexas Emerging Technology Fund has investedapproximately 62.4million in 19 semiconductor-related projects. Seepage 30 for more details.

SEMICONDUCTORSWorkforceConcentrationsNorth Central RegionNorth Central RegionSemiconductorsReal Estate CreditTexomaRegionBare Printed Circuit BoardsSemiconductorsDallas CountySemiconductor ManufacturingSemiconductorsBare PrintedCircuit BoardsThe map at right identifies the state’s WorkforceDevelopment regions with above-averagespecializations in semiconductor and electroniccomponent manufacturing. Thehighlighted regions are not theonly areas in Texas whereworkers in this sector can befound, but rather representareaswiththegreatestconcentrations relative to thesize of the local labor force.ConcentrationRegions with significant workforceconcentrations in this sector are ranked asmoderate, above average, or high.Capital RegionModerateAbove AverageSemiconductorsPrinted Circuit AssembliesHighSource: Texas Workforce CommissionSemiconductor and Electronic Components Manufacturing Employment in TexasSecond Quarter 2012Subsector (Industry Code)EmployeesBare Printed Circuit Board Manufacturing (334412)FirmsAverageAnnual Wage4,37549 62,66028,897131 104,0521,13822 40,09289413 51,636Printed Circuit Assemblies Manufacturing (334418)3,00162 61,464Other Electronic Component Manufacturing (334419)4,93179 113,56865024 82,31643,886370 95,021Semiconductor and Electronic Components Manufacturing (334413)Electronic Coils, Transformer & Inductor Manufacturing (334416)Electronic Connector Manufacturing (334417)Semiconductor Machinery Manufacturing (333242)TOTALSource: Texas Workforce Commission13

SEMICONDUCTORSMajor CompaniesTop Semiconductor & Semiconductor Machinery Manufacturerswith Operations in TexasAlphabeticalCompany NameGlobal Sales(Millions)Primary Location(s)SectorAustinSemiconductor Equipment 8,719AngletonPrinted Circuit Board Manufacturing 2,253CelesticaAustinPrinted Circuit Board Manufacturing 7,213Creation TechnologiesPlanoPrinted Circuit Board ManufacturingNAStaffordPrinted Circuit AssemblyAustinSemiconductor Design & Foundry 3,217Austin, RichardsonSemiconductor Machinery 1,595Maxim Integrated ProductsAustin, Dallas, San AntonioSemiconductor Design & Foundry 2,404MEMC Electronic MaterialsPasadenaPolysilicon Manufacturing 2,716AustinSemiconductor Design & FoundryShermanSilicon Wafer ManufacturingAustinSemiconductor Design & Foundry 1,070Dallas, Austin, Plano,Richardson, Sherman, Sugar LandSemiconductor Design & Foundry 13,735Novati Technologies(Tezzaron Subsidiary)AustinSemiconductor Design & FoundryNATokyo ElectronAustinSemiconductor Equipment 7,694Toppan PhotomasksRound RockSemiconductor Equipment 18,356TriQuint SemiconductorRichardsonSemiconductor Design & Foundry 896Ultra Clean TechnologyAustinSemiconductor Equipment 453LubbockSemiconductor Design & Foundry 85Applied MaterialsBenchmark ElectronicsDucommun LaBargeFreescale SemiconductorHoriba InstrumentsSamsung Austin SemiconductorSino-American Silicon(GlobiTech subsidiary)SpansionTexas InstrumentsX-FAB 581 104,155 576Representative sample only. Sources: D&B, LexisNexis, company websites14

SEMICONDUCTORSTop Fabless Semiconductor Companies with Operations in TexasAlphabeticalCompany NameGlobal Sales(Millions)Primary Location(s)SectorAustin, HoustonSemiconductor Design 6,568Altera Corp.AustinSemiconductor Design 2,064Apple (formerly Intrinsity)AustinSemiconductor Design 156,508Austin, PlanoSemiconductor Design 760Cirrus LogicAustinSemiconductor Design 427Diodes Inc.PlanoSemiconductor Design 635IBMAustinSemiconductor Design 106,916IntelAustinSemiconductor Design 53,999Austin, HoustonSemiconductor Design 3,393MediaTek WirelessAustinSemiconductor Design 2,852Microchip Technology(SMSC subsidiary)AustinSemiconductor Design 1,383Micron TechnologyAllenSemiconductor Design 8,234Microsemi(Zarlink Semiconductor subsidiary)AustinSemiconductor Design 1,013Austin, RichardsonSemiconductor Design 3,998AustinSemiconductor Design 4,194Austin, PlanoSemiconductor Design 3,442PMC-SierraAustinSemiconductor Design 654QualcommAustinSemiconductor Design 19,121RichardsonSemiconductor Design 871Silicon LabsAustinSemiconductor Design 492STMicroelectronicsCoppellSemiconductor DesignAdvanced Micro Devices (AMD)ARM IncMarvell SemiconductorNVIDIANXP SemiconductorsON SemiconductorRF Micro Devices 9,735Representative sample only. Sources: D&B, LexisNexis, company websites15

SEMICONDUCTORSSemiconductor Foundries in TexasFreescale SemiconductorAustin, Texas Global HQ and design center in Austin, Texas Two 200mm wafer fabs in Austin:Austin Technology & Manufacturing Center microprocessor chipsOak Hill Fab - analog/mixed signal devices Spin off from Motorola in 2004Maxim Integrated ProductsDallas and San Antonio, Texas 200mm wafer fab in San AntonioDesign center & 200mm bump fab in Dallas areaDesign center in AustinAcquired Dallas Semiconductor in 2001Global HQ in San Jose, CaliforniaSamsung Austin SemiconductorAustin, Texas SpansionAustin, Texas 200mm wafer fab & design centerProduces chips for flash memoryFormer AMD-Fujitsu joint venture, now independentGlobal HQ in Sunnyvale, California16Built in 1996Announced 4 billion expansion in 2012300mm wafer fabMakes chips for smartphones and tabletsDesign center also located in AustinEmploys 2,500 in Central Texas

SEMICONDUCTORSTexas InstrumentsDallas, Richardson, and Sherman, Texas Operates five foundries in Sherman, Richardson,and Dallas 300mm Richardson fab opened in 2006 Design centers in Dallas, Austin, and Stafford Employs 9,100 in North Texas alone Acquired National Semiconductor in 2011 Global HQ in DallasNovati Technologies(Tezzaron Semiconductor)Austin, Texas Acquired from SVTC in 2012Produces 200mm & 300mm wafersShared-use development & commercialization fabBuilt in 1988 by the SEMATECH consortiumGlobal HQ in Naperville, IllinoisTriQuint SemiconductorRichardson, Texas Purchased Richardson fab in 2000 100mm & two 150mm fabs on site Makes chips for mobile devices, networks, and aerospace& defense In-house design & foundry services Global HQ in Hillsboro, OregonX-FABLubbock, Texas 200mm fabGlobal HQ in Erfurt, GermanyFormer Texas Instruments facilityProvides foundry services for analog/mixed-signal chips17

SEMICONDUCTORSRice University: Birthplace of NanotechnologyRichard Smalley, Robert Curl, and Harold Kroto first discovered fullerenes, soccer ball-shaped carbon molecules1-nanometer in diameter, in 1985 at Rice University in Houston, Texas, thus beginning an age of nanosciencediscovery. In 1996, the three co-discoverers were awarded the Nobel Prize in Chemistry for their breakthrough.Since that landmark event, Rice University and Dr. Smalley have been leaders in nanotechnology development,establishing the world’s first nanotech research institution in 1993. The Richard E. Smalley Institute for Nanoscale Science and Technology, posthumously renamed in honor of its founder in 2005, is a leader in nanotech research across all disciplines.Nanotechnology is incredibly promising because some materials can have different physical, chemical, andelectrical properties when assembled at the molecular level. Nanotechnology is not aspecific industry, but is rather an enabling technology that underpins new innovations across a range of high tech industries, including manufacturing, aerospace& defense, renewable energy, biotechnology, and electronics. For the past 10years, integrated circuits have been manufactured at the nanoscale level (withdetails smaller than 100 nm) in the semiconductor industry.Buckminsterfullerene, or “Buckyball”The Semiconductor Manufacturing ProcessSemiconductor manufacturing is a complex multi-stage process. Here’s the short version:18

Computers & Related EquipmentAs home to the global headquarters of computer giant Dell, as well as corporate campusesof Hewlett-Packard and Apple, Texas haslong been one of the leading U.S. states in the computer sector. In 2012, Texas ranked No. 2 in the countryfor computer sector employment, behind only California. This sector includes manufacturers of computers,servers, and peripheral equipment such as monitors, aswell as firms involved in designing or marketingcomputer equipment manufactured by a third party.Texas staked its claim as a top computer manufacturing state in the 1980s, when PC makers Dell andCompaq (now part of HP) were founded in the state.Jobs in this sector grew rapidlyin Texas through much of theJobs in computer1990s, peaking at over 33,000systems designsurged by 60%in 2000. During the pastfrom2002-2012decade, employment in thesector followed national trends,contracting significantly as manufacturing operationsconsolidated, improved productivity, or shifted toforeign countries. Despite these trends, Texas remainsone of the top U.S. states for computer manufacturingemployment with more than 16,

for electronics exports, with over 42.4 billion in electronic products shipped internationally. Texas electronics exports rose 9% in 2012 to edge out alifornia for this top spot. Mexico is the top destination for these goods, with nearly half of all Texas electronics exports heading to its southern neighbor. Electronics was the third largest .