On the face of it, Arizona, a state known for its Grand Canyon and barren deserts, might seem an odd choice for an industry that demands huge amounts of water. But water, it turns out, is one of the least concerns. Semiconductor manufacturing needs a big ecosystem to get the best cost position. Semiconductor manufacturing need to have not just one company or one fab, but a big cluster of 10 to 15 of these things, to be able to get that world class performance and to be able to build a big enough ecosystem around you.This includes everything from equipment suppliers, which are needed to update and perform maintenance on chipmaking machines, to companies providing chemicals and other materials needed in making chips.Arizona has such a complete semiconductor supply chain already is thanks in no small part to Intel. Back in 1980, Intel started manufacturing microcontroller chips at its facility in Chandler, Arizona which is now Intel's largest manufacturing site in the world. In addition to Intel, leading semiconductor makers including NXP, ON Semiconductor, Qualcomm, Microchip, Broadcom and Benchmark Electronics have also built facilities in the state. Apart from its cluster of semiconductor companies, geopolitics have also worked in Arizona's favor. Arizona was also a more politically savvy state for fresh investment than strongly Democratic Washington. Arizona Gov. Doug Ducey, a Republican, was a close ally of Trump throughout both of his presidential campaigns
Why did TSMC choose Arizona for its chip manufacturing
TSMC chose Arizona for its chip making facility because Arizona already has an ecosystem of  equipment suppliers, fabrication units. Having an ecosystem makes it cost effective. Also Arizona is home to other chip companies like Intel, NXP, ON semiconductor, Qualcomm, Microchip, Broadcom and Benchmark Electronics. Also geopolitics then worked in favor of Arizona state. Arizona is a Republican state then and under Trump presidency would have given more incentives for the chip makers establishment.