Rising high into the sky amid the barren desert landscape just off Interstate 17 and Loop 303 are more than three-dozen static construction cranes, which together will soon complete a much-anticipated semiconductor fabrication plant.
The first semiconductors produced in the new Taiwan Semiconductor Manufacturing Company's fabrication center will represent the culmination of University lobbying and strategic relationships forged between ASU, the state's government and technology companies.
University administrators and state government leaders are banking on the manufacturing of semiconductors, an integral part of computers, being an economic boon that will drive new jobs and make Arizona the premier destination in the nation for semiconductor manufacturing.
Semiconductors, also known as microchips and integrated circuits, are essential pieces in electronic devices to manage the flow of electric currents. They are required to produce computing technology in computers, cell phones, vehicles, and for health care and financial data storage.
How Arizona became a technology manufacturing hotbed
In the 1950s, Motorola established a semiconductor fabrication plant, one of the first in Arizona and the United States. ASU's elevation to university status and its establishment of an engineering school at the time similarly incentivized technology companies to construct manufacturing and research facilities.
That legacy has carried over decades later. Today, companies in Phoenix have direct access to ASU students and graduates for internships and jobs, said Ira A. Fulton Schools of Engineering Dean Kyle Squires.
"The fall of 2019 was when TSMC was in the Valley and (was) really trying to come to a conclusion about where they were going to expand," Squires said. "We became involved in those conversations and began to recognize we had great alignment in terms of what we were doing and our vision."
Squires said because local technology manufacturing companies in the Valley constantly look to hire new employees, Fulton's semiconductor classes and sections are driven and shaped by industry needs.
"The 30,000 students currently enrolled in engineering programs and innovation taking place at ASU is a draw for semiconductor suppliers and TSMC because these STEM-based jobs take a good bit of training," said Chris Camacho, Greater Phoenix Economic Council president and CEO, in an email.
Outside of employment and the up-and-coming workforce, business-friendly legislation, like the 2011 Arizona Competitiveness Package, is created to increase financial investment.
The research and development tax credit coupled with a lowered corporate tax rate helped increase total capital investment. According to a GPEC and Coldwell Banker Richard Ellis report, capital investment in the Phoenix area grew from under $25 million in 2010 to over $250 million in 2012. In the following years, the trend continued, resulting in over $2 billion in investment between 2009 and 2019, according to the same report.
"All of that has been happening for the past five to six years," Camacho said in an email. "And as a market, we have the quality infrastructure, strong labor pools, a tailwind of population growth, and pro-business policies to fuel this industrial technology renaissance and we think that will continue for at least the next five years."
The Arizona Board of Regents, the state's universities governing board, has submitted budget requests to the Legislature for fiscal year 2023 that aim to establish science and technology centers so STEM companies can work in conjunction with schools like ASU. Proposed budgets are adding to the implementation of the New Economy Initiative.
ASU asked for more than $34 million to invest in its engineering school and another $14 million for science and technology centers.
Semiconductors in the Sonoran Desert
TSMC announced in 2020 it would construct a $12 billion semiconductor fabrication plant in Arizona. Earlier this month, the company said it would build an additional fabrication center, increasing its investment to $40 billion.
The company does not produce its own branded semiconductors, instead, it acts as a co-packer, producing the parts for other companies, like Apple, to later place into consumer devices.
"Apple, who doesn't want to own a (fabrication plant), designs the new M1 and M2 chips for iPads and iPhones and Macs, then TSMC makes them to Apple's specifications," said Dale Rogers, an ON Semiconductor professor of business in the W.P. Carey School of Business.
According to the Environmental Protection Agency, semiconductor manufacturing processes combine a variety of high global warming potential fluorinated compounds. The agency has supported the industry's voluntary efforts to reduce its greenhouse gas emissions.
Apple is TSMC's largest customer, providing over 25% of TSMC's revenue in fiscal year 2021. Other companies like Qualcomm, which provides microchips and other hardware that connect devices to cellular networks, have already announced it will exclusively source its next-generation semiconductors from TSMC.
Once the fabrication plant is completed in 2024, it will create around 2,000 jobs, according to a press release from Arizona Gov. Doug Ducey.
Halfway through 2022, the number of jobs in the semiconductor and other electronic manufacturing sectors was over three times that of the national average, according to the Arizona Technology Industry Impact Report.
In a similar fashion, Fulton has nearly tripled its amount of students in the last decade from about 11,600 in 2012 to about 30,300 in 2022.
Rogers said this growth is because technology manufacturing investment is closely tied to the ongoing relationships between the University and state government.
Future of technology investment
Earlier this month, President Joe Biden visited the TSMC construction site to meet with technology industry executives and to taut the prospect of new jobs made possible by recent policy to support the creation of semiconductors.
The Creating Helpful Initiatives to Produce Semiconductors and Science Act, passed in August, provides subsidies for science manufacturing. Part of the $250,000 the University spent lobbying earlier this year went toward pushing for the act's passage.
To "cement our semiconductor leadership for decades to come," Ducey said the state would be investing $100 million to the semiconductor sector.
"Arizona has earned a place as one of the world's leading destinations for chip design, manufacturing and innovation," he said in a press release.
Edited by Kaden Ryback and Piper Hansen.
Reach the reporter at greygartin@gmail.com and follow @greygartin on Twitter.
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