Two recent preliminary memoranda of terms (PMT) signed by the U.S. Department of Commerce and two leading microchip manufacturers are good news, if finalized, for Arizona’s high-tech sector and the state’s future as a U.S. semiconductor powerhouse.
More than $15 billion in CHIPS and Science Act funds could soon make their way to Intel ($8.5 billion) and TSMC Arizona ($6.6 billion) facilities. In Intel’s case, plants in Oregon, Ohio and New Mexico also would benefit.
On March 20, Intel and Commerce signed their PMT, which in addition to the $8.5 billion in direct funding for Intel semiconductor projects would see a Treasury Department Investment Tax Credit of up to 25% on more than $100 billion in qualified investments for federal loans up to $11 billion, according to a company press release. Intel expects to create more than 10,000 direct jobs and more than 50,000 indirect jobs through its investments.
Intel previously announced plans to invest more than $100 billion over five years in the four states in which it operates chip plants. In Arizona, it’s earmarked $32 billion for two new chip plants, Fabs 52 and 62, and modernization of Fab 42 at its Ocotillo campus in Chandler. AI-driven computing is among the applications planned for chips produced because of this investment.
Intel CEO Pat Gelsinger (right) and U.S. Secretary of Commerce Gina Raimondo announced on March 20 at Intel’s Chandler facility a non-binding preliminary memorandum of terms whereby the CHIPS and Science Act would fund $8.5 billion in Intel semiconductor projects.
Photo courtesy of Intel Corporation
“Today is a defining moment for the U.S. and Intel as we work to power the next great chapter of American semiconductor innovation,” said Intel CEO Pat Gelsinger at the PMT announcement at the Ocotillo campus. “AI is supercharging the digital revolution and everything digital needs semiconductors. CHIPS Act support will help to ensure that Intel and the U.S. stay at the forefront of the AI era as we build a resilient and sustainable semiconductor supply chain to power our nation’s future.”
In April, Commerce signed a PMT with TSMC Arizona, owned by Taiwan Semiconductor Manufacturing Company Ltd., to support its $65 billion investment in three Phoenix-area fabs. The first two were announced in May 2020 and April 2024, representing a combined investment of $40 billion. A recently announced third fab in Phoenix, to be built by the end of the decade, brings TSMC’s foreign direct investment in Arizona to $65 billion. The PMT funding would result in about 6,000 direct jobs and tens of thousands of indirect jobs.
“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” said TSMC Chairman Dr. Mark Liu at the PMT signing event. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”
“We congratulate TSMC for its historic investment and applaud the Commerce Department for its support,” said Jensen Huang, founder and CEO of NVIDIA. “TSMC has been a longstanding partner of NVIDIA since we invented the GPU and accelerated computing, and our ongoing innovation in artificial intelligence would not have been possible without them. We are excited to continue our partnership with TSMC as it brings cutting-edge facilities to Arizona.”
“TSMC is at the leading edge of advanced semiconductor technology — and when that expertise is paired with the ingenuity of American workers, incredible things are possible,” said Apple CEO Tim Cook. “We are proud to play a key part in the expansion of TSMC’s U.S. production, and we’ll continue to invest in America and support a new era of American advanced manufacturing.”
“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States.”
— TSMC Chairman Dr. Mark Liu, April 2024
Elsewhere in the Phoenix metro, Pentagon Technologies Group, Inc., announced plans in late February to build a cleaning facility in Mesa. The company, a subsidiary of Japan-based Kurita Water Industries, Ltd., will be a service provider to the area’s semiconductor manufacturing industry. It supplies advanced chamber cleaning equipment to semiconductor foundries. The $50 million, 65,500-square-foot project will create upwards of 300 new jobs.
Tucson’s Recent Wins
Arizona’s aerospace and defense industry has been no less active in recent months. In addition to significant maintenance, repair and overhaul (MRO) investment in the Tucson area, space launch activity and investment in the state is skyrocketing, as it were.
Ascent Aviation Services, a leading aircraft aftermarket services provider, in late March broke ground on two wide-body aircraft hangars at Pinal Airpark in Marana. The project will bring 180,000 sq. ft. of new hangar capacity for converting passenger aircraft to freighters, as well as new storage and shop space. Israel Aerospace Industries (IAI) will perform the work on Boeing 777-300ER aircraft. The two companies signed an agreement in September 2023 for IAI to perform its conversion work in the new hangars.
Also in Tucson, MRO provider MHI RJ Aviation Group plans to grow its workforce to 100 in 2024, with an additional 250 in the next three years. It will add maintenance lines to its CRJ regional airliner operations among others.
“We aim to contribute to the economic growth of Tucson through the continued growth of our maintenance activities. You can expect stability and job security by working for a company like MHIRJ,” said Ross Mitchell, vice president of strategy, business development, marketing, communications and business operations at MHIRJ, in a company statement. “We are committed to growing our facility to meet the demand coming from the market, and we need people who have the drive and determination to join us in Tucson.
“I believe that investing in Tucson’s youth is crucial,” he added. “The workforce shortage in the aviation sector has made it imperative for aeronautical companies to attract young talent. That’s why, starting in 2024, MHIRJ will support the Pima Community College Foundation by providing six annual scholarships of $1,000 for the next six years [2024- 2029]. This investment will help raise awareness among Tucson’s young people about the career opportunities in the aviation sector.”
Out of This World
On the space industry front, BlackStar Orbital Technologies, based in Florida, picked the Sierra Vista Municipal Airport in southeast Arizona as the location for an engineering and manufacturing facility. It’s where development and production of the company’s spaceplane-satellite hybrid the BlackStar Spacecraft will be developed and produced. The company says the craft will be used for such purposes as environmental monitoring, commercial and defense communications and ocean floor mapping, among others. The $7.1 million project will produce up to 15 spacecraft initially and create at least 50 aerospace jobs.
“This new facility in Sierra Vista is a landmark development for BlackStar Orbital,” said Christopher Jannette, president of BlackStar Orbital, at the January facility announcement. “The strategic location and robust support from local authorities like the City of Sierra Vista and the Arizona Commerce Authority have been instrumental in bringing this project to fruition. Our BlackStar Spacecraft, developed and produced here, will not only advance our mission in aerospace innovation but also strengthen Arizona’s position as a leading hub in the space industry.”
In July 2022, Virgin Galactic Holdings picked a site adjacent to the Phoenix-Mesa Gateway Airport for its final assembly and manufacturing facility for its Delta class spaceships. At the time, it was forecast to produce six spacecraft per year that will undergo testing and commercial operations at Spaceport America in Truth or Consequences, New Mexico.
Virgin Galactic President of Aerospace Systems Swami Iyer explained at the time the company’s choice of location for the project:
“Arizona is a growing innovation hub, geographically situated between our existing operations in Southern California and New Mexico,” he said. “This will allow us to accelerate progress from conceptual design to production to final assembly at scale as we capitalize on the many advantages Mesa and the Greater Phoenix area offer.”
Visitors enjoy the view at Hole in the Rock at Papago Park between Tempe and Scottsdale.
Photo by An Pham courtesy of Arizona Office of Tourism
Supply Chain Kicks In
In December, just weeks after Amkor Technologies announced its $2 billion semiconductor packaging and testing facility in Peoria, Arizona, yet another industry supply chain investment was made in the Greater Phoenix area. Netherlands-based ASM is investing $300 million in a semiconductor R&D facility in Scottsdale. The company, which located its North American headquarters in neighboring Phoenix in 1976, plans to construct its new HQ alongside its global technology and innovation center on the 20-acre site.
“ASM’s facility in Arizona has always been a key center for development of leading technologies that enabled many breakthroughs in the global semiconductor industry,” said ASM CEO Benjamin Loh. “The investment in our new facility in Scottsdale will substantially expand our research and development activities, further strengthening Arizona as a hub for top-notch semiconductor innovation.”
The company will focus on the wafer equipment many manufacturers use in semiconductor production to enhance its global supply chain. ASM plans to add an additional 500 new jobs with this investment to the 800 it already employs in the state. Construction of the new North American facility is expected to take about three years.
“ASM’s expansion in Arizona is one example of how we are looking to establish opportunities for Dutch and U.S. companies to exchange knowledge and establish meaningful partnerships,” said Netherlands Minister of Economic Affairs and Climate Policy Micky Adriaansens. “With its new North American headquarters, ASM will support its key customers’ expansion of leading-edge device manufacturing in Arizona, in the rest of the U.S. and globally, contributing to a more resilient, innovative and competitive semiconductor supply chain.”
The Netherlands is known for its management of water and ASM is no different, especially in a part of the world where water resources are so carefully managed and economic development activity is so robust. The company is targeting more than 80% reclaimed water in the new facility after having reduced absolute water use at its current facility by 60% from 2017 to 2022, even with substantial growth in its business activities during this period. Among the sustainability investments it’s pledged to make is a partnership with The Nature Conservancy (TNC), where ASM will support TNC with three-year investments to its Restoring Flows program, starting with a $130,000 investment in year one, which completes Phase 1 funding of the project.
“The project will improve the irrigation systems in the Verde Valley and strengthen the long-term resilience of the Verde River, one of the last free-flowing river systems in the state and a critical water supply for the Phoenix metro area,” ASM said. “Over the next three years, ASM will help fund this innovative water restoration program to save millions of gallons of water for the Verde River annually.”
— Alexis Elmore and Adam Bruns
