ALBANY, N.Y. (AP) — IBM Corp. will invest $1.5 billion to promote nanotechnology research and to create and retain jobs in New York, Gov. David Paterson said Tuesday.

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The state is giving IBM $140 million in economic development grants to support creation of as many as 1,000 new high-tech jobs upstate and to advance IBM's work on nanotechnology computer chips.

"We are very happy that New York is open for business again and we are going to work as hard as we can to restore the jobs, restore the confidence, and to restore the activity that once made New York a national leader," Paterson said.

The state money will be used to expand IBM's operations at the College of Nanoscale Science and Engineering at the University at Albany. It will also help fund a new advanced semiconductor packaging research and development center upstate, but officials haven't decided where that will be located. And the company will upgrade its East Fishkill semiconductor production plant in the Hudson Valley north of New York City.

Nanochips each carry billions of transistors and are used in high-end computers, virtual reality and advanced electronic games, medical devices and anti-terrorism systems, among other things.

Nanotechnology is the science of controlling materials at the atomic and molecular level.

"Once you're able to manage individual atoms and molecules, you can build any system, you can design it to have any properties you want," said Alain Kaloyeros, senior vice president and CEO of University of Albany NanoCollege. "So, it's basically the holy grail."

New York is investing $25 million in state-of-the-art infrastructure at Albany NanoTech, which is expected to add 325 new research and development jobs.

Another $50 million will be dedicated to the new 120,000-square-foot semiconductor packaging center. Rensselaer Polytechnic Institute will contribute to research at that facility, which is expected to create more than 675 jobs. The semiconductor packages are composed of nanochips.

"It builds on an effort that IBM and the state of New York have had going on at the University of Albany for about seven years now," said Charles King, a principal analyst with Hayward, Calif.-based Pund-IT Inc. "It's building on a previous investment, and I think pointing out the success of those previous investments. This was a good idea in 2001 and it looks like it's going to be a bigger and better idea in 2008."

IBM also committed to keeping more than 1,000 semiconductor jobs at the East Fishkill plant in Dutchess County. The company plans to upgrade the site and the state will provide $65 million to that effort.

"These new investments will spur continuing advancements in nanotechnology and semiconductor research and development — including new efforts in semiconductor packaging — propelling IBM chip innovations and solidifying the state's reputation as a high-technology leader," said Dr. John E. Kelly III, IBM senior vice president and director of research.

"We are still at the very front end of this technology with much of the growth coming next decade. If you want to be a player, the time is now to begin to build for that future," said Rob Enderle, an analyst for the Enderle Group. "This is a good idea (for New York), but it is also a start, and both the quality and amount of the investment will have to increase dramatically if they want to win this race."

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