As Part of the CHIPS act, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading semiconductor manufacturer, has recently announced its expansion in Arizona and began construction of a mega plant in north Phoenix. Let’s explore how TSMC’s presence in Arizona will impact the local economy.
The Semiconductor Industry: A Brief Overview of what is coming to AZ.
Semiconductors, often referred to as integrated circuits (ICs) or microchips, are tiny conductive components that enable the flow of information in every computer. They are the neurons in electronic devices. They are assembled to make everything from smartphones to sophisticated medical equipment. TSMC, at the forefront of this industry, plays a big role in the global supply chain, catering to major tech giants like Apple; who has already contracted TSMC to build chips for their iPhones in the Arizona mega-plant, while Nvidia has also expressed interest.
Traditionally engineers in the U.S and Europe have used Electronic Design Automation (EDA) software to design these semiconductors. Then advanced machines use ultraviolet light guided by mirrors and lenses to manufacture those semiconductors. These machines are primarily made in the U.S, Holland, Germany, and Japan. These machines and the semiconductor designs are then shipped to South Korea, Japan, and Taiwan to manufacture the desired semiconductors and eventually assembled them into computer chips. Due to Geopolitical concerns, the CHIPS act is bringing the manufacturing and assembly to the U.S from Taiwan; so TSMC started building their Mega-Factory in North Phoenix.
It should be noted that Intel has long been manufacturing Semiconductors and chips in the U.S; they also announced they are building 2 new factories on their campus in Chandler!
Direct Economic Impacts
- Job Creation: TSMC’s Arizona plant is expected to create thousands of direct jobs. These aren’t just any jobs; they are high-skilled, well-paying roles in engineering, manufacturing, and management. This influx of jobs is likely to reduce unemployment rates significantly and boost the average household income in the region. This will have a positive secondary ripple through the local economy.
- Increased Tax Revenue: The presence of a global tech giant like TSMC means substantial tax revenues for the state. These revenues can be pivotal in funding public services, education, and infrastructure projects, further enhancing the quality of life in Arizona.
- Ecosystem of Local Contractors and Suppliers: TSMC’s operations will necessitate a vast array of suppliers and ancillary industries to help maintain and/or support the buildings, machinery, technology, operations, and people. This demand will spur the growth of local businesses and attract new ones to the area, creating a vibrant supply chain ecosystem and opportunities for local contractors, suppliers, and service providers.
- Education & Workforce Development Opportunities: A skilled workforce is a key component of re-shoring semiconductor manufacturing. Right now there is a gap between the supply and demand of talent; which is why the CHIPS act provides funding for education and workforce development. Local universities and colleges will introduce specialized courses and programs, thus preparing Arizona’s youth for high-tech careers.
- Real Estate Boom: With the influx of professionals and their families, there’s an expected increase in demand for housing, retail, and recreational facilities, leading to a boom in the real estate sector.
- More Domestic and International Business: The semiconductor industry is a complex international industry. American and European companies design the semiconductors, then companies in the U.S, Holland, Germany, and Japan design and manufacture the equipment used to manufacture semiconductors, and then companies in the U.S, South Korea, Taiwan, and Japan manufacture the semiconductors, before eventually assembling them into the chips for international companies like Apple and Nvidia. Arizona will likely see a boom in interstate and international business!
Come experience Arizona’s Boom every Thursday at our Thursday Gatherings!
We host speakers from large enterprises like TSMC to small startups that are keen on impacting not just Arizona but the world!