At the inception of the semiconductor industry in the 1950s, the United States represented 100% of the world’s semiconductor manufacturing capacity due to its origins in the U.S. defense industry. Today, that number has dropped to 8%.
With the increasing cost of integrated device manufacturing in the 1980s, the semiconductor industry was prompted to outsource fabrication to countries such as Taiwan, Japan, South Korea and, later, China. It’s no surprise that today, after decades of honing their craft, these countries are the dominant players in the semiconductor sphere.
Offshoring is crucial to the success of the industry, not to mention international relations and trade. Manufacturing semiconductors is an incredibly complex and costly process and the U.S., like every country, cannot be completely independent in its semiconductor supply.
That said, the 2022 CHIPS and Science Act has helped position Arizona as a dominate leader in national semiconductor investment and onshoring, with more than $102 billion in capital investment that has led to the creation of 15,700 direct industry jobs over the past four years.
The CHIPS Act in the Desert
Backing up, the CHIPS Act pledged $52 billion to be dispersed over five years to support the U.S. semiconductor industry, in addition to its R&D and capital investment. The Act’s primary goal is to significantly decrease the risk related to U.S. reliance on the offshore production discussed above.
The three subsequent goals of the Act are to:
- Decrease risk in the semiconductor security and supply chain,
- Bring merchant fab capabilities to the U.S. and
- Develop new advanced packaging capabilities.
The Act has had a prominent impact on Arizona specifically as it allocated $8.5 billion to Arizona-based Intel and $6.6 billion to the Taiwan Semiconductor Manufacturing Company’s Arizona branch. This has not only led to a stronger statewide economy, but enhanced preexisting ties to higher education institutions.
For example, $100 million has been distributed among Arizona State University, the University of Arizona and Northern Arizona University, to further develop semiconductor talent in the U.S. This has enabled the creation of ASU’s Materials-to-Fab Center and the University of Arizona’s Nano Fabrication Center.
Furthermore, the Arizona Commerce Authority has taken an active role in public education and semiconductor research. A prominent example includes its development of the National Semiconductor Economic Roadmap, a 48-page report developed in partnership with industry leaders, academic institutions, state entities and Boston Consulting Group.
With ongoing support from the ACA and Governor Katie Hobbs, Arizona has strategically positioned itself as the focal point for onshoring semiconductor supply back to the U.S. by investing in future ideas and paving the way for further development.
TSMC and Beyond.
TSMC is the beating heart of semiconductor industry and TSMC Arizona, in addition to Intel, is the bridge the U.S. needs to regain its footing as an industry leader. TSMC has invested $65 billion in the creation of three Arizona-based fabs. This is projected to generate $32.9 billion in economic output, create roughly 40,000 new jobs and bring together a hub of innovators in the next 13 years.
With that, one cannot discount the 107 additional semiconductor companies sprinkled across Arizona and the citizens they employ. As Phoenix prepares to host SEMICON West 2025, it is important to watch trends pertaining to semiconductors, equipment, materials and R&D initiatives and how they continue to enhance Arizona’s presence on the global semiconductor stage.
Every day, new ideas are brought forward to existing and emerging industry leaders. Deca, for example, is the leading independent provider of advanced packaging technology to the semiconductor industry. It recently launched a partnership with ASU to implement Deca’s M-Series fan-out and Adaptive Patterning technologies, with the support of the Department of Defense’s Microelectronics Commons.
What’s Next in Arizona Microelectronics Landscape
Through such partnerships with statewide research facilities, universities and TSMC, the future of microelectronics in Arizona could indeed be 3D stackables, novel materials or perhaps even something as exotic as hybrid compute models, melding computational biology with microelectronics to form an entirely new compute paradigm.
Only time will tell.
