ON Semi tanks 20% following Synaptics deal as CEO defends core business

ON Semiconductor's shares took a significant hit, dropping 20% following the announcement of its largest acquisition to date. CEO Hassane El-Khoury took to CNBC to reassure investors about the company's core business amid the turmoil. The semiconductor giant is set to acquire Synaptics, a leader in edge AI and wireless connectivity solutions, in an all-stock transaction. This strategic move is aimed at expanding ON Semiconductor's market potential, projecting a boost of $30 billion to its addressable market, which could reach a staggering $243 billion by 2030. El-Khoury emphasized the long-term benefits of the acquisition, stating, "That is the strategic value of it, complementary to everything we have done on a very strong foundation." The deal also promises to open new avenues for the company, particularly in AI-driven computing platforms. ON Semiconductor is banking on advancements in physical AI, which would enable systems to sense and make real-time decisions, thereby enhancing applications in robotics and autonomous vehicles. With Synaptics' Astra platform, renowned for its AI processors and wireless tech, ON Semiconductor aims to strengthen its Edge AI capabilities. El-Khoury noted that there is no product overlap, making the acquisition particularly appealing from a research and development perspective. Additionally, the CEO reassured that the company's data center operations are thriving and on an upward trajectory. "The foundation that we have built is strong," he stated confidently. The acquisition is anticipated to close by mid-2027, with expectations of generating $200 million in annual synergies within the first 18 months.