IBM Corp. will invest $1.5 billion in nanotechnology research and development in New York's capital region, Gov. David Paterson announced yesterday. The state will pitch in $140 million in economic development grants.

New York often uses proceeds from personal income tax bonds sold by the Empire State Development Corp. for such grants, but it was unclear yesterday what the source of funding would be.

"It is just a tremendous example of the cooperation between the public and private sector, which is what we're going to need to reignite this state's economy," Paterson said. "We have a foundation we can build on, and it is nanotechnology."

IBM plans to expand its operations at the College of Nanoscale Science and Engineering at the University at Albany, which is also called Albany NanoTech. The state will provide $25 million for infrastructure and semiconductor tooling at the site.

The state also will establish a new, 120,000-square-foot semiconductor packaging center with a $50 million investment at a site that has not yet been determined. The facility will be owned by Albany NanoTech and IBM will operate at the site with Rensselaer Polytechnic Institute acting as a research partner.

IBM has agreed to upgrade its semiconductor East Fishkill plant in Dutchess County and the state will pitch in $65 million.

Touting the state as an international leader in nanotech, Paterson said that investment will help the upstate region retain population at a time when people are leaving the state. The investments are expected to create 1,000 high-tech jobs.

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