The U.S. state of Arizona has strengths as a semiconductor ecosystem. It has advantages in terms of geographic environment, infrastructure, and various costs (Semiconductor Ecosystem in Arizona, USA.
As a result, the CHIPS and Science Act (CHIPS Plus Act), passed under the former Biden administration, has spurred a number of moves to establish bases and expand investment. According to a fact sheet by the National Institute of Standards and Technology (NIST) under the U.S. Department of Commerce, since the introduction of the CHIPS Plus Act, announced private investments in the state have totaled over $102 billion (as of July 2024, Note 1). There have been 43 expansion projects related to semiconductors, which have created approximately 19,000 jobs. As a result, semiconductor-related employment increased by 22% compared to 2018; as of 2023, over 25,800 people were employed in the semiconductor industry.
At the core of Arizona’s fast-growing ecosystem are Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor foundry (contract manufacturing), and Intel, the largest U.S. semiconductor company. Both companies have received massive subsidies under the CHIPS Plus Act to build state-of-the-art semiconductor manufacturing plants (AI Chips Prevent Leakage, Subsidies Largely Determined – U.S. Making the Most of Policy).
In line with this trend, investments by related companies, including materials and equipment manufacturers, are continuing. In Arizona, industry, government, and academia are working to strengthen R&D and manufacturing capabilities not only in the front-end of advanced processes, but also in the back-end of advanced packaging.
Based on interviews conducted with companies, experts, and others in the region (in the form of face-to-face interviews from February 10-14, 2025), this report summarizes recent developments and future prospects for the ecosystem in the state, which is gaining momentum.
TSMC on the move, where the booming Arizona ecosystem is today
Arizona is making major investments in state-of-the-art logic semiconductor manufacturing, funded by the CHIPS Plus Act.
Among others, TSMC received grants of up to $6.6 billion for the construction of three state-of-the-art plants underway in the city of Phoenix (Note 2). Intel received a grant of $3.94 billion for the construction of a new advanced logic semiconductor manufacturing facility in Chandler and the modernization of its existing facility (Note 3). I would like to begin with an overview of the investment plans of these two major players.
The first announcement about TSMC building a plant in Phoenix was made in May 2020. Subsequently, the company also announced the construction of a second plant in December 2022 and a third plant in April 2024. Although it was reported that the construction of the first plant was delayed, it finally began operations in the fourth quarter of 2024 (Note 4). Mass production of 4-nanometer (nm) technology is underway at the first plant, and the yield is said to be comparable to that of the Taiwanese plant. The second plant, which is under construction, will use 3nm technology and is scheduled to start operation in 2028. On March 3, 2025, President Donald Trump and TSMC announced additional investments by the company in Arizona (see business brief dated March 4, 2025). The additional investment will amount to at least $100 billion and will build three more semiconductor factories, two advanced packaging facilities, and a major research and development center in Arizona. This brings the company’s announced total investment in Arizona to $165 billion, making it the largest foreign direct investment in U.S. history.
In contrast to TSMC, which is gaining momentum, Intel is moving slowly. In March 2021, Intel announced that it would build two new state-of-the-art semiconductor factories (Fab 52 and Fab 62) on its Ocotillo campus, previously located in Chandler, Arizona, and at the groundbreaking ceremony in September of that year, the company said it was aiming for operations in 2024 ( Business dated September 30, 2021 See the brief). Fab 52 and Fab 62 are planned to manufacture semiconductors using the company’s next-generation 18A process. However, the plan is delayed. Currently, the company plans to begin mass production at Fab 52 in 2025 (as of November 2024, see Note 5). The progress of the Arizona plant has become even more uncertain, due in part to Intel’s overall weak performance.
Despite the uncertain outlook for Intel, Arizona’s ecosystem continues to expand with both of these companies at its core. Many private investments related to semiconductors in the state have been announced through 2022, when the CHIPS Plus Act was passed (see June 28, 2022 Regional and Analytical Report).
In addition, there have been some recent developments.
For example, looking at investment plans announced for 2024, Saras Micro Devices announced in January of that year that it had moved its headquarters functions from Georgia to Arizona (Chandler) and opened a facility with state-of-the-art manufacturing capabilities (see Note 6). Saras Micro Devices is involved in power delivery system optimization solutions for semiconductor devices, and plans to further expand its facility and add a clean room by the end of 2025.
FM Industries (headquartered in California), a NGK Group company engaged in processing, surface coating, and module manufacturing of metal parts for semiconductor manufacturing equipment, also established a new manufacturing facility in Phoenix in the same month (Note 7). In February of the same year, Pentagon Technologies (headquartered in California), a wholly owned subsidiary of Kurita Water Industries, announced the construction of a new semiconductor equipment cleaning facility in Mesa (Note 8).
In August of the same year, South Korea’s KoMiCo also signed a contract to build a state-of-the-art facility (cleaning, coating, and repairing semiconductor equipment components) in Mesa City (Note 9). The facility will be equipped with multiple clean rooms, state-of-the-art equipment, and diagnostic tools, and will be able to handle cutting-edge semiconductor manufacturing, including EUV (extreme ultraviolet) and sub-1nm technology nodes.
NSTC to be established, raising expectations for the concentration of advanced packaging.
In Arizona, expectations for advanced back-end integration as well as front-end integration are high.
In November 2023, Amcor Technology, a leading U.S. OSAT (assembly and test process outsourcing) company, announced the construction of a back-end factory adjacent to the TSMC plant (see business brief dated December 6, 2023). A grant of $407 million has been finalized for the company under the CHIPS Plus Act (see business brief dated December 24, 2024).
In addition, in September 2024, Hyperion Technologies (“Hyperion”), a U.S.-based manufacturer of advanced high-density substrate and interconnect fabric devices, announced plans for a new semiconductor manufacturing facility in Arizona (Note 10). Dr. Sam Salama, CEO of Hyperion Technologies, said, “Proximity to end-users, the presence of partners to collaborate with on workforce development, and infrastructure incentives are important factors in choosing a location for a semiconductor manufacturing facility. Arizona has an advantage in these areas. Arizona is also rapidly becoming a manufacturing cluster for advanced logic semiconductors, which is at the forefront of the U.S. semiconductor industry,” he said of the state’s strengths. “Hyperion’s presence in Arizona, as the only large scale manufacturer of integrated circuit (IC) substrates and interconnect fabrics in the U.S., is a critical complement to Arizona’s cluster and efforts to strengthen the nation’s semiconductor manufacturing capacity. Hyperion’s products support cutting-edge artificial intelligence (AI) and high-performance computing systems, which are also important to the national and economic security of the United States,” he said. Focusing on cutting-edge semiconductor interconnect technology, Hyperion relies heavily on Japanese equipment, materials, and chemical manufacturers and is working with several companies. On the other hand, not many Japanese companies are currently investing in the Arizona cluster. Dr. Salama expressed hope that these companies will invest in the near future. He said, “We would like to strengthen our cooperation and partnership with Japan to accelerate the development and establishment of a U.S.-based semiconductor ecosystem. The time and opportunity to do so is mutually beneficial for our two allies, Japan and the United States,” he said, stressing the importance of US-Japan collaboration in the semiconductor field.
Arizona State University (ASU) is at the forefront of research and development in advanced packaging, which is part of the funding for research and development of the CHIPS Plus Act, and is promoting the SHIELD USA Initiative with Deca Technologies, a company involved in advanced electronic connectivity technologies. The project will focus on organic materials and substrates. In November 2024, NIST announced that the U.S. Department of Commerce will provide $100 million for this initiative (see note 11). This will be the first R&D program under the National Advanced Packaging and Manufacturing Program (NAPMP) under the CHIPS Plus Act.
In January 2025, the Department of Commerce announced the establishment of the National Semiconductor Technology Center’s (NSTC) flagship R&D facility in Arizona (see January 7, 2025 Business Brief) The establishment of the NSTC, like the NAPMP, is part of an $11 billion funding commitment for CHIPS Plus Act R&D The NSTC is part of the $11 billion funding for research and development of the CHIPS Plus method. The facility, to be built in ASU’s Research Park as the “Advanced Packaging Test Facility (PPF),” is expected to be operational in 2028, and will include at least one 300-mm (millimeter) wafer prototyping capability, enabling research and development of new materials and device architectures that are difficult to manufacture on site. The PPF will have at least one 300mm (millimeter) wafer prototyping capability, which will enable research and development of new materials and device architectures that are difficult to manufacture. It will also have a prototyping line that will serve as the basis for developing new packaging processes and facilitating commercialization.
An expert on the U.S. semiconductor industry said, “The back-end process involves very manual and labor-intensive work. For this reason, there was a history of transferring these processes to Southeast Asia and China, where labor costs are low. However, the major objective of the CHIPS Plus Act is to bring this back to the U.S. (reshoring). I think we will work on standardization of back-end processes in Arizona,” he said.
In the U.S., which is inferior to Asian countries in terms of labor and other costs, the key is the integration of advanced packaging with minimal automation of production. A Japanese semiconductor-related company commented, “The cooperative relationship between TSMC and Amcor is significant from the perspective of stabilizing the supply chain. On top of that, emerging substrate companies such as Hyperion are also emerging,” he pointed out. He expressed hope for the concentration of players involved in advanced packaging. Another Japanese company also commented, “There are high expectations for the construction of back-end factories and the completion of the supply chain in Arizona”. As mentioned earlier, TSMC has also announced the construction of an advanced packaging facility. This represents a major step toward returning semiconductor manufacturing capacity to the domestic market.
Focus on strengthening the supply of local human resources
Attracting the best and brightest talent is also essential to the development of the semiconductor ecosystem. Arizona has an advantage in its local talent pool: ASU has the largest number of public school students in the nation and the largest engineering school. According to the NIST fact sheet mentioned above, Arizona’s engineering programs enroll approximately 37,000 students each year. In addition, the state’s universities produce 2,000 semiconductor-related degree holders each year. In addition, a Japanese semiconductor-related company says, “Arizona is an advantageous region in terms of human resources, as people often come from California, where the cost of living and labor is much higher”.
In addition, industry-government-academia partnerships are gaining momentum to enhance human resource development. In Arizona, the Arizona Commerce Authority (ACA) is leading the “Future48 Workforce Accelerators,” a workforce development program for advanced manufacturing that is conducted in partnership with local community colleges and industry. By 2026, a state-of-the-art semiconductor manufacturing training facility will be built at Gateway Community College’s (GWCC) Central City campus. The facility will include cleanrooms, labs, classrooms, and a training facility. The facility will include cleanrooms, labs, and classrooms where students will gain hands-on experience using industry-standard equipment and technology. The ACA is contributing $13 million, the Arizona Governor’s Office is contributing $5 million, and the federal government is contributing $4.5 million to launch the program. The program is also working with companies (Intel, TSMC, and NXP) in designing the facility and providing training.
Is regime change a headwind or a tailwind?
Arizona’s semiconductor ecosystem continues to boom. On the other hand, concerns were voiced about the impact of the change in the U.S. administration.
The biggest concern is the impact of tariffs on related products. A local Japanese company that procures raw materials from Japan said, “If tariffs are imposed on semiconductor-related products, we are thinking of passing the cost onto the customer. We are concerned that it will be a tough negotiation”. Another Japanese company said, “Depending on how tariffs are imposed, we may have to consider changing transportation routes. However, the origin of the materials is limited and it is difficult to substitute. We will have to choose between passing the tariffs on to our suppliers or sacrificing our own profit margins.”
Against this backdrop, an expert familiar with the local semiconductor industry ecosystem expressed the view that “it is unlikely that the supply chain will change significantly during Trump’s term. Even if they wanted to change raw materials or manufacturing equipment because of the tariffs, that alone would take about three years. Considering the cost and time it would take to replace them, many companies may choose to pay the tariffs,” he said.
Along with tariffs, concerns were voiced about work visas in the United States. Many Japanese and other foreign-affiliated companies are looking to expand their operations and bases in Arizona in line with the expansion of private investment in the state. Against this backdrop, visa issuance and renewal requirements may become stricter under the Trump administration. The difficulty in obtaining visas for expatriates was cited as an issue by several local Japanese companies.
Also uncertain is the future of the CHIPS Plus Act under the Trump administration. Trump criticized the CHIPS-Plus Act as “meaningless” because it only provides subsidies (see Business Brief, March 6, 2025). A local semiconductor official commented, “The perception is that the CHIPS Plus Act is a one-time special. Even if Kamala Harris, a Democrat, had won the election, we did not expect to see the introduction of new support measures,” and “the change of administration has also changed the personnel in charge of the Department of Commerce, and the operation of the subsidy has slowed down”. On the other hand, “It was actually under the first Trump administration that we started reshoring semiconductor manufacturing capacity. It is unlikely that the second Trump administration will overturn the CHIPS-plus law”. When Trump announced the aforementioned additional investment by TSMC (March 3, 2025), he stated, “We must be able to manufacture the semiconductors we need, right here in U.S. factories, with U.S. technology and U.S. labor” (see Business Brief, March 4, 2025). It is clear that the policy of strengthening semiconductor manufacturing capacity in the U.S. will not change under the second Trump administration.
Driven by such policy demands and other factors, Arizona will continue to develop as a major semiconductor manufacturing center in the country.
Note 1:
Based on “Fact Sheet: Arizona Semiconductor Industry” published by NIST in July 2024. Includes fact sheets for other states, which can be found on NIST’s “CHIPS Regional Strategy ” page.
Note 2:
According to U.S. Department of Commerce press release dated November 15, 2024.
Note 3:
Based on U.S. Department of Commerce press release dated November 26, 2024, and NIST website.
Note 4:
Plant features and timelines are based on the company’s website.
Note 5:
Based on the company’s presentation “Intel Arizona: The Silicon Desert” (1.87MB) (revised November 2024).
Note 6:
ACA press release dated January 24, 2024..
Note 7:
Based on Greater Phoenix Economic Council announcement on X (formerly Twitter) at (dated January 24, 2024, last viewed March 14, 2025).
Note 8:
ACA press release dated February 29, 2024.
Note 9:
ACA press release dated August 20, 2024.
Note 10:
Based on various media reports and other information on the company’s website.
Note 11:
ASU press release dated November 21, 2024 at and on the NIST website.
Note 12:
According to Arizona Governor’s Office Press Release dated November 14, 2024.
MIYAJIMA Sumire
International Economy Div.
Research & Analysis Dept.
JETRO | Japan External Trade Organization
This article is published in Japanese:
https://www.jetro.go.jp/biz/areareports/special/2024/0501/ce0557ca5a13be03.html