Why Arizona Is Becoming A Hotbed For Tech
Arizona — land of snowbirds and the Grand Canyon, retirees and ATVs — is rapidly gaining a reputation of an entirely different sort. It’s becoming an epicenter of electric vehicles and self driving tech, as well as a new surge in semiconductor manufacturing as the US tries to address the worldwide chip shortage. I would say Arizona is the semiconductor capital of the world. This is going to be the hub. Intel’s $20 billion investment in Arizona, building two new fabs, and Taiwan Semi is something that I don’t think has gotten the attention it deserves. Taiwan Semiconductor or TSMC is indeed building a $12 billion chip manufacturing plant in Phoenix.
Tesla rival Lucid motors built a brand new electric vehicle factory in the state along with Nikola and Electra Meccanica. And Waymo’s, fully driverless rides are now available to the public in Arizona only. It’s the cost of living. It is the great environment. People love it. People love to be in Arizona and I think that also helped us to attract talent all over the place. In 2020, Phoenix attracted more residents than any other US city for the fourth year in a row.634 companies relocated or expanded in Arizona between 2015and 2020 creating 13,000 jobs in manufacturing alone. We headed to the desert to ask the governor, big companies, and those living amidst the boom, how is it changing the state and why Arizona. The sixth largest state by area, Arizona first became well known when a major mine opened therein 1854.
And copper mining remained its primary industry for nearly a century. Slow to grow, it became the 48th state in 1912 and didn’t experience a population boom until after World War II when air conditioning became widely available. Phoenix has been growing ever since now surrounded by a vast sprawl of suburbs and agriculture. Everybody knows the five C’s of Arizona: copper cattle, cotton, climate and citrus. I think you could add two maybe three additional C’s, you’ve got chips, you’ve got electric cars, and you’ve always had construction as well.
During World War II, GM started using about 4000 acres outside Phoenix to test parts it’s applied to US Army tanks. Toyota, Ford, Chrysler and others were all soon testing their cars on Arizona tracks, too. Aerospace manufacturing has also been huge. Raytheon has made missiles in Tucson since the 50s and recently expanded there. Boeing has built its Apache helicopters in Mesa since the 80s. In 1969, Motorola kicked off another state trend when it began manufacturing semiconductor wafers at a factory in Mesa. But during the Great Recession, 300,000Arizonans has lost their jobs and home values were down$100,000. So in 2011, the Arizona Commerce Authority was formed to attract new high paying jobs. One of the first big wins came in 2015 when Apple invested $2 billion to build adata center outside Phoenix.
In the years since the list of companies relocating or expanding and Arizona has exploded. Caterpillar, Infosys Benchmark Electronics, Blue Yonder, Insight, Zoom, Cognizant, and many more. Businesses growing in the state in the last decade have promised to bring almost $34 billion and 191,000 new jobs in exchange for some big incentives. We have a Foreign Trade Zone program. We also have some quality job tax credits. So as accompany creates jobs and makes capital investments, those programs are available to all companies. Filling all these new jobs are lots of high skilled workers flocking largely from California to states with a lower cost of living while the pandemic allowed them to work from home. If I can work in Arizona, I can have twice the house, a newer house, with a pool. The cost of living is cheaper, my taxes are cheaper, and I can tele-work. Why wouldn’t I live out here? Real Estate Agent and single dad Chris Barker was raised in Arizona.
After 16 years in Maryland. He moved back to Phoenix with his two teenage kids during the pandemic last year, but it wasn’t the same. A lot of the beautiful things that I used to enjoy about Arizona have kind of gotten spoiled; Slide Rock in Sedona, Snowbowl. All these like cool places that Arizona had to offer, well now there’s just such an influx of people that it’s almost miserable. I can see like the pollution is thicker. There has been obviously a lot more traffic. But for many, the cost of living is still a big plus. The cost of living in SanFrancisco is three times Arizona. So we had a lot of people locating here and working virtually from our state. Now they want to stay here.
The business friendly regulatory environment and lower taxes are also a draw. The Tax Foundation ranks Arizona 24 for business tax climate while California comes in for 49th. In Arizona, we’ve eliminated –wipe off the books — 2751 regulations since 2015. That’s the equivalent of $150 million tax cut, and that’s the direction Arizona is going to continue to go. This, coupled with Arizona’s long history of manufacturing, has helped the state attract an entirely new industry: electric car companies. Although Arizona lost a bid for Tesla’s first Gig factory to Nevada in 2014,the state’s big break into EV’s came in 2016, when Lucid Motors announced it would build its $700 million electric car factory in Casa Grande. We had an extensive survey of about 65 sites right across the US against a whole range of criteria.
And we made a really good decision here to come to Arizona. And then there’s Arizona is proximity to Mexico, where companies are making components for GM electric vehicles and for Lucid. It was our third interview with Lucid, the final question was, how is your relationship with Mexico? And Mexico is Arizona’s number one trading partner, it’s not even close. EV companies in Arizona can easily access supplies from nearby California and beyond via a major railroad system and I-10, a major trucking route. That was the very attractive thing about Arizona that we have this, being close to supply chain, being close to our headquarters, having enough space to grow. That’s what we found here. Lucid broke ground on its 590acre factory in 2019.
After some delays, Lucid says it’s Air Dream Edition is now in production there with customer deliveries coming later this year. The workforce work grow far north of 4000 people there. Electric semi-truck maker Nikola, which made headlines for some big missteps last year, is headquartered in Phoenix. It’s building a new factory in Coolidge, Arizona, scheduled to start producing its Nikola Trein 2022. Phase One of Coolidge is basically done on the exterior. So now it’s all the interior work at this point. It’s on schedule. We should, we intended to have that first phase complete and in operation this year, and we’re on track to do that. Another electric vehicle being manufactured in Arizona is the single-seat three wheel Solo. Continuous Reading