Chandler: The Silicon Desert


When Microchip Technology Inc. Chairman and CEO Steve Sanghi first came to Chandler in 1989, the city was little more than a small downtown business district surrounded by housing and vast swaths of farmland. “You could cut through the fields if you were running late,” Sanghi said.

Since that time, Chandler has become one of the fastest-growing high-tech centers in the country, particularly in the areas of microchip manufacturing and data-center development.

In September, Arizona State University President Michael Crow said the city is on track to become “the world’s most sophisticated high-tech factory town.”

“Chandler is an emerging global technology center,” Crow said. “It has unbelievable potential.”

Crow noted Intel Corp.’s ongoing construction of a $5billion, next-generation manufacturing facility known as Fab 42, which is scheduled to open in Chandler in 2013.

The facility is expected to employ about 1,000 workers when in full-production mode.

Another major high-tech project under construction in Chandler is a 1million-square-foot data center by CyrusOne LLC, a Houston-based data-center developer and operator. It also is scheduled to open in 2013.

When completed, it will be the largest data center by far in the Phoenix area and second-largest in the U.S., surpassed only by the 1.1million-square-foot Lakeside Technology Center in Chicago.

Chandler also has been making a name for itself recently in the area of high-tech startup companies.

In October, online business resource American Express Open Forum rated Chandler fourth in the nation among cities with the greatest number of high-tech startups per capita.

Representatives of large, small and midsize technology companies operating within the city said Chandler’s rapid transformation can be attributed to relatively inexpensive commercial real estate, the presence of microprocessor giant Intel Corp. and city officials who have made it a priority to attract high-tech companies of all sizes.

Chandler remains far behind Silicon Valley in terms of the number and variety of technology firms, but city economic-development officials say their goal is to create a world-class technology hub by luring bigger high-tech firms to Chandler while helping new startups locate and grow within the city.

“By attracting those great technology giants into your community, you also organically spin out the next technology giants,” said Christine Mackay, Chandler’s economic-development director.

Projects such as Innovations, a high-tech business incubator founded and managed by Chandler, also promise to increase the number and variety of successful startups in Chandler, area business leaders said.

Mackay said there are 20 companies currently housed in the incubator, which opened in April 2010. So far, one former occupant has grown large enough to “graduate” from the facility, and one former occupant has failed, she said.

Mackay said Innovations is in a former Intel building that contains sophisticated laboratory facilities and other infrastructure not available in most incubators.

Chandler got a deal on the property, she said: $5.7million for a facility that cost Intel $15million to build. City officials see Innovations as an investment in Chandler’s economic future, Mackay said.

“It’s creating that next generation of companies that’s going to take Chandler forward for the next 50 years,” she said.

One promising example is Serious Integrated Inc., a Chandler startup led by five former Intel executives that produces ready-made, programmable touch-screen interfaces that can be added easily to consumer and industrial products.

Incorporated in 2008, Serious Integrated has been located inside Innovations for the past 18 months.

Company CEO Terry West said the decision to locate Serious Integrated in Chandler has been critical to the company’s success at getting its initial products to market.

City economic-development officials have helped out with everything from providing furnished office facilities to connecting the company with a local product-packaging firm, West said.

That type of assistance is critical for a fast-growing company funded primarily by friends, family and sales revenue, he said.

Chandler officials’ efforts to help startups such as Serious Integrated also benefit the community in terms of growing its economy and employment base, West said.

“These are good people who are trying really hard to do the right thing for the city,” he said.

Still, West said the company faces certain challenges as a result of being in Chandler.

For instance, it’s more difficult to find qualified engineers and other highly skilled workers than it would be if Serious Integrated had chosen a larger high-tech mecca such as San Jose or Austin, he said.

But with large technology firms such as Intel offering incentives for older employees to leave, West said the local labor pool is likely to deepen, and the environment should improve for high-tech startups.

Intel Government Affairs Manager Jason Bagley said the company has influenced the business environment in Chandler and Arizona in numerous ways ranging from government policy to the choice of retailers at Chandler Fashion Center mall.

Intel, which employs about 11,000 workers in Chandler, has a strong policy of “employee engagement” in the community, he said, which includes volunteering at local schools, donating to non-profit organizations and participating in business and trade associations.

The company also has lobbied the Legislature successfully to increase tax breaks for research and development and reduce taxes on manufacturers that sell most of their products outside Arizona, Bagley said.

But Intel’s biggest impact on Chandler has been its mere presence, which has attracted countless vendors, suppliers and other businesses while generating about $2.4billion in annual tax revenue for the state, he said.

Aside from its economic impact, Bagley said the company’s greatest influence has been to foster an “ecosystem of innovation” in the community, by promoting science and math education and mentoring smaller businesses through programs such as the Innovations incubator.

“We’re always looking at what is needed to drive this climate of innovation,” he said.

Microchip Technology is nowhere near Intel’s size but is still a major local employer, with more than 1,500 workers in Chandler and Tempe.

The only major high-tech firm headquartered in Chandler, Microchip Technology ended up there almost by accident when it purchased a former calculator-manufacturing facility in the city from Bowmar Instrument Corp., which later became White Electronic Designs Corp. and is now part of Aliso Viejo, Calif.-basedMicrosemi Corp.

It can be difficult to lure top-quality employees to Chandler, Sanghi said, but those who do join the company tend to stay for a long time.

Microchip Technology’s turnover rate is less than half the average for companies of its type, he said.

He attributed the low turnover rate to the area’s warm weather, low cost of living and the relative lack of nearby competitors compared with places such as Silicon Valley.

Over the the course of its 22-year history, Microchip Technology has dealt with a series of local administrations in Chandler, some more business-friendly than others, Sanghi said.

He said the city’s current crop of officials have had a positive influence on the company and the local high-tech community.

“They have their heads screwed on straight,” Sanghi said.



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