On Semiconductor strikes $7 billion deal for Synaptics in physical AI push

On Semiconductor has made a significant move in the realm of artificial intelligence by agreeing to acquire Synaptics in an all-stock transaction valued at nearly $7 billion. This strategic acquisition aims to enhance On Semiconductor's capabilities in physical AI technology and expand its market reach. The Arizona-based semiconductor giant anticipates that this deal will elevate its total addressable market to approximately $243 billion by 2030, marking a $30 billion increase. This acquisition stands as the largest in On Semiconductor’s history. Following the announcement, On Semiconductor's shares experienced a drop of about 6%, while Synaptics saw a rise of approximately 13%. CEO Hassane El-Khoury expressed confidence in the transaction, stating, "This acquisition will immediately enhance our connected compute capabilities and broaden our software ecosystem, allowing On Semiconductor to provide increased value as the demand for intelligent systems grows." This acquisition comes amid a flurry of activity in the tech sector, as companies vie to strengthen their AI capabilities. Recently, Qualcomm acquired infrastructure startup Modular to enhance its software offerings, and Salesforce announced its intention to purchase AI customer service platform Fin for around $3.6 billion. The deal between On Semiconductor and Synaptics is expected to finalize by mid-2027. Under the terms of the acquisition, Synaptics shareholders will receive 1.350 shares of On Semiconductor's common stock for each share they hold, and a representative from Synaptics will join On Semiconductor's board. On Semiconductor is recognized as a leading supplier of silicon carbide and is well-regarded for its power and sensing solutions, particularly in the automotive and electric vehicle sectors. For those interested, CEO Hassane El-Khoury is set to discuss the implications of this deal live on CNBC TV at 9:45 a.m. ET on Friday, available for viewing on CNBC+ or the CNBC Pro stream.