A category appears, with a number attached
onsemi has sold power and sensing chips into data centers for years without separately disclosing the revenue generated by AI data center demand. That changed this quarter. The company began reporting AI data center revenue as a separate category, with its first disclosed figure reaching $180 million in the third quarter, up 39% sequentially and 175% year over year.
Total revenue was $1,722 million, up 11% year over year and 7% sequentially. Non-GAAP earnings per share of $0.90 grew faster than revenue, while gross margin expanded for a fifth consecutive quarter. Free cash flow was $489 million.
Management's forward claims are the aggressive part. AI data center revenue should reach about $620 million in 2026, up 140%, and double again in 2027 off that higher base. On the call, the chief executive pointed to volume shipments that began in the quarter, including silicon carbide and silicon MOSFETs into Google platforms, and to a power portfolio that runs from the power supply unit down to the low-voltage stages beside the processor. That last stretch, the final conversion next to the chip, is where the day's deal comes in.
The $500 million raise has a price tag
Alongside the results, onsemi announced it will acquire Ferric for $600 million in cash, plus up to $175 million more if revenue milestones are met. Ferric makes integrated voltage regulators designed to sit close to the processor, shortening the power-delivery path: the complete power regulator, including controller, power switches, capacitors and magnetics, in one thin package, placed close to the GPU to cut losses. onsemi says the acquisition will strengthen its position in power delivery for next-generation AI processors, and it raised the 2030 AI data center revenue target by $500 million, to greater than $3 billion, on the strength of it.
Read that sequence carefully, because the earnings call clarified it. Wells Fargo analyst Joe Quatrochi asked whether the $500 million increase was all from the acquisition, or whether the base business had also been raised. The chief executive's complete answer was: "This is tied to the acquisition."
The organic business is genuinely strong: $180 million in a quarter, growing 39% sequentially, with management expecting it to double again in 2027. The additional $500 million in the 2030 target, however, is tied to Ferric, according to the CEO. onsemi has not disclosed how much revenue Ferric itself is expected to contribute by 2030. The CFO described the acquisition as having no meaningful near-term financial impact, while expecting it to contribute to growth and margin targets over time.
The $500 million increase is part of a 2030 revenue target, not a forecast of Ferric's standalone contribution. The companies have not disclosed a separate Ferric revenue target, leaving investors without a clear breakdown of how much of the expected growth comes from the acquired business.
What the AI growth is being fed from
onsemi is supply-limited in parts of its line, and it said plainly where the supply went. Capacity was reallocated toward AI data center and industrial orders, and away from automotive inventory replenishment. Automotive revenue fell 1% to $777 million, and the company guided it down a further high single-digit percentage in the fourth quarter, with shipments for replenishment resuming in the first quarter as supply comes online.
The reallocation shows where management is prioritizing available capacity. But it also creates a test: if automotive customers return in the first quarter to find capacity still committed elsewhere, a temporary supply adjustment could become a longer-term allocation decision.
The rest of the balance sheet is being committed at the same time. onsemi is also managing the financing implications of its separate planned Synaptics acquisition. On November 2, the proposed transaction terms were revised from approximately $7 billion in stock to approximately $5.7 billion in cash. Management named debt reduction as its top priority following that transaction's closing. These commitments matter because the Ferric purchase adds another $600 million cash outlay, plus potential earn-outs. Buybacks were limited to $20 million in the quarter because of trading restrictions around the Synaptics deal. Fourth-quarter guidance, $1.715 billion to $1.815 billion of revenue, has a low end below the quarter just reported. None of that contradicts the AI story. It does mean the AI story is now carrying a $600 million acquisition, a $5.7 billion one behind it, and a target for 2030 that the company has already told you how it bought.
Sources
- [1] onsemi, "onsemi Reports Third Quarter 2026 Results," company release, November 2, 2026 (read first-hand, including the financial tables as furnished in the company's Form 8-K, Exhibit 99.1 — Q3 revenue of $1,722 million, GAAP diluted EPS of $0.79 and non-GAAP diluted EPS of $0.90, GAAP gross margin of 41.4% and non-GAAP gross margin of 41.2%, cash from operations of $516 million and free cash flow of $489 million; the CEO's statement that AI data center revenue grew 39% sequentially and 175% year over year; the fourth-quarter 2026 outlook of $1,715 million to $1,815 million in revenue and $0.95 to $1.07 in non-GAAP diluted EPS; the Ferric agreement described as raising the AI data center 2030 revenue target by $500 million to greater than $3 billion; revised terms for the planned Synaptics acquisition of approximately $5.7 billion in cash compared to $7 billion in stock for the prior agreement)Read source
- [2] onsemi, "onsemi to Acquire Ferric, Establishing Leadership in Power Delivery for Next-Generation AI Processors," company release, November 2, 2026 (read first-hand as furnished in the company's Form 8-K, Exhibit 99.1 — $600 million in cash at closing plus up to $175 million in contingent consideration upon achievement of certain revenue milestones; expected to close by the end of 2026 and funded with cash on hand; Ferric's technology "integrates the power controller, FETs, inductors and capacitors into a single compact package"; the acquisition raises the 2030 AI data center revenue target by $500 million to greater than $3 billion; expected to be accretive to long-term revenue growth, gross margin and EPS targets at scale, with "no meaningful near-term financial impact")Read source
- [3] ON Semiconductor Q3 2026 earnings call transcript, Motley Fool, November 2, 2026 (read first-hand — AI data center revenue of $180 million; about $620 million expected in 2026 and a doubling expected in 2027; the CFO's statement that the company is separately reporting AI data center revenue as a fourth end-market category beginning this quarter; revenue above the midpoint of the guidance range issued with the Q2 release ($1,650 million to $1,750 million); Ferric terms of $600 million in cash plus up to $175 million in earn-outs, expected Q4 close, with the CFO describing Ferric as accretive to growth and margin targets, with EPS accretion at scale and no meaningful near-term financial impact; the Q&A exchange in which CEO Hassane El-Khoury answered "This is tied to the acquisition." when Wells Fargo's Joe Quatrochi asked whether the $500 million target increase was all from the acquisition; automotive revenue of $777 million, its Q4 guide and expected Q1 normalization; volume shipments into Google platforms; $20 million of Q3 buybacks limited by trading restrictions around Synaptics; delevering named the top priority after the Synaptics closing)Read source