TECHNOLOGY CLUSTERS AND THEIR ROLE IN THE DEVELOPMENT OF THE MICROSYSTEMS INDUSTRY
Roger H. Grace
President, Roger Grace Associates;
President, Micro and Nanotechnology Commercialization Education Foundation (MANCEF)
109 GREENFIELD COURT, NAPLES, FLORIDA, USA, PH (415) 436-9101 (firstname.lastname@example.org)
The concept of clusters has existed for centuries. Industrial clusters have existed since the very beginning of the industrial revolution. Technology clusters first became prominent in the Route 128 area of Boston in the early 1940s to support the U.S. military involvement in W.W.II. Silicon Valley saw its first technology cluster develop to support the meteoric growth of the semiconductor industry in the early 1960s . The informal creation and development of these clusters has been a major catalyst in the successful economic development of these regions and the technology(ies) produced within.
Clusters are defined as "geographical concentrations of firms, supplies and related industries and specialized institutions that occur in a particular field in a nation, state, city (or region) . Cluster formation has been proven to provide organizations within them with competitive advantages in the market as a result of factors including cost-efficiencies and time-to-market.
Microsystems clusters require similar ingredients as other clusters, i.e., intellectual property creation (not only as ideas and patents but through peoples experience and expertise), funding sources, and service infrastructure. All of these ingredients need to exist in various degrees for the creation of a successful cluster.
Intellectual Property Creation Most high technology clusters have formed around centers of intellectual property, either through governmentally funded laboratories and/or through research-based universities. People who have worked for these institutions who are gifted with great ideas and an entrepreneurial spirit "spin out" of these employments and seek opportunities for greater fame and fortune. These people wish not to move themselves and their families to other communities but rather to take advantage of the business and social infrastructure within which they have developed. Therefore, they set up shop in close proximity to their former employer. Without the people and their talents and treasures, there can be no creation of new businesses, which are the basis of the cluster and a necessary requirement.
Funding Sources The world of capital formation has no physical boundaries. Investment firms are always seeking the best risk/reward tradeoff opportunities. However, there is a human tendency to want to work as close to home to maximize work efficiency. Therefore, there is a tendency for investment firms to have offices in close proximity to cluster areas in which they have made investments.. Case in point Silicon Valley and Boston. In the case of the earlier cluster, Boston, investments were made out of New York City, the U.S. financial capital. The second stage was to set up offices in the Boston areas and for Boston-based financial institutions to create venture arms. In the case of Silicon Valley, again earlier investors came from the outside the area , e.g., Boston and New York, before a significant financial infrastructure was set up locally in Northern California . Funding sources need not be physically located with a cluster but it certainly helps matters if they do. Also, although the "informal" clusters of Route 128 and Silicon Valley have received no direct federal funds (other than military contracts from the Department of Defense), most microsystems clusters received either direct investments in research and/or facilities or favorable tax considerations from their local governments.
Infrastructure A critical requirement to achieve competitive advantage is the existence of a human resources, plant, equipment and services infrastructure. The availability of these resources can reduce time to market and product development costs. The local availability of well-trained legal, financial and business professionals in addition to technicians, machine operators, designers and a broad spectrum of consultants is critical. In the case of capital intensive industries like the semiconductor and microsystems industries, the availability of research and development facilities and prototyping facilities is of significant importance. Large-scale production facilities are not absolutely necessary. The close proximity of service personnel, applications engineers and raw materials, e.g., gases and chemicals, is critical to support these facilities. These requirements have been somewhat mitigated as a result of the recent popularity of microsystems foundries.
Many Microsystems clusters have been formed in Europe, North America and most recently in Taiwan and Korea . The first Microsystems cluster was formed in Dortmund Germany in 1989. Since that time, over 1200 highly-shilled and high-paying jobs have been created at companies including Steag Microparts and H.L. Planartechnic. Currently over twenty Microsystems Clusters exist worldwide in different stages of development including:
Korea (Kyunggi Technopark)
Northwest United Kingdom (Manchester/Liverpool)
Washington Technology Center
Microsystems clusters have proven themselves to be effective facilitators to the commercialization of microsystems. They literally have created over 100 companies worldwide and thousands of high skill jobs. Their economic development objectives have more than been met. We foresee the immediate and more rapid development of both micro and nanosystems clusters in the near future to help facilitate the commercialization of these technologies.
 A. Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128. Harvard Business School Press, 1994.
 M. Porter, On Competition. Harvard Business School Press, 1996, p. 7.
The author wishes to acknowledge the Michigan Economic Development Authority, for the financial support of the project from which much of the material was created and especially Mr. Mahendra Ramsighani, Project Manager, who provided invaluable assistance and direction in the creation of the original report.