Arizona's water source for chip manufacturing is drying up

Arizona, a crucial hub for the bipartisan effort to revive American chip manufacturing, faces a significant reduction in its water supply. A new federal decision on managing the dwindling flow of the Colorado River will result in the state receiving over a quarter less water annually.

The 1,400-mile waterway is a vital lifeline for the region and other western states. The river's flow has been severely impacted by unprecedented drought conditions. The decision on how to allocate the remaining water hits Arizona particularly hard, impacting its already drought-prone desert communities.

Arizona has been a cornerstone of the semiconductor industry since its inception. Major chip manufacturers, including TSMC and Intel, are currently expanding massive factories within the state. The impending water shortage is expected to affect the operations of these facilities and influence future investments, which are critical to the U.S.'s goal of bolstering domestic chip production.