How Hard Tech History Fuels Entrepreneurship – Austin’s Story

Amidst what seems to be a boom of chips in Central Texas, I want to share with everyone, everywhere, how the hard tech of Texas isn’t a result of a recent pivot, there is a history to study in how it grew up around Austin, a history from which we can learn how to build better innovation ecosystems, drawing from the Austin hard tech ecosystem.

If you want to understand how an ecosystem matures, study it through a sector you don’t already romanticize. So, I’m going to do the obnoxious thing and write about semiconductors, quantum computing, and robotics precisely because it’s not my beat, rather, because, ecosystem development, public policy, and the governments work in innovation and entrepreneurship not being my specialty, my ignorance of the sector makes it the perfect context in which to explain my world to yours (what we do can be applied in any sector). When you strip away founder folklore and your own biases, you can see the machinery of an economy (or startup for that matter) for what it is: institutions, incentives, and culture grinding forward.  Texans, if that offends anyone still pitching “Silicon Hills” like it’s a bumper sticker, good – we need to rebrand for the future.

To do this meaningfully, of course research is involved, but also tapping expertise. I asked futurist David Smith and semiconductor sherpa Horacio Gasquet to weigh in.

Let’s put Austin’s history in the right frame. Long before today’s chip fabs and humanoid robots, Austin’s tech DNA was forged by defense electronics and corporate R&D. Tracor (founded in 1955) built sophisticated military systems, grew to thousands of employees, then disappeared into the acquisition maw of the late-90s defense rollups – useful money and skills, yes, but ultimately value that left town. IBM planted a flag in 1967 and inaugurated the North Austin campus era (which I dug into almost 10 years ago) that would attract generations of engineers and managers. National Instruments (now NI) arrived in 1976 with test-and-measurement gear, the quiet backbone of every hard-tech lab, and turned Austin into a place where hardware got debugged, not just demoed. This foundation has contributed significantly to the Austin hard tech ecosystem.

The 1980s were catalytic and oddly collectivist. In 1983, MCC chose Austin for a national research consortium designed to counter Japan’s juggernaut; it was a bet on universities, talent, and collaboration more than on any single firm. Austin Software Council was formed around this time and it was becoming clearer that lacking software marketing and sales talent was hindering the ecosystem (and does everywhere still today).  SEMATECH followed in 1988 as a public-private consortium to shore up U.S. chip manufacturing headquartered in Austin before it later drifted to New York; SEMI/Sematech was an important but often overlooked part, making up a large amount of the domestic suppliers to the US semiconductor industry.  If you want the cultural read: Austin grew up on consortia, labs, and industrial policy, not on blitz-scaled consumer apps. That’s why our “bootstrap” ethos feels different from the Valley’s market-share mania, a contrast I’ve unpacked before in “How the ‘Bootstrap Culture’ of a Place like Austin Changes Entrepreneurship.” 

David Smith, CTO at iByond and CEO Strategic Pathways, “The Austin culture during that time reflected Texas, ‘lets work with each other to a greater outcome, with the growth of west and east coast leaders the culture change to, lets protect us, our IP, and not share or collaborate’” 

Here’s a reality the practitioners keep repeating out loud… As an American Physical Society (APS) panel convened in Austin framed it, “Deep-Tech typically cannot share a fab with Samsung, Nvidia, AMD, Apple, etc. because of technical contamination/supply chain risks (usually materials).” This is why academic cleanrooms and fit-for-purpose foundry capacity (increasingly too today, Venture Studios perhaps), matter as the region scales quantum, photonics, and biotech devices.  Hard tech shares the same principles of startups and entrepreneurship as the world in which I’m more familiar, but innovation is dependent on physical infrastructure that is both collaborative and independent; supportive of distinct entities while sharing resources.

The 1990s anchored Texas’ hardware base here. Samsung’s Austin fab spun up in the late 90s and has grown ever since; today the company is also building the mammoth Taylor, TX complex with major CHIPS support, an extraordinary public endorsement of Central Texas as a semiconductor hub. The ex-Motorola Austin operations became Freescale and ultimately NXP, which still runs major fabs here; even surviving and learning from the 2021 winter storm power debacle. Meanwhile, AMD, ARM, Applied Materials, and Tokyo Electron grew large design and manufacturing support footprints in Greater Austin; Tokyo Electron even set U.S. headquarters here years ago, a reminder that supply-chain gravity matters as much as headlines.

Here’s a short-form institutional history that locals know but outsiders miss, from the APS panel’s “History of Clean Room Fabs in Central Texas” which Horacio hosted:

• Motorola ->Freescale -> NXP
• AMD -> Spansion -> Cypress -> Infineon -> “SkyWater Technologies”
• SEMATECH lineage from ATDF -> SVTC -> Novati -> Skorpios -> UT Austin’s Texas Institute for Electronics (TIE)

That snapshot of lineage reflects why we have the people, equipment, and process memory to do real device work here, and why replacing lost shared-R&D infrastructure has been urgent. And don’t overlook, Texas Instruments and MCC were substantial in the region during this time, with a TI manufacturing plant in San Marcos, home to IBM’s Selectric typewriter, and the special chips and components for early devices such as the TI calculators we all know so well.

Three academic cleanrooms now carry much of the region’s R&D load, UT Austin Microelectronics Research Center, Texas A&M’s AggieFab, and Texas State’s Nanofabrication Research Service Center, and this needs to expand into private sector resources.

Why Didn’t Central Texas Boom from the 90s into Deeper Tech?

It did, it just took time, and understanding that and how, is why we’re here. Silicon Valley started sucking up national attention. Honestly, Austin didn’t “lose” companies as much as it specialized. Tivoli (founded in Austin) was acquired by IBM in 1996; the people and paychecks remained, but the brand and governance shifted. MCC withered as federal focus moved on and companies were spun out. SEMATECH migrated. In spite of that, this era birthed Dell, a hardware company that taught a generation here how to operationalize supply chains at scale, and left behind an engineering workforce steeped in verification, manufacturing, and systems integration. The culture skewed toward practical build-it-and-ship-it competence more than venture-driven hypergrowth.

And that, my friends, is why the culture of the region is so different in as much as appealing to venture capital.  If you want to dig into what I mean by that, since it does affect your part of the world, read “Why Venture Capital Avoids Your Startup Ecosystem.”  In this context, it’s not that innovation isn’t just as capable in an ecosystem like Texas, it’s that the ecosystem has experience and a culture that favors practical build-it-and-ship-it – evident in advice typical of the region, “focus on customers,” a sentiment distinctly different from disruptive entrepreneurship. 

From the 2000s to now, the flywheels multiplied. Apple committed to a multibillion-dollar Austin campus expansion, Tesla moved its HQ and megafactory to the metro, Oracle shifted its HQ to Austin in 2020, and Samsung’s Taylor bet vaulted the region into the first rank of U.S. advanced manufacturing. The University of Texas doubled down institutionally, building what matters in deep tech: fabs, talent pipelines, and defense-aligned research. UT’s Texas Institute for Electronics (TIE) is the megaproject, the Legislature’s $552 million enabled DARPA’s $840 million award to stand up the nation’s first 3DHI manufacturing center, a five-year, $1.4 billion partnership that moves Austin from “design town” to “build town.”

SkyWater completed the acquisition of Infineon’s Austin Fab 25 in June, converting captive capacity into open-access U.S. foundry infrastructure and locking in a multiyear supply agreement that expands domestic, trusted manufacturing for automotive, industrial, and defense applications.

Austin and Hard Tech Today

If quantum felt like sci-fi in 2015, it now feels like Austin.  With those foundations, the Texas Quantum Initiative formalized a statewide strategy in 2025 to position Texas as a leader in quantum research, manufacturing, and workforce. On the ground, Austin’s Strangeworks has been commercializing quantum software since 2018; the company raised $4 million in seed capital and a $24 million Series A led by Hitachi Ventures with IBM and Raytheon; exactly the kind of dual-use capital stack that signals a region’s depth. TACC is integrating quantum compute access with the state’s HPC (high-performance computing) muscle, giving researchers and startups a serious playground.

Robotics is where Austin’s hard tech culture gets loud. Apptronik, a UT spin-out, is building the humanoid robot Apollo and closed a $350 million Series A this year. The company aims to deploy into warehouses and factories and already has commercial ties with Mercedes-Benz and GXO. Diligent Robotics raised growth rounds to scale its hospital robot Moxi. ICON, yes, 3D-printed homes count as robotics as much as do autonomous vehicles, closed successive rounds with strategic homebuilder participation and is translating R&D to neighborhoods at scale.

If you’re mapping capital, differentiate three flows

First, corporate investment: Apple’s campus, Tesla’s and Samsung’s factories, NXP’s fabs, these aren’t “relocations” so much as production bets that anchor supply chains. 

Second, public-private programs: CHIPS grants for fabrication, DARPA’s 3DHI hub money to TIE, NSF and EDA tech-hub activity across Texas; critical for semiconductors and quantum because capex is measured in commas.

Third, venture: the local set: LiveOak, Silverton, ATX Venture Partners, Elsewhere, S3, Next Coast, now complemented by 8VC and other national players who planted in Austin during the 2020–2022 migration. If you want the cultural context for why that influx doesn’t automatically translate into “more checks,” appreciate that the foundations laid in the 70s and 80s, shifted through the 90s and 00s, and rebuilt in the 10s, paint the picture of a city being architected to serve capital investment – most of you, cities, aren’t doing this well and venture capital isn’t showing up because of it.  During the early days there were almost no VCs in the region, with the Texas Capital Network, among a few others, available as a group pooling funds, in what we might call a syndicate today, to fund innovation.

Now, let’s put Austin under a consistent lens using the Six Considerations of the Economic Development of Startups because it isn’t perfect (it’s never perfect) and if we’re going to do better by innovation, we have to be discerning of strengths, weaknesses, opportunities, and threats, rather than allocating grants to startup hubs and hoping for the best.

• A culture of competition, potential, and creativity

Wins: UT research culture, Army Futures Command urgency, legacy of shipping hardware; the “prove it” attitude suits semis and robots.

Gaps: we still tell our story like a music festival; the narrative needs to be specific and credible to hard tech buyers and investors. Think of it like a contamination warning at the pointy end of the credibility spear: you either position AND build the right fabs and protocols, or you don’t scale device companies. UT still needs to address technology transfer for its labs and programs.

• Reasonable wealth available

Wins: corporate capex and federal grants substitute for missing mega-funds; family offices are learning deep tech theses (thesises?).

Gaps: true A–C stage capital remains thin locally relative to the ambitions of TIE and Samsung-Taylor, Austin imports syndicates for the biggest checks.

• Innovative employers

Wins: Samsung, NXP, Apple silicon teams, ARM, Applied Materials, Tokyo Electron; Apptronik, Diligent, ICON as anchors; defense-aligned primes circling UT.

Gaps: too few Austin-born hard and deep tech midcaps; we jump from startup to FAANG-scale, leaving a missing middle of $500M hard tech employers that stabilize careers.

• Little-to-no counterproductive government interference

Wins: Texas, helpfully, intervened where markets underprice strategic manufacturing. The Legislature’s $552 million unlocked DARPA’s $840 million and a $1.4 billion 3DHI (3D Heterogeneous Integration – I’m learning here too) hub at TIE.

Gaps: permitting, land-use, and power reliability must catch up with fab-class industry; the 2021 weather freeze was a warning shot; in short, regional politics can get in the way. 

• Access to startup-experienced people

Wins: decades of Dell/NI/IBM alumni who know operations; Valley transplants who know capital; UT, A&M, and Texas State cleanrooms now backfilling SEMATECH’s exit with real device-fabrication experience.

Gaps: too many “innovation” roles staffed by folks who’ve never shipped hard tech, which is why many founders still fly to the Bay and Boston for specific expertise.

• Credible, distinct promotion of the region

Wins: Austin can own “where deep tech gets built at scale,” from 3DHI to humanoids to 3D-printed homes, if we stop copycat branding. Such as, maybe, “Austin Is Where Tech Comes to Life.”

Gaps: media narratives still swing between hype and eulogy; we need outcome-driven storytelling that investors can underwrite.  Hopefully, I seriously pissed off the Wall Street Journal for their horrific journalism about Austin, “How Media Distorts the Truth About Regional Ecosystems” (evidence of my point that leading your narrative is critical).

Intentional Development in Hard Tech 

If you’re still throwing money at accelerators, you’re playing last decade’s game. In this sector, where capex, validation cadence, and B2B enterprise sales cycles define survival, the leverage comes from venture studios, corporate ventures, and labs, the infrastructure that manufactures startups as a process, not a pageant. I’ve laid out the case in “Stop Funding Accelerators. Invest in Venture Studios Instead” and “Building a Tough Tech Venture Studio.” The broader data is increasingly consistent: studio-born companies reach key milestones faster and more often than traditional venture-formed peers, which is exactly what regulated, capital-intensive, or hardware-heavy companies need.

Applied to Central Texas, the opportunities are obvious. Studios anchored by UT labs and TIE cleanrooms, if the technology transfer issues can be solved, can spin out process-validated companies with early customers inside Samsung/NXP supply chains. Corporate venture programs, from Dell to Samsung to defense, primes partnering with universities and can seed pilots and anchor first revenue. City and state funds should underwrite venture studios and testbeds, not another “innovation center” with free Wi-Fi and a ribbon.

“While the growth of the semiconductor and defense electronics were major drivers in the early days, other drivers in the past include the growth of the software industry, Game studios and gaming companies (Massive multiplayer) and the emergence of Austin and Texas-based foundations that funded physical and human capital infrastructure, key drivers,” added David  

The implication for Austin and Texas is not subtle: lock in a generational manufacturing and advanced-R&D advantage by aligning institutions around how hard tech firms are actually built in an information age era. That means continuing the CHIPS-era public investment in fabs and workforce, expanding consortia like TIE and the Texas Quantum Initiative, and consolidating our startup support into studios and corporate–academic pilot programs that translate research into purchase orders. Or… keep mistaking coworking square footage for economic development and watch the exits (literal company exits) happen somewhere else.

Two quotes to sit with as you decide which Austin you’re building. UT on TIE: “The $840 million award… is a substantial return on the Texas Legislature’s $552 million investment in TIE.” And Reuters on Apptronik’s raise: the funding “aims to deploy Apollo in warehouses and manufacturing plants for supply chain-related tasks.” One is public money buying the future; the other is private money hiring it.

If you care about outcomes in your city, not theater, start here: pick one of the Six Considerations where you actually have leverage: capital formation, employer engagement, workforce, or credible narrative, and move it in service of chips, quantum, and robotics. Then tell me which piece of that stack you’re willing to own: a studio, a testbed, a corporate venture lane, or a workforce wedge. If you want or need examples, push back on research and evidence about ecosystems, or argue with history, go ahead and keep going as you are with your version of the 6 considerations but then answer this: which part of a hard tech buildout will you be accountable for? Why isn’t it happening the way you hope? There is a lot to learn in Austin’s history, pivots, and resurgence.