“Arizona’s tech community is a connected community,” says Sandra Watson, president and CEO of the Arizona Commerce Authority. “The camaraderie between entrepreneurs, whether you’ve been here for decades or just arrived this year, is as generous and welcoming as any in the world — a valuable asset for fostering innovation and collaboration.”
Such positivity from the state agency charged with building business is echoed by businesspeople actually in the industry, as we heard from four members of the Arizona Technology Council for this month’s Feedback feature.
An example Watson cites is the ACA’s new partnership with Plug and Play. Plug and Play’s model, which includes more than 50 offices around the world, is anchored around connecting top industry leaders with emerging entrepreneurs and innovators. “This global network will serve Arizona by attracting worldwide technology leaders to our state while providing our best and brightest a global platform to share their ideas,” Watson says.
Chris Camacho, president and CEO of Greater Phoenix Economic Council, further elaborates: “Greater Phoenix fosters an environment that encourages collaboration, knowledge sharing and partnership among tech companies within innovation hubs and co-working spaces like ASU’s SkySong Innovation Center.” Noting that this spirit of cooperation can be seen in various initiatives and organizations that bring together tech entrepreneurs, startups, investors and established companies, he points out that there are nearly 15,000 technology companies in Arizona, providing more than 160,000 high-tech jobs, with leading national software and IT companies like Amazon, PayPal, Lyft and Opendoor all operating out of Greater Phoenix.
Furthermore, he adds, local universities and research institutions such as Arizona State University and the University of Arizona have technology transfer offices that facilitate the commercialization of research and innovation. “These offices help bridge the gap between academia and industry, encouraging collaboration and knowledge sharing,” Camacho says. “Tech-focused networking events, innovation hubs, and mentorship programs organized by groups like the Arizona Technology Council play a crucial role in connecting individuals and businesses, fostering a supportive ecosystem that encourages growth, innovation and the exchange of ideas.”
Steve Zylstra, president and CEO of the Arizona Technology Council, paints an even bigger picture, observing that, in a way, the Arizona technology community has become the center of our business community because every industry is greatly influenced and impacted by success in technology. In fact, he notes that the Arizona technology industry has held an average technology jobs multiplier of nearly 4.0 every year for the past few years. This means that for every 100 jobs added to the technology industry, nearly 400 jobs are created in other industries.
“I am proud to be part of this community because of our history of collaboration across sectors and industries. Our combined efforts make the local business community stronger, and those of us in the technology community are eager to share knowledge and help our fellow business leaders so we succeed together,” Zylstra says.
Strength of Synergy
“Greater Phoenix boasts a diverse and vibrant high-tech ecosystem that encompasses various specialties,” Camacho says, pointing to companies operating in fields such as software development, cybersecurity, data analytics, artificial intelligence, semiconductor manufacturing, aerospace and renewable energy, among others. “This convergence of specialties creates a unique synergy where businesses can collaborate, share expertise and leverage each other’s strengths,” he says.
He believes the presence of a strong technology community and a broad range of tech companies positively impacts further growth as he has found it encourages innovation, attracts investment and stimulates entrepreneurship. “The collective knowledge and expertise in different tech specialties foster an environment conducive to cross-pollination of ideas and the development of groundbreaking solutions,” Camacho explains.
Noting that the technology community continues to expand, Zylstra points out that Arizona is considered a national leader with its strong and established legacy industries, including semiconductor manufacturing, aerospace and defense, energy, software, and optics and photonics. “We’ve also seen many emerging industries grow within Arizona due to our business- and technology-friendly legislation,” he says. In particular are two laws that are very future focused in electric/autonomous vehicles and clean energy, plus our legacy and emerging industries are leading to the growth of ancillary industries such as AI and machine learning as well as driving to the region a wide variety of suppliers that support each of these industries.
Citing another important source of our strength, Zylstra emphasizes, “The impact of our universities also cannot be understated.” He notes that both Arizona State University and The University of Arizona are entering into major industry partnerships that are expanding the presence of the space, health and bioscience, and advanced manufacturing industries, to name a few.
Observing that a skilled labor pool is important to supporting our technology industries, Camacho notes that workforce development programs, partnerships between educational institutions and tech companies, and initiatives focused on upskilling and reskilling are key components of the region’s strategy.
We also benefit from legacy industries, as Zylstra points out that aerospace and defense and semiconductor manufacturing have driven talent to our state for many years. Additionally, he says, the Arizona Technology Council, as well as partners across the technology and economic development sectors, have also worked hard to create workforce development programs in an effort to produce new pathways to a career in technology. “These include programs like AZNext, AZ Cybersecurity Workforce & IT Collaboratives, Pathways to Prosperity, IT/Cyber Career Network and more that introduce technology career learning to underserved communities, upskilling and reskilling programs, and purpose-built job search sites for industries like software and cybersecurity,” he shares.
Watson gives a lot of credit to our state’s education system, pointing out it is building a large talent pipeline by preparing thousands of students for skilled roles in manufacturing, technology and more at Arizona companies. Says Watson, “Arizona’s skilled workforce is unmatched in large part because of our top-tier universities and community colleges.”
And the ACA is hands-on in this effort, working closely with industry and education partners to develop unique workforce training programs. One example is Drive48, a state-of-the-art training center in Coolidge. A partnership between the Arizona Commerce Authority, Central Arizona College, local governments and Lucid, Drive48 features cutting-edge robots and hands-on learning rooms. More than 2,000 Lucid employees have completed programming since Drive48 opened in 2021.
“The Drive48 model has achieved so much success, we plan to expand it,” Watson says. She reports the state has allocated $30 million to build six additional advanced manufacturing training centers around the state, which will feature industry partnerships in fields such as semiconductors, batteries, electric vehicles and more.
The New Economy Initiative
Strengthening our workforce was one of the critical concerns that drove the creation of the New Economy Initiative. “The New Economy Initiative is a collaborative effort focused on strengthening our workforce and furthering research and development facilities while ensuring Arizona remains competitive in high-tech industries like semiconductors,” Watson explains, adding, “We commend our three public universities — Arizona State University, The University of Arizona and Northern Arizona University — for their leadership in this area.”
In fact, it was the Arizona Board of Regents who created the NEI. In a special meeting in September 2019, the Arizona Board of Regents outlined a proposal for a $165 million state budget request, called “New Economic Initiative: Enhancing Arizona’s Competitiveness,” with the goal of preparing students for the state’s evolving economy.
Speaking to its success, Zylstra says, “Arizona universities are leading the way on the New Economy Initiative.” He notes, for instance, that Arizona State University has been very aggressive with its allocation of these investments, working both independently and with industry partners on expanding programs directly related to workforce development in advanced manufacturing, microelectronics and more. The university is also funding research across a variety of disciplines, one of which focuses on 3D printing and simulation to reduce waste in manufacturing — a project it is working on with another AzTC member, Phoenix Analysis and Design Technologies. Northern Arizona University is bolstering its health and forestry programs and research, while The University of Arizona is expanding programs and research focused on space, health and bioscience.
In fact, UArizona is one of four higher education institutions in the nation positioned to fill the research and diverse workforce needs for the defense industry specifically related to hypersonics, according to the university’s website. Federal funding for hypersonics-related research is expected to grow by more than $200 million in the next year. The Department of Defense, Raytheon and other defense companies have expressed the need for more students graduating with degrees related to STEM and hypersonics systems.
And Camacho notes the initiative has garnered the support and involvement of more than 100 industry partners who are actively collaborating with ASU. “Together, they are co-designing this groundbreaking endeavor, transforming industry ideas into real-world, high-impact outcomes, and paving the way for sustained economic growth and resilience,” Camacho says.
Camacho credits ASU’s leadership in research and talent development as having played a pivotal role in attracting substantial investments from major players such as Intel and Taiwan Semiconductor Manufacturing Corporation, and notes that these investments have resulted in the establishment of state-of-the-art facilities right here in Arizona. In addition, ASU has established five Science and Technology Centers as part of the New Economy Initiative. “These centers serve as epicenters of innovation, fostering breakthroughs in cutting-edge research and facilitating collaboration with industry leaders,” he says. “They are instrumental in attracting new enterprises, building a highly skilled workforce through training and skill-building, and nurturing entrepreneurship through technology transfer and support for startups.”
As ASU’s website describes them, “STCs bring together faculty and student researchers, industry professionals and entrepreneurs to take big ideas from the lab to market across five key clusters of future technologies.”
More broadly, ASU believes the New Economy Initiative is improving Arizona’s readiness to meet the needs of the microelectronics industry and America’s civic leaders by creating the business environment, infrastructure and human capital necessary to capitalize on emerging opportunities. In fact, ASU has reported that its leadership in research and talent development, facilitated by support from the New Economy Initiative, has played a role in the surge of microelectronics enterprises in Arizona. Economically, the most significant manifestations of that surge are Intel’s and Taiwan Semiconductor Manufacturing Corporation’s combined $60 billion investment in three new facilities in Arizona and the announcement by Apple that it plans to buy Arizona-made chips.
Commenting on the NEI’s collaborative aspect of bringing together an array of public and private partners representing sectors like aerospace, automotive, energy, healthcare, semiconductor and more, Camacho says, “This collective effort is driving tremendous economic growth, fostering the development of a highly skilled workforce, and positioning Arizona as the ultimate high-tech hub.”
Funding and Investment
Supporting his observation that Greater Phoenix has experienced growth in terms of capital availability for businesses in recent years, Camacho reports that, since 2015, $3.1 billion in funding has gone to startups based in Greater Phoenix. “From early-stage ventures testing a product to late-stage startups looking to expand, the region is home to startups at all stages,” he says. “This influx of capital has supported the growth and expansion of both established companies and startups across various industries, including the tech sector.”
Referring to the significant growth of venture capital over the past few years, Zylstra notes that in 2021, for example, we hit a state record with close to $2 billion in venture capital investment. “We’re also developing a robust financial services industry on the verge of becoming No. 1 in the country,” he adds.
The surge of new funding sources we’ve seen in Arizona comes from both private and public sources, Watson shares, citing as an example the newly formed Arizona Venture Development Corporation. “The ACA launched the AVC recently with $87 million in funding to support local entrepreneurs, especially those from disadvantaged communities,” she says.
Additionally, she points to a $24 million small-business loan guarantee program, administered by the ACA in partnership with local CDFIs, that is running parallel to the venture funding.
And in recent weeks, KORE Power, Inc. announced it had received a conditional commitment from the U.S. Department of Energy’s Loan Programs Office for a loan in the principal amount of $850 million under the Advanced Technology Vehicles Manufacturing Loan Program.
The loan will be used to fund the construction of KORE’s advanced battery cell manufacturing facility in Buckeye, Arizona. The KOREPlex, a 1,330,000-square-foot facility, will house multiple production lines to manufacture batteries for electric vehicles and energy storage systems in the United States. “We are focused on building a facility where American workers will build the battery cells that power our energy and mobility future,” says Lindsay Gorrill, founder and CEO of KORE, which serves utility, commercial, industrial and e-mobility, including EV manufacturers and fast-charging infrastructure companies. “Domestic manufacturing will unlock the benefits of clean energy investments for U.S. workers across the supply chain.”
Commenting on the significance of this loan, Arizona Senator Mark Kelly said, “This is big news for Arizona and the country; supporting KORE Power’s gigafactory in Arizona will bring manufacturing back to America for a critical supply chain, while creating good-paying jobs. The administration is taking advantage of the resources we provided through the Inflation Reduction Act to not just boost jobs in Arizona, but also to strengthen our national security by reducing our dependence on foreign sources of battery components for everything from electric vehicles to energy storage. Thanks to KORE Power and the rest of our emerging battery sector, Arizona will be front and center leading the country in developing and manufacturing the technology that will power our economy into the future.”
Intel has long been a force in the growth of our technology industries. “Intel is so proud to say that we have invested and innovated in Arizona for more than 40 years,” says Liz Shipley, public affairs director for Intel Arizona, noting that Intel has invested significant time and resources to help make Arizona an outstanding location to develop and manufacture semiconductors — from education and workforce development to supply chain and more. A recent investment of note was the $20 billion for two new leading-edge semiconductor factories that broke ground in September 2021. “This investment will create 3,000 high-tech, high-wage Intel jobs, 3,000 construction jobs, and support an estimated 15,000 additional jobs in Arizona. We are expanding in Arizona because of our long track record of success, along with this ecosystem of innovation we have helped develop,” Shipley says.
And among the many headlines that Taiwan Semiconductor Manufacturing Company has made by bringing its groundbreaking chip manufacturing process here was its announcement last December of a $40 billion investment to build its extensive complex in northwest Phoenix — the largest foreign direct investment in Arizona history.
Zylstra has observed that capital for infrastructure has been a bit more difficult to attain. “But we’re beginning to see progress in this area,” he says. Acknowledging that a few pieces of legislation — such as extension of the half-cent sales tax that originated with Proposition 400 and adding a much-needed infrastructure tax — are still up for debate, he shares that “infrastructure capital, especially as it pertains to clean energy investment, is something Arizona Technology Council will be focused on in the coming months and years.”
However, Camacho points out that Greater Phoenix has made significant investments to enhance its technological infrastructure. He cites the region’s robust fiber-optic network, reliable power supply and state-of-the-art data centers. “These infrastructure developments are crucial for supporting the needs of technology-driven businesses, including high-speed data transfer, cloud computing and emerging technologies,” he says.
Among the many high-tech sectors in Arizona that are growing rapidly, Watson names semiconductors, electric and automated vehicles, batteries and more. She notes that, in just the last half year, five battery companies have announced expansions in the state, and, since 2016, five electric vehicle manufacturing facilities have opened.
And semiconductors, in fact, is an industry sector in which Arizona leads the nation. “We rank No. 1 for investment since 2020, with more than $60 billion announced,” Watson says. “We also lead the nation in the number of supplier announcements during that time. All told, we’ve been proud to partner to announce more than two dozen semiconductor expansions in just the last two years.”