Arizona Keeps Getting Hotter, Another Semiconductor Company Signs A Huge Deal


Arizona Keeps Getting Hotter, Another Semiconductor Company Signs A Huge Deal

Arizona Keeps Getting Hotter, Another Semiconductor Company Signs A Huge Deal

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The CHIPS and Science Act has provided funding for several major semiconductor facilities in Arizona, including Taiwan Semiconductor (NYSE:TSM), which is investing $40 billion in multiple semiconductor factories in the Phoenix area, and Intel (NASDAQ:INTC), which is receiving $8.5 billion to invest in Arizona, New Mexico, Ohio, and Oregon. Another smaller semiconductor company is the latest to benefit from CHIPS Act funding.

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Amkor Technology, based in Tempe, AZ, is planning a new plant in Peoria, Arizona. Amkor is an OSAT (Outsourced Semiconductor Assembly and Test) service provider. OSAT companies play a crucial role in the semiconductor supply chain, focusing on the back end processes of chip production. Amkor’s planned facility would be the largest OSAT facility in the country. The project proposal includes up to $400 million in direct funding and access to $200 million in loans. The Semiconductor Industry Association has endorsed the deal, stating it would strengthen advanced packaging operations, which are key components of the chipmaking process. On Amkor’s most recent earnings call, CEO Giel Rutten mentioned that once operational, the factory will contribute less than 10% of the company’s total production and will utilize technology similar to that used in its facilities in Korea.

The project, first announced last year, has been approved by the city. Amkor expects to spend around $2 billion to get the project fully operational, which will employ approximately 2,000 people. The 55-acre campus will feature over 500,000 square feet of clean room space. Public infrastructure associated with the project will be located within Five North at Vistancia, a 320-acre mixed-use lifestyle and employment development.

The CHIPS Act, signed into law in 2022, has distributed about $30 billion of its $52 billion investment into building the U.S. semiconductor industry. While Intel and Taiwan Semiconductor have faced challenges in getting their facilities up and running, the impact of these planned factories is already being felt in the Phoenix area.

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The New Semiconductor Hub

Phoenix is positioning itself to become one of the core American hubs for semiconductor companies, and where high-paying jobs go, high-priced real estate often follows. With an estimated 50,000 jobs expected from Taiwan Semiconductor alone, the push is on to build both high-quality rental housing and homes for sale. Major homebuilder Lennar (NYSE:LEN) plans to develop over 700 homes near one of Taiwan Semiconductor’s factories.

For the Phoenix area, the ongoing expansion is a mixed blessing. While it’s positive for local businesses and attracts real estate developers eager to transform desert land into new home communities, some residents are concerned about the rapid growth. One resident told Marketplace that the new construction is “rather threatening to my way of life.”

Although the Amkor facility is a relatively small project compared to other factories, its location in the comparatively smaller town of Peoria, with around 200,000 residents, may give it an outsized impact. In Peoria, where the new Amkor facility will be located, the median sale price for a house is $533,750, suggesting that homes are at a premium. The city does have time to plan; phase one construction won’t be complete until 2027, and the entire project won’t be finished until 2034.

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