Nokia buys NXP's Arizona chip fab to secure US optical supply

What's the deal? NokiaDealroom has a profile for this one. Try Dealroom → has agreed to acquire NXP Semiconductors'Dealroom has a profile for this one. Try Dealroom → fabrication campus in Chandler, Arizona, expanding its US semiconductor manufacturing beyond 2028. The purchase also brings over NXP's experienced semiconductor team.

How it's structured: The transaction runs in stages. Nokia will begin leasing part of the facility in early 2027, pending approvals, and convert it to produce indium phosphide (InP) semiconductors. It takes full ownership when the deal closes in the first quarter of 2029.

Why InP matters: InP chips power fast optical transceivers that move large volumes of data using light rather than electricity. Demand has surged as tech firms build large AI data centres and supercomputers.

The wider build-out: Nokia's new San Jose, California optical fab is on track to start production in the fourth quarter of 2026, while a Pennsylvania investment will lift its packaging and testing capacity tenfold, with the first phase due in the third quarter of 2026.

Together, the three sites are meant to support high-volume delivery in 2027 and 2028, with Arizona handling InP chip production after 2028.

Why now? Nokia is positioning ahead of what it expects to be sharp demand growth driven by global investment in AI and advanced networks. Producing components domestically shields the company from international supply chain disruptions.

The signal: By concentrating InP production and testing capacity in the US, Nokia is building an end-to-end domestic supply chain for optical components — and staking a claim as a key supplier to the American tech industry through the AI buildout.

Read more: BIS Infotech

Image credit: Generated with Gemini