Why Are Semiconductor Fabs Dotting Arizona, the “Silicon Desert?”

February 24, 2021 by Luke James

Forget Silicon Valley—here’s how Arizona could become the "Silicon Desert" with more semiconductor titans considering the move.

While Silicon Valley is typically considered the ideal place to work and live in the tech industry, mounting expenses in the Bay area for both corporations and workers alike have driven a migration to more economical tech hubs.

As early as 2012, commentators were noting that silicon fabs were slowly vanishing from Silicon Valley. Where have they all gone?

One popular location is (somewhat surprisingly) Arizona. Known for its lower cost of living, lower personal and corporate taxes, more affordable housing, and fewer regulatory hoops, several major semiconductor manufacturers have announced plans to build manufacturing facilities in the Phoenix area and beyond.

Here’s a roundup of the major chip industry firms that are looking to establish operations in the Grand Canyon state, along with a glimpse at what makes the "Silicon Desert" so appealing.



One of the biggest wins for Arizona's silicon presence has been TSMC's plan to build a $3.5 billion semiconductor fab there, which the company says will lead to creating 1,600 new jobs and cost a total of $12 billion between 2021 and 2029. 

According to TSMC, which is the world’s largest manufacturer of contract semiconductors, production at the site should begin in 2024 and push out 20,000 wafers per month with a 5nm process (or, if it’s ready by this time, 4nm) with 3nm reserved for production in Taiwan. 


A chart showing the progress of TSMC's logic technology.

A chart showing the current progress of TSMC's logic technology. Image used courtesy of TSMC


While the U.S. government's pressure to build more U.S.-based fabs partly led to this decision, the production of a U.S. fab is a strategic move for TSMC as well. If anything, it'll enable the chipmaking giant to compete better with other U.S. chipmakers such as GlobalFoundries and bid on U.S. government and military contracts. 

TSMC supplier LCY, one of the world's biggest producers of chemicals for semiconductors, is also considering building a U.S. plant in Arizona. The plant will be LCY's largest investment outside of Taiwan and, should plans be finalized and given approval, should be completed by the end of 2023, which ties in nicely with TSMC's 2024 production goal. 



In Q3 2020, NXP opened its latest fab in Chandler, Arizona—a 150mm gallium nitride (GaN) facility, which the company confidently calls “the most advanced fab dedicated to 5G RF power amplifiers in the United States.”


The opening of NXP's new Arizona-based GaN fab with Governor Doug Ducey and other official representatives.

The opening of NXP's new Arizona-based GaN fab with Governor Doug Ducey and other official representatives. Image used courtesy of NXP


The new factory brings together NXP's expertise in GaN development and RF power with its high-volume manufacturing capabilities by serving as an "innovation hub" for chip development. By establishing this hub, NXP hopes to support the expansion of 5G base stations and advance infrastructure in key markets such as aerospace.

The fab will enable quicker production cycles for NXP GaN devices from concept to validation. 


Samsung Electronics

Recently, Samsung has filed documents with authorities in Arizona, New York, and Texas, seeking to build a semiconductor fab, which is expected to create 1,800 jobs at the cost of $17 billion. 

In a statement made to the Korea Herald, a Samsung official acknowledged that the company had not yet made a decision while exploring other potential locations. Still, Samsung is known to be in negotiations regarding tax benefits and reductions with these U.S. states and uses the potential $8.9 billion local economy boost as leverage. 

In the case that Samsung cannot negotiate a favorable tax benefit with Texas officials (considering that Samsung already has plants in Texas), Arizona may be the next best location since it is known for being generous when offering tax incentives to tech firms

Depending on where Samsung decides to build, the fab could be online by as early as Q4 2023. 


Why Arizona?

Why is Arizona quickly becoming the new center of silicon wafer production in the United States? 

At first glance, there might not be a compelling reason to build in Arizona besides the availability of land for chipmakers to build their fabs. In terms of the state's physical location—it's not as if Arizona offers an abundance of silica mines or better supply links. But despite the lack of benefits, there is also no compelling reason not to build in the desert state. 

At least that was the case before Intel got there.

Intel established its first fab in Arizona back in 1980. And as the years went by, Intel doubled down on its presence through heavy investments into its fab centers, the most recent being Intel’s Ocotillo silicon wafer campus in Arizona—one of the largest construction sites in the U.S. 

Why Intel chose Arizona isn’t well known; however, the positive impact Intel has had on Arizona's economy is well documented. 


Intel Arizona operations help to advance Arizona’s economy. Our annual economic impact in Arizona is approximately $8.3 billion, based on 2018 data. We’ve also invested more than $23 billion in capital to support our operations here. Intel creates high-tech jobs in Arizona, with 12,000 employees in Arizona, as of January 2020. We hire for interns, entry-level, and experienced positions across manufacturing, hardware, software, and more.

Arizona's economy benefits from Intel's manufacturing and will continue to benefit from other companies moving there. Image used courtesy of Intel


Intel and its suppliers led the way in establishing Arizona as a semiconductor manufacturing hub. It makes sense for others to follow suit, primarily due to the supply chains and infrastructure already established in the Phoenix area. Today, several chipmakers and other chip industry firms have operations in Arizona, including ASML, Applied Materials, and Nova. 

Since Arizona is a viable place for new chip fabs, Samsung may forget Austin and follow TSMC and NXP by settling on Arizona as the place for its upcoming foundry. 

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    jduby February 26, 2021

    Intel started the first fab in Arizona in 1980? Nope. When I hired into Motorola Government Electronics Division (as it was then) in Scottsdale in 1976, Motorola’s Semiconductor Products Sector already had a fab at 52nd Street and McDowell in Phoenix; it’s now ON Semiconductor.

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    • brannnnn March 03, 2021
      And it's not just ON, the article neglects a lot more non-Intel fabs. Motorola had half a dozen other fabs across the valley at that time. Even NXP's presence in the valley traces back through Freescale to Motorola. Microchip still has a fab here. ST used to have a fab here. I'm probably forgetting some - point is that Phoenix metro has been a hub of silicon fabs for almost as long as California.
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      phase90 March 11, 2021
      Yes, Motorola for sure. Did Burr Brown have a fab in Tucson?
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