Dutch chipmaker NXP is exiting the 5G market with closure of its U.S. based fab.

As reported by Light Reading, the firm is closing its ECHO Fab in Chandler, Arizona, which manufactured power amplifiers (PAs) for 5G equipment based on gallium nitride (GaN) chips.

NXP puts its decision down to poor 5G uptake, telling Light Reading: "5G rollout declined in recent years due to a lack of return on investment for mobile operators and global 5G basestation deployments have been well below original estimates."

"Given the market realities with no outlook for recovery, the RP business no longer fits into the company's long-term strategic direction," NXP continued. "Therefore, NXP has made the decision to ramp down its Radio Power product line."

As reported by SDxCentral, telecom operators have bemoaned the return on their 5G investments. According to Dell’Oro Group, operators invested more than $2 trillion in capex between 2010 and 2023, a time span that included the full 4G lifecycle and nearly half-a-decade of 5G investments.

In addition to casting a question mark, the NXP pullback also slows down GaN chip development.

GaN is a wide-bandgap material capable of handling greater power levels than silicon, making GaN-based chips more efficient and durable than their silicon counterparts.

In collaboration with semiconductor manufacturer SweGaN, Ericsson has worked on developing 6G power amplifiers based on gallium nitride-on-silicon carbide (GaN-on-SiC), which can help mitigate overheating for power-intensive applications such as 5G/6G networks.

With NXP out of the picture, as well as fellow manufacturer Wolfspeed, the likes of Ericsson will have a smaller pool of PA manufacturers to draw from, which currently includes the likes of Qorvo, Macom, RFHIC Corporation, Ampleon, and arguable heavyweight Infineon Technologies.

Semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC) previously noted it will wind down gallium nitride production in 2027, amid increased competition in the market from Chinese manufacturer Innoscience and Germany’s Infineon.