Selected Research > China Drawing High-Tech Research From U.S.

By KEITH BRADSHER, Published: March 17, 2010 on New York Time http://www.nytimes.com

Original Article

XI’AN, China — For years, many of China’s best and brightest left for the United States, where high-tech industry was more cutting-edge. But Mark R. Pinto is moving in the opposite direction.

Mr. Pinto is the first chief technology officer of a major American tech company to move to China. The company, Applied Materials, is one of Silicon Valley’s most prominent firms. It supplied equipment used to perfect the first computer chips. Today, it is the world’s biggest supplier of the equipment used to make semiconductors, solar panels and flat-panel displays.

In addition to moving Mr. Pinto and his family to Beijing in January, Applied Materials, whose headquarters are in Santa Clara, Calif., has just built its newest and largest research labs here. Last week, it even held its annual shareholders’ meeting in Xi’an.

It is hardly alone. Companies — and their engineers — are being drawn here more and more as China develops a high-tech economy that increasingly competes directly with the United States.

A few American companies are even making deals with Chinese companies to license Chinese technology.

The Chinese market is surging for electricity, cars and much more, and companies are concluding that their researchers need to be close to factories and consumers alike. Applied Materials set up its latest solar research labs here after estimating that China would be producing two-thirds of the world’s solar panels by the end of this year.

“We’re obviously not giving up on the U.S.,” Mr. Pinto said. “China needs more electricity. It’s as simple as that.”

China has become the world’s largest auto market, and General Motors has a large and growing auto research center in Shanghai.

The country is also the biggest market for desktop computers and has the most Internet users. Intel has opened research labs in Beijing for semiconductors and server networks.

Not just drawn by China’s markets, Western companies are also attracted to China’s huge reservoirs of cheap, highly skilled engineers — and the subsidies offered by many Chinese cities and regions, particularly for green energy companies.

Now, Mr. Pinto said, researchers from the United States and Europe have to be ready to move to China if they want to do cutting-edge work on solar manufacturing because the new Applied Materials complex here is the only research center that can fit an entire solar panel assembly line.

“If you really want to have an impact on this field, this is just such a tremendous laboratory,” he said.

Xi’an — a city about 600 miles southwest of Beijing known for the discovery nearby of 2,200-year-old terra cotta warriors — has 47 universities and other institutions of higher learning, churning out engineers with master’s degrees who can be hired for $730 a month.

On the other side of Xi’an from Applied Materials sits Thermal Power Research Institute, China’s world-leading laboratory on cleaner coal. The company has just licensed its latest design to Future Fuels in the United States.

The American company plans to pay about $100 million to import from China a 130-foot-high maze of equipment that turns coal into a gas before burning it. This method reduces toxic pollution and makes it easier to capture and sequester gases like carbon dioxide under ground.

Future Fuels will ship the equipment to Pennsylvania and have Chinese engineers teach American workers how to assemble and operate it.

Small clean-energy companies are headed to China, too.

NatCore Technology of Red Bank, N.J., recently discovered a way to make solar panels much thinner, reducing the energy and toxic materials required to manufacture them. American companies did not even come look at the technology, so NatCore reached a deal with a consortium of Chinese companies to finish developing its invention and mass-produce it in Changsha, China.

“These other countries — China, Taiwan, Brazil — were all over us,” said Chuck Provini, the company’s chief executive.

President Obama has often spoken about creating clean-energy jobs in the United States. But China has shown the political will to do so, said Mr. Pinto, 49, who is also Applied Materials’ executive vice president for solar systems and flat-panel displays.

Locally, the Xi’an city government sold a 75-year land lease to Applied Materials at a deep discount and is reimbursing the company for roughly a quarter of the lab complex’s operating costs for five years, said Gang Zou, the site’s general manager.

The two labs, the first of their kind anywhere in the world, are each bigger than two American football fields. Applied Materials continues to develop the electronic guts of its complex machines at laboratories in the United States and Europe. But putting all the machines together and figuring out processes to make them work in unison will be done in Xi’an. The two labs, one on top of the other, will become operational once they are fully outfitted late this year.

Applied Materials has built a 360-employee operation here in Xi’an after announcing an 18-month program last year to reduce employment by 10 to 12 percent, or 1,300 to 1,500 jobs, including layoffs in the United States and Europe. Mr. Pinto said that the company was readjusting its work force as manufacturing shifted to Asia, but that the Xi’an facility involved a new approach to researching the design of an entire assembly line and was not replacing laboratories elsewhere.

Mr. Pinto is a well-known figure in Silicon Valley in his own right. While still a doctoral student at Stanford in the early 1980s, he wrote the first widely used two-dimensional computer simulation of how semiconductors work. This allowed engineers to test each one on a computer before building prototypes, shortening the semiconductor development process.

Later, he became a celebrated researcher at Bell Labs.

With China’s economy gaining strength, Mr. Pinto and his wife, then living in Santa Clara, began insisting in 2005 that their sons study Chinese once a week.

Now 10 and 11, the boys are improving their Chinese and mastering the art of eating with chopsticks.

Applied Materials has greater challenges, including fighting technological theft, a chronic problem in China.

The company has taken measures, including sealing its computers’ ports here, to prevent the easy use of flash drives to record data. Employees are not allowed to take computers from the building without special permission, and an elaborate system of computer passwords and electronic door keys limits access to certain technological secrets.

But none of that changes the sense that tectonic shifts are under way.

When Xie Lina, a 26-year-old Applied Materials engineer here, was asked recently whether China would play a big role in clean energy in the future, she was surprised by the question.

“Most of the graduate students in China are chasing this area,” she said. “Of course, China will lead everything.”