What to Know About Semiconductor Construction in Phoenix

Phoenix natives know that driving north on Interstate 17 means two things – traffic and scenery. But well before the terrain turns to majestic mountains, there is another changing landscape, just as you’re leaving Phoenix, that has also been turning some heads.

From the highway, it is hard to miss the 38 cranes that are scattered throughout a 1,100-acre construction site where the Loop 303 meets the I-17. This site will be the future home of a $12 billion semiconductor plant operated by the Taiwanese company, TSMC. 

The sheer size of the operation is undoubtedly impressive, but the implications it has for other projects in the Phoenix Valley doesn’t necessarily have local general contractors singing its praises. The ripple effect of such a project has posed major challenges for construction firms who were already having a hard time sourcing materials because of the pre-existing supply chain issues. 

When you consider the fact that Intel is investing $20 billion in two similar facilities in the Phoenix Valley, it is safe to say that securing materials for other projects in Arizona will become even more difficult. Subcontractors are already being put on allocation for many of the materials needed for the semiconductor projects.

While it may be difficult to pin down exact numbers as to what degree these new facilities will delay other construction projects, an in-depth look at what we already know about the TSMC plant and recent legislation may help shed some light on what can be expected in the near future.

THE DEMAND FOR SEMICONDUCTOR PRODUCTION

Just as the onset of the pandemic created a shortage in the supply of many items, computer chips, like the ones that will be produced by TSMC here in Phoenix, also proved to be scarce. These chips are vital for not only computers, but cell phones and major household appliances as well, along with many other electronic devices.

RECENTLY PASSED LEGISLATION

In early August, President Biden signed into law the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act). Of the $280 billion allocated toward the bill, $52 billion will be devoted specifically toward incentivizing chip production domestically. Just one week prior to Biden signing the CHIPS Act into law, U.S. Speaker of the House, Nancy Pelosi (D-California), made a trip to Taiwan to meet with the chairman of TSMC to discuss what the bill entails. The meeting is a strong indication that TSMC is considering building more factories at their site in Phoenix.

TIMELINE OF THE TSMC CONSTRUCTION

Construction on the TSMC plant began in 2021 and they are expected to start production of their chips in 2024. Completion of the fabrication structure (“fab”) is near completion, and as of June, about half of the glasswork had been installed. Under normal conditions, a plant like this can generally be built in a little more than a year’s time, but supply chain issues and the fact that this is a Taiwanese company building their facility overseas, it is expected to take longer.

SIZE OF THE PROJECT

Across the 1,100 acres of land in North Phoenix, the TSMC complex is expected to total 3.8 million square feet once completed.  If the company does decide to build additional “fabs” on the site, the total cost could be as high as $35 billion.

SIMILAR CONSTRUCTION PROJECTS

In addition to the TSMC and Intel facilities, other developments are in the works to strengthen the supply chain to the these plants. Most notably, Sunlit Chemical, a company that produces chemicals used in the manufacturing of semiconductors, broke ground on a $100-million facility earlier this year, near the TSMC plant in North Phoenix.

MANUFACTURING AND CONSTRUCTION JOBS

The TSMC plant is immediately expected to create 1,600 jobs and nearly 5,000 manufacturing jobs over the next three years. According to Intel, their semiconductor plants will create approximately 15,000 jobs, which doesn’t include the more than 3,000 construction positions needed to build their two facilities. Because Sunlit Chemical relies heavily on automation for the production of their chemicals, their impact in terms of labor will not be as significant, but their services are vital to TSMC and Intel’s operations. They will, of course, need to dip into the construction labor pool to complete the building of their 900,000-square-foot facility.