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Digital Greenhouse effort celebrates 1st birthday with Sony design center

Thursday, July 06, 2000

By Dan Fitzpatrick, Post-Gazette Staff Writer

When Gov. Ridge pledged last June to turn Pittsburgh into a microchip design center, he made the announcement inside a stiflingly hot solarium at the Phipps Conservatory, forcing those in the audience to roll up their shirtsleeves and mop their brows.

Today, as he touts the one-year anniversary of the state-funded "Pittsburgh Digital Greenhouse," Ridge plans to cool things down.

"We will stick to the AC," said Steve Aaron, a spokesman for Ridge.

The governor has several reasons to feel more comfortable. At a 10 a.m. Carnegie Science Center press conference, Sony Corp. is expected to announce plans to build a new semiconductor design center, probably in Oakland. Yoji Kato, the San Jose, Calif.-based president of Sony's semiconductor business division, will be in charge of the new office, which could employ six to 10 people to start and as many as 50 over time.

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The Sony design center, expected to open in the fall and focus its research on personal security and mobile wireless technologies, is the first proof that the Digital Greenhouse can create jobs. Ridge promised the Greenhouse would generate 1,500 such jobs in three years.

"This is a huge step," Aaron said.

As part of today's event, Tyco Electronics, Ansoft Corp., Maya Design Group and Tollgrade Communications are expected to join 13 other corporate, university and nonprofit partners already participating in the Greenhouse, a local consortium attempting to make the region a worldwide leader in advanced chip design.

The goal of the Greenhouse is to make it easier for electronics firms that use computer chips to develop ideas, share technology and bring their products to market quickly.

By 2001, the Greenhouse team expects to have joint programs at Carnegie Mellon University, the University of Pittsburgh and Penn State University that train electrical engineering and computer science graduates in so-called "system-on-a-chip" design -- a smaller, more efficient chip-making method considered to be the wave of the future in the semiconductor industry.

By using these graduates as bait and by bankrolling research in the areas of digital video and digital networking, the Greenhouse hopes to attract companies that make set-top boxes, high-definition TVs and wireless communications products. The Greenhouse also wants to help local companies not involved in the digital video and digital networking businesses, persuading them to use advanced chips to improve productivity and profits.

This project is a big risk for the state, which already has spent more than $7 million and is expected to spend another $4 million this year.

Its total commitment is expected to top $13 million.

With the state's money, the nonprofit Greenhouse team has funded 16 different research projects, many of which are just beginning.

One group, at the University of Pittsburgh, is working on a "wireless network wire," a remote-controlled chip that could be imbedded in an underground parking space and used to tell a garage owner how many parking spaces are filled at any given time. Another group, at Lehigh University, is using Greenhouse money to develop "fuel cells" -- chips that power electronic devices with liquid fuel instead of batteries.

Many of these Greenhouse-funded research projects have spans of eight to 24 months, so it is too early to know what benefit they will be to the Greenhouse partners, who for a fee of $100,000 are able to license the technology.

As a result, it is difficult to gauge Greenhouse's progress a year after its highly touted start.

"We are still in the honeymoon stage," said Jim Klueber, a research and development manager for Monroeville-based Compunetix Inc., a Greenhouse member.

When Klueber first heard about the Greenhouse, he was skeptical.

"Is this going to be another one of those adventures where we fork over some money and don't get anything out of it?" he wondered.

A year later, most of the member companies are pleased with the project, saying it provides opportunities for networking and recruiting. "We have made some good contacts," said Dave Hochendoner, director of product development for Oakmont-based Sima Products, another Greenhouse member.

Todd Erdley, who participates in the Greenhouse as president and CEO of State College-based Videon Central Inc., likes the Greenhouse, but he wants it to be "tweaked."

"I don't think it is as good as it could be, but it is working," he said.

Erdley, who makes products for high-definition TVs and VCRs, pays $10,000 to be a part of the Greenhouse, meaning he does not have the same access to new technology as the members who pay $100,000. He wants to see more research dedicated to the needs of smaller companies that can't afford to wait five years for a new technology to develop.

"I am looking for something more tangible," he said.

Those who put together the Greenhouse project, though, have a hard time finding fault.

"If you were giving academy awards for the best performance by an economic development initiative, the Pittsburgh Digital Greenhouse would win the award," said Tim Parks, outgoing president and CEO of the Pittsburgh Regional Alliance, who helped get the project going in 1998.

Dennis Yablonsky, the Greenhouse's chief executive, said, "At the end of year one, I am definitely more comfortable than I was a year ago."

Several things have changed, though.

One is the role of Cadence Design Systems, the Silicon Valley chip software developer that sold Ridge on the Greenhouse idea and collected a $3 million consulting fee from the state.

Since last year's announcement, Cadence's role has been diminished. Bob Leach, the Cadence senior vice president who pitched the idea to Pittsburgh's economic development officials, has left the company.

Also, Cadence's revenue and net income were down in 1999.

Before he left Cadence, Leach pitched his economic development idea to dozens of states and countries, but Pennsylvania and Georgia were the only two states that bit.

Outside the U.S., Scotland also agreed to the chip-design idea. That project, however, has not gone as planned. Cadence wanted to recruit 1,800 Scottish design engineers by the year 2004, all of them working at a large design center. Cadence promised to anchor the center, which the company said would create 4,000 jobs.

Cadence just finished a $30 million building there, but it has been forced to rethink its larger plans after finding it difficult to recruit experienced engineers. In a newspaper article, it called the initial 1,800-job prediction an "unattainable goal."

Georgia is making a similar bet.

With Cadence acting as a consultant, Georgia has agreed to $100 million over five years to create the Yamacraw Design Center --a chip-design project Georgia officials hope will attract 10 high-tech companies and create demand for 2,000 new semiconductor designers.

In Georgia, seven companies have signed up to be a part of the project.

The most recent announcement was that Nortel Networks, the $22 billion rival to Cisco Systems, would become part of the design center and commit up to 500 new engineering and computer science jobs in the next five years.

When compared to the Pittsburgh Digital Greenhouse, it took Georgia longer to hire a chief executive, form a marketing plan and put up a Web site. "Late-starting Pittsburgh appears to have made more progress in its effort to court the microchip business," wrote the Atlanta Journal and Constitution.

But Georgia and Pittsburgh are different.

Pittsburgh is focusing its efforts on digital video, and Georgia is concentrating on telecommunications. Georgia has placed more emphasis on adding university researchers and teachers, too.

Georgia's chip-design project has landed commitments of 1,000 new jobs -- halfway to its goal of 2,000.

In Pittsburgh, Sony does not yet have a site. Aaron, the governor's spokesman, expects the company to lease space in Oakland.

"It will grow," Yablonsky said.

In time, Yablonsky hopes other members of the Pittsburgh Digital Greenhouse will build design centers, too. He hopes Sony's decision to build a design center will bring attention to Pittsburgh and attract other companies of the same size.

"I think it has a chance to work," said George Scalise, president of the Semiconductor Industry Association in San Jose, Calif.

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