ON Semiconductor Bets $600M on AI Power Tech, Raises 2030 Data Center Revenue Target 20%

ON Semiconductor Acquires Ferric to Strengthen AI Processor Power Delivery

ON Semiconductor agreed to acquire Ferric for $600 million in cash, plus up to $175 million in contingent consideration tied to revenue milestones1

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. Ferric develops integrated voltage regulator technology that combines controllers, power switches, capacitors and magnetic components in a thin package near graphics processing units1

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. The technology reduces power losses and addresses rising power demands in AI data centers1

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The deal strengthens ON Semiconductor's position in AI processor power delivery and expands its presence in core voltage regulation1

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. CEO Hassane El-Khoury stated that the rapid growth of AI is reshaping requirements for power delivery to increasingly capable and power-intensive processors2

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. Combined with ON Semiconductor's broad power portfolio, this strategic acquisition will strengthen leadership position while expanding content opportunity and ability to support customers as AI processor architectures continue to evolve2

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AI Data Center Revenue Target Jumps 20% to Over $3 Billion

Following the Ferric acquisition announcement, ON Semiconductor raised its 2030 AI data center revenue goal by $500 million, or 20%, to more than $3 billion1

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. The company expects multi-year accelerated growth in its integrated voltage regulator business thereafter2

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. Management anticipates AI data center revenue to reach approximately $620 million in 2026, up 140% from a year earlier, with revenue expected to double in 20271

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Third-quarter AI data center revenue jumped 175% year-over-year and 39% from the previous quarter to $180 million1

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. The company began volume shipments for several major platforms, including Google, supplying silicon carbide and silicon MOSFETs for power supply units and 54-to-12-volt power conversion applications1

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Third-Quarter Earnings Beat Wall Street Estimates

ON Semiconductor reported adjusted earnings of 90 cents per share, beating the 88-cent analyst estimate1

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. Revenue reached $1.72 billion, topping the $1.7 billion consensus estimate, representing 7% sequential growth and 11% year-over-year expansion3

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. Earnings grew four times faster than revenue year over year, driven by stronger demand, a better product mix and cost discipline1

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The company achieved its fifth consecutive quarter of non-GAAP gross margin expansion, with the metric improving 190 basis points sequentially to 41.2%3

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. Operating margin expanded 240 basis points quarter-over-quarter to 23.2%, while last twelve months free cash flow margin reached 25.4%, up 350 basis points year-over-year3

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Automotive Demand Softens While Industrial Sales Grow

Automotive revenue fell 1% both sequentially and year over year to $777 million1

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. Management characterized this decline as a supply allocation decision toward AI data center and industrial markets rather than a strategic retreat from automotive3

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. El-Khoury emphasized that automotive remains strategic as an end market and the weakness is short-term in nature and supply-driven, not strategically driven3

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Management expects automotive revenue to fall by a high-single-digit percentage in the fourth quarter before recovering in the first quarter as supply improves1

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. Industrial revenue climbed 10% sequentially and 9% year over year to $467 million, driven by energy infrastructure and factory automation1

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. Management expects low-double-digit industrial growth in the fourth quarter1

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Embedded Power Platform Addresses Power Density Challenges

ON Semiconductor introduced the Embedded Power Platform, characterized as a breakthrough architecture for the AI era3

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. The platform addresses the critical industry transition from solving power challenges to solving power density challenges as power requirements increase while physical space constraints tighten3

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. The technology delivers 3-5x higher power density than conventional power solutions by using the silicon wafer itself as the package, embedding heterogeneous dies to optimize electrical, mechanical and thermal performance simultaneously3

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The platform offers 30% higher system value, utilizes standard 12-inch manufacturing, and enables 4-month faster time to market with best-in-class inductance and superior thermal performance3

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. Subaru announced it will evaluate the Embedded Power Platform for future electric vehicles, providing early validation of the platform's automotive applicability3

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Synaptics Acquisition Terms Revised

ON Semiconductor announced revised terms for the planned Synaptics acquisition, reducing the purchase price from $7 billion to $5.7 billion—a $1.3 billion reduction designed to deliver immediate earnings per share accretion upon closing2

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. The deal aims to expand ON Semiconductor's capabilities in edge AI and intelligent sensing3

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. The revised agreement shifts from $7 billion in stock to roughly $5.7 billion in cash2

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