VIDEO: IBM DEAL: What's it mean for E. Fishkill?

What does IBM's $3 billion innovation plan mean for Big Blue's East Fishkill chip fabrication plant?

That's the question being asked amid IBM's massive news regarding plans to invest $3 billion in next-generation computer chips.

The question wasn't addressed Wednesday by IBM, fueling new speculation about any possible ripple effect on the company's mid-Hudson Valley plants, which employ more than 7,000. But industry analysts told the Journal on Wednesday night that the East Fishkill plant remains a vibrant part of the industry.

IBM's announcement has the potential to transform the technology world. While a news release explaining the five-year plan mentions "IBM Research scientists and engineers from Albany and Yorktown, New York, Almaden, California, and Europe," there is no mention of East Fishkill's research and development or chip fabrication.

When asked what impact the plan would have on operations in East Fishkill and Poughkeepsie, IBM spokesman Doug Shelton declined comment.

For years, the East Fishkill plant has been an industry leader in manufacturing computer chips, which are used to power everything from handheld devices created by other companies to mainframe computers assembled in the IBM Route 9, Poughkeepsie plant. They're, in essence, the "brains" of those computers, and over the years, they've gotten smaller, more powerful and more efficient.

The Wednesday announcement follows months of speculation about a possible sale by IBM of its chip business — and rumor after rumor have included the Route 52 plant in East Fishkill as being part of any transaction.

IBMers, even those long used to job cuts and rumors and speculation, have been left to wonder about the future of the company — and their place in it. One rumor has the plant being sold to GlobalFoundries, a chip manufacturer now operating in upstate New York.

Indeed, any big action by IBM, as the largest private employer in the area, carries the potential to bring implications to families, local businesses, schools and municipalities directly and indirectly touched by IBM.

The East Fishkill complex, opened in 1962 and built up over decades, had as many as 11,600 people working for IBM there in 1984, back when IBM reported jobs by each site it operated.

VIEW INTERACTIVE TIMELINE: IBM's legacy of change

Flavio Tigre, manager of Gigi's Cleaners, a dry cleaning shop in the Wiccopee Plaza on Route 52, said the business isn't as dependent on IBM as local lunch places, but they do get business from workers there.

Tigre said whatever happens to the IBM plant, keeping manufacturing in the area, he believes, is key.

"Because with that comes everything else," he said.

IBM no longer reveals site populations. But it had an average of 3,675 employees in 2013, according to a required company posting seen by members of the Alliance@IBM worker group.

Richard Doherty, research director at Long Island-based Envisioneering Group, suggested a sale of the East Fishkill and Essex Junction, Vermont, plants may not be a forgone conclusion, in part because some of the carbon nanotube devices IBM wants to invest in were made there.

"I don't know what is going to happen with that building (in East Fishkill)," he said. "… Anybody who thinks that (East Fishkill) is just a silicon plant — and they are trying to get it off the books to make the next quarter look good — is very shortsighted."

Doherty said the Hudson Valley's skilled labor pool makes it attractive for any company.

In May, IBMers began working at Malta, Saratoga County, for GlobalFoundries under a large-scale services contract to help that company bring its chipmaking plant up to speed.

"We're running about 125 contractors on site," Travis Bullard, spokesman for GlobalFoundries and its "Fab 8" in Malta, said at the time. But he added that up to 200 may be involved. Most employees were IBMers based in East Fishkill. "It sounds like it's going very well," he said. The contract runs through March 2015.

"The talent pool that still has IBM badges on it — some of whom are commuting to GlobalFoundries (in Malta, Saratoga County) — is perhaps the finest in the nation," Doherty said.

Rob Lineback, senior market research analyst at IC Insights Inc., based in Scottsdale, Arizona, said he believes Wednesday's announcement and the future of the fabrication plants are not necessarily connected.

IBM may still want to sell the plants, he said, but not simply because the company is investing in new technology.

"The products for the next five, maybe even 10 years, are still going to be built with integrated circuits," Lineback said. "It's not going to be replaced that quickly."

Doherty said the announcement was the largest bet in history for nontraditional semiconductors.

"They have seen that silicon may run out of steam in the next two shrinks of chips," Doherty said. "IBM is still in the IT business, in software and hardware and the cloud. If you don't have an architecture that favors your system, where would you be?"

IBM's plan involves two new research programs. One is aimed at reducing the size of chips from the current 22 nanometers to 7 nanometers and smaller, according to a press release.

The second program will focus on developing technologies for chips in the "post-silicon era," which IBM says are needed because silicon-based semiconductors present physical challenges.

Town of Poughkeepsie resident Carolyn Phillips, 60, worked at IBM for 17 years, in Poughkeepsie from 1990-94 and at East Fishkill from 1995-2007, when she was laid off.

During her last seven years there, she was a production manager at the chip-fabrication plant in East Fishkill. At that time, the chips were still 30 nanometers — today they're 22 nanometers, and plans are to scale that down further.

"The smaller the chip, the smaller the devices it can fit into. You can compare the old cellphones 40 years ago when they invented them to now — look at the difference. The chip in that cellphone may have been an inch and a half by an inch and a half. Now it's the size of half the pinky nail," she said.

"They have to keep up with the boys next door. This is the industry: faster smaller. If IBM doesn't do it, someone is going to do it before them. It's good news that they're staying in the semiconductor industry. Because there was a rumor they were going to get out of it completely. If they're putting that much money into research and development it means they are going to stay in it, unfortunately it may not be in Dutchess County," she said.

Several research breakthroughs involving those technologies could lead to smaller, faster and more powerful computer chips, according to IBM.

IBM got into the modern age of semiconductors in order to create brains for its mainframe computers.

The partnership of chips from East Fishkill going into mainframes at its Poughkeepsie site has worked well for IBM.

But the semiconductor manufacturing business is getting more costly.

A semiconductor, according to the Semiconductor Industry Association, "is the generic name for discrete devices and integrated circuits that can control the flow of electrical signals."

Staff writer Emily Stewart contributed to this report. John W. Barry: jobarry@poughkeepsiejournal.com, 845-437-4822; Twitter: @JohnBarryPoJo. John Ferro at 845-437-4816; jferro@poughkeepsiejournal.com; Twitter: @PoJoEnviro

IBM

Formed: In 1911, three smaller entities merged. It's initially known as the Computing-Tabulating-Recording-Company before being renamed IBM in 1924.

Employees: 431,212 worldwide.

Headquarters: Executive offices are in Armonk, New York.

Revenue: $99.7 billion in 2013. Of that, 26 percent was from software, 57 percent from services and 17 percent from hardware.

Net income: $16.4 billion in 2013.

Total assets: $126.2 billion in 2013.

Impact: The company says 90 percent of the top 60 banks use IBM products to run their IT systems, 90 percent of global credit card transactions are processed on IBM mainframes, 80 percent of all worldwide airline reservations are processed on IBM hardware and software, 23 of the top 25 U.S. retailers run their businesses on IBM mainframes.

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