Unknown: Arizona – land of
snowbirds and the Grand Canyon, retirees and ATVs – is rapidly
gaining a reputation of an entirely different sort. It's
becoming an epicenter of electric vehicles and self
driving tech, as well as a new surge in semiconductor
manufacturing as the US tries to address the worldwide chip
shortage. I would say Arizona is the
semiconductor capital of the world. This is going to be the
hub. Intel's $20 billion investment in Arizona, building
two new fabs, and Taiwan Semi is something that I don't think has
gotten the attention it deserves. Taiwan Semiconductor or TSMC is
indeed building a $12 billion chip manufacturing plant in
Phoenix. Tesla rival Lucid motors built a brand new
electric vehicle factory in the state along with Nikola and
ElectraMeccanica. And Waymo's, fully driverless rides are now
available to the public in Arizona only. It's the cost of living. It is
the great environment. People love it. People love to be in
Arizona and I think that also helped us to attract talent all
over the place. In 2020, Phoenix attracted more
residents than any other US city for the fourth year in a row.
634 companies relocated or expanded in Arizona between 2015
and 2020 creating 13,000 jobs in manufacturing alone. We headed
to the desert to ask the governor, big companies, and
those living amidst the boom, how is it changing the state and
why Arizona. The sixth largest state by area,
Arizona first became well known when a major mine opened there
in 1854. And copper mining remained its primary industry
for nearly a century. Slow to grow, it became the 48th state
in 1912 and didn't experience a population boom until after
World War II when air conditioning became widely
available. Phoenix has been growing ever since now
surrounded by a vast sprawl of suburbs and agriculture. Everybody knows the five C's of
Arizona: copper cattle, cotton, climate and citrus. I think you
could add two maybe three additional C's, you've got
chips, you've got electric cars, and you've always had
construction as well. During World War II, GM started
using about 4000 acres outside Phoenix to test parts it's
applied to US Army tanks. Toyota, Ford, Chrysler and
others were all soon testing their cars on Arizona tracks,
too. Aerospace manufacturing has also been huge. Raytheon has
made missiles in Tucson since the 50s and recently expanded
there. Boeing has built its Apache helicopters in Mesa since
the 80s. In 1969, Motorola kicked off another state trend
when it began manufacturing semiconductor wafers at a
factory in Mesa. But during the Great Recession, 300,000
Arizonans has lost their jobs and home values were down
$100,000. So in 2011, the Arizona Commerce Authority was
formed to attract new high paying jobs. One of the first
big wins came in 2015 when Apple invested $2 billion to build a
data center outside Phoenix. In the years since the list of
companies relocating or expanding and Arizona has
exploded. Caterpillar, Infosys Benchmark Electronics, Blue
Yonder, Insight, Zoom, Cognizant, and many more.
Businesses growing in the state in the last decade have promised
to bring almost $34 billion and 191,000 new jobs in exchange for
some big incentives. We have a Foreign Trade Zone
program. We also have some quality job tax credits. So as a
company creates jobs and makes capital investments, those
programs are available to all companies. Filling all these new jobs are
lots of high skilled workers flocking largely from California
to states with a lower cost of living while the pandemic
allowed them to work from home. If I can work in Arizona, I can
have twice the house, a newer house, with a pool. The cost of
living is cheaper, my taxes are cheaper, and I can tele-work.
Why wouldn't I live out here? Real Estate Agent and single dad
Chris Barker was raised in Arizona. After 16 years in
Maryland. He moved back to Phoenix with his two teenage
kids during the pandemic last year, but it wasn't the same. A lot of the beautiful things
that I used to enjoy about Arizona have kind of gotten
spoiled; Slide Rock in Sedona, Snowbowl. All these like cool
places that Arizona had to offer, well now there's just
such an influx of people that it's almost miserable. I can see
like the pollution is thicker. There has been obviously a lot
more traffic. But for many, the cost of living
is still a big plus. The cost of living in San
Francisco is three times Arizona. So we had a lot of
people locating here and working virtually from our state. Now
they want to stay here. The business friendly regulatory
environment and lower taxes are also a draw. The Tax Foundation
ranks Arizona 24 for business tax climate while California
comes in for 49th. In Arizona, we've eliminated –
wipe off the books – 2751 regulations since 2015. That's
the equivalent of $150 million tax cut, and that's the
direction Arizona is going to continue to go. This, coupled with Arizona's
long history of manufacturing, has helped the state attract an
entirely new industry: electric car companies. Although Arizona
lost a bid for Tesla's first Gigafactory to Nevada in 2014,
the state's big break into EV's came in 2016, when Lucid Motors
announced it would build its $700 million electric car
factory in Casa Grande. We had an extensive survey of
about 65 sites right across the US against a whole range of
criteria. And we made a really good decision here to come to
Arizona. And then there's Arizona is
proximity to Mexico, where companies are making components
for GM electric vehicles and for Lucid. It was our third interview with
Lucid, the final question was, how is your relationship with
Mexico? And Mexico is Arizona's number one trading partner, it's
not even close. EV companies in Arizona can
easily access supplies from nearby California and beyond via
a major railroad system and I-10, a major trucking route. That was the very attractive
thing about Arizona that we have this, being close to supply
chain, being close to our headquarters, having enough
space to grow. That's what we found here. Lucid broke ground on its 590
acre factory in 2019. After some delays, Lucid says it's Air
Dream Edition is now in production there with customer
deliveries coming later this year. The workforce work grow far
north of 4000 people there. Electric semi truck maker
Nikola, which made headlines for some big missteps last year, is
headquartered in Phoenix. It's building a new factory in
Coolidge, Arizona, scheduled to start producing its Nikola Tre
in 2022. Phase One of Coolidge is
basically done on the exterior. So now it's all the interior
work at this point. It's on schedule. We should, we intended
to have that first phase complete and in operation this
year, and we're on track to do that. Another electric vehicle being
manufactured in Arizona is the single-seat three wheel Solo.
ElectraMeccanica says its new factory in Mesa, which just
broke ground, will create 500 jobs and eventually produced
20,000 Solos per year starting in early 2023. It's also
creating sharing pods of Solos, similar to short term rentals of
electric bikes and scooters. Between being near our target
market on the West Coast and the willingness for these five
municipalities to test that Solo share, that was probably the
tipping point for us. That really helped us decide on
Arizona. Rivera says access to the EV
supply chain, much of it now being manufactured in-state was
a huge factor in choosing Arizona. The secondary supply chain, the
tier one suppliers who are all going to support us in addition
to those that are already here supporting Lucid and Nikola for
example. UACJ Whitehall, a leading
supplier of aluminum components for EVs, just announced its
opening a new plant in Flagstaff. Lithium-ion batteries
are also a crucial part of the EV supply chain. And battery
recycler Li-Cycle is now building a new recycling
facility in Gilbert, Arizona. And now Atlas Motor Vehicles,
known for its electric XT pickup truck, recently announced it's
building a production line for battery packs and cells at its
headquarters outside Phoenix. A number of our employees that
came from California, they love that, for the price of an
apartment with three roommate, they can have a house and live
by themselves, and that's very appealing, but they still have
the benefits that they had in California. On top of a growing supply chain
and robust manufacturing, Arizona is known for ideal
testing conditions for vehicles. Six major test tracks or proving
grounds are scattered in remote Arizona deserts where major car
companies can discreetly test their new cars. GM, Ford,
Toyota, VW, Chrysler, and Nissan all tests their cars on these
tracks. Low rainfall and winds allow testing almost every day
of the year. The extreme desert heat is also a draw. Here in the summer, it's as hot
as it gets anywhere, which is not great when you're in the
middle of it. But it's great for testing vehicles in hot weather. Arizona is now one of the first
testing grounds for driverless cars, too. They've become a
common sight in some cities surrounding Phoenix, which have
ideal wide streets for testing designed on a grid. I think that there is truth to
the fact that the infrastructure here is fantastic, right? But I
think that the bigger and more appealing attraction is the
forward... dynamic and forward thinking government here and the
fact that, you know, you're bringing companies like Uber and
Waymo, Cruise, the willingness to allow those kinds of
companies to test. In 2015, Governor Ducey signed
an executive order allowing testing of autonomous cars on
public roads. Since then, Waymo, Uber, Chevy, Ford and Cruise
have all tested their self driving cars in Arizona,
although Uber sold its self driving division last year. Five
years after it began testing in Chandler, Arizona, Google's
Waymo now offers fully driverless rides to the public
there. Now Walmart is testing self driven deliveries by
GM-owned Cruise cars in Scottsdale and autonomous semi
truck company TuSimple announced a major Tucson expansion in
January before going public in April. We are the first and only
autonomous driving company to be publicly traded. It's really a
validation of our shareholders' confidence in us and our
technology. Semiconductors, which have a
long history of being made in Arizona, are another crucial
part of self driving tech and the electric vehicle supply
chain. Intel started making chips there in 1980, and now has
plans to rapidly expand in the state as demand surges. Chips
are in short supply after the pandemic have ended supply
chains and caused consumers to buy more electronics. Intel,
which says its tech powers nearly all autonomous vehicles,
has four factories in Arizona and two more on the way. Today Intel is announcing a new
$20 billion investment, the largest private sector
investment in Arizona history. These facilities will add 3000
high tech, high wage jobs to the state of Arizona. Amid the worldwide shortage, the
US share of global chip manufacturing fell from 37% in
1990 to just 12.5% in 2019. The world more than ever is
counting on Intel to deliver, you know, innovative products. Intel's two new Arizona
factories are scheduled to be online by 2023 and will make
Arizona its biggest manufacturing site in the world.
And it's far from alone. TSMC, the world's largest contract
chip manufacturer with customers like Apple and Qualcomm has a
goal to manufacture 20,000 chips a month and its new Phoenix fab
by 2024, the first factory of its kind in the US, Arizona is considered one of the
top four states in the country for the concentration of
semiconductor talent. This will continue to elevate Arizona's
position to a top state in the country. Chips are vital for powering our
modern lives. But making chips takes an incredible amount of
water; two to 4 million gallons of water a day for a typical
fab. And water is not exactly plentiful in the desert.
Arizona's biggest water source is groundwater, which is
accessed by wells. But deeper and deeper wells at big farms
are using up groundwater faster than it's naturally replenished.
So some manufacturers have added on site water recycling at their
factories. Overall, a lion portion of our
water is reclaimed. In order I would say more than you know 80
to 90% is reclaimed. So that's very, very significant. And we
use in billions of gallons, you know, per year for the overall
company. Intel says it treats 9 million
gallons of water a day, adding much of it back into the local
supply for things like irrigation. Arizona has a
history of reusing almost all its grey water to cool power
plants and to water fields, storing water banks in
underground aquifers and restricting irrigation in urban
areas. We are using less water today
than we did in 1957 with six times the population. No one is better in the country
than Arizona with water. Israel's probably the best in
the world at water with Arizona right behind them, taking
advantage of the generational projects like the Central
Arizona Project and then the Drought Contingency Act that we
passed in this administration. And before that we had the
Groundwater Management Act. So we continue to focus on water. Major tributaries, and 336 miles
of manmade canals allow 36% of the state's water to come from
the Colorado River. The growth has not been limited
by water at this point. The water that's here is extremely
well utilized. The Colorado River sometimes doesn't even
make it to the ocean because it's all used, every drop of it. Lucid also recycles the water it
uses to make the Air. So we have a water treatment
system in our plants, so we double treat the water and we
put it back into the system. Making cars and chips takes a
huge amount of energy, too. US News and World Report ranks
Arizona as the second most reliable power grid in the
country, and its energy costs about half of California's
industry rates. What I would say is great about
Arizona is just the overall infrastructure when it comes in
to power, when it comes to the stability of what we need to
count on to run this world class operation. 14% of Arizona's electricity
comes from renewable sources, thanks largely to its ranking as
the sunniest state. It generates the fourth most solar power of
any state and ranks second in solar energy potential. But all
that consistent sunshine also means intense heat. At an
average of 99.1 degrees, Phoenix had its hottest month ever
recorded last August, and last year was the driest on record
for the state. Although Arizona doesn't suffer from the myriad
of natural disasters that California and Texas face, the
state does have dust storms, flash flooding, and significant
fires. I think there's a lot of people
who are moving here who have not moved here during the summer. So
I'm like, I don't know if they know what they're quite getting
into. But in recent years, the heat
certainly hasn't kept people away. Arizona's population has
been on a steady rise for the last decade, up 13.9% between
2010 and 2019. The upside for the incoming EV companies and
chip manufacturers is the availability of skilled workers. We are graduating 9000 students
a year from our three universities in the
semiconductor industry. In CNBC, his most recent top
states for business rankings, Arizona came in 20th. But when
looking specifically at workforce, Arizona ranked
second, and many of those workers are coming from
California. U-Haul, which itself is headquartered in Phoenix and
two manufacturers much of its equipment in Arizona, found
California was the top state people moved to Arizona from.
More than 10,000 truck customers rented one way from California
to Arizona in 2020, making Arizona fifth on its annual list
of growth states, up 15 spots from 2019. There's no denying
that all these people, especially from wealthy
California, are changing the fabric of Arizona, starting with
the real estate market. While Arizona comes in right at the
middle of the cost of living index, a typical Arizona home
value is about $329,000, about half the typical home value of
California, at least for now. My mortgage is three times less
than what our rent was in Seattle. During the pandemic last year,
Arizona native Brooke Sanders-Silverman and her family
moved back to 1000 square foot home that she bought in Tucson
in 2010. When you have a four year old
running around, it's like the space gets a lot smaller,
quicker. They intended to quickly upgrade
to a bigger house. Probably three to four days a
week either by mail or phone, I get an offer to buy my house for
full cash. But she declines these offers
because her own home search has been unsuccessful. She put in an
offer $10,000 above asking price on her dream home in September,
and another offer a couple months ago. We went in for full offer and I
think it went for about 100 over. I'm just baffled by these
all cash offers, sight unseen. They don't want to inspection. The cost of living has gone up
so much that I don't think a lot of retirees can afford the
current housing market. As a whole, we're looking at anywhere
between 30 and 40% increase from July up until now of home
values. And that's nuts. Can you walk over here? Sanders-Silverman's daughter is
starting kindergarten next year, and CNBC ranked Arizona schools
all the way down at 47th. Her parents were both teachers in
Tucson. What are teachers make here is
offensive. I mean, there's no way that they're going to be
able to stay here if our, you know, cost of living keeps
elevating the way that it is in the last few months. And so if
we continue to lose our teachers and our good teachers because
they can make way more in another state, then I think our
education is going to continue to decrease. Aside from pricing our existing
residents, the population and manufacturing booms have also
led to worsening pollution with the American Lung Association
finding that nearly all Arizonians are breathing
unhealthy air with Phoenix and Tucson worsening in all
categories last year. The population boom is shifting
Arizona's politics, too. When Biden won Arizona in November,
it was the first time Arizona turned blue since 1996. You'll see a lot of flags of
Commie-fornia. You know you can visit but leave your politics at
home. California is chasing people
out, they're punishing people and producers with lack of a
quality of life, with onerous taxes and regulation. Arizona is
going to remain Arizona. As more young professionals
relocate from states like California, and the states Asian
and Latino population grows, too, it's no surprise that
demographics and politics are changing. The state also had a
large voter turnout from members of its 22 Native American
tribes. As more and more people move
here from Washington State and California, there is a very big
undercurrent of people that are upset about it and they hate it,
you know, because not only are they making this place
unaffordable for the people that are considered native or have
lived here for a long time. But they're also changing the
politics. Regardless of politics, Arizona
is certainly changing as new people and new EV and chip
companies solidify its reputation as a hub of advanced
manufacturing. It really has become a center of
excellence here that's just going to get bigger and more
important as we go forward. Because there's enough momentum
now I think that's inevitable.
This was a great video. Our great infrastructure is certainly something we take for granted, but I 100% understand why that’s appealing for businesses.
I can't believe I'm typing this but Gov. Ducey said all the right things in this video, from a business perspective. He even points out Mexico is our #1 trade partner which almost everyone forgets
Becoming? It's been the silicon desert for decades.
Cheap abundant land, low-cost of living(minus housing which is only recent(2 years)), and above all cheap electricity. It also helps that we're on the main thoroughfare from the ports in LA to Texas, so commercial goods pass right through us. This also adds to the cheap cost of living.
Those are the reasons many companies are moving here. In the last few years, there's been an abundance of call centers being built. We're also seeing more and more food production moving here too.
Plus a QT coming to Scottsdale!
Just watched this tonight! Didn’t realize there’s such consistent population growth, nor the huge influx of tech. Seems AZ is continuing to become ever more popular.
They have been saying this for so long.
I appreciate that they discuss water use.