$2B Phoenix Project Lands CHIPS Act Funding
Amkor Technologies is building the largest facility of its kind in the U.S.
Semiconductor company Amkor Technology has signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce to receive proposed funding as part of the CHIPS and Science Act. Terms include up to $400 million in proposed direct funding and access to $200 million in proposed loans.
The provider of semiconductor packaging and test services announced in November 2023 its plans to build its first domestic OSAT (outsourced semiconductor assembly and test) facility in Peoria, Ariz. The city approved the Phoenix-area project earlier this year.
Amkor expects to invest approximately $2 billion and employ approximately 2,000 people at the new facility. Upon completion, this will be the largest outsourced advanced packaging and test facility in the U.S.
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Amkor secured some 55 acres for the manufacturing campus, which will include more than 500,000 square feet of clean room space. The first phase of the facility targets production within three years.
President Biden signed the CHIPS Act into law on Aug. 9, 2022—creating a $52 billion investment to revitalize America’s domestic semiconductor industry and strengthen the country’s economic and national security. So far, $30 billion in funds have been issued.
Phoenix, a semiconductor epicenter
Phoenix is one of the country’s largest epicenters of the booming field, while the industry itself is transformative for the U.S. economy and one of the country’s main economic pillars looking forward.
In April, Taiwan Semiconductor Manufacturing Co. also announced it signed a preliminary memorandum to receive significant CHIPS and Science Act funding for what would be the largest-ever direct foreign investment in a U.S. greenfield development.
In March, Intel also signed a preliminary memorandum of terms for up to $8.5 billion. Proceeds are aimed at semiconductor project development and expansion in Arizona, New Mexico, Ohio and Oregon.
Bob Hess, vice chairman of global strategy at Newmark, told Commercial Property Executive that Phoenix has firmly established itself as a top-tier metro for advanced manufacturing and semiconductors.
“The region has sustained attraction of California companies, underpinned by a favorable business climate and a proactive approach to investment and infrastructure development,” Hess mentioned.
“What sets Phoenix apart is the collaboration between business executives, local governments and state agencies. True public-private sector partnerships that meet regularly.” He added that leaders such as Chris Camacho of the Greater Phoenix Economic Council and Sandra Watson of the Arizona Commerce Authority have been instrumental in strategic planning.
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Just recently, the U.S. Department of Commerce and National Science Foundation announced a partnership to advance semiconductor workforce development, which will be critical to ensuring a strong and sustainable talent pool to further drive economic growth.
“As Phoenix continues to grow, the housing market becomes a critical factor in site selection for companies,” Hess reasoned.
“The city has done well to manage challenges related to water, zoning and growth. However, there’s a need for more condos, apartments and multifamily housing to meet demand. Engaging with developers and industry leaders is essential to keep pace.”
“The expansion of companies like Amkor highlights the importance of workforce development, including addressing issues like childcare to support a diverse workforce. Arizona’s leaders, working with national think tanks and workforce committees, are looking outward for best practices to prepare for the future needs of the semiconductor industry.”
Phoenix investment from other industry players
John Leddy, managing director in the tech division with JLL Work Dynamics, told CPE that according to the Semiconductor Industry Association, major projects in the Phoenix area increasing semiconductor manufacturing capabilities total more than $100 billion.
“Those investments are expected to create over 11,500 skilled workforce jobs at those sites and require roughly 25,000 construction and skilled trade jobs to complete these projects,” Leddy summed up.
“Arizona is one of 12 states that have created or expanded upon existing tax incentives to attract private sector investment toward semiconductors. Arizona’s statewide incentives include funding for semiconductor infrastructure, workforce and research capabilities.”
Rusty Martin, Graycor general manager with the Southwest division, told CPE that the significant investments from companies such as Intel, Amcor and TSMC have led to additional investments from their suppliers and other businesses operating within the industry.
“Phoenix offers ample available land, a strategic location, robust infrastructure, a competitive cost of living, and a business-friendly environment, making it an attractive location for companies looking to establish a presence,” Martin added.
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The Phoenix market has transitioned over the past two decades into a diverse economy with large companies in tech and manufacturing relocating to the valley, according to Cory Sposi, vice president of sales & leasing at Commercial Properties Inc./CORFAC International.
“Plans that were put in place here decades ago in higher education and infrastructure, as well as keeping our core business-friendly values, allowed us to be a top choice for the future of domestic manufacturing and technology,” Sposi said.
The Phoenix industrial market also continues to remain one the nation’s frontrunners for small to mid-bay leasing activity, according to Morgan Hill, vice president of acquisitions at Stos Partners.
He told CPE that tenant demand for warehouse space continues to be fueled by 3PLs and construction-related occupiers, while significant growth continues in the advanced manufacturing and semiconductor chip-related industries.
“The market has experienced a recent surge in manufacturing with over $60 billion in private investments in the semiconductor, battery production, and energy storage sectors,” Hill mentioned. “Even with the significant construction pipeline, Stos Partners remains bullish on the Phoenix industrial market for functional, well-located industrial product.”
Multifamily and single-family also get a boost
Amkor’s major investment and the addition of 2,000 jobs in Peoria is expected to significantly boost the Phoenix economy, fueling demand for rental housing, according to Jeff Seaman, senior managing director at JLL Phoenix, who specializes in multi-housing.
“Multifamily owners can anticipate increased asset values and occupancy rates, creating a more robust and appealing investment landscape,” Seaman said.
“NexMetro has strategically invested in developing luxury leased home neighborhoods in the Northwest Valley because of the significant manufacturing company presence and investment in the region,” added Jacque Petroulakis, chief communications officer for NexMetro. “This industry creates high-wage jobs, and these homes are attractive to those who want the lifestyle of a detached home with a private yard, but don’t want to purchase a home at this point in their lives.”
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