Podcast Summary: Asianometry – "TSMC Arizona: What About the Water?"

Host: Jon Y
Date: November 16, 2025

Overview

In this episode of Asianometry, Jon Y dives deep into the water consumption challenges associated with the construction and operation of TSMC's new semiconductor fabs in Phoenix, Arizona—a city well-known for its arid desert climate. Addressing public anxieties, Jon explores state-wide water sourcing, the role of agriculture, the technological demands of advanced chipmaking, and how water recycling and reclamation technologies could mitigate looming water concerns. The episode uses a detailed, evidence-driven approach, mixing local Arizona data with comparisons to TSMC's operations in Taiwan.

Key Discussion Points & Insights

1. TSMC in the Desert: Water Demand vs. Supply

• [00:03] TSMC’s new Fab 21 Phase 1 in Phoenix uses about 18,000 cubic meters (4.75 million gallons) of water daily, with more planned as additional phases come online.
• Manufacturing semiconductors is water-intensive; the site will need effective water management as Arizona is known for water scarcity.
• Quote: “More than a few people have asked, don’t these fabs use a ton of water? Why are we building them in the desert?” (A, 00:12)

2. Arizona Water Sources & Usage Breakdown

• Phoenix gets little rainfall—about as much annually as Hsinchu, Taiwan gets in a single wet month.
• Three main water sources:
  • Mountains & Rivers: Gila, Salt, and Verda rivers (require treatment due to salinity).
  • Aquifers: Deep underground “fossil” water, not easily replenished.
  • Importation: Central Arizona Project, a canal bringing Colorado River water.
• Quote: “In 2020, 36% of Arizona’s water came from Colorado, another 18% from the in-state rivers, and 5% is reclaimed water...” (A, 07:10)

3. Water Demand: Residential vs. Agriculture

• Agriculture still accounts for roughly 72% of Arizona’s water use, despite urban growth and conservation success.
• “You can’t just cut these farmers off from their water... 56% of these farmers are Native Americans who have been farming for hundreds of years and see it as a crucial part of their culture.” (A, 12:40)
• Top water-hungry crops: alfalfa and cotton—primarily not for direct consumption, with some hay exported to Saudi Arabia.

4. Drought and Climate Stress

• Arizona is midway through a 30-year “megadrought,” the harshest in centuries.
• Water allocations from external sources like the Colorado River are subject to negotiation and climate-driven reductions.
• Despite drought, the City claims a certified 100-year water supply thanks to a diversified portfolio and heavy reliance on surface water and reclamation.

5. Water Reclamation and Recycling

• Phoenix operates five reclamation plants (2.45 million cubic meters/day total). For industrial demand spikes, reclamation is a crucial backup.
• Residential water use per capita has fallen 29% since 1990, but continued population growth stresses the system.
• Quote: “...the city sources 98% of its water from surface river sources... Also has 22 groundwater wells...capable of providing about 121,300 cubic meters of water per day.” (A, 14:30)

6. Comparisons to Taiwan’s Fabs

• TSMC Taiwan uses 259,000 cubic meters/day in 2024—still just 1.09% of Arizona’s current annual demand.
• Taiwanese droughts prompt water trucking and severe agricultural curtailment, especially in drier areas like Hsinchu. However, such measures are episodic and relate more to distribution than total supply.
• Quote: “It’s often asserted online that TSMC uses so much water in Taiwan that they have to truck in water... this gets dragged out every so often as if it is still going on.” (A, 26:45)

7. Inside the Fab: Water Use & Reduction Techniques

• Over 75% of fab water use is for the manufacturing process:
  • Wet cleans (using ultrapure water to wash wafers).
  • Chemical Mechanical Polishing (CMP).
• Process improvements:
  • Spray cleaning uses 20x less water than baths.
  • “Dry clean” process such as plasma ashing saves water but consumes more energy.
  • TSMC reuses each drop about 3.5 times before final evaporation in cooling towers.
• Quote: “TSMC says that they use each drop of water 3.5 times... The company has pledged that by 2030, over 60% of the total water consumed by its fabs will be reclaimed water.” (A, 38:55)

8. Learning from Intel (Phoenix) and TSMC’s Reclamation Projects

• Intel’s Chandler plant returns 95% of consumed water to municipal supply, setting “a high bar for water stewardship.”
• TSMC’s Taiwanese plants (e.g., in Tainan and Hsinchu) have built similar large-scale reclamation facilities, with innovative breakthroughs (e.g., urea filtration).
• These models and investments are being replicated in Arizona, with a new industrial reclamation plant breaking ground in September 2025.

9. The Increasing Water Needs of Advanced Chip Nodes

• As semiconductor technology advances (e.g., from 3nm to 2nm processes), water demand rises rapidly:
  • N2-class fabs projected to double water consumption due to far more complex steps per wafer.
  • “Better nodes will need more water and these are serious problems.” (A, 56:30)
• Ongoing expansion means new Arizona fabs will need significant new water infrastructure.

Notable Quotes & Memorable Moments

• “Phoenix is a monument to man’s arrogance.” (A, 02:12)

  • Citing King of the Hill, highlighting the profound challenge of locating massive industrial projects in such a dry environment.

• “The burdens of the state’s changing water conditions will ultimately fall hardest on such farmers. They will either have to change what or how much they plant...” (A, 18:16)

• On Taiwan’s periodic droughts:

  • “...an illustration of how the climate’s complexity defies our demands for simple answers.” (A, 29:30)

• Reality check on water use:

  • “Pre-N2 TSMC in Taiwan uses as much water as 930,000 people or as much as the entirety of all the people in Pingtung county. And droughts will always be a part of life here.” (A, 57:05)

• Final takeaway:

  • “The other things that Arizona has to offer—plentiful land, a business friendly local government and a pipeline of talents—are not so easily found and pumped out of an aquifer.” (A, 58:00)

Timestamps for Key Segments

• [00:03] – TSMC Arizona Fab: Initial Water Consumption and Public Concerns
• [03:50] – The Water Geography: Rainfall and Mountain Rivers in Phoenix
• [07:10] – Arizona’s Three Water Sources
• [12:40] – Water Use Demographics: Agriculture vs. Urban
• [18:16] – Agriculture’s Role and Challenges
• [22:00] – Droughts, Water Planning, and Conservation Achievements
• [26:45] – Taiwan’s Experience: Drought, Trucked Water, and Regional Differences
• [29:30] – The Need for Reclamation and Recycling in Semiconductor Manufacturing
• [38:55] – Fab Process Water Use, TSMC’s Current & Future Reuse Targets
• [41:20] – Intel’s Example: Chandler Reclamation Partnership and Water Return
• [44:30] – TSMC Water Reclamation Achievements and Breakthroughs
• [49:00] – Preparing Arizona for Greater Water Demands: New Plants and Infrastructure
• [53:30] – Technological Progress Increases Water Demand Per Chip
• [57:05] – Perspective: TSMC’s Water Needs Compared to Regional Populations
• [58:00] – Final Words on Arizona’s Advantages Beyond Water

Conclusion

Jon concludes that semiconductor manufacturing in arid Arizona is a challenge but not an insurmountable one if tackled with technological innovation, aggressive water reclamation, and realistic planning. While more advanced chipmaking will always increase water demand, careful stewardship and significant investments in recycling and infrastructure can ameliorate the impact. Ultimately, Arizona’s other competitive advantages lure global industrial giants like TSMC to its desert—where, in Jon’s view, “[w]ith that money, all water related ameliorations are on the table.” (A, 58:45)