[The Trap of Subsidies] TSMC's Nest in Arizona 'Simmering'... "Wrong Direction"

US Presidential Swing State Arizona
Difficult to Win Voters Despite Semiconductor Subsidies
60% of Residents Say "Going in the Wrong Direction"
Residents Complain of Relative Deprivation Despite Economic Recovery

The voting sentiment in Arizona, a key battleground state where the Biden administration has poured massive semiconductor subsidies, is wavering. Arizona is the site where Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer), has decided to build a factory in the U.S. While the local economy is showing rapid growth, rising interest rates, housing prices, and inflation have significantly increased the relative deprivation felt by residents, leading to widespread assessments that "my life has gotten worse."

President Joe Biden of the United States [Photo by Reuters]

The Wall Street Journal (WSJ) recently reported in an article titled "Arizona is experiencing rapid economic growth, but anxious voters are pessimistic about the economy" that public sentiment in Arizona, where semiconductor subsidies are concentrated, is significantly shaken. A survey conducted in March among voters in seven battleground states (Arizona, Georgia, Michigan, North Carolina, Nevada, Pennsylvania, Wisconsin) found that 60% of respondents in Arizona believed the state was heading in the wrong direction, the highest among the surveyed regions. Notably, one in two Arizona residents said the local economy had worsened over the past two years.

Such evaluations by Arizona residents inevitably affect the voting sentiment in the November presidential election. Recent polls targeting Arizona residents show that former Republican President Donald Trump leads Democratic President Joe Biden by about 5 percentage points. Traditionally a Republican stronghold, Arizona has mostly seen Republican candidates win major elections since the 1950s, except for the 2020 presidential and 2022 midterm elections. In the 2020 presidential election, the vote difference between Trump and Biden was only about 10,000 votes, leading Republicans to request a recount before Biden's victory was confirmed. Given this context, Arizona is considered a battleground state that could decide the outcome of this U.S. presidential election.

Since taking office, President Biden has introduced large-scale economic support measures for Arizona. In particular, the administration decided to provide $11.6 billion in financial support, including $6.6 billion in subsidies and $5 billion in loans, for TSMC's semiconductor factory in Arizona. With the Biden administration agreeing to provide more support than initially expected, TSMC expanded its planned investment from $25 billion to $65 billion. This was the largest foreign direct investment in U.S. history.

[Image source=AP Yonhap News]

In addition to TSMC, Arizona is home to Intel, a leading American semiconductor company. Intel plans to invest an additional $30 billion in its Arizona factory. The Biden administration has pledged to provide Intel with the maximum subsidies under the semiconductor support law.

Typically, when companies and the government pour such large-scale investments into a region, the local economy revives and residents respond positively. However, in Arizona, the opposite is happening. Although the local economy is growing, rising housing prices and oil prices are causing household difficulties, compounded by unresolved immigration issues in the southern region, according to WSJ analysis.

Housing prices in Phoenix, Arizona's key city, have risen about 50% compared to pre-pandemic levels. Homeowners are pleased with the price increase but are concerned about rising interest rates making transactions difficult. WSJ pointed out that "new homes far from downtown are priced at $1 million, and traffic congestion is worsening."

However, the abortion issue, which is shaking the entire U.S., is also having a significant impact in Arizona, prompting the Republican Party to closely monitor changes in voter sentiment. Democratic Governor Katie Hobbs signed a bill repealing the abortion ban on the 2nd of this month. In Arizona, a 160-year-old abortion ban law was nearly reinstated by a court ruling but was permanently repealed. Olivia Lewis, a 21-year-old student working part-time at a theater earning $15 an hour, said, "I am disappointed with the Biden administration that has supported Israel, and I like former President Trump's boldness," but added that she has no choice but to support the Democrats on abortion-related issues.

Erle Riley, a 56-year-old male voter and product manager at a semiconductor factory living on the outskirts of Phoenix, said, "Since the Biden administration started, I have never seen my life truly improve," adding, "If anything, the situation has gotten a little worse." He voted for Trump in the 2016 election and for Biden in 2020 but said he is leaning toward the Republican Party in this year's election. Michael Rusconi, a 60-year-old voter from Phoenix who runs a restaurant, also said he is under pressure from inflation and labor costs and is considering which party to vote for in this year's presidential and Senate elections.