Taiwan Semiconductor Manufacturing Co. is buying a large tract of undeveloped state land in north Phoenix to build its multibillion-dollar semiconductor factory.
The company's $89 million bid was the only bid the state received at an auction on Wednesday for 1,129 acres of undeveloped land off Interstate 17 between Loop 303 and Carefree Highway. The bidding started at $89 million.
The auction made public the exact location for the advanced chip factory, which the company has kept quiet since May, when city and state officials announced it was coming.
The factory will anchor a massive new industrial park across from Ben Avery Shooting Facility in the mostly undeveloped area between Norterra and Anthem.
As development creeps north in neighboring Peoria as well, Carefree Highway — a remote desert drive leading to Lake Pleasant — may eventually become the region's next employment corridor.
Phoenix officials said they can't talk about the future location of Taiwan Semiconductor Manufacturing because of an agreement with the company.
But Alan Stephenson, the city's planning and development director, said more generally Wednesday that the area is set to be a "significant employment area" in coming years, which will attract more single-family and multifamily housing as well as offer opportunities for planned, connected open space throughout the northern region of the Valley.
"It will be a success no matter what but it will happen sooner if things fall into place," he said.
Lauded $12B deal nowhere near final
Taiwan Semiconductor Manufacturing is the world's largest contract producer of silicon chips. It makes products for computers, smartphones, automobiles and other applications for tech giants such as Apple, Intel, Qualcomm and Sony.
The company's commitment to spend $12 billion building its factory, which will open by 2024 and employ 1,600 workers, in Phoenix has been lauded as a huge economic win for the city.
It further establishes the region as a leader in the advanced manufacturing and semiconductor industries and secures American jobs for work that is increasingly going overseas.
This is the second major recent win for Arizona in this field — the first being Intel's $7 billion expansion in Chandler.
Phoenix secured the deal after Mayor Kate Gallego and Chris Mackay, the city's economic development director, traveled to Taiwan last year to make a pitch to the company.
She said her trip and the hard work from local and federal government agencies that worked on this for years — such as Phoenix, the Greater Phoenix Economic Council, Arizona Commerce Authority and the U.S. Department of Commerce — brought the project to Phoenix.
Councilmember Thelda Williams, who represents the area and is serving the last year of her second four-year term, said this was an accomplishment for her, as well, since she has been promoting international business for years.
The deal is not final, though.
Abhinav Davuluri, an investment strategist at Morningstar, previously told The Arizona Republic that the construction of advanced fabrication plants such as this is an expensive, multiyear process that comes with some uncertainty.
Phoenix still is working to finalize a development agreement with the company. The Phoenix City Council in November gave staff the go-ahead to move forward with an agreement that would commit the city to spending $205 million to build infrastructure that will connect the site to the city, such as streets, sidewalks and water connections.
The company could also be banking on federal assistance that is still on shaky ground.
A federal program called Chips for America would, in part, provide significant tax credits tosemiconductor companies that build in the United States.
The proposed program was tacked onto the pending National Defense Authorization Act, which the U.S. House of Representatives passed on Tuesday, but President Donald Trump has threatened to veto it if makes it through the U.S. Senate.
Elected officials are hoping that doesn't derail the project.
Arizona's U.S. Sen. Kyrsten Sinema and Congressman Greg Stanton were co-sponsors of the original related legislation and Stanton said Tuesday that companies such as Taiwan Semiconductor Manufacturing "add new, quality jobs and lift up our local economy."
Gallego said that "all signs are pointed in the right direction."
Phoenix says undeveloped area will be industrial center
If the Taiwan Semiconductor Manufacturing project does happen, Williams said she's excited not just for this company but its many suppliers that would come to the surrounding area.
The land auctioned on Wednesday is just one piece of a 3,700-acre industrial park the city has planned.
The city has worked since at least the 1980s to reserve part of the undeveloped land in the area for jobs, not just housing.
In October, the City Council changed its general plan and rezoned the land for a mix of mostly industrial and commercial uses instead of for housing.
The overall plan shows a technology campus for the land that Taiwan Manufacturing Company is purchasing, which is on the northwest corner of Loop 303 and the 43rd avenue alignment, a technology park to the west and north of that land, and mixed uses along I-17.
Stephenson said he expects high-wage jobs to come as the area is built out over the next 20 years. The location just off I-17, Loop 303 and Carefree Highway and the skilled workforce in the area makes it attractive to employers, he said.
He said any development would follow design guidelines that would blend in with the desert, include desert trees and trails. With the Phoenix Sonoran Preserve nearby, he expects any plans to attempt to connect open space across the region.
Any residential development would be kept to the northwest corner of Loop 303 and I-17, at least a half mile away from Ben Avery,a state-operated shooting range, according to a city document.
Williams said Ben Avery officials have been involved in the development discussions and support the plan.
What does Taiwan Semiconductor Manufacturing do?
The planned facility will use the company's 5-nanometer technology for semiconductor wafer fabrication, have a capacity for 20,000 semiconductor wafers per month and create 1,600 high-tech professional jobs, while supporting thousands of additional indirect jobs, the company said.
Taiwan Semiconductor described its 5-nanometer production capabilities as the most advanced in the world.
"This U.S. facility not only enables us to better support our customers and partners, it also gives us more opportunities to attract global talents," the company said. "This project is of critical, strategic importance to a vibrant and competitive U.S. semiconductor ecosystem," allowing U.S. firms to fabricate their cutting-edge semiconductor products within the country.
Taiwan Semiconductor cited "forward-looking investment policies" in the U.S. and a talented workforce here as important considerations.
Russ Wiles, Lorraine Longhi and Uriel J. Garcia contributed to this report.