The onsemi story

What drives the business

• Automotive and industrial applications accounted for 51% and 28% of onsemi’s revenue in 2025, anchoring a business built around vehicle electrification, safety, energy efficiency and factory automation.
• Power Solutions, Analog and Mixed-Signal, and Intelligent Sensing contributed 47%, 38% and 15% of revenue in 2025, respectively, spanning power conversion chips, power management and connectivity products, and imaging sensors.
• The expansion into AI power includes the $118.8 million acquisition of Qorvo’s silicon carbide transistor technology business and rights to Aura Semiconductor’s Vcore power technologies for consideration of up to $144 million, both completed in 2025.
• The Synaptics agreement announced in June 2026 represents approximately $7 billion in enterprise value in an all-stock transaction, with a fixed exchange ratio of 1.350 onsemi shares for each Synaptics share.
• In the quarter to July 2026, onsemi reported AI power platform wins with Great Wall in China, an expanded role in NVIDIA’s MGX ecosystem and power solutions for Rivian’s R2 platform, alongside the launch of its GaNEXUS gallium nitride portfolio.

What the price assumes

At $75.65, the reverse DCF implies free cash flow after stock pay growing 7.3% a year for ten years, using a 10.2% discount rate.

That compares with delivered growth of 17.7% a year over the last 10 years and the TenQ check’s 10.8% bar, which slows that record halfway toward 4%.

The implied growth clears that check, although the 5.1% free cash flow yield is below its historical 5.7% comparison and the 49.4x earnings multiple fails the earnings valuation check against onsemi’s own history.

Value ON on your own assumptions

What could change the story

• The quarterly recovery has not erased the longer contraction, with annual revenue growth of -10.4% over the last three years and both sustained revenue and profit growth failing TenQ’s sector comparisons.
• Manufacturing realignment remains consequential, following $496.0 million in equipment impairment charges and $268.2 million in excess and obsolete inventory charges in 2025.
• Return on capital employed of 5.9% falls short of TenQ’s 10.0% bar, leaving improved capital productivity an unfinished part of the operating recovery.
• The Synaptics transaction would issue shares and expand onsemi into additional technologies, making completion and delivery of the expected gross margin benefit important to the acquisition case.
• Shareholder returns exceeded free cash flow over the first half of 2026, while total debt was $4.5 billion against $3.9 billion in cash and short-term investments, despite onsemi passing all financial health checks.

What to watch next

• For the third quarter of 2026, onsemi expects revenue between $1,650 million and $1,750 million, GAAP gross margin of 39.9% to 41.9%, and GAAP diluted earnings per share of $0.79 to $0.91.
• AI data center revenue will test management’s expectation that the business more than doubles in 2026, while subsequent customer wins and product revenue will show how broadly adoption is spreading.
• Further Synaptics disclosures will clarify progress toward completion and the expected margin benefit, while operating cash flow, capital spending and repurchases will show whether stronger cash generation continues to cover shareholder returns.

Sources

• onsemi's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The ON stock report, for every figure and check