Two of the world’s leading chip makers – Intel and TSMC – are increasing their manufacturing presence in the US by building new factories in Arizona.
Chip foundries are critically dependent on water, and Arizona is one of the driest states in the country. Arizona gets just 13.6 inches of rain per year (compared to 50-60 inches in most of the Deep South, or 30.3 inches on average for the US as a whole). But as Forrester research director Glenn O’Donnell told CNBC, chip manufacturing plants are like indoor swimming pools: “you need a lot to fill it, but you don’t have to add a lot to keep it running.” to hold.”
Counterintuitively, the famously thirsty industry may even improve local water supplies thanks to a focus on reclamation and purification — Intel has funded 15 water restoration projects in Grand Canyon State with a goal of restoring 937 million gallons per year, and it expects net positive water use once the projects are completed.
What Arizona lacks in water it makes up for in overall stability: The state is very seismically stable and unaffected by hurricanes, with low risks of other natural disasters like tornadoes to boot. Building chip factories without such guarantees is possible—Intel has a strong presence in Oregon, for example—but West Coast chipmakers must take extreme isolation measures, which factories in Arizona do not need.
Arizona’s lack of rain has another benefit: abundant sunshine, which former Arizona governor Janet Napolitano once said gives the state the potential to be “the Persian Gulf of solar energy.” As of 2018, the state’s utilities generated about 5.2 GW — nearly 5 percent of the total energy budget — through solar power generation. Distributed (non-useful) generation in Arizona provided an additional 2.3 GW in the same year.
However, the human factor can yield more than the natural benefits of the state. Intel established its presence in Arizona more than 40 years ago and currently employs more than 12,000 people in the state. Local Arizona universities responded by “building a strong reputation for semiconductor design coursework and research,” according to Gartner analyst Alan Priestley. And, as Forrester director O’Donnell points out, “The political apparatus in Arizona is determined to make the state business-friendly…the recent Intel and TSMC announcements come via a lot of help from federal, state, and local government agencies.”