President-elect Donald Trump’s decisions regarding the federal CHIPS Act will strongly impact Arizona’s growth as a new semiconductor manufacturing center for the nation. The CHIPS Act has been the source of large grants to Arizona chip manufacturers such as Intel and Taiwan Semiconductor Manufacturing Co.
TSMC’s $12 billion factory in north Phoenix is substantially complete. In December 2024, it announced plans to build a second factory that will open in 2026, bringing its total investment in the state to $40 billion. A large part of that investment was funded by the CHIPS Act, which also funded Intel’s plans to build new a semiconductor manufacturing facility.
Additionally, the CHIPS Act committed to a $400 million investment for Amkor, a semiconductor packaging company constructing a $2 billion manufacturing facility in Peoria.
The surge in semiconductor manufacturing in Arizona has already caused 24 suppliers for TSMC and Intel to buy, lease or otherwise announce plans to set up manufacturing in Arizona.
Today, Arizona leads the nation in semiconductor investment, supplier expansions and jobs Semiconductor Advantages. Since 2020, Arizona has won more than 40 semiconductor expansions, representing over $102 billion in capital investment and over 15,700 direct industry jobs.
These projects span the entire ecosystem, including manufacturing, advanced packaging, research and development, equipment, supply chain and workforce development.
To fulfill the semiconductor workflow, The CHIPS Act provides $50 billion to train and develop Arizona’s workers. This funding allowed Gov. Katie Hobbs to commit $48 million to Maricopa Community Colleges to work in tandem with these companies and build classrooms for workers to be trained or retrained as the technology advances.
Some have voiced concerns that the new administration may hold back some of those investments or redirect them toward other industries. Arizona’s newly elected Republican majority U.S. Congressional delegation along with Gov. Hobbs will need to work closely with the administration to ensure that these key investments are in fact provided to these semiconductor manufacturers and suppliers to assure the success of this industry in Arizona.
Also affecting Arizona’s economy in 2025
Other key state laws that drive Arizona’s economic engine are also front and center as we look toward 2025. House Bill 2720, Accessory Dwelling Units, mandates that cities with 75,000 or more residents must implement regulations before Jan. 1, 2025, to allow at least one accessory dwelling unit in the house and one detached guest house.
This law bars local governments from requiring additional parking, restricting advertising, or requiring setbacks of more than five feet from the property line. There are some concerns that the law will result in more short-term rentals and provide no additional long-term housing to urban residents.
The second new housing law to watch how it impacts our economy is House Bill 2721 establishing requirements for middle housing developments. It applies to cities of 75,000 or more and prescribes that all lots zoned for single-family residential use within a mile of the community's central business district allow for duplexes, triplexes, fourplexes and townhomes.
The law also states that multiplexes can be built outside the central business district in new developments of 10 acres or more anywhere in the city. While this will lead to more density, it will likely provide more housing as builders can construct multistory condominiums and apartments in areas where it is needed but previously prohibited by local regulations. With the smaller building footprints, this will reduce the cost for builders to acquire the land.
Arizona is poised to move full steam ahead in 2025 provided the new administration leaves critical provisions and funding of the CHIPS Act in place. At the same time, our state is set up for continued growth bolstered by new laws designed to increase construction jobs and boost the housing supply for workers wanting to live in the cities where they work.
Editor’s note: Alexis Glascock chairs Fennemore’s Government Relations and Regulatory Practice Group. Reach her at aglascock@fennemorelaw.com. Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.
