{"id":6879,"date":"2026-09-11T12:35:30","date_gmt":"2026-09-11T12:35:30","guid":{"rendered":"https:\/\/silvybrand.com\/?p=6879"},"modified":"2026-09-11T12:35:30","modified_gmt":"2026-09-11T12:35:30","slug":"water-chip-semiconductor-manufacturing-colorado-river","status":"publish","type":"post","link":"https:\/\/silvybrand.com\/?p=6879","title":{"rendered":"Arizona\u2019s lifeline for chip manufacturing is drying up"},"content":{"rendered":"


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Arizona, an epicenter for the bipartisan push to revive American chip manufacturing<\/a>, is about to lose more than a quarter<\/a> of the water it typically pulls each year from the Colorado River.<\/p>\n<\/div>\n

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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 hard<\/a>. The river provides more than a third<\/a> of the Grand Canyon State\u2019s water. Arizona has been a manufacturing hub since the start of the semiconductor industry, and now it\u2019s where TSMC and Intel are expanding massive factories to make advanced chips for AI \u2014 a water-intensive effort.<\/p>\n<\/div>\n

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City planners and industry leaders have already taken precautions to conserve water and find alternative sources. It\u2019s 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\u2019s 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.<\/p>\n<\/div>\n

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TSMC and Intel are expanding massive factories to make advanced chips for AI \u2014 a water intensive effort<\/p>\n<\/div>\n<\/div>\n

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\u201cOur economy is changing, and that\u2019s really painful,\u201d says Kathryn Sorensen, research director at the Kyl Center for Water Policy at Arizona State University. \u201cWhen there\u2019s 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.\u201d<\/p>\n<\/div>\n

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Agriculture has been a major part of Arizona\u2019s economy since it became a state, and still gobbles up more than 70 percent<\/a> of the state\u2019s water. Industrial uses, including the chip manufacturing that\u2019s had a foothold in the state since the 1940s, account for just 6 percent<\/a>.<\/p>\n<\/div>\n

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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 \u201cultra-pure\u201d water<\/a> 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 10 million gallons<\/a> of ultra-pure water a day, which could require up to 16 million gallons of municipal water<\/a>.<\/p>\n<\/div>\n

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New chip factories are sprouting up in Arizona\u2019s desert with the help of federal funding. President Joe Biden signed the \u200b\u200bCHIPS and Science Act into law in 2022<\/a>, setting aside $52.7 billion to expand domestic chip manufacturing. Armed with a $7.86 billion<\/a> grant from the government, Intel is planning to spend $32 billion<\/a> on two new factories and an expansion of an existing facility in Arizona. In 2025, the company\u2019s facilities in Chandler, Arizona withdrew more than 2.7 billion gallons of freshwater, according to its latest corporate responsibility report<\/a>.<\/p>\n<\/div>\n

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TSMC, the world\u2019s largest chipmaker, received<\/a> up to $6.6 billion in CHIPS Act funding and decided to build at least six new semiconductor fabs in Phoenix. TSMC\u2019s first fab in Arizona uses roughly 4.75 million gallons of water a day, the company told The Verge<\/em><\/a> last year. It\u2019s approximately equivalent to the water usage of more than 14,000 homes<\/a> a day, or 2 percent of Phoenix\u2019s housing. That amount grows with each new fab the company builds, and with the more advanced manufacturing processes TSMC is developing. The company recycles 65 percent of the water it uses in Arizona, TSMC says, a figure that\u2019s supposed to grow to at least 90 percent when it finishes building a water reclamation plant.<\/p>\n<\/div>\n

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\u201cThere\u2019s not enough water for everything we want to do with it.\u201d<\/p>\n<\/div>\n<\/div>\n

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The Colorado River is the state\u2019s biggest renewable source of water. But the Colorado River Basin has faced \u201cunprecedented\u201d drought for more than a quarter century, according to the US Bureau of Reclamation<\/a>. Climate change, unfortunately, is also making the region more<\/a> dry<\/a> as growing water demand adds to decades of overuse.<\/p>\n<\/div>\n

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\u201cThere\u2019s not enough water for everything we want to do with it,\u201d Sorensen, who previously worked as the director of Phoenix Water Services, says. \u201cSo what do we have enough water for? What are the uses we most value?\u2029Is it cotton or is it microchips?\u201d<\/p>\n<\/div>\n

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With 40 million Americans from Denver to Los Angeles relying on water from the Colorado River, states have been tussling over how to allocate the remaining water for years. Guidelines for how to manage that water, collectively known as the \u201cLaw of the River,\u201d expire this year. After states failed to reach an agreement on their own, the US Department of the Interior finalized<\/a> its own plan<\/a> in August for how to move forward. It outlines steep cuts for downriver states: Arizona, Nevada, and California. Arizona stands to lose the most, at least 760,000 acre-feet of water a year starting in 2027. An acre-foot represents how much water it would take to cover an acre with a foot of water, and is enough to supply about three homes<\/a> with water for a year in the Phoenix area. The City of Phoenix uses about 300,000 acre feet of water in a year.<\/p>\n<\/div>\n

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Maricopa County, home to Intel and TSMC\u2019s chip fabs, isn\u2019t as reliant on water from the Colorado River as other counties. Its primary resource is groundwater<\/a>, but surface water flowing from the Colorado and Salt rivers still make up close to 40 percent of the county\u2019s supply.<\/p>\n<\/div>\n

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Local leaders insist that Phoenix and other cities in the region are prepared for water cuts, citing plans to make up for the shortfall with underground water stores and other surface water sources. \u201cFor the most part, they\u2019ve planned accordingly and can fall back onto water that was previously stored underground,\u201d Sorensen says.<\/p>\n<\/div>\n

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But even without sudden tap water shortages, Sorensen expects utility bills to climb over time. The transition to alternative water resources will entail new infrastructure, like new wells and pipes. That\u2019s likely to be the most significant driver of higher tap water prices, Sorensen explains.<\/p>\n<\/div>\n

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Meanwhile, the city of Phoenix is pushing back, with Mayor Kate Gallego arguing that the federal government\u2019s decision to cut the state\u2019s intake \u201cdoes not provide the fair, basin-wide leadership the Colorado River crisis demands.\u201d That said, \u201cPhoenix is prepared for this moment because of decades of planning and conservation, we will push for new federal support to mitigate the rising cost of water that will result from this federal decision,\u201d Gallego added in an August press release<\/a>. A spokesperson for the city declined to comment further in an interview.<\/p>\n<\/div>\n

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TSMC in particular, located in Phoenix, will be subject to the same price hikes as its neighbors. Phoenix is unique in that it sets the same water rates for companies as it does for residential customers. Cities often charge industrial customers less if they want to attract certain businesses.<\/p>\n<\/div>\n

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\u201cThe cost of water will increase for TSMC,\u201d Sorensen says. \u201cEveryone pays the same rate for water in the city of Phoenix, whether you\u2019re a mom-and-pop store, a family of eight, or TSMC.\u201d<\/p>\n<\/div>\n

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TSMC and Intel declined interviews with The Verge<\/em> for this story. Both have made public commitments, however, to minimize the amount of fresh water they consume.<\/p>\n<\/div>\n

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\u201cA stable supply of water is critical to chip production,\u201d TSMC deputy spokesperson Nina Kao said in an emailed statement. \u201cOne of the reasons the city of Phoenix was selected for our US expansion is because of their long-term water plan, which includes varied water supply sources, as well as steps taken in preparation for reduced water supplies over the course of decades.\u201d<\/p>\n<\/div>\n

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Apprehensions are still mounting over the impact that AI and the tech industry as a whole have on the region. AI has spawned a new generation<\/a> of semiconductor factories, chip packaging plants, and data centers across Arizona.<\/p>\n<\/div>\n

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\u201cA stable supply of water is critical to chip production.\u201d<\/p>\n<\/div>\n<\/div>\n

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\u201cIt\u2019s almost happening at a level that\u2019s difficult to wrap your head around,\u201d says Jennifer Martin-McLeod, a program manager for the Grand Canyon chapter of Sierra Club. \u201cTo try to say \u2018Everybody take a breath and think through what we\u2019re doing\u2019 is difficult when you have that steamroller of money coming at your state to try to make it all happen overnight.\u201d<\/p>\n<\/div>\n

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She has broader concerns about the health of the Colorado River and wildlife that depends on it. Over the long term, Sorensen points out that a shortage of water from the Colorado River will result in the depletion of groundwater in Central Arizona, as most cities cope by increasing how much water they draw from local aquifers. \u201cIt\u2019s something they can sustain, but it is only sustained at a cost to future generations,\u201d she adds.<\/p>\n<\/div>\n

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The impact of water cuts next year will be felt most by typical residents, Martin-McLeod says. \u201cFor me, that\u2019s going to mean serious lifestyle changes. \u2026 But to an enormous chip manufacturer, that\u2019s maybe just part of the cost of doing business, you know?\u201d<\/p>\n<\/div>\n

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