It is undeniable that the global semiconductor industry is witnessing two key innovation “races”. First is the race to shrink chip sizes and enhance processing capabilities down to 9nm, 7nm, 5nm, and even 3nm and 2nm. Second is the race to build silicon valleys with robust semiconductor ecosystems, driving the internal power of the end-to-end supply chains in semiconductor industries such as the United States, Japan, Taiwan, Singapore, and others.
In this “race”, the state of Arizona is emerging as a “promising land”, attracting leading semiconductor enterprises worldwide. The main reasons not only lie in favorable natural and geographical conditions but also the land serves as a playground for industry giants to establish their presence in the U.S. semiconductor hub. Throughout the time, the semiconductor ecosystem in Arizona is gradually taking shape and continues to grow.
The silicon valley laid the foundation for Arizona’s semiconductor ecosystem.
In 2021, Forbes called Arizona the “new Semiconductor Valley” due to its rapid semiconductor industry development in a couple of recent years. Discussing about the attributions to this growth, favorable tax policies, local support, skilled labor force, and available land are the factors that need to be listed. Currently, the U.S. holds a 12% share in global semiconductor production facilities, with Arizona playing a significant role in this percentage.
Despite the arid landscape, Arizona has transformed into one of the leading chip manufacturing hubs in the U.S., providing a robust supply of microchips used in various electronic devices such as smartphones, computers, smart TVs, automobiles, and aerospace equipment.
To achieve this, Arizona has attracted major semiconductor players to contruct manufacturing plants in the area, including NXP, Intel, Raytheon, Microchip, ON Semiconductor (ONSEMI), VLSI Technology, STMicroelectronics, Marvel, Amkor, Analog Devices, Infineon Technologies, FlipChip, Medtronic, Dialog Semiconductor, and many others. These companies are responsible for producing processors, memory chips, embedded systems, and similar components.
Additionally, Arizona also offers various complementary industries, which play an essential role in supporting semiconductor manufacturing, such as chemical production plants, silicon semiconductor wafer suppliers, and semiconductor equipment support service providers. These enterprises contributes to the development of Arizona’s semiconductor industry, transform this “chip valley” into a semiconductor ecosystem in the near future.
Currently, prominent semiconductor names are actively completing procedures and plans to build chip fabrication facilities in Arizona, including TSMC, Taiwan Semiconductor, and Samsung, recognizing Arizona as a potential location for their new Fab.
Semiconductor manufacturing companies in Arizona have poured huge invesments into expanding production capacity, hiring additional staff, therefore, creating high-paying jobs, opening up hundreds of valuable collaboration opportunities within this ecosystem.
Inevitable Related Industries in the Thriving Semiconductor Ecosystem
In today’s modern’s society, the semiconductor industry holds a pivotal position in the economic development of nations due to its vital role in various electronic devices, healthcare, household appliances, aviation, transportation, etc. Therefore, wherever there is a “chip valley,” there is an indispensable need for related industries to assist and optimize the end-to-end supply chain process—from research, production, to commercialization of semiconductor end-products, highlighting the role of an ecosystem in the overall growth of this fast-moving industry.
Some notable industries closely tied to semiconductors in Arizona:
Data Centers – Apple / Google / Facebook / CyrusOne
Apple currently operates a global data command center spanning 1.3 million square feet in the suburban area of East Mesa, while CyrusOne owns a data center covering 1,000,000 square meters located in Chandler.
Previously, many enterprises also announced plans to construct data centers in this booming area, such as Google (planning to construct a 750,000 square meters data center), Facebook (planning to build a 960,000 square meters data center), and even CyrusOne, which is in the process of constructing a second data center in the Elliot Technology Corridor.
Autonomous Vehicles Research and Testing
The Phoenix Arizona subway area (Tempe, Mesa, & Chandler) has become a popular testing ground for autonomous vehicles, with companies like Uber, Mobileye, Intel, NURO, Apple, and Google’s Waymo conducting extensive automotive research and data collection since 2015.
Electric Vehicle Manufacturing
In the southern outskirts of Phoenix, near the town of Casa Grande, electric car manufacturer Lucid Motors established a sprawling 590-acre facility. Meanwhile, clean energy Semi-Truck manufacturer of Nikola, headquartered in Phoenix, is currently construct a new assembly plant recently, near Coolidge town, for crafting their hydrogen fuel cell electric vehicles (FCEVs)
Electronic Medical Devices
It can be said that Arizona is home to leading companies producing advanced electronic devices for the healthcare industry, such as Medtronic, a top player in designing, developing, and manufacturing electronic circuits and implants for medical use. The company owns a 30-acre manufacturing facility in Tempe.
Solar Power Technology
With the advantage of abundant sunshine and wind, Arizona boasts no fewer than 15 solar energy companies across the Phoenix region. Among them, First Solar, Inc. (1999) remains as the largest solar panel manufacturer in the United States and a global “titan” in the solar panel industry.
First Solar currently involves in numerous projects in Arizona, including supplying energy to Microsoft’s new energy-saving data centers located in Western part of Phoenix, in the Goodyear/El Mirage area.
Amid the expanding Arizona ecosystem, numerous other industries are also experiencing robust growth and development.
How does the ‘Ecosystem’ Model Impact Arizona’s Semiconductor Valley?
Lucy Chen, Vice President of Marketing at Isaiah Research, shared insights into the semiconductor ecosystem at Hsinchu Park with a model similar to Arizona. According to her, having numerous chip manufacturing companies in close proximity is considered a valuable ‘asset,’ emphasizing the value of time in semiconductor production: ‘Every second is money in semiconductor manufacturing. Delaying means losing money.’ In other words, having related companies near chip production facilities is crucial for immediate support in case of any production system issues, especially in conditions where infrastructure and transportation are limited. Therefore, having companies and suppliers within the same ecosystem at the same location optimizes costs and operational efficiency.
Analysts also point out that the success of end-to-end semiconductor research, production, and commercialization projects is significantly influenced by the surrounding ecosystem. This is clearly seen in cases of semiconductor hubs that have become “pillars” of the global chip industry, maintaining continuous growth over an extended period.
However, developing a semiconductor ecosystem is a demanding process that requires a significant amount of time, effort, financial investment, infrastructure, high-quality workforce, and even surpassing a nation’s supply threshold. Specifically, the construction cost of an advanced chip manufacturing facility, known as a fab, has now reached tens of billions of USD, making this an exclusive “playground” for true industry giants.
The challenges don’t stop there. Beyond the foundations of infrastructure and human resources, a successful semiconductor ecosystem also demands a culture of “support” to remain a “sustainable” development. This entails fostering an environment that encourages collaborative interactions among businesses within the same ecosystem, ensuring a continuous supply-demand cycle to optimize overall operational performance and the business efficiency of all companies involved.
In reality, despite many countries and regions have expressed considerable efforts to develop a “semiconductor valley” and elevate it to a “semiconductor ecosystem” within their territories, the majority have yet to achieve success.