ON Semiconductor (ON) has agreed to acquire smart device semiconductor company Synaptics (SYNA) in an all-stock transaction that values the latter at approximately $6.2 billion. According to the announcement, each share of Synaptics common stock held by its shareholders will be exchanged for 1.35 shares of ON Semiconductor common stock, representing a premium of approximately 19% based on the average trading prices of both companies over the past 10 trading days. Including debt, the total enterprise value of the transaction is approximately $7 billion, and the deal is expected to close by mid-2027, subject to regulatory approvals.
This acquisition marks a critical step in ON Semiconductor’s strategic transformation. A year ago, the company abandoned a $6.9 billion bid to acquire Allegro MicroSystems, citing “no viable path forward.” With the new target, ON Semiconductor has made it clear that it is seeking to expand its business beyond power and sensing into intelligent systems. Chief Executive Officer Hassane El-Khoury noted that as artificial intelligence moves out of the cloud and into the physical world—including automotive and industrial applications—the next phase of innovation will depend on systems capable of sensing, decision-making, and adapting in real time, and the complementary nature of the two companies’ product portfolios is what makes this transaction exciting.
Following the announcement, ON Semiconductor shares fell 8.2% in after-hours trading, while Synaptics shares rose 12%. Both companies have reaffirmed their respective financial outlooks. ON Semiconductor expects the acquisition to be accretive to earnings within 18 months of closing and has acknowledged that layoffs may occur, with the majority of reductions taking place in operating expense areas. El-Khoury emphasized that the company will focus on retaining its research and development teams to concentrate on new product development.
Currently, AI-related spending continues to exceed expectations, and investment plans from hyperscalers indicate that this trend will persist for years. However, the nature of spending is shifting, with inference spending expected to surpass data center infrastructure spending within a few years. Inference operations are highly power-intensive, require thermal management, and are scaling rapidly, all of which bode well for power semiconductor companies over the long term. ON Semiconductor stands among the beneficiaries.
ON Semiconductor has traditionally been known for its power and sensing chips in the electric vehicle and industrial markets. These end markets have now reached an inflection point, and the company is back on a growth trajectory. At the same time, its data center business has grown rapidly, posting 30% growth in the first quarter and contributing approximately $250 million to the company’s $6 billion in sales for 2025. El-Khoury now expects the data center business to double year-over-year in 2026, reaching approximately $500 million in revenue, compared with Wall Street’s consensus revenue forecast of $6.47 billion for that year. As long-term inference demand continues to unfold, the market may not yet fully appreciate the growth potential of this business segment.
