Deukmejian Quietly Bids for High-Tech Study Center

SACRAMENTO — Gov. George Deukmejian, apparently determined to avoid the wrangling in the Capitol that almost prevented the state from bidding on a $4.4-billion federal atom-smasher project, bypassed the Legislature on Friday in submitting a reported $125-million bid to bring a high-technology research project to the Silicon Valley.

Deukmejian, in submitting the financial aid package to a consortium of semiconductor manufacturers looking for a home for a nonprofit research center, kept details of the proposal under tight wraps.

More than 30 other states are competing with California for the project, which is being put together by a consortium known as Sematech.

Deukmejian, in a letter to Sematech, said in part: “I am sure you will find that the California proposal exceeds the incentives available in any other state.”

Would Hire 800 People

State officials like the project because Sematech, created in May by a group of semiconductor manufacturers, is expected to employ 800 people and have an annual operating budget of $250 million.

In addition to providing an economic shot in the arm to the Silicon Valley, the project would help California regain some of the luster it has been losing as a leader in high-technology research. States such as North Carolina, Texas and New York have been out-hustling and outbidding California in recent years for high-tech research projects.

Deukmejian would like to reverse that trend by bringing major projects such as Sematech and the federal atom smasher to California.

The largest share of funding for Sematech will come from the federal government, which has given the project a strong push because of concerns that U.S. semiconductor manufacturing technology lags so far behind Japan’s that it could pose a threat to national defense.

U.S. Losing Ground

A U.S. Department of Defense report being circulated in the state Capitol by supporters of the project notes that the United States is rapidly losing ground to Japan in the manufacture of computers and semiconductors, the electronic circuit boards that form the main building blocks of computers.

The report concluded: “The U.S. will depend to a large degree upon foreign sources of microelectronics hardware and technology to meet its defense needs unless measures are taken to help this country recapture and retain leadership in semiconductor manufacturing technology.”

The bid to make California the home of the world’s largest atom smasher was made Wednesday, only minutes before a deadline set by the U.S. Department of Energy. In that one, the state, as an inducement to the Department of Energy, is offering to put up $560 million to partially finance the project.

Unlike the atom-smasher project, which will rely 100% on government financing, private corporations are pledging to put up nearly half the money for Sematech.

One of the few details disclosed by Deukmejian is that the proposed sites are in the San Jose area.

Features of Proposal

The governor said California’s proposal includes the necessary public works improvements for the sites. He also said the proposal calls for establishing an Institute for Semiconductor Manufacturing Sciences and Technologies. The institute will give Sematech access to facilities at California’s major universities and laboratories, the governor’s announcement said.

Officials familiar with the bid said it is very close to the package of benefits promised in legislation now pending in the Assembly.

That legislation, drafted by Assemblyman John Vasconcellos (D-Santa Clara), pledges up to $25 million a year for five years in direct financial aid and public improvements, such as construction of freeway on-ramps near the proposed site of the research center.

Although Deukmejian said the bid “represents the collaborative endeavors of legislative leaders, the mayor and economic development officials in San Jose and my office,” Assemblyman Sam Farr (D-Carmel), chairman of the Assembly’s Economic Development and New Technologies Committee, said he has not seen a copy of the Administration’s bid.