Chandler and Phoenix set to become hubs in changing face of trillion-dollar industry

A major development in Arizona has been the building of manufacturing facilities by global giants.

PUBLISHED JUL 8, 2024

Intel, which has had a presence in Arizona for decades (pictured above is its Ocotillo Campus), has announced a $20 billion expansion project to build two new semiconductor factories in Chandler.

Chandler, Arizona: "Our economy now, I think it's fair to say, runs on semiconductor chips. We can't risk losing access to them," Senator Mark Kelly, D-Ariz, told The Arizona Republic's popular 'The Briefing'. And for better or worse, he's probably hit the nail on the head. The microchip industry in Arizona has recently seen some strong growth.

One of the major developments in Arizona’s microchip industry has been the establishment of new manufacturing facilities by global giants like Intel and Taiwan Semiconductor Manufacturing Company (TSMC). Intel, which has had a presence in Arizona for decades, has announced a $20 billion expansion project to build two new semiconductor factories in Chandler.

Intel, which has had a presence in Arizona for decades, has announced a $20 billion expansion project to build two new Fabs in Chandler.

TSMC, the world’s largest contract chipmaker, has committed to building a $12 billion manufacturing plant in Phoenix. This facility will focus on producing advanced 5-nanometer chips, essential for next-generation technologies like 5G, artificial intelligence, and high-performance computing. TSMC’s investment is expected to create thousands of high-tech jobs.

Arizona’s government has played its part in wooing the companies to the state by providing incentives, such as tax breaks and infrastructure improvements. Educational institutions like Arizona State University have developed specialized programs to train the next generation of engineers and technicians, ensuring a local pool of talent.

While a majority of chips are still made in South Korea, Taiwan and China, there is shift to other markets, primarily the US.

Things you need to know about the global microchip industry in 2024

Market Growth: The global semiconductor industry is projected to grow into a trillion-dollar industry by 2030, with an average annual growth rate of 6-8%.

Revenue: In 2022, the industry's revenue reached nearly $600 billion. The market is rebounding in 2024 after declines in 2023 due to various economic pressures.

Top Companies: Nvidia leads the market with a capitalization of $3.01 trillion, followed by other major players like TSMC and Broadcom.

Sales Growth: The semiconductor industry saw a 15.2% year-on-year increase in sales in January 2024, reaching $47.6 billion.

Key Drivers: Automotive, computation and data storage, and wireless industries are predicted to drive about 70% of the industry’s growth. Automotive demand is expected to triple by 2030 due to advancements in autonomous driving and electric vehicles.

Automotive Segment: The cost of semiconductor content in electric and autonomous vehicles could increase from $500 in traditional cars to $4,000 in advanced models.

Memory Market: Memory sales, which accounted for almost $130 billion in 2022, are rebounding to 2022 levels after a significant drop in 2023.

Smartphone Market: Smartphone sales are expected to grow by 4% in 2024 after a decline in 2023. The shift towards mid-tier segments in emerging markets and 5G growth are key contributors.

Supply Chain Shifts: The industry is experiencing significant changes in its supply chain, moving away from traditional strongholds like Japan towards newer hubs like Arizona.

Sources: McKinsey & Company, Deloitte United States