Recent economic uncertainties create headwinds for Arizona businesses, yet our state continues to strengthen its position as a growing technology hub. Phoenix recently hosted SEMICON West 2025, ASU and Applied Materials just opened a shared world-class $270-million research and development facility, and TSMC’s $100-billion investment attracts supplier companies daily. These wins build on a decade of impressive growth, with our gross metropolitan product increasing 39% since 2012.
To capitalize on this momentum, the Partnership for Economic Innovation is promoting a clear path for future growth and identifying obstacles to future innovation. By pinpointing specific barriers, PEI aims to remove roadblocks before they slow Arizona’s economic advancement.
After my tenure as CEO of Honeywell Aerospace, I joined forces with Chris Camacho, then CEO of the Greater Phoenix Economic Council, to engage industry to garner their feedback. We interviewed leaders from 15 prominent Valley companies spanning medical devices, therapeutics, aerospace, defense, semiconductors, mining and consumer products.
Our goal was to identify concrete actions to foster innovation in Greater Phoenix. What we discovered surprised us: Despite their diverse industries, these companies reported remarkably similar challenges. Innovation now extends beyond traditional tech companies into every industry, touching not just products, but also services and internal processes.
Technology Megatrends Shaping Arizona’s Future
Industry insights revealed powerful technology megatrends reshaping Arizona’s business landscape: healthcare innovation with brain-computer interfaces, electrification driving demand for specialized systems, artificial intelligence extending into mission-critical operations, autonomous technologies proliferating, aerospace growth tied to customer travel demand and geopolitical tensions, and strategic on-shoring bringing critical manufacturing back to Arizona.
These interconnected forces create tremendous opportunities, but only when we work together to overcome barriers to innovation. In our conversations, leaders consistently identified hiring and workforce development, research partnerships, regulatory environment and supplier ecosystem as critical areas needing improvement to capitalize on these trends.
Nurturing Talent: Today and Tomorrow
Talent emerged as the primary challenge across every conversation. Companies struggle to find and keep skilled professionals, from neuroscience researchers to electrical engineers. When potential recruits consider Arizona, they evaluate our schools, professional networks, career opportunities and quality of life. Misperceptions about Arizona’s professional environment often hamper recruitment efforts.
Companies also face internal talent challenges as technology evolves at breakneck speed. Workers need continuous re-skilling to remain effective in rapidly changing fields.
PEI is creating communities of practice for key disciplines and developing re-skilling programs. Our talent pipeline project is addressing longer-term needs through unified regional messaging and talent development best practices. We are connecting companies with educational institutions to align student preparation with market demands and creating a mentorship model for startups.
Policy & Infrastructure for R&D Investment
Beyond talent challenges, companies identified barriers to commercialization.
The WearTech Applied Research Center demonstrates what’s possible when these barriers fall — its $20-million portfolio spans 43 projects in wearable and other technologies, with half of the early two cohorts reaching market.
Companies seek more such collaboration. Targeted policy initiatives can bridge gaps through incentives and matching funds for industry-sponsored applied research projects. PEI is perfecting the framework for universities and businesses to collaborate effectively, turning research into market-ready products faster.
PEI is bringing together industry, education and community leaders to champion policies that overcome R&D barriers. These efforts recognize that policy improvements require coordinated action across sectors to accelerate the journey from laboratory discovery to market success.
How We Can Advance Innovation
Arizona’s economic future depends on our ability to overcome innovation roadblocks. PEI continues building on a decade of momentum by bringing together business leaders, educational institutions and policymakers — and then acting. I invite all Arizona business leaders to join this effort. Together, we can build an innovation ecosystem that rivals any in the world — one that creates high-paying jobs, attracts investment and positions Arizona as a global leader in tomorrow’s industries.
Celebrating Innovation Summit
What: The Celebrating Innovation Summit brings together Arizona’s industry leaders, innovators and partners to explore future technologies across MedTech, aerospace & defense, chips & AI sectors.
When & Where: Friday, November 14, 2025, 8:30 a.m. to 5:30 p.m. at ASU’s Media and Immersive Experience Center in Mesa.
Why it matters: The Summit creates a platform for meaningful discussions about the future of Arizona’s innovation economy as Arizona strengthens its position as an innovation hub across multiple sectors.
Highlights: Industry panels, discussions on infrastructure and workforce, Champions of Innovation Awards ceremony, live technology demonstrations, and networking with industry leaders.
Featured speakers: Mike Madsen, former Honeywell Aerospace CEO; Dr. Sethuraman Panchanathan, former National Science Foundation director; Amy Liu of Brookings Institution; and Grace O’Sullivan, ASU Vice President of Corporate Engagement.
Registration information: www.azpei.org/celebratinginnovation2025
Mike Madsen has 37 years of experience in aerospace and defense, recently retiring as president and CEO of Honeywell Aerospace Technologies. He serves on the Partnership for Economic Innovation Board of Directors and chairs PEI’s strategic planning to develop an actionable framework for future growth of Greater Phoenix’s innovation economy.
