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Why Key Players Choose Arizona’s Arid Landscape for Semiconductor Plants’ Construction


In the dynamic sector of semiconductor manufacturing, the choice of location for constructing semiconductor plants plays a pivotal role in ensuring efficiency, productivity, and long-term success. Although the chip producing process requires a huge amount of water, surprisingly, some of the largest semiconductor “giants” opt for Arizona, known for its arid climate, to establish their cutting-edge semiconductor fabs, create a “semiconductor ecosystem” in the state. Why is this the case? Let’s delve into the critical role water plays in semiconductor manufacturing, and explore the strategic reasons behind this unexpected choice of semiconductor leaders.

The Role of Water in Semiconductor Plant

A high-tech semiconductor plant can use upto millions of gallons of water every day (1 gal = 3.7854L water).

semiconductor plant

Considered as a key element in semiconductor fabs, purified water contribute in controlling contamination, ensuring the cleanroom is qualified for the critical, sophisticated chip manufacturing process, including

1. Critical Cooling Processes

Water plays a crucial role in the cooling processes within semiconductor fabs as advanced semiconductor equipment generates significant amounts of heat. Acted as a cooling element, purified water modifies the heat, ensuring that the machines operate at the optimal temperature, preventing damage to sensitive components of the micrometer-sized chips.

2. Precision in Semiconductor Production:

Semiconductor manufacturing requires precision and control over multiple processes. Especially,

  • Wafer cleaning: The use of ultra-pure water in cleaning and etching processes is essential for ensuring the quality and integrity of semiconductor components. Just a small impurities in the water for wafer manufacturing can affect the output of the chip “harvested” on the wafer, lead to defected chips
  • Chemical mixing and dilution: In terms of chemical usage throughout the chip manufacturing process, purified water serves as a reliable solvent, ensuring the chemical dilution reaction meets the desirable output, preserving the microelectronics’ integrity and quality.

The Unexpected Semiconductor “Oasis”: Why Arizona’s Appeal to Building Semiconductor Plants?

On one hand, Arizona is among one of the most arid landscape in the US. According to information from Arizona State, this area had only received an average rainfall amount of 12.26 inches per year between 1991 and 2020, making it the fourth driest state nationwide.

semiconductor plant

On the other hand, according to The Verge, semiconductor plants can use between 2 million and 4 million gallons of water per day. The enormous number is equivalent to between 13,698 to 27,397 Arizona residents daily water usage. While Arizona is known for its aridity, semiconductor giants face with a challenge to leverage advanced water management technologies to ensure a sustainable water supply for their fabs. Companies invest heavily in water recycling, purification, and conservation measures, showcasing a commitment to responsible resource management. In addition, Intel also showed their effort in achieving “net positive water use”, returning and restoring more fresh water than the amount consumed, as it has funded 15 water restoration projects

In an interview with CNBC, Glenn O’Donnell, vice president and research director at analyst firm Forrester shared that each semiconductor fab have its own way to “recycle water”. He indicated that although the initial amount of water required to be fill in is a lot, chipmakers don’t have to add much along the way, very similar to “a swimming pool in a close building”

As highlighted above, the role of pure water in the chip manufacturing process is essential, ensuring the effectiveness and efficiency of the chip wafers. So what makes Arizona Desert so appealing “in the eyes” of chipmakers?

1. Spacious Available Land

One of the most compelling factors that make Arizona a desirable destination to contruct semiconductor fabs is the availability of land.

semiconductor plant

Intel’s Fab 42 in Arizona (Source: Cnet)

Semiconductor “giants” has been pouring investment in building new fabs in this one of the driest state in the US. Specifically, in early 2021, Arizona was selected as a hub for recovering the US’s semiconductor manufacturing power, with the joint of two new Intel fabs (work harmoniously with the other four – fab 12, fab 22, fab 32 and fab 42), and the new TSMC fab. According too Forbes, other semiconfuctor plants of industry’s “titan” in Arizona call the name of Medtronic, NXP, Microchip, ASML, Nova, etc.

At that time, Samsung was also seeking and evaluating a new fab site, hoped to be operated as early as Q4 2023. Arizona was no doubt among the three authorities (along with New York and Texas) to be on the list of discussion.

2. Low Risk of Natural Disasters (Predictable Weather)

Seismic stability is considered as one of the key factors to construct semiconductor plants. “A chip factory cannot shake, not even a microscopic amount,” said Glenn O’Donnell to CNBC. An entire “crop of chips” can be ruined by just a small shake of 0.5 Richter.

semiconductor plant

One of Intel’s Semiconductor Plants in Arizona (Source: Barron’s)

When it comes to major natural disasters risk, Arizona is regarded as the 12th least dangerous state. With minimal catastrophe risk, this arid area has been the choice for Motorola and other early semiconductor companies to establish Arizona as a leader in semiconductor design and manufacturing since the 1950s. In other words, as the weather is unchange, predictable, and seismic stable chipmakers who invest billions of dollar of semiconductor foundry might feel somewhat more at ease, knowing that their assets and investments are unlikely to be vanished away by a hurricanes, an earthquake or wildfire overnight.

3. Abundance of Potential Solar Power

​​”The two most important pieces of infrastructure for a wafer fab are electricity, and more electricity.” shared Bill Wiseman, a senior partner at McKinsey, with Asia Nikkei. A semiconductor plant can use as much electricity as a steel factory.

semiconductor plant

Arizona boasts a high number of sunny days, making it an ideal location for harnessing solar power. Semiconductor fabs are energy-intensive, and the availability of abundant solar energy aligns with the industry’s commitment to sustainable practices. This not only reduces operational costs but also underscores the semiconductor industry’s growing focus on eco-friendly solutions.

Discussing about the practice of solar power in Arizona, the state call out their Salt River project of Phoenix, the power plant that caters a big amount of electricity consumption for enterprises.

4. Pool of Skilled Semiconductor Talents

Apart from the natural advantages of the state, human factor is also an add-up element, making Arizona appealing in the eyes of semiconductor investors. With more than 22,000 direct jobs in semiconductor manufacturing (according to data by Arizona Commerce Authority), Arizona places fourth in the US in chip employment.

semiconductor plant

However this was not the case until Intel established its first semiconductor foundry in 1980. With the pouring investment fund, and consider the state as a strategic area for development, Intel had grate impacts and brought about benefits for Arizona, such as investing in facilities, creating more jobs (over 12.000 employees in 2020), attracting talents, improving the economy, etc.

As Intel brought back the semiconductor industry to Arizona, the local universities also responded by establishing “a strong reputation for semiconductor design courses and research,” According to a sharing of the state officials, in a The New York Times article, the Arizona State University’s engineering school of more than 30,000 students is one of the significant effort to regulate a business-friendly environment for further investments, offering a “pool” of skilled talents attract chipmakers around the world.

5. Favorable Government Incentives and Support

The state of Arizona actively attracts semiconductor investments by offering various financial incentives and support programs. From tax credits, streamlined permitting processes, infrastructure grants, to offering a broad view to expand local technical and engineering education, these incentives make Arizona a compelling destination for semiconductor companies looking to establish their manufacturing plants.

semiconductor plant

Led the nation in chip investments since 2020, in the context of the $52 Billion CHIPS ACT fund for semiconductor manufacturing and research, Arizona have the potential to take action, and “lead the nation in microchip production”, according to Arizona senator, Mark Kelly shared with The New York Times article about “How Arizona Is Positioning Itself for $52 Billion to the Chips Industry”

Along with the CHIPS Act’s investment tax credit for up to 25 percent of a manufacturer’s capital expenditure costs, Arizona is continuing to regulate a business-friendly environment for further investment in semiconductor plants.

Arizona’s on the Way of Building A Strong “Semiconductor Ecosystem”

Bruce Andrews, chief government affairs officer of Intel, stated, “The state of Arizona has been a great collaborator.” “By investing in semiconductors early, they created an ecosystem that has had a jobs multiplier effect and massive economic benefits.”

semiconductor plant

With the focus of the state, emphasizing on create a business-friendly environment, attracting investment from “semiconductor giants” to enhance and construct facilities, Arizona is the destination for semiconductor plant sites of some popular names Intel, TSMC, Medtronic, NXP, Microchip, ASML, Nova, and more, therefore, creating a developing “Semiconductor Ecosystem”. Having the potential to “lead the nation in microchip production”, Arizona needs to seize the opportunities, and find ways to cope with some enterprises’ arising problems to maintain the investment flow into the state in further future.