Why is Arizona fighting data centers after welcoming TSMC?
Arizona spent five years courting one of the world's most important chipmakers. It is now spending a great deal of time fighting the buildings that use those chips. The Verge published a feature on 29 October from Phoenix and Tucson that sets the two stories side by side.
Taiwan Semiconductor Manufacturing Company's Arizona fabs draw little organised opposition. Hyperscale data centers do. Arizona has more than 170 data centers, according to The Verge, and new projects outside Phoenix and Tucson are meeting protests, lawsuits and zoning fights.
The proposal at the centre of the conflict is Project Blue. It would sit on 290 acres of unincorporated Pima County land outside Tucson and draw up to 600 megawatts. Developer Beale Infrastructure is also planning a 600-acre site in Marana, a town northwest of Tucson.
Water is the issue residents return to. But the volume alone does not explain the politics. Farms use far more water than data centers. What changed is the belief that a project pays something back. A fab brings suppliers and factory jobs. A data center brings tax revenue and a promise of very few permanent staff.
How much water do TSMC and AI data centers actually use?
TSMC's Arizona complex takes 4.75 million gallons a day from Phoenix's municipal water supply, The Verge reports, citing Paul Westerhoff, director of Arizona State University's Global Center for Water Technology. That is nearly 5 million gallons every day.
Chipmaking needs ultrapure water. Each chip goes through 50 to 250 wash cycles, and it takes 1.4 to 1.6 gallons of municipal water to make a single gallon of the ultrapure grade. TSMC recycles 60 to 65 percent of the water at its first Arizona fab and aims for 90 percent reuse by 2028, according to Sarah Porter of ASU's Kyl Center for Water Policy.
The Verge reports that TSMC mostly uses reclaimed wastewater, with some groundwater, citing The Arizona Republic. Phoenix also requires the company to treat water before it returns to the municipal wastewater system, Porter said.
Project Blue's published water figure is smaller. The Arizona Department of Water Resources approved two wells allowing the site to draw up to 31 million gallons of groundwater a year. Beale says that water is for construction only. Once the centre runs, the company says use will be limited to restrooms, kitchens and health and safety.
The Marana facility would use roughly 6.6 million gallons a year after construction, according to Beale. That is a company projection, not an independently metered figure.
Comparisons help. Google's data center in The Dalles, Oregon, uses about 1.5 million gallons a day, roughly one-third of TSMC's Arizona draw. Arizona's golf courses used nearly 39 billion gallons a year between 2002 and 2022, according to an Arizona Republic investigation cited by The Verge. Agriculture takes about 70 percent of the state's water but produced just 0.4 percent of its gross domestic product in 2023.
- •TSMC Arizona: 4.75 million gallons a day, mostly reclaimed water
- •Project Blue construction: up to 31 million gallons a year of groundwater, about 95 acre-feet
- •Marana data center after construction: roughly 6.6 million gallons a year, per Beale
- •Arizona golf courses: nearly 39 billion gallons a year, 2002 to 2022
Why did TSMC get a welcome that data centers did not?
TSMC has committed $265 billion to Arizona, up from an initial $12 billion announced in 2020. The total covers 12 fabrication and advanced packaging facilities plus a research centre, after the company added $100 billion in July, Reuters reported via Yahoo Finance.
The plant brings more than 3,500 jobs, according to a TSMC spokesperson quoted by The Verge. Fifty-five TSMC suppliers have opened in Arizona. TSMC reported $514 million in profit at its Arizona site in 2025, its first full year of production. The average hourly wage in the Phoenix metro area rose to $33.48 from $22.85 a decade earlier.
Data centers sell a different package. Pima County's memo on Project Blue described a $3.6 billion opportunity, $152 million in tax revenue over a decade, 3,000 temporary construction jobs and 200 permanent positions. Beale's Marana proposal promised $407 million in tax revenue over ten years, more than a third of it to the town.
Those terms once persuaded local governments. They are weaker now. AI executives have spent two years warning that the technology could remove entry-level work, and some communities no longer see tax revenue as enough. Phoenix's economic development chief, Christine Mackay, framed the trade-off bluntly: "We call it the economic value of a gallon of water."
There is also a strategic difference. TSMC's fabs sit inside a federal push to rebuild domestic chip production, backed by $52.7 billion through the CHIPS and Science Act. Data centers are private commercial property. They receive no equivalent political cover.
The workforce argument is concrete. TSMC began a semiconductor technician training programme at Arizona State University in May, part of an effort to build a local workforce, The Verge reported. A data center's permanent payroll is far smaller. Project Blue promised 200 permanent positions alongside its tax revenue.
What have Tucson and Pima County done about data centers?
Tucson moved first. In July 2025 the city council unanimously rejected the annexation of the Project Blue land. That blocked the developer from using Tucson Water, which the county deal had assumed. Beale continued anyway through unincorporated county land.
On 5 August 2026, the council adopted a data center ordinance on a 6-1 vote, KOLD reported. Tucson defines a large-scale data center as a facility above 25,000 square feet of floor area or above 20 megawatts of power. The rules require more than half a mile of separation from homes and schools and 1,000 feet from commercial and office zones. The zoning administrator can require up to 2,640 feet.
The ordinance also caps height at 50 feet, requires a 40-foot buffer, a noise plan and an environmental report, and demands disclosure of the energy mix. Facilities not covered by the city's Large Quantity Water Users Ordinance cannot use potable water. Every project needs approval from the mayor and council.
Pima County followed on 22 September, approving a 120-day moratorium on a 3-2 vote, AZ Luminaria and KJZZ reported. Supervisors amended it to cover projects whose permits have not yet been submitted, so Project Blue and a second proposal, Project Gravel, are exempt. County staff will draft new zoning rules, and the health department will assess water, air, heat and noise effects.
The supervisors acted after what the county called its sixth hottest summer. They also acted under legal pressure from both directions. Arizona's attorney general appealed the Corporation Commission's approval of a special energy agreement between Beale and Tucson Electric Power. A lawsuit by the No Desert Data Center Coalition was dismissed. The Hualapai Tribal Council passed its own resolution opposing hyperscale data centers.
Rules differ from city to city. Glendale approved a 160-acre development with three data centers, 18 natural gas turbines and an APS substation, KJZZ reported. Phoenix is defending new data center rules against a $54 million claim from a Texas developer, according to the same outlet.
Bans are harder than zoning. KOLD reported that the council weighed Proposition 207, which exposes the city to damages if new rules wipe out property value. That is why Tucson regulated instead of prohibiting, and why it can revisit the ordinance after a year.
How does the 2027 Colorado River cut change the calculation?
The federal government finalised the 2027-2028 Colorado River operating guidelines on 21 August 2026. Lower Basin deliveries fall by 1.25 million acre-feet in each of the two years. If the states implement their proposed sharing agreement, Arizona's reduction is 760,000 acre-feet.
The guidelines set a ten-year framework. They also require the Upper Basin states to reach an agreement on using federal reservoirs such as Flaming Gorge and Navajo to protect Glen Canyon Dam, the Interior Department said. That keeps the river's operating rules open to further negotiation.
That is about 27 percent of Arizona's basic apportionment of 2.8 million acre-feet a year, the figure set by the Supreme Court's 1963 decision in Arizona v. California. The Interior Department said Lake Powell and Lake Mead recently hit record lows and that the winter of 2025-2026 brought the lowest snowpack on record. Lake Powell is expected to start the water year between 3,510 and 3,540 feet, with releases of 6.0 to 7.0 million acre-feet.
Tucson draws about 70 percent of its water from the Colorado River. Since 2003 the city has banked surplus river water in the Avra Valley aquifer and now holds enough groundwater for an estimated 47 years, The Verge reports. Residents argue that cushion exists for them, not for new industrial customers.
The scale is worth pausing on. Project Blue's 31 million gallons of construction water is about 95 acre-feet. The state's planned 2027 cut is 760,000 acre-feet. The project is a rounding error against the shortage.
That gap explains why the debate is not really about litres. The 31 million gallons come from local wells. The state's cut lands on a different supply, under different rules. A new well sets a precedent for the aquifer. A new municipal customer competes with households for treated river water. The dispute is about who gets which water, and who decides.
The Verge also notes that Arizona's total water use has fallen 16 percent since the 1980s, mostly because farms use less. Conservation has not settled the argument, because the rivers and aquifers are still declining.
What are the strongest arguments on the other side?
Beale disputes part of the critique. Residents argue that switching Project Blue from water cooling to closed-loop air cooling raises electricity use, and that power plants burn water to make that electricity. Beale spokesperson Tony Burkart told The Verge: "The use of air-cooled technology for this project does not increase overall energy use." He said the energy allocation changes, but the total does not.
Beale also rejects a cost estimate used by opponents. Marana council member Jackie McGuire said the two Arizona projects would cost $120 billion; Burkart put the combined figure at $8.6 billion. Beale has declined to say whether Project Blue has a tenant, and Amazon reportedly pulled out after the switch to air cooling.
The industry's broader case is that data centers are a small water user. The Verge notes that Sam Altman has argued it takes more water to grow an almond than to answer 38,000 ChatGPT queries. It also notes that Karen Hao's 2025 book Empire of AI overstated one data center's water use by a factor of 1,000, a useful correction for claims that spread widely.
Some claims in the fight are assertions rather than measurements. An organiser's statement that data centers can raise surrounding temperatures by more than 10 degrees Fahrenheit was not tied to a specific study in the coverage. Project Blue's operational water figure is Beale's own estimate. No independent metering of the site has been published.
Water quality is the harder issue. Chip plants use PFAS, the forever chemicals that wastewater plants often cannot detect. TSMC says it has optimised in-house detection and is developing ways to remove PFAS from wastewater. Most semiconductor manufacturers are not required to monitor for the chemicals, according to The Verge. Phoenix requires pretreatment, but the long-term risk is not settled.
What happens next in Arizona?
The Pima County moratorium runs for 120 days from 22 September, which puts its expiry around 20 January 2027. County staff are due to propose zoning rules before then, and supervisors can extend the pause. Project Blue is not covered, so construction can continue while the rules are written.
Tucson will review its ordinance after at least a year, and the council has asked staff to study a full ban. The city has also flagged changes to its Large Quantity Water Users Ordinance, which governs big industrial water customers.
The legal fights continue. Arizona's appeal of the Beale energy agreement is in the courts. Marana residents and Beale have both sued the town over the rezoning. Residents collected about 2,800 signatures for a referendum, which the town rejected on a technicality. McGuire, who ran on an anti-data-center platform, won a council seat.
Watch the tenant question. Beale has not named a customer for Project Blue. A signed tenant would tell residents how much power and water the site will actually need, and it would test whether the air-cooled design can attract the hyperscalers the project was built for.
Watch 1 January 2027 as well. That is when the Lower Basin delivery cuts take effect, assuming the states' sharing agreement holds. If it does not, the Interior Department's state-by-state numbers change. Either way, Arizona's next round of local zoning decisions will be made against a shrinking river.