Industrial firms perform the largest share of Arizona’s R&D. In 1995, private firms in Arizona accounted for 68 percent of the state’s R&D performance. As a source of R&D funds, however, Arizona’s firms provide only 38 percent of the state total, far less than the national average of 61 percent (see Table 1). 

In FY 1995, the federal government provided Arizona industries with $528 million for R&D, 94 percent of which came from DOD. NASA supplied most of the remaining six percent, or $24 million. This distribution of funding reflects Arizona’s strength as a prime location for aeronautics and space R&D, as well as advanced electronics. 

Arizona’s top defense contractors are all involved in such activities. In FY 1995, the top five were Hughes Electronics Corporation (recently acquired by General Motors), McDonnell Douglas Corporation (now owned by Boeing), Motorola, Allied Signal, and Litton Industries. 

Late in 1997, Raytheon Company merged with Hughes Aircraft. Hughes Missile Systems in Tucson, formerly a division of Hughes Aircraft, is now a part of Raytheon Systems Company. Raytheon will continue to do the same work developing and producing tactical missile systems. 

Also in 1997, Boeing merged with McDonnell Douglas Corporation, creating a new Boeing organizational unit called McDonnell Aircraft and Missile Systems. With this new acquisition, Boeing became the world’s largest manufacturer of military aircraft. Aircraft and Missile Systems includes U.S. Army Programs and Commercial Rotocraft in Mesa, where military helicopters like the Apache Longbow are produced. 

Allied Signal’s Aerospace Equipment Systems (AES) division is in Tucson. AES is involved in the manufacture of components for commercial transport, general aviation and military vehicles. AES also designs and manufactures electronic systems.  

Arizona’s aerospace and electronics defense contractors are benefiting from the International Space Station project currently underway. This endeavor to build a new generation of space habitation is funding R&D and production with subcontractors across the country. Arizona, with its existing aerospace resources, has attracted many of the subcontracts. Honeywell Incorporated’s Satellite Systems Operation in Phoenix is receiving over $250 million for data handling systems and beta gimbal motors, a part of the subassembly that transfers power to the station from its solar panels. ITT Corporation, also in Phoenix, and its subsidiary ITT Cannon Military, will receive approximately $11 million for electronic parts. AlliedSignal Fluid Systems and AlliedSignal-EQ in Tempe together are getting about $7.6 million. 

Arizona’s private sector R&D enterprise is also very strong in the fields of telecommunications and advanced electronics. Motorola performs R&D in Arizona focused on telecommunications and computers. The Motorola Computer Group in Tempe develops and produces computer products. The Space and Systems Technology Group researches and develops electronics systems for DOD and NASA. This group is also responsible for the concept design of a global, wireless, satellite-based communications system known as IRIDIUM. IRIDIUM is a private venture, funded by a consortium of companies, with Motorola as the prime contractor. 

Intel, maker of the microprocessors that drive most desktop computers, has several sites in Chandler. Intel develops, tests, and produces computer chips, embedded controllers for devices like cars and printers, and other chip-based products.