Arizona’s economy was once dominated by the “five C’s”: cotton, cattle, citrus, copper, and climate. But a new C has emerged that could grow to overshadow the rest: chips. New semiconductor manufacturing facilities are springing up across the greater Phoenix area, stretching across blocks of new roads with names like “Processor Parkway” and “Transistor Terrace.” Just outside the facilities, developers anticipating an influx of workers are planning mixed-use residential and industrial zones like mini modern-day company towns.
“It should be the sixth C,” says Thomas Maynard, senior vice president of business development at the Greater Phoenix Economic Council (GPEC). “We’re losing those agricultural pieces anyway … we’re diversifying our market to where we can be more resilient for the next [economic] downturn.” A less hospitable climate has taken its toll on farmers and ranchers facing dwindling water supplies that chip factories, or fabs, are now guzzling up.
Maynard is sitting next to the bustling Arizona state booth at Semicon West, the annual industry convention that is being held in Phoenix after more than 50 years in the Bay Area. The conference has ballooned in size, with a 45 percent increase in the number of booths and 60 percent more people registering to attend, according to trade group SEMI, which organizes the conference.
There’s a glimmer of hope in Maynard’s eyes, and he’s quick to flash a smile while talking about the possibilities in Phoenix. Arizona already thinks of itself as “America’s Semiconductor HQ.” At least that’s what the walls of the state’s official booth proclaim.
“We’re like a flea on David’s head fighting Goliath”
Arizona has raised more than $200 billion in semiconductor investment in just the last five years alone, with more than 75 chip companies flocking to the Greater Phoenix area. It’s where Taiwan Semiconductor Manufacturing Company (TSMC) and Intel both plan to produce the next-generation chips that American companies need if they want to stay competitive in the AI arms race.
That’s triggered a rush of hopes — and some fears — in the region. Lawmakers and industry leaders have promised a manufacturing renaissance that comes with thousands of jobs. People I spoke with in Phoenix want those opportunities, but many aren’t nearly as confident as Maynard that the benefits will materialize for everyone. Will companies hire locally? Build too close to homes and schools? Protect workers and residents from chemicals seeping into their environment? Burn through too much water and electricity in a desert city where everyday survival hinges on making the most of limited resources?
Across town, a different kind of gathering is taking place, not to hype up the chip industry, but to try to hold it accountable. While some 35,000 attendees at Semicon West buzz around the convention center, just a mile away in downtown, fewer than 100 participants — including concerned residents, some disenchanted workers, and advocates from other places in the US, like New York and California, where the chip industry has a footprint — gather at an event space in Phoenix’s warehouse district for another conference called “The Dark Side of the Chip.”
There, attendees can’t ignore the disparity. A coalition of labor and environmental groups called Chips Communities United (CCU) organized the event to make sure their demands could be heard. “We’re like a flea on David’s head fighting Goliath because we’re challenging the might of some of the world’s most powerful and highly capitalized companies,” CCU coalition director Judith Barish says onstage.
I spoke with more than a dozen people about how chip manufacturing might transform Phoenix, including residents, current and former semiconductor factory workers, labor advocates, and industry experts. The changes are already underway; there’s no denying that chipmakers have already gained a foothold. People I spoke with say they can look back at the impact the industry has already had — in Silicon Valley and in Phoenix — to see what might come next. The outcomes vary, of course, depending on whom you’re talking to. There’s a manufacturing race to win against Asia, a throne the US needs to recapture. There are also lessons to be learned, mistakes to avoid making again.
“America’s Semiconductor HQ”
Lawmakers are placing their chips on Arizona to try to solve a massive international headache. The global semiconductor shortage during the covid-19 pandemic snarled supply chains and threatened all sorts of industries from cars to video games. The hiccups spurred a bipartisan mission to bring semiconductor manufacturing back to the US. President Joe Biden signed the CHIPS and Science Act into law in 2022, authorizing $52.7 billion in funding for domestic chip manufacturing and research.
The US Department of Commerce awarded Intel up to $7.86 billion of that funding, and the company is spending $32 billion to build two new factories and expand its existing fab in Arizona. The company missed out on making chips for the smartphone boom. Now it’s trying to make up for the loss by producing cutting-edge chips for AI as it struggles to turn its business around.
Meanwhile, TSMC, the world’s largest chipmaker, has plans for six new semiconductor fabs in Phoenix after being awarded up to $6.6 billion in CHIPS Act funding. The company’s expansion out of Taiwan represents the biggest foreign direct investment in America in history, worth $165 billion.
Both companies plan to make leading-edge chips in Arizona. Intel started producing its Panther Lake processors for consumer and commercial AI PCs and gaming this year at its Ocotillo campus in Chandler. More hinges on the success of this chip than any other it’s produced in years. TSMC began producing Nvidia’s Blackwell AI GPUs at its new Phoenix fab earlier this year. These fabs also bring in dozens of other businesses to supply materials and package chips in the region.
The Grand Canyon state’s history with the semiconductor industry initially made it attractive to companies. Motorola opened an early chip facility there in the 1940s before it shuttered that side of its business in the 2000s. Intel arrived in 1979 and has stayed ever since, even after semiconductor manufacturing started moving overseas to Asia in the 1990s.
Arizona has also tried to lure companies back by promising streamlined permits and lower taxes. The state’s commerce authority boasts that Arizona has one of the lowest corporate income tax rates in the nation. And Silicon Valley, where the chip industry first took off, is too crowded and too expensive in comparison to manufacture many chips anymore — even though it’s still home to fabless chip designers like Nvidia and AMD.
In Phoenix, Intel and TSMC are each developing advanced processes for manufacturing chips, meant to improve transistor density and energy efficiency. Chips made using TSMC’s N2 process are particularly important, according to Sanjay Kumar, vice president at consulting firm Kearney. “That’s the technology China doesn’t have. That’s the technology that is needed for AI workloads,” Kumar tells The Verge. Kumar previously served as senior director at the US CHIPS Program Office under the Biden administration and senior director of technology and business strategy at Intel.
“It’s super important to bring this advanced [technology] over here … This is the most pressing priority for us to keep our lead on the technology,” Kumar says. “There is a will from the company to make it work; there’s a will from Arizona to make it work.”
Sure enough, Arizona Gov. Katie Hobbs was one of the first speakers to open up Semicon West. After being introduced to the crowd as “the semiconductor governor,” she pledged to the industry: “I give you my commitment. No state will do more to support your success.”
Jack*, a former Intel worker in Phoenix, used to volunteer at local schools encouraging students to work in the semiconductor industry. He’d tell them “if they work hard, one day, that they might be able to land a job” at Intel, he says.
“I really care for the community and I’m from Arizona,” says Jack, who was granted anonymity to speak openly about his employment. After all, he got his job at Intel through a similar outreach event catered to veterans in the region. “The company PR headlines and stuff, they would say we’re trying to do good for the neighborhood and we want to build a talent pipeline to the neighborhood. So I wanted to do my part.”
Jobs are the biggest selling point these companies try to make in the community. A theme at Semicon West was the message that workforce development is one of the industry’s biggest challenges. Local colleges and universities in Arizona have taken note, building out a host of training programs for semiconductor manufacturing.
The semiconductor industry around Phoenix already employs more than 33,000 people, with about 4,000 of those added since 2020. The Semiconductor Industry Association expects the US workforce to grow by 115,000 jobs by 2030.
Many of the people I meet in Phoenix have family members, neighbors, or friends who have worked for a chip company. But recently, it’s also become more likely that they knew someone who’d been laid off from one of those jobs.
Intel announced in July that it would cut tens of thousands of workers following waves of layoffs as the company cycled through new leadership, downsized parts of its business, and stopped making automotive chips. Considering labor costs are one of the factors that make it more expensive to make chips domestically, automating production shaves down overhead considerably. Semiconductor manufacturing in general has become much more automated over the years.
Some current and former fab workers I spoke with have come to see themselves as dispensable. “Semiconductor companies think that workers are an embarrassing and temporary replacement for something they can’t automate yet,” Simon McGrath, another former Intel worker from Oregon, tells The Verge.
I also came across skepticism over whether new fabs in the US will hire Americans. Intel, TSMC, and other companies have relied on H-1B visas to bring in workers from Asia. Half of TSMC’s 2,200 employees in Arizona arrived from Taiwan, according to Rest of World’s reporting last year. That article also describes a culture within TSMC of workers expected to be on call around the clock, transplanting grueling working environments in Taiwan to Phoenix.
“Workers are an embarrassing and temporary replacement for something they can’t automate yet”
Fab workers describe similar conditions, according to Cynthia Diaz, a local organizer with the International Union of Painters and Allied Trades (IUPAT) and Arizona Jobs with Justice. TSMC employees have described working 12 to 16 hours or more a day and are sometimes tasked with jobs for which they had no proper training, she says. Safety protocols can change frequently with little notice, according to Diaz. TSMC now also faces a class action lawsuit over alleged employment discrimination against “individuals who are not Asian and not Taiwanese citizens.”
TSMC declined to comment on ongoing litigation in an email to The Verge. The company says it now employs more than 3,000 people in Arizona and that 90 percent of technicians it has hired in the US are from Arizona. It didn’t share the percentage of Arizona residents that make up its engineers, a role which fab workers tell The Verge comes with more career growth opportunities, but TSMC says that it’s recruiting for these roles at “universities across the US.”
Jack says he was hired as a technician at Intel even though he was expected to do much of the same work as engineers hired from abroad who were paid significantly more than him. The US Department of Labor accused Intel of “failing to afford equal employment opportunity” to Hispanic American and Black employees by paying them less than comparable Asian employees in 2016 and 2017. The company settled the complaint for $5 million in 2019 to resolve allegations of systemic pay discrimination against African American and Hispanic employees, as well as female employees. Intel spokesperson Nancy Sanchez says in an email to The Verge that the company “strive[s] for an inclusive and engaged workforce and regularly work[s] with third-party experts to monitor and advance global pay equity.”
Tech companies “put on a show and say, ‘Hey, we’re going to bring jobs,’” Jack tells The Verge. “I would love to see that if [Intel has] a factory in Chandler, that they hire people from Chandler there.”
But after working for Intel for nearly a decade Jack’s optimism has evaporated. He likens the feeling to a scene in Terminator 2 where Sarah Connor tries to warn kids at a playground about an impending nuclear explosion — he wants to warn them, but can’t stop what’s about to happen.
Today, Silicon Valley is still studded with Superfund sites — places so contaminated they were put on a national priority list for cleanup. California’s Santa Clara County, home to much of the first wave of semiconductor manufacturing, has more of those sites than any other county in the US. CCU’S Barish and her colleagues often say that a chip factory is also a chemical facility because of the ever-evolving cocktail of potentially hazardous substances used in production.
Motorola’s old semiconductor facility left its own plume of contamination in Arizona. The Superfund site stretches 7 miles, from downtown Phoenix to close to Sky Harbor Airport. Similar to other Superfund sites left behind by the industry in Silicon Valley, an underground storage tank at Motorola’s facility leaked chemicals that contaminated soil and groundwater. Contaminants at the site include the known and probable carcinogens benzene, arsenic, chloroform, and lead.
Fab workers often faced the greatest risks from those chemicals. Employees at these early fabs were exposed to industrial solvents, adhesives, and other hazardous substances linked to reproductive health issues. Several industry-backed studies even showed an increased risk of miscarriage among fab workers. The research raised questions about whether developmental disabilities and congenital disorders in children could have stemmed from their parents’ exposure to those chemicals at fabs.
The industry says that automation limits the potential for workers to be exposed to chemicals. But The Verge spoke with two fab workers who weren’t convinced that automation eliminates the problem. Instead, they say risk may have just shifted away from workers along the assembly line to those tasked with maintaining equipment or offloading and transferring chemicals across facilities.
In one deadly incident in May 2024, a truck driver died at TSMC’s Arizona plant from an “uncontrolled pressure release” while transporting sulfuric acid waste. State regulators also cited TSMC in November over the risk of skin and eye exposure to sulfuric acid and levied a $16,131.00 penalty against the company over the May accident. TSMC reached a settlement agreement with state regulators this year and the penalty was ultimately dropped, according to documents the agency shared with The Verge.
“We recognize that the demands of a 24/7 semiconductor fab can be intense, particularly as we are now in volume production in Arizona. However, we remain committed to fostering a healthy and safe workplace that complies with labor laws and prioritizes the well-being of our employees,” Christine Dotts, director of public relations for TSMC Arizona, says in the email, adding that the company has a voluntary partnership with state regulators to evaluate safety protocols.
The current Intel employee I spoke with says he worries about cost-cutting measures and downsizing putting him and other workers at greater risk at his facility. “They’re not using the most effective or safest way to handle chemicals,” particularly when it comes to those used in equipment maintenance, the person tells The Verge. “I’ve been exposed to chemicals more times than I should have.” The employee, using the pseudonym Farhan, was granted anonymity to be able to speak freely about the work environment without repercussions.
“Safety is a top priority at Intel and maintaining an environment that protects the safety of our employees is vital to a sustainable company,” Intel spokesperson Sanchez says in the email to The Verge. “We address employee concerns and offer an environment that is open to employee feedback and participation in maintaining a safe and healthy work environment.”
Companies are typically reluctant to even share which chemicals they use in their facilities, protecting them as intellectual property. The semiconductor industry does acknowledge that it needs “forever chemicals,” or per- and polyfluoroalkyl substances (PFAS). Teflon and other variations of the PFAS are used in chip manufacturing because of their resistance to heat and corrosion.
They’re called “forever chemicals” because of their molecular strength, a trait that allows these substances to persist for a long time in a person’s body and in the environment. Exposure to the most widely used forever chemicals has been linked to health risks including kidney and testicular cancer, hypertension and preeclampsia in pregnancy, higher cholesterol, and more.
Regulators are starting to catch up with the growing body of research on risks associated with forever chemicals. Last year, the Environmental Protection Agency moved to designate two of the most common types of PFAS as hazardous substances under the nation’s Superfund law, which makes polluters liable for paying for the costs of cleanup. The US Chamber of Commerce and other trade groups have challenged the rule in court in a case the Trump administration is now defending. But under Donald Trump, the EPA is simultaneously attempting to roll back restrictions on several types of PFAS in drinking water that the Biden administration finalized last year.
At Semicon West, speakers argued that there are no viable replacements yet for forever chemicals ubiquitous in chip manufacturing. Limits on PFAS, ostensibly, pose an existential threat.
“Without PFAS, we can be shut down,” Ajit Manocha, SEMI president and CEO, said during his keynote talk at Semicon West. His slides showed access to PFAS as both a top priority for 2025 and a “crisis” among six “unprecedented obstacles” the industry faces (alongside a “talent shortage”). Forever chemicals are incorporated into “virtually every process step … from front end and even back end” including making mechanical seals for equipment, he said.
Companies are trying to get ahead of any new regulation at the federal or local level by attempting to carve out exemptions for semiconductor manufacturing — strategies they discussed at the “sustainability theater” on the expo floor of Semicon West. SEMI’s PFAS working group, notably, “is now monitoring and responding to US individual state-level proposals, as lack of policy guidance at the federal level has prompted states to pursue their own individual regulatory agendas,” said a slide the group shared during an update at the convention on its recent progress. The group includes tech giants Intel, IBM, and AWS, as well as DuPont and 3M, two companies notorious for a landslide of lawsuits filed against them over PFAS contamination.
Arizona, unsurprisingly, is very dry. The entire state was experiencing at least a moderate level of drought, with nearly 83 percent in severe drought, over the past few months.
“We live in a desert … [water] is kind of always in the back of your mind,” Farhan tells The Verge. So one of the first things Farhan thought about when chip companies started making their comeback to Phoenix was how much water they would use.
It’s also one of the most common calls that Jennifer Martin-McLeod, a program manager for the Grand Canyon chapter of Sierra Club, says she gets from concerned Arizona residents. Fabs are water-intensive facilities, requiring “ultra-pure” water to clean surfaces and etch sensitive chips. Creating a gallon of ultra-pure water through deionization and reverse osmosis can take as much as 1,600 gallons of municipal water.
“Water use is the biggest flashpoint with this,” Martin-McLeod says. “The elephant in the room is cumulative impact.”
Semiconductor companies including TSMC and Intel tout water recycling, she points out. But it’s crucial to look at the big picture, including suppliers and related businesses that are cropping up around Phoenix. The collective impact the entire industry could have on water resources as a whole is more telling than simply evaluating one project at a time.
The first fab at TSMC’s Arizona site, for instance, uses about 4.75 million gallons of water a day, roughly equivalent to the water used by more than 14,000 homes (about 2 percent of the city’s housing). Those numbers will grow once the company’s second and third fabs at the site are fully up and running. Combined, the company estimates that its three Phoenix fabs will use 16.4 million gallons per day. More advanced processes the company is developing require more rinsing of wafer layers, TSMC spokesperson Dotts tells The Verge.
TSMC and Intel are taking measures to limit water use. Currently, TSMC says it can recycle up to 65 percent of the water it uses in Phoenix. It’s also building a new water reclamation plant to be able to recycle at least 90 percent of the water it uses by 2028. TSMC also says it plans to become water positive by 2040, meaning it would replenish more water than it uses.
Intel’s Arizona facilities together drew more than 3.1 billion gallons of water in 2024 and returned 2.4 billion gallons of that to the local municipality for reuse or to replenish surface and groundwater sources, according to its latest sustainability report. It also recycled about 300 million gallons of the water it used that year. Intel similarly has a goal of reaching net positive water use globally by 2030 — a task it says it has already achieved in the US — and supports 20 water restoration projects across Arizona.
After all, water scarcity is a fear for residential and industrial consumers. A global survey of 100 senior leaders in top semiconductor companies in 2023 found that nearly three-quarters of participants were concerned about access to natural resources including water posing a risk to their business. In 2021, drought in Taiwan cut into fabs’ water supply.
Semiconductor companies also use a significant amount of energy, and need more. “Do we have enough energy to go around? My answer is no,” SEMI president Manocha said during his keynote.
Energy-hungry data centers have been in the spotlight for their impact on the climate and local power grids, and Phoenix is no exception. It’s the fifth-largest market for data centers in the US, according to GPEC. Soaring demand has contributed to a rise in wholesale electricity prices in the US, which rose from roughly $16 per megawatt hour in Phoenix in 2020 to $21 this year.
But it’s not just data centers to blame. The resurgence of domestic manufacturing has been another major contributor. The pang of higher electricity bills is an immediate risk that adds to other concerns residents voiced to The Verge about rising cost of living with all the industrial and urban growth in Phoenix.
In the long run, there’s another problem caused by all the electricity these companies burn through for manufacturing: Gas is still the largest source of electricity in Arizona, a fossil fuel that creates planet-heating pollution. That, in turn, makes Phoenix an even hotter and drier place to live. Both Intel and TSMC have carbon reduction goals that they’re working toward in part by supporting renewable energy projects, but any facilities that they hook up to the power grid in Phoenix will still add to local pollution as long as fossil fuels are part of the regional electricity mix.
When I asked industry leaders what made Arizona attractive, climate was a common response — specifically the lack of natural disasters that might tear up the power grid and lead to outages. But this exposes a significant blind spot. Extreme heat is often overlooked as a disaster, even though it leads to more deaths each year than any other weather-related event. Phoenix is already the hottest major city in the US, making air conditioning essential rather than a luxury. That’s good motivation for grid operators to ensure Arizona has fewer outages than most of the US. But it can be difficult to achieve when electricity demand spikes during heat waves, and another growing challenge to meet as more customers line up to connect to the grid.
Put simply, access to water and power are matters of survival, perhaps more starkly here than in most places.
Even at the “Dark Side of the Chip” meeting, there was an undercurrent of optimism that things can and should improve in the industry. “High tech doesn’t have to be a low road … Semiconductor factories could be models of high-road economic development,” CCU’s Barish said.
Farhan initially saw the job at Intel as “a foot in the door” of an industry that might offer more opportunities than previous gigs. That didn’t exactly work out as expected, but Farhan’s still at Intel and tells The Verge, “I’m looking for ways to make it better.”
Workers across the company’s facilities in the US are discussing a push to unionize, sources from different sites tell me. They’ve also started to organize a broader group called United Chips Against Global Exploitation (UNCAGE) to mobilize semiconductor workers across the industry over a host of concerns, from stronger employee protections to protesting Intel’s ties to Israel during the war on Gaza. The company has a fab in southern Israel and says it’s the largest private employer in the nation’s high-tech sector.
Residents are fighting to engrain stronger protections against PFAS pollution in local wastewater permits for semiconductor facilities, including Intel’s. Solar energy potential in Arizona’s sunny climate was another talking point at the Dark Side conference as a way to make the industry more sustainable. CCU coalition members are also pushing for legally binding community benefits agreements that would require local hiring and project labor agreements with unions.
The CHIPS Act signed by Biden was supposed to usher in some labor protections for workers, but that’s being whittled away now. In August, the Trump administration announced it would take a 10 percent equity stake in Intel. In doing so, the federal government axed Biden-era contractual obligations from CHIPS Act funding that included certain worker benefits. A form 8-K Intel filed in August says that “the [Department of Commerce] has agreed that to the maximum extent permissible under applicable law, the Company’s obligations pursuant to the [Direct Funding Agreement] will be considered discharged.”
The original 2024 funding agreement between the Department of Commerce and Intel encouraged the company to enter into project labor agreements with unions and support childcare costs for employees. As part of the agreement, Intel had also agreed to create more than 6,000 new jobs in the US and committed to investing $65 million in workforce development, including $4 million for supporting women in construction jobs. Intel declined to comment on the record on any changes to its contractual obligations. (The nonprofit Equal Rights Advocates obtained the document through a Freedom of Information Act request and shared it with CCU and The Verge.)
With policymakers hell-bent on removing any potential speed bumps that could get in the way of semiconductor manufacturing, residents are stepping up to push for more accountability. One group in Peoria, a suburb of Phoenix, has already notched a win.
When Peoria residents Kathy Bartelheim, Cheryl Orosco, and Bea Pfaff heard that Amkor, a company that tests and packages chips for brands including Apple, was coming to their neighborhood, they pictured an assembly line of workers putting chips into boxes.
In reality, “packaging” is an industry term for the crucial stage of manufacturing in which chips are encased in materials for protection and to connect them to one another and to the rest of the electronic system. Packaging happens to be one of the steps the industry is obsessing over as a way to improve chips’ performance, and it was a hot topic at Semicon West.
Bartelheim, Orosco, and Pfaff — each wearing long silver necklaces that dangle down toward their waists — can finish each other’s sentences as they describe how pissed off they were that the facility would be located near a charter school. Beyond the school, the facility’s impact on water was a big rallying point for residents opposed to the project. Amkor was expected to use 2 million gallons of water per day and return much of that water back to the municipal waste treatment system. The three women were particularly worried about forever chemicals potentially contaminating drinking water, on top of the looming risk of drought-induced water shortages in the region.
“It’s frightening,” Bartelheim says.
“It’s terrifying,” Orosco chimes in. “We are all retired … This is our forever home,” she adds, placing her hands over her heart. “Until I die I wasn’t planning on leaving.”
“We want to stay here,” Bartelheim adds, pushing the air down in front of her for emphasis.
“We want to stay here.”
“Long term,” Pfaff says, nodding her head and raising a hand to agree. Another neighbor who’s a cancer survivor was already looking for homes elsewhere after learning that Amkor planned to move in, the women say.
For now they’re all staying, and Amkor is moving instead. In August, after facing residents’ opposition campaign, the company announced it would relocate the $7 billion facility to another, larger location further from homes and schools. Even after this victory, Peoria residents are pushing the company to adopt a closed-loop water system to minimize any effects on local water resources.
Amkor tells The Verge that its new facility “will not use PFAS in its direct materials” and that no PFAS will be discharged into the wastewater stream. It says “a portion” of the facility will have a closed-loop system to conserve water, and that 80 percent of the water it uses as a whole will be reclaimed wastewater.
“Amkor has been pleased by the outpouring of community support for this project, which will create up to 3,000 skilled jobs upon completion while helping secure the semiconductor supply chain and drive high-tech growth in the region,” David McCann, Amkor Technology senior vice president, says in an email to The Verge.
Other fights are picking up steam. Residents from nearby Stetson Valley worried about increased traffic and pollution oppose the plan to rezone an area in North Phoenix for the mixed-use industrial and residential development outside of TSMC, which might include an expansion of the company’s campus.
“Stick together,” Orosco says to other communities undertaking similar battles. “Band together, and don’t give up.”
