Regional Report: Semiconductors

Greater Phoenix becoming global semiconductor industry hub

Major investment to the Greater Phoenix economy from domestic and international semiconductor companies has presented the region with an opportunity to become a world leader in the industry.

In 1990, almost 40% of the global semiconductor chain was produced in the U.S., but production capacity is now around 14% and is concentrated in just five states. Arizona has emerged as a leader in the nation.

TSMC’s $12 billion plant under construction in Phoenix will be the company’s largest footprint in the United States. Intel is investing $20 billion into building two new fabs in Chandler. When complete, the company will have over 15,000 jobs in Arizona and exceed $8.6 billion in annual economic impact. EMD Electronics, a leading material supplier to electronics and semiconductor industries globally, operates a Tempe location. It has filed more than 15,000 patents and patent applications and expects its semiconductor business sector to triple in size from 2014 to 2028.

There are 40 semiconductor manufacturers and supplier network businesses in the Greater Phoenix Economic Council pipeline that represent 10,000 jobs and $45 billion of new capital investment.

Leaders from TSMC, Intel and EMD Electronics joined our latest regional report to discuss our report on Greater Phoenix’s position in the semiconductor industry. The panel included:

• Edward Shober, Executive Advisor to CEO & EVP, Head of Strategy & Business Transformation, EMD Electronics
• Angela Creedon, Arizona Public Affairs Manager, Intel
• Peter Cleveland, Vice President, Legal Department, Taiwan Semiconductor Manufacturing Company
• Chris Camacho, President & CEO, Greater Phoenix Economic Council
• Moderator: Eric Sperling, Managing Director, Social Television Network

“It’s a tremendous industry. Behind crude oil, processed oil and cars, semiconductors is No. 4 in the world today,” Shober said. “All the future elements of our lives, including healthcare, is tied to semiconductors.”

GPEC Semiconductor Report Highlights

• Global supply chains are becoming more diverse as firms seek to reduce supply chain vulnerabilities and mitigate rising geopolitical tensions
• Semiconductor manufacturers struggle to meet the need for STEM workers
• Key technologies such as 5G, advanced telecommunications, autonomous and electric vehicles, and materials science have major influence on industry evolution
• Greater Phoenix has solidified its position as a major U.S. semiconductor manufacturing hub
• Greater Phoenix will emerge as a global semiconductor hub through investment in basic and applied R&D, skilled workforce development and supply chain reinforcement

Three major recommendations came from the report:

• Leverage ongoing STEM investments
• Advocate for new federally funded R&D programs in Greater Phoenix
• Support regional business attraction of downstream microelectronics manufacturers

“We’re unapologetic in our approach of positioning Greater Phoenix to become the top global hub for semiconductors. That’s really a moonshot expectation, but it’s attainable and achievable,” Camacho said. “It takes a community coming together to collaborate, but we have to be very intentional going forward with our partners.”

Read our semiconductor industry report

Greater Phoenix’s Operating Advantages

Since Intel started a legacy of semiconductor operations in Greater Phoenix in the 1980s, the industrial footprint has grown in the region for many reasons. Cleveland said the migration pattern and growth of Greater Phoenix, talent pipeline, land availability and regulatory structure were distinguishing factors during the company’s evaluation phase.

“Putting 15, 20 billion transistors on a piece of silicon the size of your fingernails is a hard thing to do,” Cleveland said. “What Phoenix has done is created the circumstances and an environment that is very, very welcoming.”

The education system is a major benefit to the companies as well.

Intel works with the Maricopa County Community College District on two programs, including the first AI associates degree program in the country. Arizona State University has the largest engineering school in the U.S., which serves as a pipeline to manufacturing businesses throughout the industry.

“It's a great time to be in Arizona,” Creedon said. “We have a strong talent pipeline, and we have been able to take on things in Arizona that we wouldn't be able to take on in other states.” 

“We want to embrace ‘glocalization,’ which is be a global company, but be a local company at the same time,” Shober said. “Tremendous opportunity and runway in front of us … I haven't seen this in my 35-year career in this business, so I think it's opportunity rich, but we need to act with urgency and aggressively.”

Arizona’s Water Position

Arizona’s water position is far different than other dry western regions. Due to increased conservation and a decrease in agriculture, Arizona is below 1957 water usage levels despite massive population growth. The state has five times more water stored than it uses, and the Colorado River shortage declaration will not impact municipal or residential uses.

The 1980 Groundwater Management Act provided Arizona with the legal and physical infrastructure to maintain a 100-year assured water supply.

Even while the state stands above its western peers in terms of water management, semiconductor companies work to conserve and recycle water. 

TSMC recycles up to 90% of its water. Intel restores and returns 95% of the freshwater it uses, and its goal to have net positive water use by 2030 will be aided by the 12-acre on-site water treatment recycling facility at one of its new fabs.

“We're in a position to continue to grow high wage jobs but anchoring ourselves with these kind of companies that are continuing to grow and expand here,” Camacho said.

Fast Facts: Arizona’s Water Position

Meet the panelists:

• Edward Shober, Executive Advisor to CEO & EVP, Head of Strategy & Business Transformation, EMD Electronics
• Angela Creedon, Arizona Public Affairs Manager, Intel
• Peter Cleveland, Vice President, Legal Department, Taiwan Semiconductor Manufacturing Company
• Chris Camacho, President & CEO, Greater Phoenix Economic Council
• Moderator: Eric Sperling, Managing Director, Social Television Network