ON Semi has revealed its largest acquisition ever: an all-stock purchase of Synaptics. Shares fell 20% after the announcement.
The CEO, Hassane El-Khoury, defended the core business. He called the deal "complementary to everything we have done on a very strong foundation."
ON Semiconductor produces power management and sensor technologies used in cars. Synaptics provides edge AI and wireless connectivity solutions. The two do not overlap. "There is no overlap on the product, which is why this deal is very exciting from a [research and development] and a product perspective," El-Khoury said.
El-Khoury pointed to the company's data center business, saying it is "running smoothly and accelerating." He added, "The foundation that we have built is strong. We will continue to deliver on that. We have no hesitation about our core business - that remains strong."
Think of physical AI like a self-driving car or a warehouse robot - machines that sense the world and make decisions in real time. ON Semiconductor makes power and sensing components. Synaptics brings edge AI and wireless connectivity solutions, including its Astra platform that leverages AI chips and wireless tech to strengthen edge AI capabilities.
Edge AI means artificial intelligence processing occurs on the device itself rather than in the cloud. The purchase additionally unlocks fresh opportunities for ON Semi, notably an AI-focused compute platform, according to El-Khoury.
ON Semi said the deal grows its addressable market by an additional $30 billion, or $243 billion, by 2030. El-Khoury called the deal "the strategic value of it, complementary to everything we have done on a very strong foundation."
The acquisition also aligns with ON Semi's recent restructuring efforts. The company has been cutting costs and refocusing on higher-growth areas, and Synaptics' edge AI technology fits into that strategy by opening up opportunities in autonomous systems and industrial robotics, where real-time on-device processing is critical.
The sharp drop in share price reflects investor skepticism about large acquisitions, especially given ON Semiconductor's recent focus on restructuring and cost-cutting. However, El-Khoury emphasized that the deal is complementary to the existing strong foundation, and that the core automotive and industrial businesses remain solid. Synaptics, known for its touchscreen controllers and display drivers, has been pivoting toward edge AI and IoT connectivity, making it a strategic fit for ON Semi's push into physical AI applications.
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Watch for the deal to close in mid-2027. Then watch whether ON Semi hits that $200 million in annual synergies within 18 months.
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