Onsemi, the chipmaker formerly known as ON Semiconductor, beat Wall Street forecasts in its third quarter as sales to AI data centres surged 175 percent from a year earlier — and used the moment to double down on the power systems those data centres need. The company reported revenue of $1.72 billion for the quarter ended October 2, up 11 percent year over year, with non-GAAP earnings of $0.90 per share against a consensus estimate of about $0.87 and $0.63 a year ago.
Chief executive Hassane El-Khoury pointed to accelerating demand from AI data centres and industrial customers, and the numbers backed him up: gross margin reached 41.4 percent on a GAAP basis, cash from operations rose 23 percent to $516 million, and free cash flow grew 31 percent to $489 million, or 28 percent of revenue. Shares rose in premarket trading after the November 2 announcement.
AI data centres are now the growth engine
AI data centre revenue hit $180 million in the quarter, up 39 percent from the previous quarter and 175 percent from a year earlier. Onsemi now expects about $620 million from the segment for full-year 2026, up 140 percent year over year, and anticipates it roughly doubling again in 2027. The company's headline claim — earnings growth outpacing revenue growth fourfold — rests largely on that mix shift toward higher-value power products.
The rest of the business was steadier. The Power Solutions Group, onsemi's largest unit, grew revenue 21 percent to about $890 million, while industrial revenue rose 9 percent to $467 million on energy infrastructure and factory automation demand. Automotive revenue was $777 million, roughly flat from a year earlier, as the company reallocated supply toward faster-growing segments.
Ferric deal targets the power bottleneck
Alongside the results, onsemi announced an agreement to acquire Ferric, a maker of integrated voltage regulator technology that delivers precisely controlled power to next-generation AI processors. The deal is worth $600 million in cash at closing plus up to $175 million tied to revenue milestones, and is expected to close by the end of 2026 using existing cash resources.
The strategic logic is straightforward: as AI processors pack more compute into each chip, the power delivery around them becomes a bottleneck, and owning the voltage regulation technology puts onsemi deeper inside the AI server itself. The acquisition prompted management to raise its 2030 AI data centre revenue target by $500 million, to more than $3 billion.
Synaptics goes all-cash at $5.7 billion
Onsemi also revised the terms of its planned Synaptics acquisition, switching from about $7 billion in stock to approximately $5.7 billion in cash — a change it says should make the deal immediately accretive to non-GAAP earnings per share. Management said paying down debt after the Synaptics close will be its top priority.
For the fourth quarter, onsemi guided revenue to between $1.715 billion and $1.815 billion, with non-GAAP earnings of $0.95 to $1.07 per share, the midpoint sitting above Wall Street forecasts. The message from Scottsdale is clear: the AI buildout is no longer just a story about processors and memory — the companies selling the power behind them intend to take their share too.
