U.S. Semiconductor Industry Boosts Phoenix Jobs and Local Economy

Although a significant federal award to Intel is intended to support the U.S. semiconductor industry, locals in the Phoenix area are more enthusiastic about the impact on the local economy.

TFD – Intel’s investment in the U.S. semiconductor industry is bringing new jobs to Phoenix and boosting the local economy.

CHANDLER, Arizona The unusual bipartisan push by Washington politicians to strengthen national security in their high-tech arms race with China is generating a lot of enthusiasm for something more fundamental in the burgeoning Phoenix metro area: jobs.

The Chandler region is expecting to see thousands of high-paying jobs come with the recent $8.5 billion in CHIPS and Science Act funds that Intel received to help develop two semiconductor facilities and upgrade an existing one 30 minutes southeast of downtown Phoenix.

Alfred Garza, a Chandler native of 60 years, stated that the city needs jobs and has seen its population grow “to the point where, my God, they took all the natural beauty.”

He remarked, “Look, this side of the city is still run-down. I hope it helps the community.” “I think intelligence would be a good place to start.”

With 13,000 employees already working for the tech giant in the Phoenix area, the White House estimates that the projects in Arizona will add 3,000 jobs in manufacturing and at least twice as many jobs in construction. These estimates are comparable to the gains anticipated in Ohio, which is one of the four states (along with New Mexico and Oregon) where federal grants are helping Intel grow its chip operations.

“To me and a number of people seated in our community, Made in America is good,” Garza remarked.

Officials in Chandler were pleased to discuss this viewpoint on Wednesday.

National Economic Council Director Lael Brainard told NBC News that the CHIPS and Science Act “is a huge jobs creator,” noting that the influence would extend beyond Intel’s own staff. “That also results in the opening and hiring of employees by nearby small businesses that provide services, as well as by various nearby restaurants.”

The funding for Intel is the most recent allocation from a $52.7 billion pool that was started disbursing late last year and includes up to $11 billion in loans. The initial award, which totaled only $35 million, supported BAE Systems in growing its chip production in Nashua, New Hampshire, for fighter jets and other uses.

Larger prizes are now being given out, with the majority going to industry titans in the semiconductor industry like Intel—the only American company that designs and manufactures high-end processors in the country.

However, the main goal of the CHIPS funding is not to boost the economy, especially in comparison to the billions of dollars that the Biden administration has allocated to other domestic spending, such as the Bipartisan Infrastructure Law and the Inflation Reduction Act. The bipartisan package was pushed through Congress in 2022 with the support of China, whose desires to seize control of Taiwan, an independent island and worldwide center of chip manufacture, is why the US has to protect its chip supplies from China.

Referring to pandemic-era chip shortages that highlighted “both the economic and the national security implications of such a critical industry,” Intel CEO Pat Gelsinger told NBC News on Wednesday, “After three decades of these supply chains drifting to Asia, all of a sudden we realized we’re not building them in the U.S. anymore.”

He stated, “I consider the CHIPS Act to be the most significant piece of industrial policy legislation since World War II,” pointing out that chips are essential to the development of emerging technologies like generative AI and electric cars. “We want this sector to exist here. It’s more important than where the oil reserves have been for the last 50 years.”

However, as they say, all politics is local, even in cases where it is geostrategic.

“These are fantastic jobs,” Gelsinger declared, listing openings for wafer technicians, pipefitters, welders, construction laborers, and “the highest-end Ph.D.s inventing new molecules.” However, the communities that assist them are also important,” he added. “The police and teachers benefit greatly from this; it’s fantastic for the economy.”

Furthermore, the president isn’t passing up any chances to promote economic development in a purple state like Arizona, which Biden won by just over 10,000 votes in 2020.

Speaking on Wednesday at a celebration of the agreement, he stated that the jobs in the Phoenix area created by Intel’s contribution will pay an average of over $100,000 annually, with many of them being unionized and not requiring college degrees.

That’s a shift, he exclaimed.

Aaron Pool, founder of Gadzooks Enchiladas and Soup, said he hoped the new chip plants, commonly known as “fabs,” would mean more diners for his restaurant chain after hybrid work has dented foot traffic.

On Wednesday, he said, “it will pop, and then it’s just kind of quiet” regarding the Chandler downtown location. “I believe that at some point, pulling the folks from the chip fab over here will pay off.”

According to Todd Sanders, CEO of the Greater Phoenix Chamber of Commerce, the local business sector has expectations similar to Pool’s.

He declared, “People are aware of what’s happening.” “Small businesses are trying to figure out how they can join that ecosystem.”

Apart from Intel, TSMC, a Taiwanese chip manufacturer, is also present in Phoenix and intends to establish its second semiconductor factory in the United States in the metro region. Although the project has been postponed, the company anticipates receiving funding under the CHIPS Act to continue with it.

The census projections that were made public last week show that the Phoenix-Mesa-Chandler metro area increased by almost 200,000 residents between 2020 and last year. Some locals worry that an infusion of well-paid workers could maintain pressure on inflation, which Pool described as “brutal” for Gadzooks, citing increasing prices for everything from labor to cattle, as the chip business plans its local development.

“Many predict that will result in even higher housing and other costs,” he remarked. Zillow reports that Maricopa County rents have already increased by 37% since 2020, while Redfin reports that mortgage rates have increased by 53%.

It’s no longer possible to boost prices, according to Pool. “People won’t put up with it.” That has left some area business owners in what he called a “holding pattern,” waiting to see what turn the regional economy takes next.

Phoenix’s inflation rate dropped to 2.2% in the summer of 2022 from 13%, which was 4 percentage points more than the national average at the same time. According to Pool, business conditions in the city have “been kind of lethargic” ever since that exhilarating experience.

Sanders is nonetheless upbeat, acknowledging initiatives to reduce “burdensome” regulations while increasing infrastructure investment and diversifying the state’s business base.

He reaffirmed the one thing on everyone’s minds, “I think what they’re going to do is create jobs,” after stating, “I don’t know that companies moving here are going to create inflation.”