Arizona's largest chip factory and its newest data center proposals are being met with very different reactions, even though both draw heavily on the same scarce desert water. Taiwan Semiconductor Manufacturing Company, the world's leading chip producer, was welcomed warmly when it arrived near Phoenix. Proposed hyperscale data centers from Phoenix to Tucson are now drawing a grassroots and surprisingly bipartisan wave of opposition.
TSMC's Arizona complex uses nearly 5 million gallons a day from Phoenix's municipal supply. The company's local story began in earnest in 2016, when it began looking for a US site. Christine Mackay, who leads Phoenix's economic development office, said her team spent three years addressing the company's concerns before taking a delegation to Taiwan in 2019. TSMC then looked at two sites, including an undeveloped area north of the city about the size of Manhattan known as Biscuit Flats. Mackay recalled the company saying that same day, "This could work."
The 2020 announcement initially promised $12 billion in investment by 2029. That projection has since grown to $265 billion, which the company describes as the largest foreign direct investment in US history. A second fab is finished, a third is under construction, and more are planned. TSMC has brought more than 3,500 jobs to the state. Mackay says Arizona's traditional "five Cs" of cattle, copper, cotton, citrus and climate now have a sixth: chips.
Data centers once passed with little notice. Arizona has 172 of them, and Mackay said the first 10 she helped bring in "look like pretty little office buildings." The newer proposals, often planned for rural farmland or desert, are far larger. Developers promise jobs, tax revenue and infrastructure, and argue they use less water than expected. Google's facility in The Dalles, Oregon, for example, uses about 1.5 million gallons a day, roughly one-third of TSMC's Arizona use. But Arizona is also preparing to lose access to nearly 30 percent of its Colorado River water.
The fight is sharpest in Tucson over Project Blue, a planned 600-megawatt data center on 290 acres of county-owned land. Details emerged in spring 2025, shielded by a nondisclosure agreement the county signed with the developer, Beale Infrastructure. A 44-page memo to the Pima County Board of Supervisors in June 2025 did not use the words "data center" until page four. It described a $3.6 billion opportunity, 3,000 temporary construction jobs, 200 permanent positions and $152 million in tax revenue over a decade. It also said the project would use "100% renewable water resources," with Beale paying for an 18-mile pipe extension and an aquifer recharge facility.
Supervisor Rex Scott said the boost to the local economy "may well be transformative." The board voted 3-2 to rezone the land and then voted to sell it to Beale for around $20 million, though the deal still required Tucson to annex the property and approve the sale because the city would provide water service.
Public sentiment turned quickly. Hours after the board vote, Tucson Electric Power announced it was exploring a rate hike that would raise customer bills by an average of 14 percent, which the utility said was unrelated to the data center. One commissioner who had backed the rezoning then asked to reconsider it. The Arizona Mirror reported that Project Blue and another proposed data center would make up TEP's largest customer and use more than four golf courses' worth of water each year. Amazon Web Services was reportedly the end client, and public records obtained by Arizona Luminaria showed officials had discussed the project since 2023.
On August 1, about a dozen people gathered near the site for a protest organized by the No Desert Data Center Coalition. Organizer Vivek Bharathan warned that such facilities create heat islands that can raise surrounding temperatures by more than 10 degrees Fahrenheit. Attendee Mayra Duron, a local artist, worried about the region's saguaro cacti. A hand-painted banner read, "Beale's data center will suck us dry." Passing drivers honked in support. Even so, construction on the project is moving ahead.
