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Another $100 billion has been approved by TSMC for the expansion of Arizona’s TSMC operations, and I couldn’t be more thrilled.
In total, that's $265 billion approved for this project.
If You Sleep On AZ, You Will Lose
This investment produces 12 facilities.
Supporting thousands of high-tech paying jobs and AI dev infrastructure.
In my opinion, Arizona will be the source of economic energy…IF we can keep regulations low and business friendly.
Arizona will lead tech innovations in computing, AI, and robotics…IF we can solve the water and housing problem.
The Water Question
Every time I bring up TSMC, somebody tells me Arizona is about to run dry.
The Assumption: A dozen chip facilities in a desert will drain the aquifer.
The Ground Truth: A fab is one of the few industrial users that gives most of its water back.
TSMC Arizona already recycles about 65% of its water on site today.
They broke ground on a 15-acre Industrial Reclamation Water Plant that comes online in 2028, engineered for what they call "Near Zero Liquid Discharge."
At startup it recycles 85%. The target is 90% or better.
For reference, the first fab runs on roughly 4.75 million gallons a day…
…and the plan is to hand nearly all of it back.
Phoenix also required a 100-year assured water supply before any of this got approved. TSMC's own leadership has said that planning is part of why they picked Phoenix over everywhere else.
So water is a real constraint…
…it's just not the one that bites first.
Housing Is The Actual Bottleneck
Roughly 85,000 people move to metro Phoenix every single year.
The Arizona Association of Realtors estimates the state has run about 50,000 homes short every year since 2021, and needs somewhere near 120,000 new rental units annually just to keep pace.
The Common Sense Institute put the immediate gap at 56,000 units, and the longer-term gap at 110,000.
Now stack TSMC on top of that.
More than 3,500 people work for TSMC Arizona today. The announced build-out is far bigger than what's standing.
And that's before you count the trades. Every one of those facilities takes years of electricians, pipefitters, and concrete crews who need a roof tonight, not in 2031.
TSMC is also just the headline. Since 2020, Arizona has attracted more than 70 semiconductor expansions representing over $314 billion. The most in the nation.
Meanwhile single family permits across the Valley have slowed. Land costs, labor, and municipal permitting are all working against new supply.
Demand curve going up…
…supply curve going sideways.
That gap is the entire opportunity.
Where I Think This Actually Pays
It's underserved as far as housing goes. And that's where most of my investors come in.
Land in the path: North Phoenix and the Loop 303 corridor. The entitlement clock is the moat. Whoever is holding finished lots in three years sets the price.
Workforce multifamily: Fab technicians and trades aren't buying a $700K house on day one. They rent first, and they rent close.
Single family rentals: The households that follow the jobs are families. They want yards and school districts, not studios.
Short-term and mid-term rentals: Thousands of contractors, vendors, and rotating TSMC personnel on 30 to 90 day assignments. Most STR operators still aren't underwriting that demand.
What I'd Underwrite Carefully
Assured water supply designation on any land play. No designation, no deal.
Permitting timelines. Model them longer than the seller tells you. Then add a quarter.
Basis. Everybody knows about TSMC now. Paying tomorrow's price for today's dirt is exactly how people lose money in a boom.
Being early to a story isn't the same as being right on price.
I think Arizona solves water. I'm still confident we will also solve housing.
Are you ready to raise more capital?
Most sponsors think the bottleneck is the deal.
It usually isn't.
It’s about:
Who you are
What you’ve done
Who you’re working with
The risk profile
The upside and downside
Timing
Consistency
…and a lot of other factors
I built a short assessment that scores you on what allocators actually check before they wire. Positioning, pipeline, proof, and follow-through.
Don’t guess, figure out what’s not working and raise the capital you need.
No call required. If your score comes back strong, you probably don't need me.
I hope this was helpful to you.
If you're raising for a Phoenix-area deal, or you're an allocator trying to figure out where this cycle really pays, I'd love to trade notes.
Book a call with me anytime or simply reply to this email.
Have a great evening,
Andrew LeBaron
Target returns are projections only and not a guarantee of future results. Actual results may differ materially. This is not an offer to sell securities. For accredited investors only.