Arizona’s economy was once dominated by the “five C’s”: cotton, cattle, citrus, copper, and climate. But a new C has emerged that could grow to overshadow the rest: chips. New semiconductor manufacturing facilities are springing up across the greater Phoenix area, stretching across blocks of new roads with names like “Processor Parkway” and “Transistor Terrace.” Just outside the facilities, developers anticipating an influx of workers are planning mixed-use residential and industrial zones like mini modern-day company towns.
“It should be the sixth C,” says Thomas Maynard, senior vice president of business development at the Greater Phoenix Economic Council (GPEC). “We’re losing those agricultural pieces anyway … we’re diversifying our market to where we can be more resilient for the next [economic] downturn.” A less hospitable climate has taken its toll on farmers and ranchers facing dwindling water supplies that chip factories, or fabs, are now guzzling up.
Maynard is sitting next to the bustling Arizona state booth at Semicon West, the annual industry convention that is being held in Phoenix after more than 50 years in the Bay Area. The conference has ballooned in size, with a 45 percent increase in the number of booths and 60 percent more people registering to attend, according to trade group SEMI, which organizes the conference.
There’s a glimmer of hope in Maynard’s eyes, and he’s quick to flash a smile while talking about the possibilities in Phoenix. Arizona already thinks of itself as “America’s Semiconductor HQ.” At least that’s what the walls of the state’s official booth proclaim.
“We’re like a flea on David’s head fighting Goliath”
Arizona has raised more than $200 billion in semiconductor investment in just the last five years alone, with more than 75 chip companies flocking to the Greater Phoenix area. It’s where Taiwan Semiconductor Manufacturing Company (TSMC) and Intel both plan to produce the next-generation chips that American companies need if they want to stay competitive in the AI arms race.
That’s triggered a rush of hopes — and some fears — in the region. Lawmakers and industry leaders have promised a manufacturing renaissance that comes with thousands of jobs. People I spoke with in Phoenix want those opportunities, but many aren’t nearly as confident as Maynard that the benefits will materialize for everyone. Will companies hire locally? Build too close to homes and schools? Protect workers and residents from chemicals seeping into their environment? Burn through too much water and electricity in a desert city where everyday survival hinges on making the most of limited resources?
Across town, a different kind of gathering is taking place, not to hype up the chip industry, but to try to hold it accountable. While some 35,000 attendees at Semicon West buzz around the convention center, just a mile away in downtown, fewer than 100 participants — including concerned residents, some disenchanted workers, and advocates from other places in the US, like New York and California, where the chip industry has a footprint — gather at an event space in Phoenix’s warehouse district for another conference called “The Dark Side of the Chip.”
There, attendees can’t ignore the disparity. A coalition of labor and environmental groups called Chips Communities United (CCU) organized the event to make sure their demands could be heard. “We’re like a flea on David’s head fighting Goliath because we’re challenging the might of some of the world’s most powerful and highly capitalized companies,” CCU coalition director Judith Barish says onstage.
I spoke with more than a dozen people about how chip manufacturing might transform Phoenix, including residents, current and former semiconductor factory workers, labor advocates, and industry experts. The changes are already underway; there’s no denying that chipmakers have already gained a foothold. People I spoke with say they can look back at the impact the industry has already had — in Silicon Valley and in Phoenix — to see what might come next. The outcomes vary, of course, depending on whom you’re talking to. There’s a manufacturing race to win against Asia, a throne the US needs to recapture. There are also lessons to be learned, mistakes to avoid making again.
... continue reading