TSMC Announced its Arizona Microchip Factory 3 Years Ago. Here’s What has Happened Since Then

Article originally posted on AZ Central on May 15, 2023

A presidential visit, a massive construction effort, new suppliers moving in and billions of dollars in spending.

The new Taiwan Semiconductor Manufacturing Co. complex is one of the most prominent economic projects ever for Arizona. The investment has grown even bigger since the company officially announced it would make its U.S. home in Phoenix three years ago in May 2020.

The advanced technology complex has created jobs, changed the desert landscape of north Phoenix and revitalized the state’s visibility in an increasingly vital industry. The company eventually expects to produce 600,000 semiconductor wafers annually using the most advanced industrial processes in the U.S.

Wafers are the thin, shiny disks from which individual semiconductors, or chips, are harvested. Those 600,000 or so wafers are expected to generate annual revenue of around $10 billion. Only a few Arizona-based corporations such as Freeport-McMoRan, Republic Services and Insight Enterprises generate that much or more revenue in a year.

“Our total investment in Arizona is now $40 billion,” making it the “largest foreign direct investment in Arizona history,” the company said in an update sent to The Arizona Republic this month. The project also will be one of the largest foreign investments anywhere in the United States.

“We are witnessing subsequent development by the TSMC site every day, including new TSMC suppliers, additional housing and hotel options and commercial opportunities ranging from new restaurants to expanded health and financial services,” Phoenix Mayor Kate Gallego told The Republic. “As we mark the third anniversary of TSMC’s announcement, I look forward to the many more success stories that will come with more growth.”

Here are some of the critical dates and developments that brought the company this far:

May 2020: The initial announcement

While the company points to May 15 as the official announcement date, the news broke in the U.S. the day before, when the Wall Street Journal reported that Taiwan Semiconductor Manufacturing had picked Phoenix for a new factory (the discrepancy might be due to time differences between the U.S. and Taiwan). Then-Gov. Doug Ducey and Phoenix Mayor Gallego said TSMC, an industry giant but a company little known to most Americans, would build its first U.S. factory in a not yet determined location.

Gallego said she and Chris Mackay, the city’s economic development director, traveled to Taiwan in 2019 to pitch the city as the location for what was expected, at the time, to be a $12 billion investment over eight years in an advanced factory to build semiconductors. Construction was planned to start in 2021 with production beginning in 2024.

TSMC’s products are used in computers, smartphones, automobiles and many other applications. Its roughly 500 customers include Apple, Intel, Qualcomm and Sony.

Gallego said the investment was the result of years of hard work from various groups including the city, the Greater Phoenix Economic Council, the Arizona Commerce Authority and the U.S. Department of Commerce.

“This project will undoubtedly change the landscape of our community in a huge, positive way,” said Gallego, who took office the prior year.

Gallego said she looks back with pride in helping to get the company to locate to Phoenix. “TSMC’s impact on our city has been profound, from creating hundreds of new, great-paying jobs to incentivizing increased investments in our educational institutions,” she said.

December 2020: Fab location revealed

Taiwan Semiconductor Manufacturing won a bid to buy 1,129 acres for $89 million in north Phoenix, near Interstate 17 and Loop 303 and the Carefree Highway, The Republic reported at the time.

The TSMC bid was the only one received by the state in an auction. Bidding started at $89 million.

The company hadn’t specified its planned location since it announced that it would construct its first U.S. chipmaking factory or “fab” in the city, more than six months earlier. After TSMC bought its land, city officials said the site was one of only two that could accommodate a development that size; the other was along the Loop 202 South Mountain Freeway in southwest Phoenix.

Phoenix officials envisioned the site as the eventual hub of a significant employment area that also could retain some connected open spaces while attracting more residential development. Two months earlier, the Phoenix City Council altered its general plan for the area and rezoned the area to include a higher concentration of industrial and commercial uses rather than just housing.

That plan called for a technology park to the west and north of the TSMC campus, which is expected to attract skilled, higher-wage workers.

Guidelines called for open desert spaces in the area connecting with the nearby Phoenix Sonoran Preserve.

An artist's rendering shows the entryway to Taiwan Semiconductor Manufacturing Co.'s  campus in north Phoenix.

Summer of 2021: Signs of collaboration, cooperation

Buoyed by the TSMC investment, business groups from Arizona and Taiwan pledged greater cooperation on industrial issues including development of the semiconductor, medical device and advanced-manufacturing sectors.

The Taiwan-USA Industrial Cooperation Promotion Office on Aug. 24 signed a memorandum of understanding with the Greater Phoenix Economic Council, pledging to foster a closer partnership.

It was the first memorandum of understanding with any nation for GPEC, a nonprofit economic development organization that seeks to attract and grow businesses in and around Maricopa County.

The agreement didn’t spell out any specific future projects or actions but stressed cooperation in developing next-generation products, spurring investment and attracting businesses in related industries.

Two months earlier, in June, Phoenix-based TGen, the Translational Genomics Research Institute, announced that it had received a “substantial investment” from TSMC to monitor the COVID-19 pandemic and future disease outbreaks. The size of the grant wasn’t disclosed.

Aug. 9, 2022: Federal CHIPS Act enacted

While TSMC began development of its north Phoenix complex before the federal CHIPS & Science Act passed Congress last summer, the company could receive billions of dollars in funding from it.

This bipartisan legislation addresses a range of scientific, national security, economic competitiveness and trade issues. Funding of roughly $280 billion over a decade includes nearly $53 billion for semiconductor manufacturing, research and workforce development, with $24 billion worth of tax credits for chip production, according to researcher McKinsey.

The bipartisan legislation was supported by both Arizona senators, Kyrsten Sinema and Mark Kelly. The package will help to create “tens of thousands” of high-paying jobs in Arizona, including many that don’t require a college education, said Kelly during a visit in early 2023 to Intel’s chipmaking complex in Chandler.

Both TSMC and Intel, and others, could receive massive federal subsidies under the legislation.

Dr. Mark Liu, TSMC’s chairman, said his company committed to invest in the U.S. and build the complex in north Phoenix before the CHIPS Act was enacted, but he added that the legislation encouraged the company to expand its presence here.

Companies seeking direct funding from the bill must include child care benefits, but TSMC had them in the works even earlier, said Rick Cassidy, CEO of TSMC Arizona.

The Commerce Department began accepting applications from semiconductor companies seeking funding on March 31.

Dec. 6, 2022: Dignitaries celebrate, and the project expands

TSMC officials unveiled their new chipmaking complex in north Phoenix in a ceremony that featured a long list of dignitaries including President Biden. The company also announced it would build a second fab and boost its overall investment more than threefold, from $12 billion to $40 billion.The fabs on the property, which spans 2 miles by 1 mile, are expected to generate 21,000 construction jobs and are getting built with the help of one of the world’s largest cranes. TSMC also said it would more than double its Phoenix workforce from 2,000 initially to 4,500 or so within a few years.

“Before we see even a single wafer, we will have more than 1,000 people trained,” said Dr. Morris Chang, the company’s 91-year-old founder who attended the ceremony.

Advertised jobs have included engineers, accountants, customer-support staff, memory-design managers and project managers.

Biden, speaking in Phoenix during his first presidential visit to Arizona, predicted the complex and the many suppliers that will serve it will spread the economic benefits widely. “We’re building an economy that doesn’t leave anyone behind,” Biden said during the visit to the site.

Liu, TSMC’s chairman, said the complex “will be the greatest fab in the United States” and one that will minimize water and energy waste, and with minimal airborne emissions, too.

He also predicted TSMC will have the greenest fabs in the U.S., featuring an on-site industrial water reclamation plant, enough solar panels over parking lots to power more than 2,700 homes and processes to reclaim sulfuric acid, a chemical that’s used to clean and etch semiconductors.

In an update this month, TSMC said about 20% of those solar panels are in place with installation set to be completed by early 2024. The water-reclamation plant, which the company said will allow nearly every drop to be reused, also is on track. The company also said it remains on schedule to start production in late 2024 and is in the process of installing specialized tools and equipment. The second fab is under construction too, with the expectation that it will start production by 2026.

March 8, 2023: A plane filled with employees lands in Phoenix

TSMC has trained Americans for work in the new fabs for the past couple of years, but the company showcased the human side of the investment by inviting reporters to meet employees returning from training in Taiwan, on a charter flight that touched down at Sky Harbor International Airport.

The semiconductor maker in March said it had finished the first major phase of overseas training of 600 engineers and other American workers who spent one to two years learning advanced manufacturing processes at TSMC plants in Taiwan.

Also, hundreds of Taiwanese citizens will work on assignment in Arizona for one to three years, Cassidy said.

“I had a blast,” said Martin Eseverri of his 18 months of training in Taiwan. Eseverri, an engineer who installs and maintains equipment, said he was surprised by how welcoming the Taiwanese were to Westerners.

In addition to training many of its American employees in Taiwan, TSMC is working to develop a long-term employment pipeline with the engineering school at Arizona State University as well as the Maricopa County Community College District, which is providing technicians.

The company currently has nearly 2,000 employees in Arizona, including some from Taiwan, and it’s getting ready to welcome its first group of interns this month — a mix of undergraduate students, graduates and even doctorate candidates from various universities including ASU, UCLA and Purdue. Many will be offered full-time employment opportunities.

TSMC also has been collaborating with various universities and colleges including Estrella Mountain Community College in Avondale for its semiconductor-technician program.

In addition, TSMC is partnering with the Arizona SciTech Institute to familiarize students in the Deer Valley Unified School District with STEM education and to encourage ties between Taiwanese students and their new American peers. Programs include talks hosted by engineers to explain what a career in semiconductors might look like.

The company also has been working with the school district to help roughly 350 Taiwanese children transition smoothly into school with bilingual education, counseling, cultural-awareness programs and more.

Ongoing interest: 22 companies and counting coming to Arizona

Metro Phoenix already was a solid semiconductor-manufacturing hub dating to the 1950s with Motorola and featuring, more recently, companies including Microchip Technology, On Semiconductor and Intel, which in September 2021 broke ground on its own $20 billion expansion project in Chandler. Various suppliers already had set up shop in Arizona, and the TSMC announcement has opened the doors for others, including those from Taiwan.

Economic development officials see signs of a “Silicon Desert” emerging, much like Silicon Valley became a cluster of software, computer and chipmaking companies in and around San Jose, California.

During his visit to the fabs arising in north Phoenix, TSMC Chairman Liu predicted at least 40 supply companies will locate nearby, bringing perhaps another 13,000 or so jobs.

Chris Camacho, president and CEO of the Greater Phoenix Economic Council, said so far 22 companies have announced plans to expand to Arizona because of TSMC. Those 22 companies represent about $1 billion in capital investment, including buying or building facilities and investments in equipment, and represent about 1,000 additional jobs.

Another 25 companies have contacted GPEC, the region’s economic development advocacy organization, to express interest in an Arizona location, but have not confirmed any plans yet, he said.

Some of the foreign suppliers moving in include Edwards Vacuum, for specialized vacuum and exhaust services, and two Taiwan chemical producers, Chang Chun and Sunlit Chemical.

During his visit to the TSMC site in December, Biden said he envisioned “Arizona as a hub, literally a hub … for technical change that’s going to take place.”

On global tech stage: ‘With every company, Arizona is getting a look’

In the three years since TSMC announced its Phoenix factory, Arizona has gotten looks from other foreign companies that otherwise likely would have never considered the state, Camacho said.

“We got a hypercharge when TSMC and Intel made their cumulative $60 billion announcements,” he said. “Now, with every company, Arizona is getting a look, which wasn’t the case before.”

The companies considering Arizona now are much more sophisticated, Camacho said, and the industries that are coming have required the business community and local governments to work on policy issues like water, infrastructure, energy and workforce development.

“This level of interest makes us lead in a different way,” he said.As part of the CHIPS Act, the U.S. will establish a National Semiconductor Technology Center, a public-private innovation hub that will have research, engineering and program capabilities. Camacho, who serves on the U.S. Secretary of Commerce’s Investment Advisory Council, said GPEC and other entities are pitching Arizona as a potential location for that center.