NXP Semiconductors’ decision to exit the radio power market and close its Chandler gallium nitride facility by 2027 raised questions about 5G, compound semiconductors and Arizona’s role in the global chip industry.
The Dutch semiconductor company said the decision reflects current conditions in the 5G infrastructure market. Network upgrades have slowed, particularly among mobile operators that invested heavily early in the rollout. Demand for radio frequency power components used in base stations has softened as a result.
And with no expectation of a market recovery, according to an NXP spokesperson, the company decided the radio power business no longer fit its long-term strategic direction and it would ramp down its RP product line.
The Chandler ECHO fab produces gallium nitride-based power amplifiers for 5G equipment. Gallium nitride has been used in telecom equipment for its ability to handle higher power loads. NXP brought the Chandler facility online in 2020 as part of a $100-million expansion focused on radio frequency power amplifiers for 5G. The company expects to produce its final gallium nitride wafers at the site by the end of the first quarter of 2027.
While the closure affects the workforce, analysts believe the broader impact on Arizona’s semiconductor sector will be limited. The ECHO fab produces 6-inch GaN wafers, which were advanced at launch but have since been surpassed by larger, more cost-effective wafer sizes.
“In 2020, six-inch gallium nitride was state of the art,” said semiconductor analyst Dean Freeman. “Today, 200-millimeter and even 300-millimeter GaN-on-silicon processes offer much better cost structures. This is less about the viability of GaN and more about where the economics now favor production.”
The pullback is not limited to smaller suppliers. Taiwan Semiconductor Manufacturing Co. has said it plans to wind down its gallium nitride foundry operations by 2027, pointing to margin pressure and increased competition. Fewer companies now focus on radio-frequency power devices, while gallium nitride continues to be used in defense, aerospace and other high-power applications.
For Arizona, the more immediate concern centers on talent. NXP has not disclosed how many employees will ultimately be affected, though the ECHO fab historically employed about 100 workers focused on gallium nitride fabrication. The company will continue operating its other Chandler fab, and decisions related to radio power manufacturing are independent of the rest of the site.
Semiconductor experts have commented that, although the shutdown will affect a specialized workforce, these engineers and technicians with compound semiconductor experience are in demand. The hope is that companies like Intel, TSMC and their suppliers may be able to absorb some of this workforce, helping retain talent and economic activity in Arizona.
NXP has not disclosed plans for the ECHO facility following the shutdown. Options include converting the fab to silicon production or selling it to manufacturers that continue to operate in the gallium nitride market, with cost and tooling requirements shaping any decision.
NXP’s move comes amid a series of changes across both telecommunications and semiconductor manufacturing. Facilities dedicated to specific technologies or earlier phases of network deployment sometimes see demand shift as new technologies emerge.
The decision sets a timeline for the end of production at the Chandler site and closes a chapter that began with the expansion of 5G manufacturing earlier in the decade. What follows will depend on how both the facility and its workforce are redeployed in an industry that continues to adjust.
