It is my understanding that FABS require a lot of water. I don't think Arizona has enough water. I could be wrong, though. They keep a nuclear power plant running in AZ by piping in gray water for it.
Apparently it'll use the equivalent of about 12,000 homes worth of water but have technology to recycle about 65% of their use, so ultimately ~5000 homes worth of water? https://eu.azcentral.com/story/opinion/op-ed/joannaallhands/... A lot but about 10% of current household growth in Arizona so they'll surely "find a way."
Intel has a fab nearby as well which is actually net positive for potable water because they take in waste water and purify it enough that it goes back into the supply after they’re done using it.
Fabs recycle the water so it's not a big deal. A lot of water by industrial standards is not a lot of water by state standards, even if we're talking about a pretty desert-y state.
Recycling tech exists so that net-water use can be zero or near zero. It's a matter of spending the extra money on it: it's cheaper not to.