Late last year, Taiwan Semiconductor Manufacturing Co., as part of an American initiative to the supply chain for critical national economic and national security items to the United States for development and manufacturing, announced that it would build a $12 billion advanced microchip factory in Phoenix. It’s a decision that makes it likely the company’s entire supply chain will follow, also moving to Greater Phoenix.
Last month, Korean-based Samsung announced, for the same reason, that two Phoenix sites were among four national finalists for a $17 billion chip factory to produce advanced logic devices and would likely result in their entire supply chain of approximately 100 companies following along, too.
And just a couple of weeks ago, Chandler-based American computer chip giant Intel announced that it will spend $20 billion to build two additional factories in Arizona, the largest private-sector investment in the state’s history.
These announcements, while independent of one another, are in fact related, both to the U.S. decision to concentrate critical development and manufacturing here in America and to the reawakening that the United States is, in fact, the best place for advanced manufacturing on the planet.
The talent at Arizona State University’s Fulton Schools of Engineering, the largest engineering college in the country, along with yeoman’s work from local economic development leaders, are two of the reasons why Phoenix is so attractive to these companies and so well positioned to take advantage of what is happening. This story is part of a larger opportunity for the state to multiply and expand advanced manufacturing in the future and to accelerate investment from the national and international high-tech sector, which is rapidly expanding around computational technology, information technology and all of the engineered systems that make these technologies work.
The United States is refocusing on an industry it allowed to go global, bringing back engineering and manufacturing jobs as it does so and also lay the foundation through expanded research activities for development beyond the present micro-electronics technology base to a future micro-electronics technology base which will carry us forward well into the 21st century.
In the 20th century, America was a global leader in semiconductor manufacturing with several U.S.-based companies owning and operating research and development laboratories, which are essential to the operation of micro-electronics, and factories to service both domestic and global markets. Over the years, international companies and foreign governments with strategic interests expanded the industry particularly to Japan, Taiwan, South Korea and China.
What didn’t shift was the importance of semiconductors, particularly the advanced semiconductors of the 2020s and beyond, to America’s national economy, future technological advancement and our national success both in terms of safety and defense. While America still leads the world in chip design, research and development, and technology, “today, it accounts for only 12% of global semiconductor manufacturing capacity,” according to data from the Semiconductor Industry Association.
So, it was in a welcome display of congressional bi-partisan leadership that action was taken in December of 2020, passing the Chips for America Act (Creating Helpful Incentives for Producing Semiconductors). This act of Congress initiated the transformation back to American dominance in semiconductor research, development and manufacturing. One of the concerns that had been percolating for some time was driven home through lessons learned during the Covid pandemic – relying heavily on globally distributed manufacturing entities carries significant risks, not only related to national security, but also to supply chain and economic development.
Today, as evidenced by the activity we see right here in Greater Phoenix over the past several months, the American semiconductor manufacturing industry and our global allies are reinvesting in a development and manufacturing foundation in Arizona. And the competition domestically to attract the semiconductor leaders – including their expanding investments and supply chains – is fierce and is significant to our region.
What this means for Arizona is that opportunity is knocking. We need to be ready to step forward and seize it. We are in better position to be successful than ever in our past, but there are investments we must make to be prepared. The New Economy Initiative proposed by the Arizona Board of Regents seeks to capitalize on what is happening in the rapid evolution of the American technology-based economy and its significant expansion here in Greater Phoenix and Arizona and position our state to not only seize the current opportunity in semiconductors but in other key technologies that will define future industry and the prosperity of both of our region and our nation.
Specifically, ABOR’s proposal calls for an investment in Arizona State University’s Fulton Schools of Engineering to continue its current trajectory as a catalyst for a highly skilled workforce, new company creation, and to continue to drive research and technology development of the creative solutions that are critically needed by the semiconductor industry. The public investment of $46 million for fiscal year 2022 would provide multipliers and sustaining support for the investments being brought here by the private sector. And most importantly, in the longer term, this investment will lay the foundation for emergence beyond present manufacturing technologies to all future manufacturing opportunities.
If metropolitan Phoenix is to continue on its journey to become a global leader in knowledge–based businesses, advanced engineering, advanced manufacturing and leading-edge technology, a position that will strengthen the Arizona economy across the board and throughout the state, it is important that we continue to invest in educating the workers that these advanced technology companies will need and in developing partnerships that drive continued growth, continued research and development, expansion, and ultimately future innovation and future industries. Arizona State University is the state’s best resource for doing exactly that and it’s an assignment we gladly accept.
It’s no accident that TSMC, Intel and Samsung are all here as their most significant home base for manufacturing and advanced technology development. It’s no longer about the climate or affordable housing in Arizona. State leaders have positioned us well by creating welcoming public policy. Industry leaders see ASU, with the largest engineering school in the country, as a resource for talent, research and partnerships – a meaningful incentive for business to come here, invest here, and grow here.
Public investment in ASU will result in tangible and impactful outcomes and is part of a far-reaching goal to increase Arizona’s competitiveness in the New Economy; a revolution that will be dominated by agile companies where automation and data-enabled decision-making power future industries. The FY 2022 budget request will mean investment in workforce development, expansion of the ASU engineering faculty, labs and technology to educate new learners, and for Science and Technology Centers that will bring companies, researchers and students together driving an increase in the numbers of inventions, patents, and affiliate startup companies and fueling economic expansion for the entire region.
Ultimately, this funding will accelerate the positioning that we are already well on our way to being, that is, Greater Phoenix and Arizona as one of the leading global engineering and innovation centers in the world.
Such progress will enhance the entire Arizona economy, converting us from a state that depends on the cycles of hospitality, tourism, construction and growth to an economy with multiple foundations, including one for 21st century expansion built around science and technology, a sector that is now and will continue to drive expansion and opportunity for everyone.
Kyle Squires is dean of ASU’s Fulton Schools of Engineering.