As AI infrastructure booms in Phoenix, Arizona's Route 66 towns offer a sharp lesson in tech disruption—and survival
Welcome to Eye on AI! In today's edition: Apple eyes AI-powered Safari amid looming shift away from Google...Nvidia's CEO Jensen Huang warns of a 'tremendous loss' if U.S. firms lose access to China's $50 billion AI market...CrowdStrike to lay off 5% of staff, citing AI as a "force multiplier"
You can witness Phoenix, Arizona's shape-shift into an AI powerhouse by looking out the car window while cruising Loop 303 off of Interstate 17, north of the city's downtown. That's how I first laid eyes on the colossal semiconductor plant from Taiwan Semiconductor Company (TSMC) last week after escaping the fast-paced AI news cycle for some Southwest style R&R.
When I realized we would be passing the $65 billion manufacturing complex–where a third fabrication plant is already under construction to provide sophisticated AI chips to clients like Nvidia and Amazon–I couldn't resist taking the detour onto Innovation Way to check out the sprawling gray campus rising from the desert like a data center monument to the AI age.
Phoenix, famous for its golf courses and suburban sprawl, is being reshaped by this massive local investment in AI infrastructure. The New York Times recently chronicled the influx of Taiwanese workers to Phoenix, and the new restaurants and housing that is springing up around the TSMC site. The mammoth manufacturing facilities sit next to a shimmering glass-walled office building and a seemingly-endless parking lot topped with solar panels—all while construction continues on the surrounding desert land.
But while Phoenix may be remade by the promise of AI and silicon, farther north, other Arizona towns have already lived through their version of tech disruption and have had to figure out how to survive. For today's companies and workers that fear being displaced, bypassed and forgotten in the AI era, it's worth taking heed of some hard-earned lessons.
Take Williams, Arizona, which is two-and-half-hours north of Phoenix and is a former boom town on Route 66 that was known as the 'gateway' to the Grand Canyon. Route 66, the historic highway that was built in 1926, helped Williams become a major stop for travelers, bustling with shops, motels and restaurants catering to tourists en route to the canyon. Williams also boasted the Grand Canyon Railway, which began taking passengers to the Canyon's South Rim in 1901.
But by the 1980s, Interstate I-40 was built in the name of progress, part of a nationwide highway revolution designed to supercharge commerce and tourism. It came at a cost: I-40 bypassed dozens of Route 66 towns, draining them of traffic and relevance. Many faded away into ghost towns—but Williams was an exception.
Williams was the last town on Route 66 to be bypassed by I-40, holding out until 1984 by filing lawsuits that were only dropped when the state agreed to construct three exits providing direct access. But even with the exits, the town suffered since I-40 diverted traffic around the town, rather than through it like Route 66. Even worse, the Grand Canyon Railway—once a big tourist draw—had stopped running in 1968, more than 15 years before the interstate highway was built, after the rise of the automobile undercut rail travel.
Today, the town is a bustling tourist town that was revived by leaning into nostalgia. The Grand Canyon Railway was repurchased and restored, resuming service in 1989 and soon becoming the town's biggest employer. Williams also pushed to preserve its Route 66 identity, opening the Route 66 Museum and reviving historic buildings.
As I rode the historic Grand Canyon Railway to the South Rim last weekend, and took advantage of every Route 66 photo op in town, I couldn't help but ruminate on how this small town survived a massive infrastructure shift through reinvention. So many companies and workers will need to do the same in the AI age or they risk becoming the next Route 66.
Not every Route 66 town had to reinvent itself by looking at the past. On the way to Williams, I passed through Flagstaff, which also once relied on Route 66 traffic. It had a more diversified economy than Williams—thanks to its ski area, the Lowell Observatory and a nearby university—and it continued to grow as a regional economic and transportation hub even after I-40 was built. It had already built the broad foundations it needed to survive before the disruption came.
In the age of AI, we all have to reckon with what comes next, as we face a disruption that will arguably be more sweeping than the rise of the Interstate Highway System. Phoenix is betting on turning desert into AI chip fabrication factories and building new neighborhoods to support them. But all cities, companies, and workers will have to find ways to adapt—or risk falling behind. In the 1980s, Williams and Flagstaff, like all Route 66 towns, had to figure out how to reinvent themselves or leverage what they already had. The ones that didn't? They're no longer on the map.
With that, here's the rest of the AI news.
Sharon Goldmansharon.goldman@fortune.com@sharongoldman
This story was originally featured on Fortune.com
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