Investment Growth in US Manufacturing

For the last 50 years, Semicon West, one of the microelectronic industry’s biggest conferences, has been held in the San Francisco area. However, for the first time since its inception, in 2025, it’s moving to Phoenix, Arizona, as the area becomes a hub for semiconductor manufacturing.

“Greater Phoenix is home to more than 75 semiconductor companies including SEMI members EMD Electronics, Intel, and Taiwan Semiconductor Manufacturing Company,” Joe Stockunas, president of SEMI Americas and host of the event, said in a statement announcing the change.

In just the last four years, the Phoenix metro area saw 14 major manufacturing announcements and was ranked number one in the U.S. for manufacturing construction.

Arizona’s semiconductor storyline begins in 1949, when Motorola opened a research lab in Phoenix that later manufactured transistors, a type of semiconductor, Phoenix Mayor Kate Gallego said in an email. Then, ASM came to Phoenix in 1976, followed by Intel opening its first semiconductor factory in Chandler in 1980, becoming one of the state's largest employers.

As major players in the industry started accumulating here, related companies and suppliers followed, building a strong manufacturing ecosystem in the region.

In May 2020 TSMC added to this mix, with plans to build three fabs in Arizona worth a combined $65 billion, the largest foreign direct investment in the state’s history.

Talent pipeline creates a draw

The state’s efforts and incentives to attract manufacturers combined with one of the nation’s strongest talent pipelines in the semiconductor industry, have helped draw mega projects like TSMC’s to Arizona, according to the chipmaker.

“As we were considering different sites in the U.S., the Arizona team made a strong impression with their preparedness and understanding of the range of issues and criteria for our decision,” a TSMC Arizona spokesperson said. “The team assembled included top elected leaders in city and state government, economic development, utilities, and higher education.”

Gallego said the state’s partnership with Arizona State University and the school’s growing engineering program were some of the top reasons for “getting TSMC to commit to Phoenix,” the mayor said in an email.

“ASU is a major partner on workforce development initiatives and is helping bridge the gap between when new technology is invented and when it’s made and deployed,” Gallego said.

The state has also partnered with Maricopa Community Colleges, where it sponsored the Route to Relief program and Semiconductor Quick Start courses, which aim to introduce people to the possibilities in the semiconductor manufacturing and trade industries.

“In partnership with the state, industry, and federal government, the City also launched a Registered Apprenticeship program, the first of its kind in the country, to help train the next generation of semiconductor technicians,” Gallego said.

TSMC plans to invest $5 million to train 80 facility technician apprentices over five years. The pilot program was launched with a cohort of eight facilities technician apprentices, all of whom have become full-time TSMC employees and will be a part of an 18-24 month program consisting of on-the-job training and classroom instruction, according to the company spokesperson.

The company plans to expand the program to other fab technician roles beginning in 2025.

Where manufacturers go, suppliers follow

With the growing support of state and city officials, a rapidly developing talent pipeline and the increasing impact of major projects like the TSMC fabs, the area is seeing a “massive influx of semiconductor-related companies completing the industry supply chain,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council.

“GPEC has since located 39 semiconductor-related companies to the region, creating more than 7,700 jobs and over $37 billion in capital investment,” Camacho said.

One such company is Benchmark Electronics, which builds equipment to produce semiconductor chips. The company opened a new facility in Mesa, Arizona, in 2023.

“To put it simply, we love being located near a lot of our customers,” said Ryan Rounkle, VP of the semiconductor capital equipment sector at Benchmark. CHIPS and Science Act incentives and the strong technical talent pool further supported the decision to move here, Rounkle said.

Like TSMC, the company partners with local educational institutions like the Grand Canyon University and ASU to build the necessary workforce.

The state has also added new legislation that decreased property taxes for many semiconductor companies and reimbursements related to major public infrastructure improvements.

“Manufacturers and suppliers are attracted to our environment that offers a favorable corporate tax structure and tax credits, and a minimalist regulatory approach in addition to competitive labor, land, and operating costs,” Camacho from GPEC said.

Since 2020, the state has welcomed more than 40 semiconductor projects, representing over $102 billion in capital investment and more than 15,700 direct jobs, according to the Arizona Commerce Authority. The numbers are likely to go up as Intel and TSMC’s projects begin production.

Dive Brief:

• Ford Motor Co. is investing $2.3 billion to build F-Series Super Duty pickups at its Oakville Assembly Complex in Ontario, Canada, starting in 2026, the company announced on July 18, 2024.
• The investment in Oakville includes installing new assembly and stamping equipment to initially boost heavy duty truck production by 100,000 vehicles a year.
• In total, Ford plans to invest approximately $3 billion to expand Super Duty production across three North American facilities — its Kentucky Truck Plant, Ohio Assembly Plant and Oakville facility — to meet rising demand.

Dive Insight:

Demand for Super Duty trucks is currently outpacing the company’s production capacity, according to Jim Farley, Ford president and CEO. It’s driven in large part by customers that are spending more on infrastructure and construction-related activities, according to the press release. 

In the first half of 2024, the automaker’s Kentucky Truck and Ohio Assembly plants produced more than 200,000 F-Series Super Duty trucks, but Ford’s CEO says it’s still not enough.

“Super Duty is a vital tool for businesses and people around the world and, even with our Kentucky Truck Plant and Ohio Assembly Plant running flat out, we can’t meet the demand,” Farley said in the press release.

Ford originally planned to build a new three-row electric SUV at the Oakville plant, but those plans are on hold as EV demand wanes. In April 2024, Ford said that retiming the launch of the electric SUV to 2027 will allow it to take advantage of emerging battery technology to increase durability and reduce costs.

However, the automaker says the Oakville facility will be “a fully flexible plant” once retooling is complete, allowing Ford to add electrified powertrains to vehicles it builds there in the future.

The expansion of Super Duty truck production will initially add approximately 1,800 jobs in Oakville, 150 jobs at Ford’s Windsor Engine Complex and roughly 70 jobs at automaker’s Rawsonville Components Plant and Sterling Axle Plant in Michigan. Ford will also invest $24 million in its Sharonville Transmission Plant in Ohio and offer employees there additional overtime. 

In total, 10 U.S. plants support Super Duty truck production across powertrain, transmission, stamping and final assembly, employing approximately 20,000 workers.

“This investment will benefit Ford, our employees in Canada and the U.S., and especially our customers who want and need Super Duty for their lives and livelihoods,” Ford COO Kumar Galhotra said in the press release. “It is fully consistent with our Ford+ plan for profitable growth, as we take steps to maximize our global manufacturing footprint, and our investments will have a fast payback.”

Dive Brief:

• Novo Nordisk will spend $4.1 billion to build a new U.S. factory in Clayton, North Carolina, the latest multibillion-dollar investment by the Danish drugmaker to expand production of its fast-selling weight loss and diabetes drugs Wegovy and Ozempic.
• Funding for the planned factory, announced June 24, 2024, comes as Novo plans to allocate $6.8 billion towards manufacturing in 2024. The investments are designed to help the company expand access to its obesity medicines and fend off competition from Eli Lilly.
• Novo in 2023 budgeted $3.9 billion on production capacity expansions. It added even more bandwidth earlier in 2024, when its controlling shareholder agreed to buy contract manufacturing company Catalent and sell three plants to Novo in a separate transaction. Meanwhile, Lilly has committed $9 billion to facilities in Indiana.

Dive Insight:

Wall Street analysts believe the market for weight loss drugs like Wegovy and Zepbound could surpass more than $100 billion a year by the 2030s. But even now, manufacturers of marketed products are struggling to keep pace with demand. Novo limited access to the lower, “starter” doses of Wegovy for months, while some doses of Lilly’s Zepbound and Mounjaro are currently in shortage.

Demand is expected to grow in the years ahead, as Novo and Lilly bring their medicines into new indications and broaden insurance coverage. Novo showed in testing that Wegovy can help reduce the risk of cardiovascular events, winning Medicare coverage for some people. Lilly could similarly win over Medicare with recent results showing Zepbound can ease obstructive sleep apnea.

The two companies are also testing their medicines in other common conditions, like the metabolic disease known as MASH, heart failure and even Alzheimer’s.

In the meantime, Lilly and Novo are pouring considerable resources into drug production. The $9 billion Lilly is spending on facilities in Indiana is the largest single investment in its history. Now Novo is following suit with plans to significantly increase its production footprint in North Carolina.

Novo already has a large presence in the state, with three production plants there. But the new plant in Clayton will double its existing square footage. Foundational work has already begun on a 56-acre site, with construction expected to be finalized between 2027 and 2029. The facility will specialize in what’s known as fill-finish, or sterilizing and standardizing medicines and containers before filling and sealing them with drug products.

When completed, the new facility will add 1,000 new jobs to the roughly 2,500 the company already employs in the region.

The facility is the second in the U.S. the company has added in 2024. The Catalent transaction hands Novo a plant in Indiana, as well as manufacturing sites in Italy and Belgium.

In addition to its investment in Indiana, meanwhile, Lilly is buying a plant in Wisconsin.

Dive Brief:

• U.S. solar panel manufacturing capacity has increased 4-fold since the passage of the Inflation Reduction Act, up by over 10 gigawatts to now surpass 31 GW nationwide, according to a Q2 2024 report by the Solar Energy Industries Association and Wood Mackenzie. 
• The growth was largely in the utility-scale segment, which installed 7.6 gigawatts of direct current in the second quarter, a 59% jump year-over-year, the report stated.
• The industry’s expansion comes as it is also bracing for the impact of new tariffs on solar components from Cambodia, Malaysia, Thailand and Vietnam, set to take effect this fall. Yet the solar association said it expects impacts on solar deployment to be modest.

Dive Insight:

The IRA has boosted the clean energy sector by incentivizing companies with tax breaks for financing projects, sparking dozens of solar panel manufacturing projects across the country.

Ten domestic solar projects were announced in Q2 2024, according to data from environmental advocacy group E2. NorSun invested $620 million in its first U.S. solar facility. The Norway-based company will work with Silfab Solar to supply the manufacturing plant in Tulsa, Oklahoma.

Vietnam-based Boviet Solar will also build a more than $294 million solar panel manufacturing site in Greenville, North Carolina, its first in North America and set to open in Q1 2025.

Yet future solar capacity growth may be hindered by broader power sector challenges, such as interconnection backlogs, electrical equipment shortages, and constraints on labor availability, the report stated. 

“The industry also faces uncertainty related to newly proposed tariffs and the presidential election. There is currently a lot to navigate in the solar industry,” said Michelle Davis, head of global solar at Wood Mackenzie and lead author of the report.

One of those uncertainties has been the Biden administration’s proposal to hike tariffs on solar manufacturing equipment. The administration finalized the tariff hikes Sept. 13, 2024, which include a 50% tariff on photovoltaic solar cells and a decrease in the number of allowed exclusions for solar manufacturing equipment from 19 to 14. 

The solar association has been monitoring the tariffs’ impacts since they were introduced in April 2024. The group expects that crystalline silicon cells and modules imports from Cambodia, Malaysia, Thailand and Vietnam will have a negligible impact on the utility-scale segment.

This is due to major suppliers moving their supply chains out of the designated countries already. There’s also a substantial amount of module inventory, including both crystalline silicon and non-subject thin film, already allocated to current projects, the report stated.

The report noted that the distributed solar market expects some short-term impacts from the tariffs. Around 40% of residential and 60% of commercial and community solar projects rely on imported modules, and their shorter project timelines mean tariff effects could be felt sooner, the report stated.

It predicts a 4% drop in residential installations, a 5% fall in commercial installations and a 4% decrease in community solar installations for 2025.

“Preliminary determinations for these tariffs are anticipated this fall. While there is still considerable uncertainty around final details, we expect that tariff impacts on solar deployment will be modest,” the report stated.

Dive Brief:

• Sodium-ion battery maker Natron Energy plans to spend nearly $1.4 billion to build a factory in Rocky Mount, North Carolina, its first in the U.S., the company announced Aug. 15, 2024.
• The facility will span nearly 1.2 million square feet and create more than 1,000 jobs, with salaries averaging just over $64,000, according to Gov. Roy Cooper’s news release.
• The plant is expected to produce 14 gigawatts of sodium-ion batteries at full capacity, increasing Natron’s production by more than 40 times its current capacity. Construction of the facility is set to begin in early 2025, with commercial production expected to be achieved in 2027, according to a company spokesperson.

Dive Insight:

The factory is part of Natron’s strategy to leverage the growing demand for sodium-ion battery storage, co-CEO Wendell Brooks said in a statement.

Natron’s batteries will be delivered to a wide range of customers in the industrial power space, such as data centers, mobility, electric vehicle fast charging, microgrids and telecommunications, according to the battery maker.

Natron’s Prussian blue electrodes store and transform sodium ions faster due to their lower internal resistance, the company said. The battery chemistry does not strain amid charging and discharging, has a 10-times faster cycling than lithium-ion batteries and a more than 50,000 cycle life, Natron said.

Sodium-ion batteries do not require lithium, cobalt or nickel. Instead they’re made from materials such as aluminum, iron, manganese and sodium electrolyte, making them an alternative to lead-acid and lithium-ion batteries, according to the company.

Natron’s upcoming facility will be located on the state’s Kingsboro business park, a CSX-platinum designated location, according to the releases. Rail carrier CSX’s select site helps businesses locate the best rail-served sites for development or expansion, according to its website.

The Kingsboro site is located near two interstate highways, Raleigh-Durham International Airport and in foreign trade and opportunity zones, according to the CSX website.

“This flagship manufacturing facility will dramatically accelerate our efforts to deliver sodium-ion batteries to customers who are hungry for safe, reliable, and environmentally responsible energy storage solutions,” Natron founder and co-CEO Colin Wessells said in a statement.

Natron has progressively expanded its battery production capacity over the past few months. In April 2024, it began commercial-scale operations at its sodium-ion battery manufacturing facility in Holland, Michigan.

In just a few years, Eli Lilly has managed to grow into the most valuable pharma company with new diabetes and weight loss drugs like Mounjaro and Zepbound taking the world by storm. But with that growth comes a responsibility to environmental, social and governance issues — and the pharma giant is taking those goals seriously.

To meet raging demand for GLP-1 drugs, Lilly has expanded its manufacturing footprint substantially, committing more than $18 billion to facilities across the U.S. and Europe — building, upgrading and acquiring with an eye toward sustainability. From solar power to AI-driven efficiencies, the company is working toward a 2030 goal of carbon neutrality through renewable energy.

With the company growing so quickly, those aims are as important as ever, said Jim Greffet, head of ESG at Lilly. And they extend beyond the environmental impact as the drugmaker includes access and affordability under the umbrella of sustainability.

“This mindset of doing the right thing, bringing medicine that helps patients over the long run, playing the long game — we didn’t call it sustainability in the past, but that’s what sustainability is really getting after,” Greffet said. “For us, that hasn’t changed, because we’re at a crossroads.”

ESG efforts have been subject to a backlash after a major push into the early 2020s, but Greffet wants Lilly to stay at the forefront of sustainable business practices to fulfill what the company has been doing for years, he said.

“These topics aren’t controversial, because taking care of the planet is a good idea, and getting medicine to patients that need it is a good idea,” Greffet said. “We also like to think about this in a very pragmatic way tied to our purpose of making medicines and flying above the fray.”

Here, Greffet explains to sister publication PharmaVoice what ESG efforts look like in the pharma industry, how transparency in drug pricing is part of the company’s social contract and what ESG can do for a major company’s bottom line.

This interview has been edited for brevity and style.

PHARMAVOICE: What is unique about the approach to ESG in pharma compared with other industries?

JIM GREFFET: The value in looking at these topics is to put a company on the most solid foundation to be resilient for the long term. In the case of pharma, we have to play the long game — it takes us 10 years or more from an idea in a scientist’s eye to get a new medicine in the hands of a patient [who] can benefit from it. So by design, we have to think and act with the long term in mind, and it makes my job easier that we’re conditioned as pharma, and Lilly in particular, to operate that way.

Our efforts on sustainability have taken the way we run the company and made them more obvious and transparent for stakeholders. When I took this job four years ago, this newly created role, I thought: Is the work here creating new ways of doing things or getting better at communicating the things that are already in place? And it has been almost entirely the latter. We’re a 150-year-old company, so a lot of these things are just the way we run the joint.

How do you make sure the company grows the ‘right way,’ weighing the social need for access to these drugs against environmental concerns of manufacturing, for instance?

We’ve found ways to alleviate a lot of suffering from obesity and diabetes. To accomplish that, we’re building new manufacturing plants around the world, and that’s expanding our footprint to bring those medicines to people who need them. But when we start a new plant with a white sheet of paper, we are overtly designing environmentally friendly principles from the get-go. On-site solar, water recycling, water preservation — we’re doing it the right way from the start. It also forces us to look at efficiency, and so we’re using AI to study the way a machine moves, for example, looking at split-second inefficiencies that a human can’t see but that make a big difference in the long run.

Access and affordability are some of the biggest topics we focus on in our sustainability report, and we’ve done a lot there. It’s not an either-or proposition of growing or being sustainable — we’re trying to do both. 

The broader point is the non-competitive nature of sustainability topics overall. In this job, I talk with my counterparts at other pharma companies almost daily, which would have been verboten in my earlier roles in finance. That same theme carries over as we’re collaborating across pharma with the supply chain — let’s all learn from one another to improve what is a common goal for us all.

On the social side of ESG, Lilly has in recent years been proactive about insulin pricing, but public perception is a different story due to all sorts of factors. How do you as a company retain a good ESG reputation when the public wants someone to blame and those eyes fall on you?

The most valuable thing we can do is be transparent and show data, and we try to do that in our sustainability report. You’ll see some very transparent graphs that show how our list price has changed over time and how our net price as a percentage of list has gone down over time. Facts are your friend in this regard. It’s an easy sound bite for someone to talk about somebody who got an outrageous bill at the pharmacy counter, and it’s a lot harder to have this conversation on PBMs and rebates and discounts and all the stuff that we have to explain to get to our part of the answer. But we do the best we can because we think it does reflect our real situation and what we’re doing here.

Do you see ESG as tied to the bottom line for shareholders as they weigh the investment opportunity?

I’m not a zealot, and I think it’s important when you’re in a role like this to keep the real purpose and value in mind. At the most pragmatic level, having an effective sustainability program is about helping to prevent bad things from happening, and that is a very easy discussion with investors. We’re going to look at our environmental footprint because we don’t want to get sideways [with] the EPA. We want to make sure we’ve got the most engaged, diverse and included employees bringing everything they have every day, because that helps us make medicine. These are easy, non-controversial ways of looking at these topics that should resonate with any stakeholder, including an investor.

That said, if we have the most innovative climate plans and the most fantastic governance structures, and we’re not innovating new medicines, investors probably aren’t going to be that interested in putting their money with us, so we have to think of both.

Dive Brief:

• The Biden-Harris administration is working with asset management firm Monroe Capital to create a $1 billion fund for small- and medium-sized auto manufacturers and suppliers, the firm announced Sept. 23, 2024.
• The “White House inspired” fund, supported by MEMA, The Vehicle Suppliers Association and Alliance for Automotive Innovation and launched by Monroe Capital, will focus on makers of powertrain, body, drivetrain, chassis, interiors and electrical components, as well as complementary software-as-a-service providers, according to the investment firm. 
• The money comes as the administration continues its push to bring more funding to automakers and suppliers transitioning to electrification.

Dive Insight:

The “Drive Forward” fund particularly aims to help companies make investments in new technologies, including in making the switch from internal combustion production to electric vehicles. It will also offer funding used for investments in smart factories, autonomous driving systems and other connected technologies. 

Such priorities put a premium on helping the country's end-to-end auto supply chain transition to EV production, an endeavor that has proven more expensive than anticipated for many companies. 

The Biden-Harris administration has poured billions of dollars into this endeavor in a bid to ease the capital expense of the transition. In September 2023, the Department of Energy unveiled $15.5 billion in funding and loans to help automakers transition to EV production. 

Also during the month, the administration announced $3 billion in funding for battery manufacturers, another arm of the domestic EV industry it's trying to grow.

"Automakers are investing billions in this transition and building electrified vehicles in all makes and models, but you’ve got to remember the automotive supply chain is made up of hundreds of companies – many small and medium-sized businesses – that have been churning out components and parts for generations, support communities across the country," John Bozzella, president and CEO of the Alliance for Automotive Innovation, said in a statement. 

As part of the initiative, Monroe Capital plans to apply for a Small Business Administration Small Business Investment Company license, which will allow the firm to offer companies low-cost, government guaranteed-leverage. Fundraising will begin following the licensing process, the firm said.