On August 6th, century old communication giant Nokia announced the signing of a final agreement to acquire chip manufacturer NXP's wafer fab in Arizona, USA, with plans to transform it into an indium phosphide optical chip production line to fill the AI optical chip production capacity gap.

After obtaining approval from relevant regulatory authorities, Nokia will lease the production capacity of some facilities in the park from early 2027 and transform it into producing indium phosphide semiconductors for optical components. Afterwards, Nokia will acquire the entire campus, and the transaction is expected to be completed in the first quarter of 2029.

Behind this move is the severe supply shortage of indium phosphide caused by the explosion of AI computing power. Market data shows that the current demand has reached more than twice the production capacity.

Nokia stated that this transaction will further enhance Nokia's internal compound semiconductor manufacturing capabilities by introducing a senior team with extensive industry experience. In addition, against the backdrop of the increasingly important development of the current artificial intelligence super cycle, this transaction also adds Nokia's indium phosphide semiconductor manufacturing capacity in the United States.

Indium phosphide (InP) is an important III-V compound semiconductor material with high electron mobility and excellent optical properties. It is the core basic material for AI data center optical interconnection and 5G/6G communication, responsible for bidirectional conversion of electrical and optical signals, and is the core component of high-speed optical transceivers. This factory was originally NXP's gallium nitride RF production base, which was put into operation in 2020. It is equipped with a 6-inch production line and produces 5G base station RF power amplifiers.

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