There are several reasons why the semiconductor industry was established in northern California. Not only was land plentiful, but graduates from Stanford University, such as David Packard and Bill Hewett, stayed and started companies, encouraging an ecosystem to grow around them.
In 2013 Stanford’s Graduate School of Business said that more than 32,000 high-tech companies had come out of the university since 1960. The result was to transform the Santa Clara valley fruit orchards and farmland into today’s Silicon Valley.
The Valley is characterised by warm, dry summers and mild winters, which has been attracting people from out of state for decades. But now a desert city, around 700 miles (1,140km) away, is vying for the same investments from the semiconductor industry.
Competition emerges
This year Phoenix, Arizona, was the host city for the semiconductor industry’s largest trade show, Semicon West, a departure from its traditional home of San Francisco. Intel employs 12,000 people in its R&D and manufacturing facilities in Arizona. Since 1979 it has invested $66bn in high-tech manufacturing and its Chandler site is the second largest in the US. One of its two Arizona fabs uses its 18A process technology. TSMC has two fabs here and plans to build a third, investing more than $66bn and creating 6,000 jobs in total. At full build, TSMC estimates that 30% of its worldwide production of 2nm and more advanced chips will be in Arizona. NXP was born from the merger with Arizona native Motorola’s spinoff Freescale Semiconductor. It announced a $100m expansion in 2020 with a fab dedicated to 5G RF power amplifiers and operates two of its four fabs in Chandler, Arizona.
After Semicon West, Nvidia’s Jensen Huang presented a keynote at the company’s GPU Technology Conference in Washington DC, in which he said that the company’s fastest AI chips, the Blackwell GPUs, are now in full production in Arizona.
Attracting and nurturing talent
As an ‘upstart’ Arizona is having to work to attract employees and create a pipeline of entrepreneurs and skilled workers. It is rising to that challenge with Arizona State University, which has the ASU Research Park where companies such as Avnet, Amkor, Applied Materials and Iridium use cleanrooms and wet lab space for semiconductor research as well as development projects for flexible displays, and wearable and solar tracking technology in conjunction with the US Army.
A recent CHIPS Act funding award means the ASU Research Park in Tempe will be the home of the largest facility for the development of the domestic microelectronics supply chain. The NSTC Prototyping and NAPMP Advanced Packaging Piloting Facility will include the world’s first 300mm front-end semiconductor manufacturing and advanced packaging research facility. The university says the investment “will play a pivotal role in rebuilding America’s microelectronics ecosystem and ensuring the nation’s technological leadership”.
The state is also home to the Arizona Advanced Manufacturing Institute, which has programmes covering automation, robotics, electronics engineering technology, mechanical drafting and electromechanical automation technology.
Decades of preparation
Thomas Maynard, interim CEO of the Greater Phoenix Economic Council, credited Motorola with the genesis of Arizona as a technology hub. The company built a research laboratory in Phoenix in 1949, and one of the first semiconductor campuses in the US in 1956. “That was really with the kickstart for [a]microeconomics cluster, historical way back then,” he said.
Today the former Motorola and onsemi campus is being demolished. The 62-acre site will be the site for the new AZUL Campus. Developer Baker Development told the Phoenix Business Journal that it expects the new AZUL Campus to attract “a new major corporate headquarters user in the advanced manufacturing space or quantum computing space”.
The cluster continues with the University of Arizona, which is one of the top research universities in the country, said Maynard, and particularly strong in optics and photonics.
“Not only is there a significant cluster of optics and photonics companies, but also aerospace and defence within the state of Arizona, over 1,200 companies,” he continued. He said that the historical association with the semiconductor industry, has uniquely prepared Arizona to capitalise on this moment and accelerate innovation.
Semiconductor boom
Ryan Ruiz, executive vice-president of business development at Arizona Commerce Authority, agrees. “I think a lot of people will think that Arizona’s semiconductor boom really started in 2020 when TSMC and Intel made their major announcements, but there have been different levels of involvement from state, local and regional governments as well as the private sector.”
He emphasises the expertise available to support companies building in what is essentially a desert area, surrounded by rocky mountain ranges. “There are economic development professionals to help with site selection, finding a building – building a building. We have been doing this here in Arizona for decades. These facilities are very complicated, very technical.”
Arizona has a modern and strategic approach to infrastructure compared to other places in the US. The state’s water supply and power grid are consistently ranked as among the most reliable in the country.
Ruiz says projects by TSMC, Intel, Amcor technologies and LG have all required significant infrastructure planning, from water, power and roads, all of which have to be delivered on time. “Our utility partners… along with our state agencies, have a very proactive approach with infrastructure to ensure that we can meet the demand of the companies landing here today, but also forward thinking and meet the demand and the growth that we’re expecting in the years to come.”
I left Phoenix infused with its optimism and pondering whether it is indeed the David to San Jose’s Goliath. I will be watching this competition with interest.
