Arizona’s Ascent: A Model for Reshoring American manufacturing
Arizona is rapidly establishing itself as a prime location for advanced manufacturing, particularly in the burgeoning semiconductor industry, driven by strategic policy choices and a focus on resource stability. Recent data highlights the state’s success: the 18th edition of the ALEC-Laffer Economic competitiveness Index ranks Arizona second nationally for economic performance and sixth for economic outlook. This favorable habitat is actively attracting investment and positioning Arizona to answer the call for reshoring manufacturing and securing american technological leadership.
A key component of arizona’s appeal is its robust energy infrastructure. recognizing the intensive power demands of semiconductor fabrication (“fabs”), similar to those of data centers, the state has prioritized a dependable electricity supply. U.S. News & World Report recently ranked Arizona eighth in the nation for electric grid reliability, a testament to this focus. Over the past two decades, Arizona experienced only six major extreme weather outages (affecting at least 50,000 residents or interrupting more than 300 MW), a stark contrast to the 145 outages experienced by a neighboring Southwestern state, california, during the same period, despite Arizona’s consistent exposure to extreme heat.
While ALEC’s Energy Affordability Report (4th Edition) places Arizona’s energy affordability as moderate, the state benefits from a diverse energy generation mix including natural gas, nuclear, coal, and solar.Notably, Arizona regulators have recently initiated a process to repeal the state’s Renewable Portfolio Standard, which currently requires 15% of retail electric sales to be sourced from renewables.
Beyond energy, Arizona is addressing the critical issue of water scarcity, a notable concern for resource-intensive manufacturing. Industry leaders are pioneering conservation efforts, exemplified by TSMC‘s commitment to 90% water reclamation at its Phoenix operations following a $12 billion investment in American chip manufacturing. This will be achieved through the construction of on-site water treatment facilities capable of recycling industrial wastewater for reuse within the fabs.
Thes proactive steps – increasing the abundance, reliability, and affordability of essential resources – demonstrate Arizona’s commitment to attracting and supporting the chip industry. By combining principled state policy with a pro-innovation regulatory environment, Arizona is positioning itself to capitalize on the growing demand for domestic manufacturing and solidify its role as a global technology leader. The state’s success offers a valuable blueprint for other states seeking to foster a new age of American manufacturing.
