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How a midsize Pennsylvania market is poised to lead on chip manufacturing

Dec. 4, 2023
Lehigh Valley has undergone profound change in the last 25 years and advanced materials sciences companies that support the semiconductor industry now have a major presence there.

Reclaiming U.S. leadership in global technology development and production is a goal that is as inspirational as it is challenging. The Lehigh Valley, a growing region of 700,000 in eastern Pennsylvania that is just a short drive from both New York City and Philadelphia, is ready to take on a leading role in this important task.

We have a well-earned reputation for being a leader in innovation and have made significant contributions to the development of the semiconductor industry. Years before California claimed the name Silicon Valley, long before semiconductor production became concentrated in Asia, the world’s first transistors—predecessors of today’s silicon chips—were made at AT&T/Western Electric’s Allentown Works in the heart of Lehigh Valley.

From the 1950s to the later years of the 20th century, the world’s top tech talent designed, developed, and made semiconductors in the Lehigh Valley. At its peak, the Allentown Works employed 6,000 people.

See also: Promoting engagement, retention in changing IT/OT workforce

That heyday ended with the federal government’s breakup of the Bell Telephone monopoly, but the legacy never left this midsize Pennsylvania market. A core of industry leaders remains in optoelectronic and semiconductor chips and components critical to U.S. economic interests and national security, with companies such as Intel, Cisco, Broadcom, and Infinera.

They’ve been joined by emerging companies such as iDEAL Semiconductor, maker of power efficiency chips; Cybel, maker of photonics for satellites; and Coherent, which grows silicon carbide ingots in the Lehigh Valley. Advanced materials sciences companies that support the semiconductor industry have a major presence there, too, including Evonik, EMD Electronics, Air Liquide, and Air Products, which has its world headquarters outside Allentown.

Together, these companies and others create and support solutions that allow data and electricity to be transmitted faster and more securely, with less heat, in smaller hardware. Solutions that power devices that people use every day.

The Lehigh Valley’s mix of legacy and new semiconductor companies, the core of tech talent, and the potential to upscale quickly are tailor-made for the objectives of the federal government’s CHIPS and Science Act: to reclaim American leadership in the production of semiconductors and other critical technologies.

Transformation, 25 years in the making

Known for its rich industrial history in manufacturing, the Lehigh Valley has quietly and steadily undergone a remarkable change in the past 25 years. It diversified its economy and has emerged as a hub for innovation, modern manufacturing, and entrepreneurial drive.

While many communities in the U.S. are losing manufacturing jobs, the Lehigh Valley has added 4,500 in the past five years. Manufacturing has regained its place as the largest contributor to regional economic output: $8.4 billion in 2021, produced by more than 700 manufacturers of products as diverse as electric-powered trucks and lighting controls, to candy, pet food, and crayons. Manufacturing represents 18% of the Lehigh Valley’s regional economic output, compared with only 12% of U.S. private-sector GDP.

One of the drivers of this transformation has been a willingness to collaborate. Leaders in business and education come together to identify and address workforce needs and skills gaps. Local government officials focus on shared regional needs.

That spirit of collaboration showed earlier this year when a consortium of legacy semiconductor companies and technology startups, research universities and community colleges, labor and workforce organizations, and state and local governments worked together to apply for the Lehigh Valley to be designated as a federal Tech Hub under the CHIPS and Science Act.

See also: New research sees buy-in for digital transformation growing among manufacturing stakeholders

While that application was not successful, the Lehigh Valley’s technology industry grew much stronger through the process. We’ve learned so much more about our semiconductor sector and have developed a strong coalition to help it grow. This is just the beginning of a newfound focus for the Lehigh Valley.

What the Lehigh Valley has to offer the nation in its quest to re-establish the production of technology components and systems critical to long-term economic and security interests are the same advantages that make the region attractive to manufacturers of all sorts of products.

The Lehigh Valley is centrally located in the Northeast corridor, within a day’s drive of one-third of the U.S. population. The exceptional transportation infrastructure—highway rail, air, and seaports—provide convenient access to both domestic and international markets.

The population is increasing, and its skilled workers represent the latest generation of makers, a Lehigh Valley heritage that dates to the colonial era. A pipeline of talent supplies employers through an educational system that includes three career and technical schools, two community colleges, and nine four-year colleges and universities.

A unique asset serving the technology sector is Ben Franklin Technology Partners of Northeastern Pennsylvania, part of a state-funded system that supports startup tech companies. It has attracted nearly $3 billion in outside capital and operates a 130,000-square-foot incubator space on the campus of Lehigh University that is home to more than 30 startups.

The Lehigh Valley tech sector journey, from its manufacturing roots to its prominent early role in the semiconductor era to its current technology renaissance, speaks to the region's resilience and adaptability. With the right mix of talent, resources, and vision, communities can reinvent themselves and succeed in the global economy.

The growing collaboration among tech companies; the emerging partnerships among tech companies, universities, and technical schools; and the expansion of internship and apprenticeship programs for technology workers will lead to investment, job growth, and a greater role for Lehigh Valley in reclaiming America’s global leadership in chip manufacturing.

About the Author

Don Cunningham