NXP will close its Chandler wafer fab and gradually exit the 5G RF sector.

Recently, Earl Lum, founder of market analysis firm EJL Wireless Research, revealed on LinkedIn that NXP will close its ECHO wafer fab in Chandler, Arizona, USA, by 2027. This marks NXP's exit from the 5G RF sector. NXP subsequently confirmed this news in a statement.

The ECHO fab officially commenced operations in September 2020 during the rapid expansion of 5G technology. Primarily manufacturing RF components for 5G networks, NXP described it as the “most advanced” facility of its kind. Previously, older fabs had produced power amplifier (PA) chips for global 4G networks. NXP's power amplifiers utilize silicon-based technology known as Lateral Diffusion Metal Oxide Semiconductor (LDMOS), widely adopted in early mobile communications. The ECHO fab, however, primarily manufactures gallium nitride (GaN)-based power amplifiers. NXP views GaN as the new “gold standard” for power density and efficiency. Unexpectedly, however, the ECHO fab is now slated for closure just five years later.

In a statement, NXP responded: “In recent years, global 5G base station deployments have fallen far short of initial projections due to slow 5G rollouts and low return on investment for mobile operators. Given the current market conditions and dim prospects for recovery, the RF business no longer aligns with the company's long-term strategic direction. NXP has therefore decided to gradually phase out its RF power product line.” "

NXP's assessment of the current 5G market is particularly pessimistic, yet it aligns with Omdia analysts' observations of consecutive annual declines in 5G product sales over two years. Annual revenue for 5G products reached $45 billion in 2022 but dropped by $5 billion the following year, with a further $5 billion decline projected for 2024. This prompted layoffs at Ericsson and Nokia, with the two companies collectively shedding over 25,000 jobs during this period—representing at least 13% of their previous total workforce reductions.

NXP anticipates the ECHO fab will produce its final GaN wafer in the first quarter of 2027. During the “transition period” preceding the facility's closure, NXP will continue manufacturing GaN products for customers. Meanwhile, the manufacturing facility in Chandler producing other semiconductor types will remain operational. NXP emphasized that “decisions regarding NXP's Rapid Photonics product line and the ECHO fab are unrelated to other operations at the Chandler facility.”

NXP has simultaneously informed employees of its plan to scale back operations at the Chandler ECHO GaN wafer fab. Financial reports indicate that NXP Semiconductors employed approximately 750 staff at the Chandler facility in 2024, though the number directly involved in power amplifier (PA) manufacturing is significantly lower.