Anyone who buys the image of France as a country that shirks work, slights foreigners and spends its time pondering the glorious past is bound to be thunderstruck by the sight of Crolles 2, a gargantuan research and manufacturing facility just outside of Grenoble. It is here — not in Singapore or Bratislava or Bangalore — that U.S-based Motorola, Dutch Philips and Franco-Italian STMicroelectronics have placed a $1.7 billion bet in the global race to get small — very small.

In a 10,000-sq-m nanotech clean room, engineers from these companies are perfecting manufacturing processes that cram thousands of 90- and 65-nanometer chips — each of them containing millions of transistors the size of a single dna strand — onto silicon wafers measuring 300 mm in diameter. Their work will lead to the halving of chip prices. The place hums 24/7 in a happy marriage of research and fabrication. Says Joël Hartmann, Crolles 2 operations director: "We realized early on that the best way to move fast is to put R. and D. people right into the [manufacturing process]."

That formula has helped make Grenoble (pop. 160,000), nestled in the Alps of southeastern France, a world nanotech leader and the hub of one of Europe's prime high-tech ecosystems. The facility in Crolles, 15 km north of the city center, is merely the latest to exploit what Geneviève Fioraso, deputy mayor for economic development, calls "Grenoble's long tradition of synergy between research and industry." Near the city center, construction is under way for Minatec, a micro and nanotech research center, that teams up local engineering schools and the prestigious Electronics and Information Technologies Laboratory (LETI) of the French Atomic Energy Commission (CEA) to develop new nanotechnologies. With 1,200 new jobs at Crolles 2 alone, the microelectronics sector provides employment for an estimated 20,000 people in the Grenoble region.

Residents of Grenoble have the fourth-highest median income among France's major cities (behind those of Paris, Toulouse and Lyons); it also has one of the country's best-educated populaces, and they work for global players like Hewlett-Packard, Xerox and Sun Microsystems. The town's cachet among technologists is nothing new. Joseph Fourier, one of history's greatest mathematicians, was appointed prefect of the place by Napoleon in 1801. Later that century Aristide Berges exploited alpine runoff to create hydroelectricity for paper mills. And Louis Néel, the 1970 Nobel laureate in physics, developed what would become a key research facility of the cea. By the mid-'70s, says Horst Störmer, another physics laureate, Grenoble had "a frontier atmosphere with an exhilarating 'can-do' sentiment."

It still does. "You couldn't design a more attractive environment," says Gregg Bartlett, a Minnesota-born engineer for Freescale, the former semiconductor division of Motorola that recently went public. It's three hours by train from both Paris and the Côte d'Azur and even closer to Italy, there is world-class skiing and snowboarding within half an hour, and you can often see paragliders in the air from the Crolles parking lot. "This is a very cozy place, and I don't see myself ever moving away," says Samir Asghar, 20, a computer-science student at the Grenoble National Polytechnical Institute.

It's not a paradise for everyone: unemployment runs at about 8%, and the influx of high-salary tech jobs has driven up housing prices. Grenoble's techno-wizards know they can't rest on their laurels either. "Sure, this is an example of Europe's capacity to stay at the head of global R. and D. in microtechnology," says STMicroelectronics ceo Pasquale Pistorio. "We have an advantage, but we have to keep pushing." The smaller his circuits get, the bigger will be Grenoble's future.