Could Arizona’s New Chip Facilities Worsen Its Drought?

By: Anneken Tappe · April 10, 2024 · Reading Time: 2 minutes

Chips are hot. Shares of semiconductor companies have been rallying, and the White House is spending a lot of money to shore up domestic manufacturing of the powerful little pieces of technology that are driving the AI revolution and much more.

The White House announced this week $6.6 billion in fresh funding to help Taiwan Semiconductor Manufacturing Company (TSM) build a third factory in Phoenix, Arizona, on top of the two TSMC is already building. This could be a boon for the local economy, and U.S. chip manufacturing power. But it could also be a problem for the city’s water supply.

The Main Problem

Chip manufacturing is a very water-intensive process as machinery needs to be cooled. The global chip making industry consumes as much water as all of New York City, the most populated city in the U.S., per a report from S&P Global (SPGI).

And to make matters worse, Phoenix is in a drought that has been going on for a decade and a half.

State officials are adamant that Phoenix has enough water to go around, and TSMC said it can reuse 90% of the water that it uses in the first place.

But skeptics believe the long-term construction projects plus the operations when they’re up and running will put pressure on the system. It also underscores the impact of climate change in urban planning.

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