🚨 Nokia is making a huge AI infrastructure bet.
$Nokia Oyj(NOK)$ has agreed to acquire NXP's semiconductor factory in Arizona, USA, and will convert it into an Indium Phosphide (InP) photonic chip production facility.
Production is expected to start in early 2027 (through a leased section of the factory), with the full acquisition expected to close in Q1 2029.
Why is this important?
• AI data centers are rapidly replacing copper cables with optical fiber, driving explosive demand for InP photonic chips.
• InP chips convert electrical signals into optical signals, making them a critical component for high-speed AI networking.
• Industry estimates suggest demand for optical transceivers is already more than double the current global InP supply.
Even Nvidia invested US$2 billion each into $COHERENT(COHR)$ and $Lumentum(LITE)$ earlier this year to secure InP chip supply. Lumentum's CEO warned that the InP shortage could become even worse than the memory chip shortage.
Because there are very few InP manufacturers worldwide and almost no foundries, Nokia is securing its own chip production instead of relying on suppliers.
$AXT Inc(AXTI)$ is expanding its InP wafer capacity through 2028 to meet growing AI optics demand, including co-packaged optics (CPO).
This also marks Nokia's transformation from a telecom equipment company into an AI data center infrastructure player.
📈 Q2 2026 highlights:
• Revenue: €4.815 billion
• Optical networking revenue: +20% YoY
• AI & cloud customer sales: +105% YoY
• Share price: +52.4% in 2026
Bottom line: The AI race is no longer just about GPUs. The next major bottleneck could be optical networking and InP photonic chips.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
