California’s KLA-Tencor Corp. Gains Approval From Michigan Strategic Fund to Invest in $70M R&D Center in Ann Arbor

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KLA-Tencor Corp., a Silicon Valley-based provider of process control and yield management solutions for the semiconductor and related nanoelectronics industries, today announced plans to establish a research and development center in Ann Arbor. The project was approved by the Michigan Strategic Fund (MSF), the Michigan Economic Development Corp. (MEDC) announced today.

The development is expected to generate a total capital investment of more than $70 million and create 500 high-tech jobs over the next five years.

“KLA-Tencor’s decision to invest and grow here offers further evidence that Michigan is becoming one of the preeminent locations for high-tech companies to grow or relocate their business,” says Michigan Gov. Rick Snyder. “This expansion underscores the attractiveness of our business environment as well as the strength of our logistical assets, our talented workforce and our high quality of life. The company’s high-profile investment further establishes Michigan as a place where high-tech talent demands can be met, and tech companies can grow.”

KLA-Tencor has about 6,800 employees worldwide but has none in Michigan. The new site was chosen from 350 potential sites in North America.

“Among the decisive reasons for building a major R&D hub in Michigan are Ann Arbor and the Detroit metropolitan area’s attractive talent pool, relative low-cost of living (compared to the San Francisco region, where KLA-Tencor is headquartered), proximity to Detroit Metropolitan Airport, and other logistical advantages that support KLA-Tencor’s leading international semiconductor and electronics customers,” says Bobby Bell, chief strategic officer for the company. “These advantages enable innovation across a broad spectrum of semiconductor consumption and electronics, including data storage, cloud computing, machine learning, and automotive.

“Ann Arbor also stood out by giving us the opportunity to strengthen our partnership with the University of Michigan and its proximity to the automotive industry. Locating in Ann Arbor and the surrounding area allows the company to draw from one of the greatest concentrations of engineering talent in the U.S.”

The plan to hire 500 employees over the next five years was a condition of MSF support, and many of the new jobs will be highly skilled, high-paying positions requiring top talent. The investment qualifies for Good Jobs for Michigan, withholding tax capture for up to eight years, and a $1.5-million Michigan Business Development Program Performance-based grant.

“Semiconductor demand from the automotive industry is experiencing rapid growth, along with a corresponding need for improved device reliability and defect control,” says Bell. “Customers in the automotive industry and the leading semiconductor manufacturers are turning to KLA-Tencor and our advanced process control solutions and services to help address these complex challenges.”

Automotive companies purchase $21.8 million of semiconductors from Michigan-based companies. It’s expected that semiconductor demand will increase rapidly with the development of mobility and autonomous vehicles.

“KLA’s investment is a catalyst for attracting other high-tech companies and underscores the state’s growing automotive and technology R&D assets,” says Jeff Mason, CEO of MEDC. “Gov. Snyder’s collaboration with KLA-Tencor executives demonstrates his commitment to helping high-tech companies establish a presence in Michigan and delivers the message that there is no better place in North America for growing companies to expand and succeed.”

The project brings the total number of jobs created under the Good Jobs for Michigan program to nearly 1,000, including an announcement by Pfizer in July 2018 that it is establishing a new $465-million manufacturing facility in Portage, a project that will create 450 highly skilled, high-paying jobs. Snyder signed the Good Jobs for Michigan job-creation package in July 2017.

The board also approved a $1.5-million Michigan Business Development Performance-based grant to support Coyote Logistics’ $3.6-million investment in Detroit’s Corktown neighborhood, near the Ambassador Bridge and Ford Motor Co.’s recently acquired train station. Coyote is a third-party logistics provider in North America and maintains 14,000 shippers servicing a range of industries. In 2015, Coyote acquired UPS but maintains a separate identity in 12 states. The company established operations in Michigan in 2013.

The expansion includes the addition of 300 jobs, and Michigan was selected over a site in Denver because of proximity to recruiting recent college graduates and cost-of-living advantages.

“Coyote is a growing organization that sees great promise in Detroit for its location, talent in Michigan schools, and support for economic resurgence from public and private organizations,” says Craig Gaubert, CFO of Coyote. “We are excited to expand Coyote’s presence in the Corktown neighborhood of Detroit and look forward to recruiting Michiganders to join the Coyote team.”

The city of Detroit anticipates approval of a personal property tax abatement in support of the project.

“Today’s projects demonstrate that our efforts to expand and diversify Michigan’s business environment continue to gain momentum and bring results,” says Mason. “Companies continue to realize the invaluable assets that Michigan has to offer; high-tech engineering resources, top-notch research and design, and a highly skilled workforce. Matched with low cost of living, Michigan has the ingredients that companies seek out when looking to relocate or expand their business.”

MSF also approved an authorizing resolution for issuance of private activity bonds Oakland Corridor Partners LLC to make improvements to a 5.5-mile segment of the I-75 corridor and an award of $9.6 million from the Investment Fund to be contributed as an equity investment into Grow Michigan II. The purpose of the investment is to leverage private sector investment with a fund size of $59.6 million. MSF also approved an additional $3 million in funding for the Invest Michigan Pre-Seed II Fund to allow investments in new technology startup companies to continue for another year; an extension of one year and additional funding totaling $2.485 million for two University Technology Acceleration and Commercialization programs: the Technology Transfer Talent Network and Michigan Corporate Relations Network; and changes to the Michigan Translational Research and Commercialization (MTRAC) program guidelines to add an Advanced Manufacturing hub and combine the Bio Medical and Life Sciences Hub.

The Michigan Economic Development Corp. is the state’s marketing arm and lead advocate for business development, job awareness, and community development with the focus of growing the state’s economy.

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