Drone footage of the Taiwan Semiconductor Campus in Phoenix
A drone video shows the construction progress at Taiwan Semiconductor Manufacturing Co.’s campus in north Phoenix.
Courtesy of TSMC
This story was updated to correct a misspelling/typo.
Scottsdale is slated to receive billions in new economic activity over the next decade after city officials struck a deal with a major player in the semiconductor industry, something that’s expected to bring hundreds of new jobs with six-figure salaries.
The company behind the development is called ASM. It produces materials that other companies such as Intel use to manufacture semiconductor chips, which are basically tiny brains that help power everything from cellphones to air conditioners.
Scottsdale officials on Sept. 17 approved an agreement that will allow ASM to build a 400,000-square-foot facility on a 21-acre, company-owned site at the southeast corner of North Scottsdale Road and Loop 101. City staffers describe the property as “one of the last key undeveloped portions of the community.”
As part of the deal, Scottsdale agreed to “reimburse” the company nearly $6.4 million to install “public infrastructure” such as sewers throughout the undeveloped land around that intersection, where companies ranging from Axon to Banner Health also plan to build soon. That cost is typically the city’s responsibility.
ASM plans to make the site its North American hub once it wraps up construction in six years. City leaders say the facility is expected to have a multi-billion-dollar economic impact in its first decade and create so many jobs that ASM will become one of Scottsdale’s largest private employers.
“ASM America Incorporated is bringing their national headquarters in the United States to Scottsdale, and along with it a net new 1,200 jobs to our area,” Scottsdale Economic Development Director Teri Killgore said. “They will become one of our Top 10 private employers.”
“When you add up all of the ancillary benefits of people going out and eating, people moving into the community, (the total economic impact) climbs to over $4 billion,” she added, calling the project a “significant economic driver for us.”
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What is ASM and what will it do at the new Scottsdale facility?
Federal lawmakers have made domestic production of semiconductors a top priority. The international supply of chips is somewhat vulnerable and would implode if China were to invade Taiwan, where over 60% of the world’s chips are produced.
A long-term chip shortage would create knock-on scarcities and price surges throughout the economy, like when the cost of cars skyrocketed in response to a post-pandemic chip shortage. It would also have a massive impact on the production of military technology.
ASM doesn’t make the actual chips. Killgore called the company part of a “support industry that comes along with … chip manufacturers,” that have a significant presence in the nearby city of Chandler, which has become a hub for the semiconductor giant Intel.
ASM’s role in the industry is to manufacture the equipment that allows Intel to “print” tiny designs made out of metals and composites that “help each layer of a (semiconductor) chip, communicate different information and run different processes,” Killgore explained.
The company won’t build that equipment at its future Scottsdale facility, however. It will instead be a hub for ASM’s research and development operations where employees will refine the products and work to design next-generation versions of ASM’s machines.
The upcoming facility ensures Scottsdale will get a slice of a crucial industry that’s growing the Valley and is all but guaranteed to remain viable well into the future with staunch federal support and funding.
“This project is an outstanding project,” Scottsdale Mayor David Ortega said. “They’re bringing amazing technology that is part of our world economy, it’s part of our regional economy and it’s even part of our national security.”
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What’s in it for Scottsdale: Economic activity, 1,200 jobs, high salaries
Killgore said the new facility represents “an over $400 million capital expenditure for (ASM) between the land, building and equipment. That translates into property tax dollars for our community.”
The amount of cash that will flow directly from the ASM facility into city coffers is about $8 million over the next decade. That includes things like city taxes paid by the company and development fees.
But that doesn’t include other indirect factors, such as spending at nearby businesses that result from increased activity around ASM. When those are considered, the total economic impact of the new facility jumps to roughly $4 billion over a decade for the city, Killgore said.
Part of that has to do with the large number of employees the company promises to bring into Scottsdale.
About 700 ASM staffers who currently work elsewhere in the Valley will be relocated to Scottsdale. On top of that, the company committed to hiring another 500 workers to staff the 400,000-square-foot facility, meaning the project will bring roughly 1,200 new professionals to Scottsdale.
And those workers will be highly paid: Killgore said the average ASM worker will be making six figures or about 70% more than what’s typical for most of the other companies that are trying to set up shop in Scottsdale currently.
“The new jobs they are bringing in are … at an average wage of $110,000. For context, many of the (employer projects) we’re seeing come through our pipeline now are averaging $60,000 to $70,000,” the economic development director said.
“That’s because of the highly technical, highly educated workforce that ASM relies on. A lot of these jobs will be PhDs, they’ll be folks who are very knowledgeable about the next waves of technology.”
Terms of the deal: What ASM’s reimbursement hinges
ASM did not need to ask Scottsdale for zoning changes or permission to buy the property developers typically come to the City Council to request. The company already owns the land and its project fits the city’s current land use designation.
The deal Scottsdale officials approved instead centered around an agreement that the city would repay ASM just shy of $6.4 million for installing more expansive infrastructure than the facility itself will require, which would otherwise be the city’s responsibility.
The strategy is meant to more quickly and efficiently prepare the “highly desirable” yet currently underdeveloped location near Scottsdale Road and Loop 101 for an upcoming stream of large-scale projects with sizable economic prospects, according to a city memo.
“The public infrastructure that we are gaining is (ASM is) building out sections of roadways. They are also, primarily in this agreement, accelerating the construction of infrastructure for which we as a city are ultimately responsible to provide,” Killgore said.
ASM has to keep its development promises if it hopes to receive the full reimbursement, however. The company must build “over 400,000-square-feet of commercial space,” hire 500 new employees and have a “minimum payroll of $55 million,” according to the deal.
The company has to finish the project within six years, which city staffers call the “milestone date.” Every month the project remains unfinished after that deadline, the total amount of city reimbursement ASM receives will decrease by 5%, or roughly $318,000 each month.
There are also strict water use terms in the deal.
ASM has to bring nearly 200 million gallons of water to the city, which is enough to supply its facility for 20 years. After its first two years, the company has to prove that at least 75% of the water it’s using is being returned to city sewers so it can be reused for things like landscaping.
The city will slash ASM’s reimbursement by somewhere between 5% and 20% if the company doesn’t meet that water recycling goal, depending on how badly it misses the mark. That could result in as much as a $1.3 million penalty for the manufacturer.
Killgore emphasized that whatever amount of money the city ultimately reimburses ASM, no public dollars will go towards costs that are typically borne by developers. It will solely fund infrastructure which would be the city’s responsibility, regardless.
“It is not paying project expenses that are solely ASM’s responsibility. So, development pays for development. This is to build the public infrastructure that supports this area and will support other neighboring properties and community members, as well.”
Reporter Sam Kmack covers Tempe, Scottsdale and Chandler .Follow him on X @KmackSam or reach him at sam.kmack@arizonarepublic.com.
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Publish date : 2024-09-20 01:01:00
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