A hulking gray giant rises from the desert. Inside, engineers create the force behind our phones and computers and appliances, our streaming services and search engines and chatbots and vibe-coded apps and websites. The complex is simultaneously massive and squat, dwarfed by the mountains that surround it, and it is endless. I drive past one building, and then another, and then the ground opens up where construction crews have dug up the earth so a third building can rise.

There is a parking lot, and then another, and then another. There is an empty lot on the other side of the street, full of cars and the occasional food truck to feed the thousands of laborers who are busy transforming this expanse of desert into an industrial park. There is dust, so much of it, choking the air.

I stand before the savior of Arizona’s economy. Like all great deities, it demands sacrifice. In the desert, nothing is more precious than water, and water is what must be given — nearly 5 million gallons a day, every day, sourced from Phoenix’s municipal supply. The offering has been well worth it.

All of this is the fruit of the Taiwan Semiconductor Manufacturing Company, the world’s leading producer of microchips. Its Arizona operation is the result of a pre-pandemic gamble Phoenix made to revive its sluggish economy , which never quite rebounded from the Great Recession. Now TSMC’s foundry looms over the city’s outskirts.

TSMC is a success story, one that some local leaders may have hoped to repeat with hyperscale data center developments. The progression may have seemed natural: The Grand Canyon State is not only home to the largest chip factory this side of the Pacific but also 172 data centers , neither of which faced much pushback. But the newer, larger developments being proposed from Phoenix to Tucson demand more of everything — more water, more power, more land — than Arizonans are willing to give.

Where TSMC was welcomed with open arms and the first wave of data centers was largely ignored, new developments are facing mass backlash in Arizona, where a grassroots, surprisingly bipartisan coalition of residents has united against data centers.

Now the state has a sixth C, Arizona native Christine Mackay tells me. “Chips.”

In reporting this story, I spoke to local activists and economic developers, elected officials and their angry constituents. I sat in on city council meetings where people lined up by the dozens to speak up against data center projects, and in cozy suburban homes where tight-knit groups of former strangers told me about the struggle that brought them together. I pored over maps of Arizona’s dry, cracked landscape with laypeople who, over the past two years, have made themselves experts on zoning and land use and water consumption so they can understand the beast they’re trying to fight.

The locals on both sides of this debate claim to want the same thing: a better, more prosperous Arizona. Their visions for achieving it, however, are completely at odds.

In Arizona and elsewhere, data center developers have tried to win over locals by making enticing promises about the jobs, tax revenue, and infrastructure they’ll bring with them. All they ask for in exchange is water — and, they swear, not nearly as much of it as you’d expect. Some hyperscale data centers, like Google’s facility in The Dalles, Oregon, use about 1.5 million gallons a day, about one-third of what TSMC’s Arizona complex consumes in the same timeframe. Those reassurances, however, aren’t enough to assuage Arizonans, who now have to contend with the fact that the state will soon lose access to nearly 30 percent of the water it receives from the Colorado River.

Even now, as people across the country sour on AI and fight against data centers in their communities, TSMC’s Arizona operation hums along without significant opposition. And yet it’s impossible to make sense of why Arizonans are so opposed to new data center development without first understanding why they eagerly welcomed TSMC, even though both industries must contend with the issue that has plagued Arizona since its founding: There isn’t enough water.

For as long as anyone could remember, business in Arizona revolved around the storied “five C’s”: cattle, copper, cotton, citrus, and climate, a catchall for the region’s mild, salubrious winters, which locals say often more than make up for the sweltering summers.

Now the state has a sixth C, Arizona native Christine Mackay tells me. “Chips.”

The TSMC development is, in a sense, Mackay’s doing. As the head of Phoenix’s economic development office, she spearheaded the effort that brought the Taiwanese giant to the Sonoran Desert. In 2020, while the global economy was all but shut down, TSMC made an announcement. The same forces that brought the world to a standstill had created even more demand for TSMC’s products, and in response, TSMC would be opening an advanced semiconductor foundry — a “fab,” in industry jargon — in Phoenix.

Initially, TSMC predicted that it would pour $12 billion into Arizona’s economy by 2029. Since then, TSMC’s projected expenditure in the state has ballooned to $265 billion, what the company touts as the largest foreign direct investment in US history.

TSMC just put the finishing touches on its second fab in a formerly desolate swath of north Phoenix, with a third under construction and plans for several more underway. This buildout has been more than a decade in the making. TSMC started shopping around for a US location in 2016. That year, Mackay said, the company put out a request for proposals through a codename. No one won.

“We aren’t a group that takes no for an answer,” Mackay said proudly. Her office asked TSMC executives what they thought Arizona was missing, and then spent the next three years addressing their concerns. In 2019, Phoenix sent a delegation to Taiwan to share a new development plan for a science and technology park, the nucleus of which would be a factory, ideally one of TSMC’s fabs. “They agreed they needed to come back and take another look at Phoenix,” Mackay told me.

Her team showed them two locations: Laveen, Arizona, a suburb southwest of Phoenix, and, just north of the city, an undeveloped area roughly the size of Manhattan called Biscuit Flats, so named, Mackay told me, because “it’s as round and flat as a biscuit.”“That very day,” she recalled, “they said, ‘This could work.’”What followed was a flurry of development unlike anything the state has ever seen.

TSMC has brought more than 3,500 jobs to the state, and an entire economy has sprung up to support the company’s Arizona operation. Much like in Taiwan — where the company accounts for nearly one-tenth of Taiwan’s gross domestic product — TSMC has become, if not the center of the universe, then at least a galaxy unto itself. The company controls an estimated 70 percent of the global chip market, and its contracts with Apple and Nvidia alone make up more than one-third of its annual revenue. (Apple and Nvidia design their own chips, but they don’t produce them. The complex manufacturing process is instead largely outsourced to TSMC.)

TSMC has changed swaths of Phoenix — its landscape, its industries — and it has brought with it jobs and prosperity. Locals fear that the new hyperscale data center developments will do the former but not the latter, consuming resources while contributing little to the community. Mackay, who has worked as an economic developer for over 30 years, didn’t experience significant pushback when she helped court data center developments in the past. “The first 10 data centers I did look like pretty little office buildings,” she said.

The new developments being proposed are neither pretty nor little. Where earlier data centers were inconspicuous, the hyperscale facilities developers want to build in Arizona — often on rural farm or desert land — are both massive and incongruous. Despite the state’s recently acquired reputation for sprawl, there are still plenty of places where, in the quiet desert stillness, you can sometimes hear a pack of coyotes howl in the middle of the night. There are dark-sky corridors and wild animals, ghost towns and saguaro forests.

All of this, some locals say, could be sacrificed for the benefit of an industry that also poses an existential threat to humanity. There are ethical questions and environmental ones, debates over zoning and taxes and, most of all, over water. Yet the cities and the outlying suburbs keep growing, spreading in all directions until they’re constrained by geography or bureaucracy or Indigenous sovereignty. And industry, somehow, keeps arriving, thirstier than ever.

Year-round but especially in the summers, Arizonans tailor their routines to the elements. Drivers are careful not to get stuck in dust storms or monsoons. Joggers avoid going out in late mornings and early afternoons, when the heat is at its most intense. And on August 1st, at the peak of monsoon season, the No Desert Data Center Coalition’s protest began in the early evening, when the sun’s punishing rays were starting to give way to a muted desert sunset.

About a dozen people showed up to the rally on the outskirts of Tucson, in front of the 290-acre site where Beale Infrastructure is building a 600-megawatt data center. Every few minutes, Vivek Bharathan, one of the organizers, reminded the protesters to stay hydrated. Children sprayed each other with water guns and dutifully accepted drinks from their parents. Mayra Duron, one of the attendees, brought a cooler of agua de jamaica to share with the group. The magenta beverage, she said, was full of electrolytes.

Water — the lack of it, the need for it, the amount required to build a massive data center in the middle of the desert — was top of mind. A hand-painted banner expressed the overarching sentiment: BEALE’S DATA CENTER WILL SUCK US DRY.

“If you feel the heat, please head home,” Bharathan told the small crowd. “It is a hot day, and if they succeed in building a data center here, it’ll be even hotter. We know these things create heat islands that can affect the surrounding area by over 10 degrees Fahrenheit.”Duron, a local macrame artist who incorporates cactus spines into her weaving, said she worried about how rising temperatures would affect the region’s saguaros. “In Phoenix, it’s hyper-industrialized,” she said, “and they’ve seen saguaros die left and right.”

Cars honked in support. Some drivers pumped their fists out their windows as they sped by. Arizonans weren’t riled up about AI in 2019, when the TSMC project was announced, nor did they notice or care much about the previous data centers that were quietly built throughout the state. Things have changed. Tucson, it appears, is united in its opposition to the data center complex dubbed Project Blue. But the buildings are going up anyway.

“We take it as normal because it’s been that way for so long. But it isn’t normal. It’s a catastrophe.”

Information about Project Blue began slowly trickling out in the spring of 2025. First came the name, and some clues : The development, whatever it was, would be on a county-owned plot of land; it would create 3,000 temporary construction jobs and 200 well-paying positions down the road; it would generate $152 million in tax revenue over the next decade; it would be big, and it would be thirsty, and new water lines would be built to keep it satiated. That was all anyone in the know would say, because the county government, which owned the land, signed a nondisclosure agreement with the would-be developer.

The news came out in a mundane, bureaucratic way, as information about prospective land sales in midsize cities often does. In June 2025, Jan Lesher, the Pima County administrator, submitted a 44-page memo to the Board of Supervisors. The words “data center” did not appear until the fourth page. This data center would provide an “unprecedented” $3.6 billion opportunity for Tucson and for the county. There were other details, and there was flattery, and there were promises. Project Blue would use “100% renewable water resources.”Its developer, Beale Infrastructure, would build critical infrastructure at its own expense, including an 18-mile pipe extension and an aquifer recharge facility.

“The boost it could provide to our local economy may well be transformative,” Rex Scott, one of five members of the County Board of Supervisors, said at the time . His colleagues were split. They voted 3-2 to rezone the 290-acre tract, and voted again to sell it to Beale for around $20 million. But it wasn’t a guarantee yet. One of the terms of the deal required Tucson to annex the land and approve the sale, since the city would be on the hook for the land’s water service.

The honeymoon, if there even was one, didn’t last. Just hours after the board’s vote, Tucson Electric Power announced it was looking into a rate hike that would increase customers’ bills by an average of 14 percent. The utility claimed the decision was unrelated to the forthcoming data center. Even still, one of the commissioners who voted to rezone the land and sell it to Beale officially asked to reconsider the rezoning.

Perhaps it was the fact that Tucsonans learned of the data center and the rate hike in such quick succession, coupled with the inescapable news of data centers raising locals’ utility bills , that catalyzed their mass opposition. Maybe it was the Arizona Mirror ’s report that Project Blue, combined with another proposed data center, would not only be TEP’s biggest customer but also consume more than four golf courses’ worth of water each year.

The fact that Amazon Web Services was reportedly the end client — and that county officials had been discussing the project since 2023, and, according to public records obtained by Arizona Luminaria , signed NDAs prohibiting them from naming the companies involved — certainly didn’t help. Whatever the reason, Beale executives probably weren’t prepared for just how angry the public would be.

Around 200 people showed up to a public information meeting Beale hosted in the auditorium of a local high school in July 2025. Most of them were furious about the data center, or they were worried, or they were scared. Tensions were even higher at the follow-up meeting held at the Tucson Convention Center. Over a thousand people showed up. The boos started before Beale’s representatives got through their introductions, and they continued throughout the night.

Keri Silvyn, one of the attorneys representing Beale, tried to warm up the crowd. “We all have cellphones, we have computers, a number of us have multiple of those in our households,” she said. “Many of the various signs that I’ve seen have QR codes, that if you click on, will take you through a data center in order to get to different sites. The internet is housed in data centers. That’s what they are.”Beale’s team explained that they selected the site because it was far from residential areas, and then they reiterated the now familiar pitch data center developers make to wary communities.

Beale said it would pay for a pipeline, and once the pipeline was built the data center would run on reclaimed water. (Until then, however, it would rely on potable water.) The company would pay to clean up contaminated water. It would inject any extra water into local aquifers, eventually making the whole thing “water-positive.”None of this mollified the thousand or so people in the audience, who booed every few minutes.

To no one’s surprise, the opposition mostly came down to water. Locals worried that if the data center came to town, the resource, already so scarce and so precious, would vanish. They cited the fact that Arizona would likely lose more of its Colorado River allotment. They conjured images of even hotter, drier summers. “Can you guarantee us water for future generations?”

When it was her turn to speak, Melanie Cooley, an education specialist at the Watershed Management Group, a local habitat restoration nonprofit, conjured up a past familiar to few Tucsonans. “Where we are sitting right now was a forest 125 years ago that adjoined a flowing river that flowed year-round,” she said. “There are people alive today who grew up swimming in the Santa Cruz River.”

Average temperatures in Tucson are now 11 degrees Fahrenheit higher than they were a century ago, Cooley said. About six degrees of that rise can be attributed to global warming. The other five, Cooley explained, are because of changes in the local ecosystem, including the felling of forests and the drying up of rivers like the Santa Cruz. “What we see today when we drive across that river that looks like a big, dry ditch, we take it as normal because it’s been that way for so long. But it isn’t normal. It’s a catastrophe. It’s a catastrophe that was brought on by overpumping of our groundwater and bad development decisions, and Project Blue is another bad development decision.”

Another speaker compared Project Blue to industrial projects of decades past. “This is like déjà vu for me,” he said, listing off economic development projects that were supposed to turn things around for the city: Raytheon; Hughes, the military contractor that preceded it; the Air National Guard. “What did they do? They contaminated our water. To this day, we’re having to deal with that.”Tucsonans had gone to great lengths to conserve their water. “We took our landscaping out, we took our swimming pools out.”

He waved over a relative who was holding an infant in a sling. “Can you guarantee us water for future generations?” he asked the Beale representatives. “Can you guarantee water for her generation, my kids’ generation, my grandkids’ generation, and this little baby’s generation?”

Two days after this contentious hearing, a unanimous vote by the Tucson City Council shut down the annexation of the land. At a subsequent meeting, the city adopted new rules for data centers and other large water users. Residents were relieved, but not for long. Three weeks after the city stopped the annexation, effectively killing the development, local reporters confirmed that Beale was moving forward with the data center anyway. County officials and Beale representatives had previously said that the deal was contingent on Tucson’s annexation of the land.

Suddenly that was no longer an issue. (Beale declined to comment on why annexation was no longer necessary for the deal.) Over time, there were other adjustments to the plan: The data center would no longer be water-cooled and would instead rely on closed-loop air cooling. If the shift was intended to win over Beale’s critics, it didn’t work. Members of the No Desert Data Center Coalition claim that air-cooled facilities use more electricity, and, since power plants also use water to cool their systems, air-cooled data centers may actually be more water-intensive, just indirectly, an allegation Beale denies.

“The use of air-cooled technology for this project does not increase overall energy use; while the energy allocation is different, the energy use is the same,” Beale spokesperson Tony Burkart, the Beale spokesperson, told The Verge . (Energy generation does require water, though there’s little data on just how much water Arizona’s power plants consume.) The change also cost Beale a tenant: Amazon reportedly pulled out of the project , saying an air-cooled facility wouldn’t meet its needs. Beale declined to disclose whether it has since found a new tenant for Project Blue. “It’s up to our tenants when they choose to announce their investment in a project,” Burkart said.

Still, the project moved forward. The county completed its deal with Beale on Christmas Eve, and Beale promised to bring even more gifts in the form of $15 million in donations, some of which would go toward local STEM and trade school programs. The new year brought more challenges. The state’s attorney general filed an appeal against the Arizona Corporation Commission , the state agency that oversees public utilities, over its approval of a special energy agreement between Beale and TEP. Members of the No Desert Data Center Coalition filed a separate lawsuit alleging that the county’s dealings with Beale violated the state’s open meeting law.

The coalition’s suit got tossed, but the data center’s opponents found other ways to voice their displeasure. They staged a protest inside the offices of Lazarus and Silvyn, the law firm representing Beale in its dealings with the county. When construction crews broke ground on the site, dozens of people were there, blocking vehicles while chanting, “We respect the workers, we don’t respect the work.”The data center’s opponents haven’t been able to stop construction altogether, but they’ve managed to slow it.

After observers affiliated with No Desert Data Center noticed that contractors with Ames Construction were using city-owned hydrants , officials demanded that Beale give the city water credits to replenish the approximately 651,702 gallons of drinking water used for dust control. (A host of local ordinances require construction crews to spray water to mitigate the air pollution caused by blowing dust.) Burkart, the Beale spokesperson, said the contractor “followed standard procedures and the City issued a permit for temporary water per the normal course of business.”

After Ames stopped using city water, officials with the Pima County Department of Environmental Quality also found the contractors in violation of their “fugitive dust permit” on two separate occasions , each of which could carry a fine of up to $10,000. And when Ames turned to a Tucson green waste facility for water, protesters flooded the subcontractor with phone calls until its owner dropped the contract.

None of this grassroots opposition, however, has been enough to actually stop Project Blue. To facilitate construction, the Arizona Department of Water approved a request to build two wells on the site, allowing the facility to draw up 31 million gallons of groundwater a year. Burkart said this water will only be used for construction. Once the data center is up and running, Burkart said, water use “will be limited to ordinary domestic purposes, such as restrooms, employee kitchens and health and safety.”

Some local leaders have since worked to regain the community’s trust. After a contentious meeting in August, the Tucson City Council implemented new, stringent limits on data centers , making them one of the most regulated developments in the city. But residents want more, and they’ve vowed to keep showing up until they get a full ban. Even the county government has been surprisingly amenable of late. In September, the Pima County Board of Supervisors imposed a 120-day moratorium on new data center projects.

But that doesn’t mean other developments are off the table. In March, the county announced it would be putting some of the proceeds of the Beale land sale toward hiring an economic developer. The goal of the job, which comes with an annual salary of $150,000, would be to bring foreign direct investments to Tucson. The city, it seems, is looking for a Christine Mackay of its own — and maybe a TSMC, too.

Rebecca Chen understood the promise of TSMC well before most other Arizonans. A Phoenix resident since 2015, she started working as a Realtor in 2019, just before the company arrived. “TSMC may not be a huge household name for a lot of Americans, but it is for Asians,” Chen said. “TSMC is basically like Apple or Tesla for Taiwanese.”The covid-19 pandemic sent the industry into a frenzy: Americans, largely confined to their homes, wanted space and sunshine and relocated to the Sun Belt in droves, and Arizona was no exception.

Still, Chen knew this was nothing compared to what TSMC would bring. She was introduced to her first Taiwanese client by an industry friend in California, and soon the referrals were piling up. She sold homes virtually, showing them to clients via video call; some TSMC workers bought houses sight unseen.

“I feel like I’m way more than a Realtor,” Chen told me. “I’m like a guide to them.”She’s helped clients set up utility bills, get their driver’s licenses, recommended places to eat and shop. “I’m an immigrant myself,” she explained, so she knows how hard it can be to feel settled in a new place. Arizona’s Taiwanese immigrants have risked a lot in coming to America, staking their futures on a new project in an unknown place at a time of extreme nativist backlash. It’s a leap of faith, and it appears to have worked out.

TSMC’s presence in Arizona has revived a way of life some thought had vanished in America: a prosperous household where one partner (usually male) works at a factory and earns enough to support a family. Think of it as the midcentury ideal with a new global twist, suburban idyll propped up by industrial manufacturing.

TSMC now has more than 3,500 employees in Arizona, according to spokesperson William Moss, who said the company doesn’t disclose the number of international workers it has, which can fluctuate depending on the project.

Early reports claimed that about half of TSMC’s 2,200 employees at a single fab were from Taiwan. Still, it’s undeniable that TSMC’s presence in Arizona has led to an influx of Taiwanese immigrants in the Phoenix metro area — all while the Trump administration wages a full-fledged attack on legal immigration.

TSMC is now working to cultivate local talent. In May, the company announced it was starting a semiconductor technician training program at Arizona State University, and the university recently signed on to a White House initiative to build up America’s manufacturing workforce.

As part of the partnership, ASU will organize a “Foundry School” taught by experts from Japan, South Korea, India, and Taiwan.

New businesses have popped up to cater to Arizona’s growing Taiwanese community, further bolstering the local economy. North Phoenix now has a Little Taipei . Restaurants have opened to cater to these new Arizonans, some opened by the newcomers themselves. Buildings have popped up seemingly overnight to house them. Mandarin-speaking real estate agents like Chen have found a lucrative niche selling luxe new-build homes to well-compensated tech workers, including employees of TSMC suppliers.

The state has added a new holiday to its unofficial calendar: October 10th, or Double Ten Day, a commemoration of the uprising that felled the Qing dynasty. Phoenix is now home to the largest Double Ten celebration in North America. Each year, thousands of spectators ooh and aah at a drone show sponsored by TSMC. China Airlines started offering direct flights between Phoenix and Taipei in 2025. Taiwan’s Starlux Airlines soon followed suit. The Hilton Garden Inn I stayed in, located just 10 minutes from the TSMC campus, served congee for breakfast. Scottsdale now has a Din Tai Fung. Reservations are hard to get. “We call it the economic value of a gallon of water.”

Some of these changes happened organically; others resulted from meticulous planning. Mackay, the economic developer, told me that the local grocery chain Fry’s reached out to her office to ask what products Taiwanese customers might want to see on its shelves. Mackay set up a meeting between Fry’s and TSMC, and she set up another with a Taiwanese attorney who worked with the state Department of Transportation to ensure Taiwanese immigrants’ driver’s licenses would be valid in Arizona. Working along Phoenix Sister Cities, a nonprofit that started in 1972, Mackay’s office put together a team of Mandarin-speaking doctors and nurses to serve Taiwanese immigrants in their native language.

Phoenix and Taipei have been sister cities since 1979, a designation that, until recently, was largely ceremonial. As is the case in all sororal relationships, there have been conflicts, some of them over shared resources. Given the industry’s demands and the state’s historic drought, critics ask, is it wise to build water-guzzling factories in the middle of the desert?

TSMC hasn’t faced nearly as much pushback for its water use as data centers have, but semiconductor manufacturing nonetheless requires massive amounts of water, and this water must be of a specific grade — free of contaminants organic or otherwise, and so devoid of minerals that it’s actually not recommended for human consumption. It takes 1.4 to 1.6 gallons of municipal water to create a single gallon of ultrapure water, since some is inevitably lost to evaporation in the process. Each chip requires 50 to 250 wash cycles, Paul Westerhoff, the director of ASU’s Global Center for Water Technology, told me.

“If there’s a little particle in there, or an ion-like chloride in there, the thing doesn’t work,” Westerhoff said, “so they need to use a lot of water in each of these cleaning cycles.”This process requires 4.75 million gallons of water each day, which TSMC obtains through Phoenix’s municipal water supply. The Arizona Republic reports that TSMC mostly uses reclaimed wastewater, with some groundwater as well.

Westerhoff compared the process of semiconductor manufacturing to washing dishes. And just like you wouldn’t reuse your sink water to wash a second round of pots and pans, chip manufacturers can’t reuse their dirty water to wash other chips. But this water isn’t totally lost. “If you want to reuse sink water, maybe you throw it out on your lawn,” Westerhoff said. He explained that TSMC uses 20 percent or so of its recycled water to power its evaporative cooling systems. Part of Westerhoff’s role is to figure out new ways for TSMC to use its excess wastewater — hopefully, someday, as part of the chip manufacturing process itself.

Sarah Porter, the director of ASU’s Kyl Center for Water Policy, explained that while 15 to 20 percent of the water TSMC uses is lost to evaporation, much of the rest is processed in the company’s recycling plant. According to Porter, TSMC recycles 60 to 65 percent of the water that flows through its first Arizona fab and is planning for 90 percent reuse by 2028. To get there, TSMC is building an on-site reclamation facility. The ultimate goal, however, is to figure out how to use reclaimed water in the manufacturing process. Westerhoff has called this the “holy grail.”“When we’re talking about semiconductor manufacturing, that’s very different from, say, a golf course.”

The fact that TSMC can recycle most of the water it consumes differentiates it from some of the state’s traditional industries. And even if TSMC were to someday use more water than some of Arizona’s more conventional enterprises, the region’s leaders say the tradeoff would be well worth it. “We call it the economic value of a gallon of water,” Mackay told me. “That gallon of water can do a huge amount for the region, or it can do nothing for the region.”In Mackay’s estimation, TSMC has earned its keep and then some.

TSMC brought with it an entire industry. So far, 55 TSMC suppliers have set up shop in Arizona, as per Mackay, and more are on their way. Topco Scientific, a Taiwanese materials integrator that works closely with TSMC, opened an outpost in Phoenix in 2022, operating at a loss for years until TSMC’s first fab was up and running. Chang Chun, a Taiwanese petrochemical firm, now manufactures electronic-grade hydrogen peroxide in Casa Grande, a city of some 70,000 people halfway between Phoenix and Tucson.

Rebecca Chen, the Phoenix-based real estate agent, has moved into the commercial and industrial market, which she said is hotter than ever. Applied Materials, another supplier, opened a $270 million research and development facility at ASU last fall. New construction projects are underway, many of them clustered around TSMC’s growing campus. Among them is Halo Vista, a $7 billion, 2,300-acre master-planned community developed by a New York real estate firm .

Business is booming. TSMC reported $514 million in profit at its Arizona site in 2025, its first full year of production. And the average hourly wage in the Phoenix metro area climbed to $33.48 from $22.85 a decade earlier, outpacing inflation.

The TSMC complex uses more water in nine days than Project Blue is expected to consume in a year, but TSMC has also boosted the state economy in a way no data center could. Data center developers used to pitch the projects to local governments by emphasizing the fact that they don’t create many permanent jobs; communities would get infrastructure and tax revenue but none of the congestion that comes with rapid population growth. But now, after years of AI executives warning that the product they’re building could vaporize entry-level work — and potentially cause a literal apocalypse — more communities see data centers as a lose-lose proposition.

TSMC’s chips make the generative AI boom possible, but unlike data centers and AI itself, they actually create jobs.

“When we’re talking about semiconductor manufacturing, that’s very different from, say, a golf course,” Porter said. Arizona’s golf courses, in fact, have historically used far more water than the state allows, much of it sourced from the rapidly drying Colorado River. An investigation by The Arizona Republic found that the state’s golf courses consumed nearly 39 billion gallons each year between 2002 and 2022. “That water,” Porter added, “is not reclaimed.”

Where TSMC can go through as much as 1.7 billion gallons of water a year, much of which is recycled, golf clubs and courses in Arizona’s active management areas consumed upwards of 41 billion gallons of water in 2020 alone — and that water is largely lost to evaporation. And still, golf courses use just 2 percent of Arizona’s water, or 9 percent of water in municipal areas. When it comes to overall water use, putting greens and semiconductor manufacturers are, to use an apt turn of phrase, a drop in the bucket.

But critics of semiconductor manufacturing say that the amount of water the industry uses is just part of the problem. “There’s water quality, and there’s water quantity — or water use and water contamination,” Judith Barish, the coalition director of CHIPS Communities United, told me. The coalition, made up largely of labor and environmental groups, was founded in the wake of the CHIPS and Science Act, which designated $52.7 billion in funding for domestic semiconductor manufacturing. Its goal is to ensure that communities, not corporations, reap the benefits of the tech boom.

Semiconductor manufacturing involves the use of hundreds of different per- and polyfluoroalkyl substances, or PFAS, which are commonly referred to as forever chemicals because they don’t naturally break down. The durability of these chemicals means they won’t be degraded during the manufacturing process, which can involve hundreds or even thousands of steps. But the qualities that make PFAS so essential to chipmaking are precisely what make them so dangerous to people. Some researchers have linked forever chemicals to liver and kidney issues, high cholesterol, birth defects, and various cancers.

The use of forever chemicals isn’t limited to chip manufacturing, or to the tech industry writ large — PFAS have been found in nonstick pans, dental floss, shampoo, menstrual care products, food packaging, and even food itself — but the semiconductor industry, by nature of the manufacturing process, uses a significant amount of chemicals that are detrimental to human health.

Some researchers have linked chip manufacturing to thyroid and liver diseases, fertility problems, and cancer — an especially ironic outcome, given AI boosters’ claims that the technology will cure cancer within our lifetimes. Women who worked in chip fabs during the ’80s manufacturing heyday were twice as likely to suffer miscarriages than women who didn’t, and their children were also more likely to experience birth defects. And because each step of semiconductor manufacturing requires thousands of gallons of water, these chemicals ultimately become liquid waste.

A single fab can produce tens or hundreds of thousands of gallons of wastewater a day, discharge one bimolecular researcher described as a veritable “soup” of forever chemicals.

Traditional wastewater treatment methods often fail to detect forever chemicals, and most semiconductor manufacturers aren’t required to monitor or test for PFAS. Compounding the problem, the exact chemical cocktails used in chip fabs are closely guarded trade secrets. But TSMC says it has “continuously optimized” its in-house PFAS detection systems and is developing technologies to remove PFAS from its wastewater streams. The company also says it’s studying how and when it can use non-PFAS alternatives in the manufacturing process.

And Porter pointed out that unlike Tucson, where groundwater has been contaminated by military bases and manufacturing, Phoenix doesn’t have much of a PFAS problem, and city leaders are interested in keeping it that way. Phoenix requires TSMC to treat its water before putting it back into the municipal wastewater system, Porter said. And all Arizona cities are required to comply with standards set by the Environmental Protection Agency.

Still, for organizers like Barish, wastewater disposal remains a concern. While TSMC and other chip manufacturers have to comply with city and EPA standards, Donald Trump has largely defanged the EPA and eased restrictions on PFAS in drinking water since returning to office. But concessions for chip manufacturers have been largely bipartisan. The Building Chips in America Act — sponsored by Sen. Mark Kelly (D-AZ) and signed into law by President Joe Biden — exempted semiconductor manufacturing from key environmental review.

Arizonans have gone to great lengths to reduce their water consumption and to roll back the industrial pollution that has tainted groundwater in Tucson and surrounding communities for decades. Still, experts say the mess caused by PFAS could take generations to clean up . And as the state’s economy becomes increasingly tied to tech — which not only uses huge amounts of water but also produces industrial waste — some residents fear an even more parched Arizona, a drought exacerbated by the promise of industry.

The culprit there isn’t population growth or heavy industry, at least not in the way most people think of it. It’s agriculture

Arizona’s historic megadrought was set in motion well before any part of the tech industry gained a foothold in the Grand Canyon State. It’s an almost cartoonishly simple issue of supply and demand, one whose consequences are complex and still uncertain. Hotter and drier summers in the Rocky Mountains are drying up the Colorado River, the source of more than one-third of Arizona’s water. At the same time, Arizona’s aquifers are being drained far faster than they can be replenished. The latter is a problem of demand, the former one of supply. Together, they add up to a crisis over a century in the making.

The 1922 Colorado River Compact — the agreement that determines how much of the river’s water to allocate to seven states — simultaneously overestimated the long-term supply of water and underestimated the demand. Legislators in 1922 could not have foreseen the midcentury population boom or the severity of climate change. But this alone does not explain Arizona’s current water woes. There’s also the matter of Arizona’s dwindling aquifers. The culprit there isn’t population growth or heavy industry, at least not in the way most people think of it.

It’s agriculture, an extractive, hyperindustrialized process unto itself. Arizona’s now romanticized five C’s were largely brought to the state from elsewhere, and they continue to use far more water than a casual observer imagines or expects. You can’t grow cotton and citrus in the desert, nor can you raise cattle, without water — lots of it.

Over the past decade, one commodity crop, increasingly dominated by hedge funds and foreign investors, has become a sort of scapegoat for the state’s water woes: alfalfa. Its presence is incongruous and inescapable, shocks of green in a sea of clay. Every few dozen miles, the earth-toned monotony that surrounds I-10, the artery connecting Tucson and Phoenix, is interrupted by fields of the stuff.

The plant — technically a legume — is grown as cow feed, fueling one of the state’s oldest and most romanticized industries. More recently, however, deep-pocketed outsiders started getting in on the game, growing alfalfa to produce hay for herds overseas. Until 2011, almost all of Arizona’s alfalfa crop was consumed inside the state. And then Fondomonte moved in.

Fondomonte, a subsidiary of the Saudi dairy company Almarai, bought a 14,000-acre plot of land just off the I-10 in 2014, as part of what the Middle East Policy Council described as a strategy of “developing farm resources in land-rich, cash-poor countries around the world.”Other foreign investors soon followed. The United Arab Emirates-based Al Dahra opened an alfalfa farm of its own in La Paz County, on the state’s border with California; a massive Minnesota-owned dairy bought up more than 50,000 acres in Cochise County.

One could look at this outside investment as a continuation — or perhaps an escalation — of the cattle economy that has sustained Arizona since the arrival of the first Catholic missionaries. But these industrial megafarms are consuming more water than ever before, at a time when the resource has never been more scarce. For over a decade, Arizonans have urged the government to do something about these industrial alfalfa farms. This year, they finally got their way. In January, the backlash became so pronounced that Gov. Katie Hobbs reduced Fondomonte’s water access . Still, the company is just one among many . All told, the animal feed industry has a significant presence in Arizona, where alfalfa alone accounted for 35 percent of crops harvested in a single year.

“It’s a legacy of the way the West was settled,” said Porter. “I feel like it’s important to respect the historical context, but most of that water use is not sustainable. And the only way to move away from that is to have different economic activities — like data centers and chip manufacturing.”

The 31 million gallons per year granted to Project Blue for construction pales in comparison to the 11 billion gallons Fondomonte guzzled in 2023, and this water comes from different places. Rural farms rely on groundwater; Arizona’s urban and suburban data centers rely on municipal water, much of it sourced from the Colorado River. And Project Blue’s water allotment adds up to a tiny fraction of the water governed by the Tucson Active Management Area, a state-designated region with specific conservation measures in place, including a provision requiring developers to prove they can guarantee a 100-year supply of water for their projects. The active management area comprised about 326,000 acre-feet in 2024, most of which was slated for residential use.

And yet it’s not AI safety, air pollution, or fears of AGI-enabled economic collapse but water that dominates the data center debate in Arizona and elsewhere, even when those other issues are raised, too. More broadly, recent concerns over data centers’ water usage may stem from Empire of AI , a 2025 bestseller by journalist Karen Hao that traces the rise of OpenAI — and, for all its journalistic merits, significantly overestimates one data center’s water usage by a factor of 1,000.

Partly in response to Hao’s book, and to the widespread backlash to data center construction, the AI industry has gone on the defensive, but hardly anyone is buying what they’re selling, even when they’re telling the truth. It’s easy to make fun of Sam Altman’s self-exculpatory assertion that it takes more water to grow a single almond than to make 38,000 ChatGPT queries, or to quibble with his lazy math, but the general sentiment is nonetheless true.

Globally, agriculture uses about 70 percent of the world’s fresh water; the same is true in Arizona, though agriculture accounted for just 0.4 percent of the state’s gross domestic product in 2023. One could argue that, unlike data centers, farms are necessary for human life — although most of the crops grown around the world are used for biofuels, or to feed livestock , not people.

But many locals maintain that any amount of water used for AI is too much. The No Desert Data Center Coalition encourages Arizonans to look beyond the issue of water, tying its fight against Project Blue to a bigger, more fraught battle against extractive industry in all its forms, urging the state and local governments to prioritize industries that revitalize the land instead of further destroying it. Coalition members describe data centers as crucial infrastructure that powers the “cruelty industry,” emphasizing the connections between tech, mass surveillance, and the Trump administration’s immigration crackdown.

Still, the broader opposition to data centers seemingly always comes back to water. The concern is especially acute in the drought-stricken state, which lost up to one-third of its Colorado River allotment in late August. Tucson, which sources about 70 percent of its water from the Colorado River, has been preparing for this moment for years. Since 2003, the city has used its excess Colorado River water, which flows to the city through a 326-mile network of aqueducts, to recharge the Avra Valley aquifer .

Tucson recently expanded its groundwater treatment plant, opening a dedicated facility to cleanse the aquifer of forever chemicals. Through its conservation efforts, Tucson has banked enough groundwater to sustain its residents for an estimated 47 years, but locals say that water should be used for them and their families, not to enrich tech companies in California. The opposition to Project Blue has rallied around a succinct slogan: NOT ONE DROP FOR DATA. “This Town Council has never met a development they didn’t like”

Widespread opposition has done little to temper Beale’s ambitions. In the midst of the Project Blue saga, news broke that the developer was looking into building a data center campus in Marana, a rural town 20 miles northwest of Tucson. Beale submitted an application to the Town Council last October, asking it to rezone two adjoining 300-acre plots. One of the properties was owned by the Church of Jesus Christ of Latter-day Saints. The other belongs to a trust connected to Herb Kai, a member of the Town Council who boasts more than three decades in public service.

The Kais are the biggest landowners in town. The patriarch, Cantonese immigrant John Kai, moved to Marana in the 1930s. John, whose descendants remember him as savvy and tenacious, evaded the racist federal ban on Chinese immigrants by assuming a new identity. In Marana, he earned a living hauling vegetables to and from Tucson for the town’s farmers. Eventually he had enough money to buy a plot of his own, where he cultivated cotton. Kai slowly built up his holdings and diversified his investments, and in so doing helped transform once-sleepy Marana into a bustling little town.

It is now one of the fastest-growing communities in southern Arizona. Its population has increased by nearly 25 percent since 2020, now hovering around 65,000, but its leaders still think there’s plenty of room to grow. The town is nearly three times the size of Boston and has one-tenth of the population — at least for now.

“You’ll talk to people and they’ll say this Town Council has never met a development they didn’t like,” Marana resident Jackie McGuire told me.

McGuire, a cybersecurity analyst, moved to Marana from California 15 years ago. She still misses the near-perfect climate of the Bay Area and the easy access to the best Vietnamese food in the country, and her bright pink hair looks out of place in the town, where most people are conservative and many are Mormon. But she loves the desert and the life she has built there. And now the Town Council, she said, is poised to destroy exactly what drew her to Marana in the first place. Though she had never been involved in local politics, McGuire was one of dozens of Marana residents to speak out against Beale’s proposal at a Town Council meeting in December.

“I had my children here. I’m raising my children here,” McGuire said. “The town has done a phenomenal job of creating public spaces where people want to come out of their houses and socialize.”The data center, she said, would be an “eyesore,” but her opposition to it isn’t purely aesthetic. McGuire, who worked on Wall Street in the years leading up to the Great Recession, is worried that the AI bubble is about to burst. “One thing I find curious that Beale hasn’t mentioned is that they’re a subsidiary of a company called Blue Owl,” which is currently embroiled in a class action lawsuit for securities fraud, McGuire said.

“For what it’s worth,” she added, “I make a living on cloud computing. This AI bubble bursting is going to materially impact my ability to pay my mortgage, and I will have to pivot. I don’t want that for the entire town of Marana.”

The Town Council did not heed McGuire’s warnings, nor did they listen to the other people who pleaded that they reject Beale’s proposal. Beale’s promises were enticing: $407 million in tax revenue over the next decade, more than one-third of which would go directly to Marana. A data center, the town’s leaders claimed, would be in Marana’s best interest. The Town Council had in fact passed an ordinance in 2024 restricting data center development. Any facility built in the town would be prohibited from using Marana’s water supply for its cooling systems and would have to adhere to design and noise requirements.

Developers would also have to get documentation from the utility provider with proof that there’s sufficient electricity to power a data center. There would be jobs, good ones. Members of various trade unions attended the Town Council meetings and spoke out in support of the data center. Beale employees were present, too, and they brought signs that said “Yes for data centers” to distribute to supporters. No one took them. With the exception of Kai, who recused himself from the proceedings, the council unanimously voted to rezone the land.

“I saw more than one person be like, ‘I can’t believe I’m going to have to vote for a liberal with pink hair just to get rid of this stupid fucking data center.’”Marana residents fought back: They collected around 2,800 signatures on petitions asking for a referendum on the data center, only to have the town reject them on a technicality. Residents sued the town, and so did Beale. In the middle of all this, McGuire and three other data center opponents decided to run for Town Council.

Their tagline was “Marana for the People.”They held town halls and knocked on hundreds of doors. McGuire, whose politics and presentation are out of step with those of most Marana residents, told me she focused on local policies when talking to voters. “I saw more than one person be like, ‘I can’t believe I’m going to have to vote for a liberal with pink hair just to get rid of this stupid fucking data center,’” McGuire told me. Unlike the other insurgent candidates, she won.

McGuire, now a member of the Town Council, still worries about the long-term effects a data center will have on her community. Beyond the water and power use, she noted that the chips that power data centers have a shorter shelf life than tech companies’ financials would suggest. In other words, the chips themselves will depreciate more quickly than their financial models take into account. Beale declined to comment on this particular line of criticism, but Burkart emphasized the tax revenue the project will bring to Marana. He also noted the project’s low water footprint. After construction is complete, the Marana facility will use roughly 6.6 million gallons a year.

The costs and uncertainties of data center construction are so massive that some major tech companies lack the cash, or the desire, to pay for them outright. McGuire said Beale’s two projects in Arizona would cost a combined $120 billion to build, money that would be funded with private equity and debt, a figure Beale rebuts. According to Burkart, the two projects will cost a combined $8.6 billion. Debt financing isn’t unusual in the tech industry, but the data center buildout requires so much capital that even major financial firms can’t go it alone.

Nvidia recently worked with a consortium of six major financial firms that included Blackstone, BlackRock, and Goldman Sachs to finance $500 billion for AI compute; this atypical financing push has been described as more a series of partnerships and memos of understanding than closed deals. For small towns hoping to ride the AI wave, it’s also a risky one. Pulitzer Prize-winning historian Liaquat Ahamed has compared the new AI economy to the railroad boom of the late 19th century, when a handful of companies, armed with generous government contracts, remade the country in their own image and tanked the global economy in the process.

The advent of the railroad made Arizona what it is today. It connected the homesteads and ranches scattered throughout the desert to international markets, and to the whims and caprices of global capital.

On a blazing Wednesday morning in early August, I stepped out of my air-conditioned car and into the Wild West. There was a miner’s cabin and a sheriff’s office and an abandoned farmhouse, a church, and a saloon where, I understood, gunfights had broken out in the past and would someday break out again. There was a small, inoperable well, an opera house and a carpenter’s studio, a dressmaker, a blacksmith, a bank. There was a ranch complex and an “Oriental Cafe” right next door to the undertaker. Here was a small civilization, an oasis in the inhospitable desert, surrounded on all sides by mountains. Not quite a ghost town, but nonetheless devoid of people.

When I walked into the lobby of the Pioneer Living History Museum in north Phoenix, the woman behind the counter asked if I was sure I wanted to be there. Aside from the telephone museum — which I wouldn’t be able to peruse anyway, since the feral peacock that lives on the property had gotten in again, and he was in a foul mood — the whole thing was outside. Outside that day was 105 degrees. The volunteer actors who typically populate the little town weren’t there. Too hot. Well before it became a state, overconsumption of water was encoded into Arizona’s DNA.

A paved sidewalk that certainly didn’t exist in the pioneer days led me to the door of a well-appointed Victorian home built in the 1890s for a J. Marion Sears and his family. Though the paint’s yellow exterior now cracks under the intense Arizona sun, it was clear the Searses had lived well. The Sears home, a placard boasted, was one of the first wood-framed homes to be erected in the city.

Lumber was hard to come by before the railroad’s tracks reached Phoenix in 1887. Before then all goods had to be freighted into the city, typically by teams of mules, and in fact that was how Sears had made a small fortune. A Confederate veteran, he arrived in the Arizona Territory in 1878 and made a living as a freighter and cattle rancher. Though they lived in the desert, the Sears family homestead was fruitful: Tidy orchards provided them with apples, pears, apricots, figs, and almonds.

This bounty was not unusual, but, as detailed in Thomas E. Sheridan’s Arizona: A History , it was precarious. The Sears family, like other white settlers, tended to their crops with water sourced from an intricate network of canals, the first of which was built by the Swilling Irrigation and Canal Company in 1867. Its owner, Jack Swilling, was a hardworking, hard-drinking entrepreneur who often supplemented his whiskey with liquid morphine. He was not, however, a particularly talented engineer, a limitation that ultimately didn’t matter much, because Swilling neither designed nor built the canals that helped white men settle the Salt River Valley.

That work had been done centuries ago by the Hohokam, a pre-Columbian people who tapped into the Salt and Gila rivers to build a thriving agricultural civilization in the middle of the desert. By the 16th century the Hohokam had fallen. Their descendants scattered; their canals sat idle and eventually went dry until Swilling thought to revive them.

Arizona’s AI boom isn’t something new; rather, it is more of the same, albeit on a grander scale

Swilling’s innovation kicked off a new wave of development in Arizona. Homesteaders flocked to the territory, as did speculators who were less interested in eking a living out of the land than getting rich off what lay beneath it. The earth didn’t yield much in the way of precious metals, but it was rich in copper, and it wasn’t long until investors from San Francisco and New York opened up mines and smelters. Across the territory, family farms were crowded out by capital. The cattle conglomerates came first, and with them came alfalfa.

Agricultural conglomerates planted wheat and barley and, after some botanical experimentation, tens of thousands of citrus trees, until it all dried up in the national depression of 1893, two years into a drought that drained the canals and the rivers that fed them. After a few parched years Arizona was bailed out by the federal government, which built a reservoir so the people of the Salt River Valley would never again experience privation. Theodore Roosevelt christened his namesake dam in 1911 and predicted that, having harnessed the power of water, the valley would someday be “one of the richest agricultural areas in the world.”Well before it became a state, overconsumption of water was encoded into Arizona’s DNA.

Propped up by feats of engineering, Arizona’s economy steadily plugged along until the first World War, when the industrial demands of militarization transformed the desert state into an economic powerhouse. Suddenly there was insatiable demand for everything Arizona produced: citrus and cattle to feed the troops, alfalfa to feed the cattle, cotton for airplane tires, copper for manufacturing. Fortunes grew. “Alfalfa was King,” the Arizona Republican declared in 1917, “Cotton was Queen, and every Dairy Cow was a Princess.”

When the war ended and the Depression tanked the economy a decade later, it all went bust again. It took another war to revive the economy. The first indication that things were turning around came in 1939, when a new war in Europe sent metal prices soaring. Even before the United States entered World War II in 1941, the federal government had started looking to Arizona as a training ground for the military, building out flight schools and Air Force bases in the desert. Arizona’s industrial economy is the product of two world wars — and TSMC’s investment in the state is part of a trade war with China, a 21st-century arms race where the end goal is not a nuclear bomb but something critics say is akin to it.

Looked at this way, Arizona’s AI boom isn’t something new; rather, it is more of the same, albeit on a grander scale.

“It’s crazy to think about where we used to be and what we used to do,” Mackay, Phoenix’s former economic developer, told me. “You’d disappear out into the desert. I could ride my horse to Indian Bend in Pima all the way to the Verde River without seeing a building.”That route now passes three golf courses, a hospital, an indoor water park, an aquarium, and countless subdivisions and strip malls. The Salt River Valley had a population of 11,000 in 1890.

Fifty years and several irrigation projects later, just over 65,000 people lived in Phoenix. Last year, the metropolitan area reported a population of more than 5 million. Shockingly, this development isn’t to blame for Arizona’s perilous lack of water. Population growth hasn’t led to an increase in Arizona’s water consumption. Not only does the average Arizonan consume less water today than in the 1980s, but the state’s overall water use has also dropped by 16 percent since then, a decline almost entirely attributable to reduced agricultural demand.

But resource conservation can only go so far when the rivers and aquifers that sustain life in the state are drying up , and locals are understandably furious that they’re being asked to reduce their own water consumption while local officials welcome new water-intensive industries.

The land immediately surrounding the Pioneer Living History Museum remains largely undeveloped. Here the past remains unchanged and lovingly maintained in honor of the rugged pioneers who made the desert bloom. This is Arizona’s history. And just five miles south, where TSMC’s engineers manufacture the chips that enable the AI industry to reshape life as we know it, lies Arizona’s future.