Tech might not be the first thing that comes to mind when one pictures Phoenix. The city is better known for its golf courses, Major League Baseball’s Spring Training, retirement appeal and scorching heat.
But its growth into an innovation hub has been quietly playing out over several decades. Arizona’s largest city has, for a variety of reasons, become the epicenter for semiconductor manufacturing, and testing self-driving cars and drones.
“If we look at cities that really do end up becoming these, you know, important technology hubs, there are really four things that we usually see, and Phoenix really has all of them going,” said Anne Hoecker, global head of technology at Bain Global. “The first is a favorable business environment. The second really is that ecosystem of other companies. The next is really close proximity to a university that has a strong engineering program. And then finally it is that availability of talent.”
Technology companies have flocked to the city to capitalize on those perks. Taiwan Semiconductor Manufacturing Company, or TSMC, is among the biggest.
TSMC makes the most advanced chips in the world, and has pledged to invest $65 billion in the greater Phoenix area. The chipmaker initially held discussions with the city of Phoenix in 2016, when it was looking to grow its advanced chip manufacturing beyond Taiwan. In order to secure the bid, the Greater Phoenix Economic Council spent three years conceptualizing a science and technology park to meet the needs of the company. The project, once complete, expects to bring in about 62,000 jobs surrounding and including TSMC.
“They’re basically duplicating the science park concept that was pioneered in Taiwan,” said Rick Cassidy, chairman of TSMC Arizona. “It solves lots of problems for our smaller suppliers. They can actually rent space and just plug in.”
Self-driving cars are another hallmark of the city’s tech scene. Uber, Cruise and Alphabet‘s Waymo have all tested autonomous vehicles in the city. The infrastructure in Phoenix, with its gridded streets and consistent weather, made it an “optimal” place to roll these out, according to Bain’s Hoecker.
Arizona’s policy has been welcoming to self-driving technology. Former Arizona Governor Doug Ducey enacted several executive orders to reduce barriers for autonomous testing. Waymo began testing in Phoenix in 2017 and is the biggest player in the market. The company’s robotaxi service now operates across 315 square miles in the city.
Drones have been another technology putting the city on the map. In November, Amazon received regulatory approval to launch its Prime Air drone program in Tolleson, a suburb in west Phoenix. The plan is to scale the program to 500 million deliveries per year, according to Amazon. The company says thousands of packages have been delivered so far.
“It’s about scaling around the U.S. and around the world, said David Carbon, vice president and general manager of Amazon Prime Air, adding that more is coming in 2025. “This is just the beginning.”
Watch the video as CNBC’s Kate Rooney gets a behind-the-scenes look at Amazon’s cutting-edge drone operation and explores how Phoenix became a hot spot for tech.