Nokia Acquires NXP Fab to Produce Indium Phosphide Optical Semiconductors
Nokia has agreed to acquire NXP's semiconductor manufacturing park in Chandler, Arizona, to produce Indium Phosphide (InP) optical semiconductors. The company will lease and convert parts of the facility starting in early 2027, with the full acquisition expected to close in the first quarter of 2029. Indium Phosphide is a critical material for optical interconnects in AI data centers, which currently face a supply-demand gap larger than that of DRAM or NAND. This acquisition secures Nokia's internal supply chain and establishes domestic manufacturing capacity in the US to support the AI infrastructure boom. In addition to the Arizona acquisition, Nokia is expanding its San Jose facility for mass production by late 2026 and increasing its Pennsylvania testing and packaging capacity tenfold by Q3 2026. These moves aim to address the projected surge in demand for optical components in 2027 and 2028.
## BACKGROUND
Indium Phosphide (InP) is a III-V compound semiconductor known for its high electron mobility and superior optical properties, making it ideal for high-speed optoelectronic devices. As AI workloads grow, traditional copper interconnects struggle with bandwidth and power limits, driving data centers to adopt optical interconnects to link GPUs and servers efficiently.