Arizona’s lifeline for chip manufacturing is drying up

The 1,400-mile waterway is a crucial lifeline for the region and other western states. A recent federal decision on how to manage its dwindling flow hits Arizona, and its already drought-prone desert communities, particularly . The river provides of the Grand Canyon State’s water. Arizona has been a manufacturing hub since the start of the semiconductor industry, and now it’s where TSMC and Intel are expanding massive factories to make advanced chips for AI — a water-intensive effort.

City planners and industry leaders have already taken precautions to conserve water and find alternative sources. It’s a resource that is likely to become more expensive for manufacturers and residents alike as they learn to rely less on the Colorado River. That’s already raising tensions over who shoulders the costs for new infrastructure needed to adapt, as well as what constitutes a good use of water. The challenges that come with managing a limited water supply are only going to grow as AI demands a larger share.

“Our economy is changing, and that’s really painful,” says Kathryn Sorensen, research director at the Kyl Center for Water Policy at Arizona State University. “When there’s a water scarcity issue you have to start looking at what the uses of that water are that bring the most value to the community.”

Agriculture has been a major part of Arizona’s economy since it became a state, and still gobbles up more than of the state’s water. Industrial uses, including the chip manufacturing that’s had a foothold in the state since the 1940s, account for just .

While the amount of water that semiconductor factories, or fabs, use is still quite small compared to agriculture, the chip industry is growing fast. Fabs use to clean surfaces and etch sensitive chips. It takes more municipal water to create a smaller amount of ultra-pure water through deionization and reverse osmosis. A typical facility might use of ultra-pure water a day, which could require .

New chip factories are sprouting up in Arizona’s desert with the help of federal funding. President Joe Biden , setting aside $52.7 billion to expand domestic chip manufacturing. Armed with a grant from the government, Intel is planning to on two new factories and an expansion of an existing facility in Arizona. In 2025, the company’s facilities in Chandler, Arizona withdrew more than 2.7 billion gallons of freshwater, according to its latest corporate responsibility .

TSMC, the world’s largest chipmaker, up to $6.6 billion in CHIPS Act funding and decided to build at least six new semiconductor fabs in Phoenix. TSMC’s first fab in Arizona uses roughly 4.75 million gallons of water a day, The Verge last year. It’s approximately Justine Calma