With the announcement of the two new Intel fabs and the new TSMC fab announced late last year, Arizona becomes the big winner in the focus of rebuilding state-of-the-art semiconductor manufacturing capability in the US. These fabs join four other Intel fabs (fab 12, fab 22, fab 32, and fab 42) at the company’s Ocotillo facility plus fabs from Medtronic, NXP, Microchip, and others. Samsung is also evaluating a new fab site and Arizona is in the running.
Arizona has high interest because it has the five key factors for semiconductor fabs – available land, infrastructure (power, water, etc.), skilled talent, no natural disasters, and favorable tax incentives. Motorola and other early semiconductor companies established Arizona as a leader in semiconductor design and manufacturing in the 1950s. Since then, the universities, utilities, and government have continued to improve the infrastructure and talent necessary for semiconductor manufacturing.
While Intel will receive favorable local tax incentives for the new fabs, this is no different than the incentives offered to other industries like automotive. However, because semiconductor fabs require a huge upfront investment, there is an unwritten guarantee that the fabs will operate 24/7 for at least 10 years or three generations of products. But, as we have seen with Intel’s fab strategy, even at the anticipated end of life of these fabs, they can be stripped and refitted for another life cycle or converted for use other purposes like research and development.
Intel has a long history in Arizona and has always indicated it as being one of its primary locations for future investment. That investment not only pays off for the future Intel fabs, but for others semiconductor companies looking to expand fab capacity. Additionally, Arizona gains valuable jobs and continued investment in developing and attracting talent to the area.
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