Arizona seems destined to emerge as a dominant center for semiconductors and jobs, eventually.
The CHIPS and Science Act is sparking a resurgence of domestic chip manufacturing along with more research and development. Semiconductors have been on a solid growth trajectory anyway, with the tiny electronic devices showing up in an expanding array of products.
But semiconductor manufacturers don’t yet claim a sizable slice of overall employment here and might not for years. Only three chip makers are on the latest list of the 100 largest nongovernmental employers in Arizona compiled by The Arizona Republic.
Intel remains the largest with 13,000 statewide jobs, followed by nearly 2,400 at Microchip Technology and 2,000 at Taiwan Semiconductor Manufacturing Co. Combined, they represent about 2.9% of the more than 608,000 people working for Arizona’s 100 largest employers. Hospitals, other health care companies, banks, supermarkets and other retailers dominate that list.
Still, it’s all but certain that semiconductor manufacturers will make progress on the jobs front. Intel is pursuing a $20 billion expansion of its Chandler campus — a development that will add 3,000 jobs plus an estimated 15,000 among local suppliers.
Taiwan Semiconductor Manufacturing Co. is investing $40 billion at two new factories, or “fabs,” in north Phoenix and expects to have 4,500 people working there by 2026. And more suppliers are setting up shop in Arizona to serve these and other companies including On Semiconductor, which manufactures outside of Arizona but counts around 700 administrative, R&D and other jobs at its Scottsdale headquarters.
The industry’s long-term prospects look “very good,” said Steve Sanghi, the longtime CEO of Microchip Technology who now serves as executive chairman of the Chandler-based company. He points to several key megatrends driving growth, including artificial intelligence, 5G cellular communications, internet-connected products, electric vehicles, self-driving cars and data centers. It’s hard to imagine any of those fields growing without semiconductors.
Sanghi also views the prospects for metro Phoenix as promising, especially as more semiconductor manufacturers and suppliers set up shop here. Sanghi doesn’t see water availability as a daunting problem, noting that large manufacturers, including Intel and Taiwan Semiconductor Manufacturing, are reusing 95% or more of their water.
“I’ve lived in Arizona for 33 years, and we’ve never had any water rationing,” he said.
Tony Tanner, who follows the local economy as portfolio manager of the Aquila Tax-Free Trust of Arizona, agrees with that assessment, arguing that the state has done a good job of managing water. Just as critical — and less appreciated, in his view — is what he called the relatively good reliability of the electric grid.
"It's critical that you don't have shutdowns when you're involved in precision manufacturing as with semiconductors," he said.
Tanner expects a smart-manufacturing trend focused around semiconductors to continue in Arizona and, especially, metro Phoenix. He cites catalysts including more big companies and their decision-makers locating here, the contribution of Arizona State University as an innovation hub and even overall improvements in education.
Including suppliers, vendors and smaller manufacturers, semiconductor-related employment in Arizona is probably closer to 140,000 people, he said.
While the semiconductor industry is growing, companies struggle to find enough qualified employees to replace retiring workers and drive expansion plans, though that's not a problem unique to Arizona.
Nationally, the industry employs about 345,000 people, with the Semiconductor Industry Association and Oxford Economics projecting that could grow by another 115,000 jobs by 2023, an increase of one-third. However, the industry will have trouble finding enough people to fill those positions, the groups warn.
“As America’s semiconductor ecosystem expands in the years ahead, so, too, will its demand for semiconductor workers with the skills, training and education needed,” they said in a recent report.
Of the 115,000 additional jobs that will be needed over the next seven or so years, 67,000, or 58%, could remain unfilled, given current rates of training and college education, the report warned.
Of the unfilled jobs, 39% will be for technicians, most of whom have earned training certificates or two-year college degrees. Another 35% will be engineers with four-year college degrees, and 26% will be for engineers at the master's or doctorate level.
Other advanced, high-growth industries face the same worker gap and will be competing in the same talent pool, the report said. These industries include medical technology, clean energy, artificial intelligence, the Internet of Things, cybersecurity, next-generation communications, aerospace, automotive and advanced manufacturing.
Semiconductor technicians operate, maintain and troubleshoot equipment used in manufacturing. Engineers research, develop and improve semiconductor devices and fabrication processes. Those with more advanced degrees design and develop software and hardware for semiconductor-based systems.
The Republic 100 largest employers: Where have all the workers gone? Big employers aren't adding jobs, even if they want to
Filling the gap will require a range of programs and initiatives from companies, colleges and universities, government entities and others.
“The process of growing the domestic pipeline of U.S.-citizen students pursuing advanced degrees in STEM fields will take years or decades to bear fruit,” the industry association and Oxford Economics predicted.
As one promising possibility, the study highlighted a program developed by the 10-campus Maricopa County Community College District. The college system last year unveiled a Semiconductor Technician Quick Start program, designed to give students real-world exposure to semiconductor manufacturing in 10 days.
Students who pass a certification exam can have their tuition fees refunded, making the program free. In its first year, which ended this past June, the program enrolled 684 students, 589 of whom earned a certificate. Of those, 69% were students of color, 34% were women and 53% were first-generation college students. Employees at Phoenix-area fabs have provided some instruction, giving students job connections along with a better understanding of employment in the industry, the report said.
“While the 10-day Quick Start program is not going to replace longer certificates and associate degrees for most technician positions, programs like it can certainly raise awareness of the opportunities in the semiconductor industry and spur students to further educational and workforce opportunities,” the report said.
Semiconductor-industry growth in Arizona has been generating headlines. In 2021, Intel's announcement of the $20 billion expansion was hailed as the largest private-sector investment ever in Arizona. Then Taiwan Semiconductor Manufacturing said it would spend $40 billion here.
As executive chair at Microchip Technology, Sanghi said he welcomes newcomers to the Valley such as Taiwan Semiconductor Manufacturing and major expansion efforts, as with Intel.
“It grows the talent pool and brings in a lot of subcontractors,” he said.
But it’s also a two-edged sword, especially when competitors need to ramp up their staffs quickly. “TSMC is hiring a lot of people from Intel," he said. "Then Intel hires from us."
Reach the writer at russ.wiles@arizonarepublic.com.
This article originally appeared on Arizona Republic: Arizona needs chip-industry workers. Can the state meet the demand?
