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Why do so many microchip companies bring such a water-intensive process to drought-stricken Arizona? Part of the answer lies in the state's history.

Intel has announced a $20 billion, two-factory expansion in Chandler, and Taiwan Semiconductor is building a new plant in Phoenix.

But why do so many companies bring such a water-intensive process to drought-stricken Arizona? One listener asked just that through KJZZ's Q&AZ project.

Part of the answer lies in the state's history.

"We were Silicon Valley before Silicon Valley. Really, Silicon Valley didn't come about until sort of like the middle '50s, but Galvin put a stake in the ground here in Arizona in 1949," said Steven Zylstra, president and CEO of the Arizona Technology Council.

Intel supports the council and its nonprofit SciTech Institute, which promotes STEM education.

Paul Galvin set up his Motorola R&D facility during Arizona's postwar boom. Decades before Central Arizona Project water began to flow, Arizona offered other benefits.

"We have no floods, hurricanes, tornadoes, earthquakes — all those things that could really upset semiconductor manufacturing," said Zylstra.

Since then, Arizona has offered cheap land, good universities, a skilled labor force — and some obliging policies. In a Feb. 12 executive order, Gov. Doug Ducey directed state agencies to eliminate at least three existing rules for every new rule they requested.

The state also offers corporations a modest 4.9% income tax and a 24% R&D tax credit on their first $2.5 million annually, plus 15% on whatever's left.

"That's the best tax treatment for R&D in the United States," Zylstra said. 

Nicholas Gerbis/KJZZ

View northeastward from Arizona Falls along the Arizona Canal toward Camelback Mountain.

Striking A Water Balance

So why pay these companies to drink Arizona's milkshake? The answer requires balancing a variety of factors beyond water alone.

"It's not that one is good and one is bad. It's that, you know, we want everyone to be trying to do their thing as efficiently as possible," said Sarah Porter of the Kyl Center for Water Policy, part of Arizona State University's Morrison Institute.

Many businesses guzzle water, from craft beer makers to golf courses to data centers. But they don't offer the thousands of high-paying jobs that come with a semiconductor fab.

According to City of Phoenix statistics quoted by Porter, a million gallons of water can provide 200 high-paying semiconductor jobs, 30-40 lower-paying data center jobs, or about 50 still lower-paying golf course jobs.

"If you're going to use your water for something, use it for lots of high paying jobs," she said.

But Porter added cities need a variety of industries and sectors to attract business and residents.

"A Phoenix that has only semiconductor plants and no craft beer factories and no golf courses is probably not a Phoenix that a lot of people would want to live in."

Sky Schaudt/KJZZ

A laptop with an Intel processor.

Plants And Plans

Intel injects tens of billions of dollars into the state economy. But how much water does it siphon out?

As Porter put it, "A lot of water needs to go into the plant for the plant to produce a lot of chips."

A chipmaker's wet footprint consists partly of water used to generate the power bought by semiconductor fabrication plants, or fabs. But fabs mainly use water for a multistage process that washes impurities from silicon wafers.

That water first undergoes a membrane-based, water-intensive process to render it ultra-pure.

"Membrane technologies actually require a large volume of water to start with to get a smaller volume of very high purity water," said sustainability engineer Inez Hua of Purdue University in West Lafayette, Indiana.

Chip factories can reuse some water, but a simple reality remains:

"Water consumed for one use can't be simultaneously consumed for another use," said Hua.

So big fabs coming to Arizona and tapping city water can feel a bit vampiric, especially during a decades-long drought. But the water and infrastructure provisions for such companies entered the pipeline decades ago, too — built, for example, into Chandler's general plan.

Such plans typically include a public comment process before the City Council votes on them.

"We've always known that demand was coming, so we do have a supply. It's not going to cut it into the folks that already live in Chandler, because we've already projected it," said Gregg Capps, water resource manager for city of Chandler.

Capps says special teams ensure the city can process water returning from chipmakers to A+ standards — the highest quality recycled wastewater standard.

"They'll go out, determine what's being manufactured and what type of wastewater flows are acceptable back into our system," he said.

Water classified A+ by the Arizona Department of Environmental Quality meets the standard required for stream discharge or irrigation use, but requires further testing and treatment to rise to drinkable standards.

Intel

Intel's Fab 42 facility in Chandler in 2017.

Reduce, Reuse And Reclaim

HOAs and parks use reclaimed water for irrigation, and large buildings use it in AC cooling towers. Treated water can recharge aquifers and earn storage credits toward a city's future needs.

In Phoenix, Taiwan Semiconductor's arrival will actually help the city gain water.

"Part of the water supply that's going to be available is Colorado River water that wasn't currently being allocated to Phoenix," said Porter.

As Phoenix acquires and urbanizes state lands, it can acquire the CAP water already allocated to them. That water's high priority CAP classification buffers it from cuts when shortages curtail Colorado River deliveries.

And, like Chandler, Phoenix will recoup 80% or more of water used by its semiconductor fab, which will provide the area with a new, large supply of reclaimed water.

Intel says it wants to reach or surpass water neutrality — replacing as much water as it uses — by 2030.

The company already offsets its water use by funding nonprofit organizations like the Nature Conservancy and National Forest Foundation to restore state waterways and implement more efficient irrigation.

"We've funded now 15 projects that support Arizona. Some of those are upstream in Colorado River system up in Utah. All those restored nearly 625 million gallons in 2020 alone," said Fawn Bergen, who leads the corporate sustainability team at Intel.

But Porter would like to see such benefits secured for the long term.

"Those local restoration efforts only go so far. So, I think that long-term thinking is where they're headed and, you know, I kind of look forward to that time," she said.

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