As the global demand for chips continues to grow, Arizona is positioning itself as America's answer to Taiwan's semiconductor prowess. The state is rapidly evolving into a powerhouse for chip manufacturing, with ambitious plans that mirror the successful clustering model that has made Taiwan a global leader in the sector.
Sandra Watson, President and CEO of the Arizona Commerce Authority (ACA), leads a delegation of over 30 representatives from industry, government, and academia to Taiwan on the eve of SEMICON Taiwan 2024, which aims to foster technological cooperation and talent exchange between the two regions.
Credit: DIGITIMES
"Arizona and Taiwan share a very special friendship that has been forged through decades of mutual support and collaboration," Watson stated. This bond is now translating into significant economic activity, with total trade between Arizona and Taiwan surpassing US$3.15 billion last year and continuing to grow.
Central to Arizona's semiconductor ambitions is Taiwan Semiconductor Manufacturing Company's (TSMC) historic US$65 billion investment in the state. The project, which recently announced a third fab, has been a game-changer for Arizona's tech ecosystem.
The TSMC project has attracted at least 10 new suppliers to Arizona in the past couple of years, representing hundreds of jobs and billions of dollars in additional investment. This clustering effect is reminiscent of Taiwan's successful model, where a dense network of suppliers and manufacturers has created a highly efficient semiconductor ecosystem.
In a move that echoes Taiwan's science park approach, the state is developing over 2,300 acres adjacent to TSMC's site into a dedicated science park.
Credit: TSMC
"The planning of the park will basically refer to the needs of Taiwanese manufacturers," Steve Hsu, Executive Director of the Arizona-Taiwan Trade and Investment Office, explained. This approach represents a significant shift in US industrial development strategy. Rather than leaving companies to acquire and develop land individually, Arizona is adopting Taiwan's more collaborative model. The park will provide ready infrastructure including water, electricity, and waste management systems, allowing manufacturers to plug into a pre-existing ecosystem.
"The United States is now learning from Taiwan," Hsu added. "Because Taiwan is not just about individual companies; our entire technology industry package is worth learning from."
This science park development is poised to accelerate Arizona's transformation into a semiconductor hub. The state is already home to Intel and several other major players in the industry. With TSMC's investment and the new science park, Arizona is creating a dense cluster of chip-related businesses that could rival established hubs.
Sean Fogarty, Vice President at the Greater Phoenix Economic Council (GPEC), has revealed Arizona's innovative approach to business incentives. The state has implemented a transparent system based on three key factors: capital expenditure, job creation, and average salary. "If you reach those three, automatically you'll get the incentive," Fogarty explained.
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GPEC offers free services to model these incentives based on specific project details and timelines. They can also identify potential federal incentives and facilitate connections with various government agencies.
However, challenges remain. Chief among these is the need for a skilled workforce to support this rapidly growing industry. Arizona is tackling this head-on through collaborations with academia and targeted initiatives to boost the capabilities of its workforce.
To address this, Lewis Chen, General Director of ITRI's Commercialization and Industry Service Center, outlined Taiwan's strategy to address its own talent shortage and bolster its semiconductor industry. The approach includes cultivating domestic talent, attracting top international professionals by 2025, and building collaborative ecosystems with global partners.
Programs like the Taiwan Chip-Based Innovation Program are designed to integrate global innovators into Taiwan's supply chains. The government, through the National Science and Technology Council (NSTC), is also partnering with universities and research institutes to enhance talent development and research capabilities, further solidifying Taiwan's role in the global semiconductor landscape.
Fernando Garcia, Executive Vice President of International Trade & Investment at the ACA, emphasized the state's focus on workforce development. "We've had continued initiatives to increase the capabilities of the workforce in our nation, working closely with our academia partners," Garcia stated. The ACA is collaborating with the University of Arizona, Arizona State University, and Northern Arizona University to create an environment supportive of tech growth and startups.
Credit: AFP
Another potential concern is water availability, given Arizona's desert climate. However, Hsu assures that this is not an issue. "Arizona is not short of water," he stated. He outlined four primary water sources: the Colorado River (providing 60% of the state's water), northern mountain snow, groundwater, and water recycling efforts. "In Arizona, the water supply is guaranteed for 100 years for incoming businesses," he added.
The state is also leveraging its natural advantages. With 300 days of sunshine per year, Arizona is well-positioned to support the high energy demands of semiconductor fabs with solar power. This aligns well with the industry's increasing focus on sustainability and could provide a competitive edge.
Arizona's semiconductor strategy appears to be paying off. The state has been ranked number one in the semiconductor industry in the entire United States, according to Garcia. This ranking is attributed to three main factors: the workforce, continued initiatives to increase workforce capabilities, and strong collaboration throughout the state.
The state's commitment to the semiconductor industry is further underscored by the relocation of SEMICON West, the most important semiconductor event in the US, to Phoenix in 2025. This move signals Arizona's emergence as a focal point for the American chip industry.
