Taiwan Semiconductor’s Phoenix Factory Fuels Growth in Unlikely Place: Pinal County

Article originally posted on AZ Central on June 7, 2023

In north Phoenix, the beginnings of Arizona’s largest foreign direct investment, the $40 billion Taiwan Semiconductor Manufacturing plant, are easy to see as tower cranes dominate the landscape.

But more than 80 miles away in Casa Grande, the ripple effect is strong.

When Jackob Andersen’s company, Saint Holdings, first began buying land in Pinal County around 2006, he expected the area to eventually attract companies specializing in construction and other areas related to homebuilding, the state’s dominant industries at the time.

Instead, the area is now a landing spot for several semiconductor industry suppliers, either establishing an Arizona presence for the first time or expanding their footprint to serve the state’s growing industry.

“We have different businesses coming in than we anticipated before,” Andersen said. The Central Arizona Commerce Park, a 740-acre industrial park in Casa Grande, which Saint Holdings developed, has nearly sold out, with only about five acres left for new buildings.

Luxury electric vehicle manufacturer Lucid and Tractor Supply Co. now own the largest pieces in the commerce park, and that large-scale activity kicked off the momentum for high-quality companies, Andersen said.

Chemical companies an unexpected addition

In early May, Chemical Strategies Inc. bought land from Saint Holdings in Casa Grande, the latest semiconductor industry company to do so. The company, which already has a large presence in Phoenix, supplies and transports chemicals for the semiconductor industry and other industries like aerospace and defense. According to real estate database Vizzda, Chemical Strategies bought its 10-acre parcel for $2.4 million.

Including the sale of land to Lucid, Saint Holdings had more than $50.7 million worth of land closings at the commerce park since 2018.

Chemical Strategies joins other suppliers that work with TSMC and Intel at the commerce park, including Solvay, a Belgium-based supplier of electronic-grade hydrogen peroxide. The company announced it would develop a new facility to service the U.S. semiconductor manufacturing market, which will create about 30 jobs.

LCY Electronic Materials Inc., a Taiwan-based producer of chemicals used in the production of semiconductors, including electronic-grade isopropyl alcohol, also bought land in the area. LCY plans to develop a $100 million manufacturing plant to service five-nanometer production of semiconductors.

Water purification company Chameleon Industries also bought land from Saint Holdings in Casa Grande. The company provides water treatment for a variety of uses including chemical uses and wastewater treatment.

Andersen said the site’s easy access by rail and freeway made it attractive for companies that may have looked for larger, more affordable sites than they could have found in Phoenix or nearby cities. But he said the early moves his company made by investing in infrastructure and courting large companies has paid off.

“We were there, we were pioneers,” he said. “We courted Tractor Supply, we courted Lucid, and we proved that the city, county and state could really collaborate. All eyes were on us.”

Six companies represent $850 million investment

Including the companies that bought land from Saint Holdings, there are six companies that have announced plans or bought sites in Casa Grande specifically to serve the growing semiconductor industry, Pinal County Economic Development Director James Smith said. Those six companies represent about $850 million worth of capital investment, he said.

The injection of the semiconductor industry has also renewed interest in some of Pinal County’s longstanding industries, like mining, he said. Demand for materials that are mined in Pinal County, including copper, have grown as the technology industry has grown.

“Traditionally, Pinal County’s economy was mining and agriculture,” he said. “The moves towards green energy, electric vehicles and solar have driven mining demand.”

The county has worked with some of the companies on issues like foreign trade zone approvals, job training and other programs, Smith said. Now, Pinal County, and Casa Grande, are on the radar of much different companies than what might have chosen the area before the semiconductor industry landed there.

Most Pinal County residents commute out for work

Pinal County has a workforce of about 200,000 people, but the lion’s share, about 80%, commute outside of the county for work, he said.

“We have some pent-up demand for new jobs and other opportunities here,” he said.

Smith said it was “a bit surprising,” when the suppliers began selecting sites in Casa Grande, but said the location is strong for some of the world’s largest economies, with easy access to Phoenix, California, Texas and Mexico. With Pinal County’s growing electric vehicle industry, access to Mexico — where much of the automotive supply chain is located — is a major benefit. In addition to Lucid, hydrogen fuel-cell and battery-electric truck maker Nikola Corp. also has a manufacturing plant in Pinal County, in Coolidge.

Trying to land an even bigger fish

The shift in types of companies eyeing Pinal County also has affected some of the county’s economic development goals, Smith said.

“Now that we have the ecosystem of the supply chain, we would like to see the manufacturing of the chips happen in Pinal County, like a TSMC or an Intel is doing,” Smith said. “That will be a target for us.”

Other recent company announcements have come across a range of industries, including advanced manufacturing and other, more traditional industries for the county, like building materials.

LG Energy Solution is moving forward on a $5.5 billion battery plant in Queen Creek, where it plans to produce two types of batteries — one for cylindrical batteries for electric vehicles and another for lithium iron phosphate batteries for energy storage systems. Production is expected to start in 2025.

Kohler Co., a kitchen and bath product supplier, is constructing a manufacturing facility, warehouse and office space on 216 acres in Casa Grande, which is expected to create about 400 jobs.

In Coolidge, Procter & Gamble bought about 427 acres from Saint Holdings to develop a manufacturing facility for its fabric care products, including the Tide, Downy and Bounce brands. The facility is expected to create about 500 new jobs.

And in Eloy, National Gypsum, the parent company of Gold Bond Building, is developing a wallboard manufacturing facility, to create products used in residential and commercial construction. The plant is expected to create 100 permanent jobs.