LAM RESEARCH

Chances are you’ve never heard of Tualatin’s largest employer

(the times) Tualatin’s largest private employer is located on a 58-acre campus across the road from Fujimi, Inc., and has brought about 300 jobs to the city in the past three years. With a total of 700 employees, the company pays the highest amount of property taxes of any private company in town.

But as many members of its management will tell you, it seems like most of Tualatin doesn’t even know the Lam Research Corporation is even there. That’s strange, since according to Lam’s chief operating officer, Tim Archer, “There’s not a single smart phone sold anywhere in the world today that doesn’t use chips made by equipment manufactured here in Tualatin.”

To be fair, the semiconductor equipment manufacturer has had a recent name change: Until June 2012, Lam was known as Novellus Systems, Inc. Novellus had its comparatively humble beginnings in San Jose, Calif., in 1984, and first made its mark in Oregon by moving its research and development operations to Wilsonville in 1996. In 2001, Novellus bought the former Oki Semiconductor facilities in Tualatin for a reported $12 million.

The property had been on the market for nearly two years, and Novellus’ purchase of its two pre-existing structures and another 16 acres signaled the company’s intent to reinvigorate the erstwhile “Silicon Forest.”

By the time Novellus made its move to its new 64,000-square-foot manufacturing headquarters on Leveton Drive, the company had grown to 80 employees.

At that point, Novellus launched a reported $135 million expansion project to add an additional 378,000 square feet for research and development, manufacturing and administration.

The Daily Journal of Commerce deemed Novellus’ plans the “top construction project started in 2000,” and the Portland-based publication quoted Macadam Forbes principal broker Stu Peterson as saying Novellus’ investment in the area “legitimizes Tualatin as a site for technology companies.”

Merging interests

Lam’s decision in 2011 to acquire Novellus for $3.3 billion was a move to offer a broader product line for customers — and gain a larger market share.

Novellus’ focus was on equipment that deposited film and then cleaned silicon wafers during semiconductor chip assembly; Lam was an industry leader on etching technology, the process of creating “micro circuitry” on semiconductor chips.

“It was two companies that had very complementary product sets,” Archer said, “and which had very similar histories in terms of being Silicon Valley companies headquartered 10 miles apart. (Both Novellus and Lam) had similar company cultures — all of this allows us to gain some synergy.”

For Lam, Tualatin was an ideal location for “continuity planning” as well. It was close enough to the company’s Silicon Valley headquarters that employees could reasonably book same-day roundtrip tickets for meeting, but also far enough removed from the Bay Area that Lam would be securing itself from the “natural risk” factor.

“We cannot have as a $4 (billion) to $5 billion company with all of our manufacturing based in one location. Tualatin is an ideal alternative planning site, and provides some backup in the case of a natural disaster,” he said.

The acquisition came at a time when the companies could report combined earnings of nearly $4.2 billion. Given their respective market shares, it is estimated the merger could enable Lam to land the fourth spot across-the-board among semiconductor equipment manufacturers.

Or as Archer put it, “About one-fourth of all the types of equipment (companies manufacturing microchip processors) need to buy, we can provide.”

Based on 2011 revenues, Archer said, Novellus and Lam’s merger last year poised the company to become the fifth largest semiconductor equipment business in the world. Using data available in November 2012, Lam projected revenue of approximately $5.3 billion by 2016.

Lam’s earnings announcement for 2012 was scheduled shortly after The Times’ press deadline.

“In terms of dollars, we’ve actually produced over the past 10 years over $5 billion worth of product for our company at this Oregon facility,” Pacioni said.

Manufacturing jobs make up about one-third of all positions at Lam. While the majority of these are considered highly-skilled, Pacioni said some entry-level positions require at minimum a high school diploma. Because Lam gives its manufacturing staff a rigorous cross-training program, even those who enter without any college courses on their resume can expect significant professional development.

“Because we have multiple products that we sell to our customers, we need to be flexible and produce all of these products on-site,” Pacioni said. “Everyone (in manufacturing) is completely trained and certified on each and every one of those products. One of the big thrusts we have in Oregon is a very strong and detailed training program.”

“That’s why the (Multiple Engineering Co-Op Program, an internship agreement with Oregon State University) is so important to us,” he added. “The Portland State relationship, the OSU relationship, act as feeders into a growing operation.”

Work and community balance

Lam now employs about 6,600 people in 17 countries. Most Lam locations are decided by where the largest number of customers and consumers are situated, Archer said, since nearly one-third of Lam’s employees are engineers and support staff located mainly in Asia but also Europe.

According to Lam human resource records, of Lam’s more than 700 Tualatin-based employees, nine percent are recent college graduates.

“We really do foster this development of our employees from the time of their hiring all through their career, if they choose to stay here,” Archer said. Archer himself has been with the company for more than 17 years.

Lam invests heavily in employee retention: According to Archer, 75 percent of the company’s management promotions are in-house. Lam also offers a continuing education program open to many of its employees. Through agreements with Portland State University and Oregon State University, courses are often taught on-site to allow staff to attend classes at little inconvenience to them.

But Lam also participates in education at an earlier level. Through its participation with the Multiple Engineering Co-Op Program at OSU, it is one of 200 companies in the region that offers six-month internships to undergraduates.

Bart Forsberg, director of engineering operations, explained the agreement between OSU and companies like Lam as symbiotic.

“These 200 companies make commitments to OSU to hire a number of interns every year, and in return the university makes a commitment to go screen and evaluate and basically only provide the top candidates in every class for internships,” he said.

MECOP recently adjusted its curriculum so that internships are no longer three months over the summer, but account for two school terms.

“At the end of (MECOP participants’) college career, it took five years to get through as opposed to four, because they had two six-month internships,” Forsberg said. “But they’re graduating with a four-year degree and a total of one year of working experience, which is very valuable.”

To further enforce its commitment to education and the community, Lam plans to launch a scholarship program for college-bound Tualatin-area students. According to Ed Rebello, senior manager of corporate communications and public relations at Lam, the Lam Core Values Scholarship will award two $10,000 scholarships this spring, one to a Tigard High School student and one to a Tualatin High School student. This breaks down to $2,500 each year.

For Archer, philanthropy and involvement in the community are indicative of Lam’s long-term investment in the area.

“Despite the fact that the Oregon economy has not been very strong the last three years, we’ve brought 300 new jobs. And these are great jobs, high-paying jobs, high-skilled workforce jobs, and they’re the type of jobs that help fuel the whole economy in this area.”