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Arizona’s shrinking Semiconductor Industry

semiconductors

I am always interested in jobs in the Phoenix area. The semiconductor industries brought lots of well paying jobs to the Phoenix area.  Recently that has been down…..I hate that. BUT all is not bleak….Worldwide semiconductor revenue is forecast to reach $358 billion in 2015, a 5.4 percent increase from 2014, but down from the previous quarter’s forecast of 5.8 percent growth, according to Gartner, Inc. The market is being driven by strong growth in application-specific standard products (ASSPs) in smartphones, along with DRAM and NAND flash in ultramobiles and solid-state drives (SSDs).  So maybe we will see some local growth.

Arizona’s semiconductor industry has been shrinking, and the result is some serious real estate rollover.

Long one of the top semiconductor hubs in the U.S., Arizona has shed computer chip jobs and sector exports have dropped. That’s leaving some real estate empty and some spaces are being redeveloped.

The state’s semiconductor and electronics workforce totaled 33,300 in February. That is down almost half from 2000 when there were 60,000 semiconductor workers statewide, according to the Arizona Department of Administration. There were 45,700 chip workers in Arizona in 2006 before the recession.

Semiconductor exports, Arizona’s largest outgoing trade segment, are down.

They totaled $4.98 billion in 2014, according to the U.S. Commercial Service. They were $6.9 billion in 2000 and $7.6 billion in 2006.

A new $5 billion Intel Corp. fabrication plant in Chandler was never put into operation despite a 2012 visit from President Barack Obama touting the site.

The dwindling chip sector isn’t helping the Valley’s still recovering commercial real estate market nor efforts to attract high-wage jobs in a still sluggish post-recession economy. Semiconductors used to be one of the drivers of high-wage jobs in the Valley.

On the real estate front, the changes have prompted redevelopment projects of former semiconductor space. San Diego-based Southwest Value Partners bought a former Motorola office park last year and is gearing it towards high-tech tenants.

A former Jabil Circuit plant in Tempe is being converted to tech offices. EverWest Real Estate Partners and CarVal Investors bought the Jabil building earlier in 2014 for $11.4 million.

Phoenix-based Evergreen Development just acquired a former semiconductor plant on Bell Road in Phoenix. Evergreen is tearing the 500,000-square-foot chip plant down. It plans on building a mixed-use project including homes, restaurants and apartments on the site.

The plant was most recently operated by Western Digital Corp. Before that Geneva-based STMicroelectronics operated a computer chip plant at the site.

The global semiconductor industry sold $27.8 billion worth of chips in February, a 6.7 percent increase over the same month last year, according to the Semiconductor Industry Association. Increase is good.

Arizona benefits from more sales in semiconductors with more than 30,000 workers in the industry, and Phoenix is home to such companies as Intel Corp. (Nasdaq: INTC), Microchip Technology Inc. (Nasdaq: MCHP) and ON Semiconductor Corp. (Nasdaq: ONNN)

Globalization has challenged U.S. semiconductor markets such as Arizona, and declines in demand for personal computers has impacted Intel Corp. and other manufacturers. Intel has 11,500 workers and a big campus in Chandler. Intel is letting a planned new $1.7 billion fabrication plant sit empty in the East Valley for now.

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