Phoenix is Emerging as the City of the Future

By Jessica Boehm, Axios

Phoenix is having a moment.

  • Recent major investments in computer chip manufacturing and electric and autonomous vehicles have made it the overnight darling of the U.S. innovation elite.

Why it matters: The broad attention is showing the world what local leaders have spent the past half-century trying to prove: This desert city can be a major player in global tech and manufacturing.

State of play: Arizona has attracted more semiconductor investment since 2020 than any other U.S. state — driven mainly by Taiwan Semiconductor Manufacturing Co.’s $40 billion facilities in north Phoenix.

  • Semiconductors are used in just about every electronic device — including electric and autonomous cars, fields in which Phoenix is also thriving.

Waymo has been testing its self-driving vehicles in metro Phoenix since 2017.

  • It recently doubled its local ride-hailing service area to cover 180 square miles, the largest fully autonomous service area in the world.
  • Five EV manufacturers have set up shop in Arizona since 2016, per the Arizona Commerce Authority.

How it happened: Government and business leaders pledged to diversify Phoenix’s construction-based economy after it collapsed during the 2008 housing crash.

  • They formed the Arizona Commerce Authority, offered incentives and relaxed regulations to lure new companies.

Yes, but: Those moves were built on the back of decades of groundwork, strategic investments — and maybe some dumb luck too.

Flashback: Metro Phoenix was home to several U.S. Air Force and Navy training bases during World War II, which made it a natural fit for post-war military manufacturing.

  • Motorola arrived in 1949, becoming the area’s first semiconductor facility.
  • Intel followed, opening its first fabrication plant in the area in 1980.
  • They attracted chemical suppliers, engineering outfits and other skilled manufacturing companies to metro Phoenix.

Meanwhile: The area has invited auto companies to test their products here for decades.

  • General Motors, Goodyear, Ford, Chrysler and others established proving grounds on the outskirts of town in the 1940s and 1950s.
  • Many still exist and are now used to test electric and autonomous vehicles.

What’s next: Homegrown innovation.

  • Intel has been around long enough to see some of its engineers leave and start their own ventures. For example: Footprint, a Gilbert, Arizona-based company designing alternatives to plastic food packaging.
  • Venture capitalists are finally taking the city’s startup scene seriously. In 2015, Arizona companies secured $396 million in VC money, per PitchBook. By 2018, that number had ballooned to $2.5 billion — though investments have slowed since.

Reality check: How far Phoenix’s national star rises depends on the city confronting some daunting challenges.

  • It’s facing big city problems like housing affordability for the first time — plus the increasingly dire challenge of water security.