onsemi Targets $2.5B AI Data-Center Revenue, Sets Ambitious 2030 Margin Goals

Key Points

• AI data-center growth is a central focus: onsemi expects AI data-center revenue to exceed $500 million in 2026, potentially surpass $2.5 billion by 2030, as higher-voltage infrastructure increases its semiconductor content opportunity per rack.
• The company introduced its Embedded Power Platform and highlighted vertical gallium nitride and silicon carbide technologies to improve power density, efficiency and thermal performance across AI, automotive and industrial applications.
• onsemi set ambitious 2030 financial targets: 12%–14% annual revenue growth, nearly $11 billion in revenue, 53% gross margins, 38% operating margins and more than $3.5 billion in free cash flow, while planning to return 100% of free cash flow to shareholders after investments and acquisitions.

onsemi NASDAQ: ON outlined a strategy centered on power-density technologies for artificial intelligence data centers, electric vehicles, industrial systems and “Physical AI,” while setting long-term revenue, margin and free-cash-flow targets through 2030.

At the company’s analyst event, President and CEO Hassane El-Khoury said AI infrastructure is increasingly constrained not only by compute and memory, but by the ability to efficiently deliver and manage power. He said future systems will require power that is distributed, efficient and able to operate under sustained peak loads.

“More power is really not enough,” El-Khoury said. “We need better power.”

Embedded Power Platform and high-voltage technologies

The company introduced its Embedded Power Platform, or EPP, which it described as a platform rather than a single product. EPP uses a silicon wafer as an active package and embeds heterogeneous semiconductor products, including silicon carbide and gallium nitride components, into a wafer-level architecture. onsemi said the approach is intended to improve electrical, thermal and mechanical performance simultaneously while reducing system-development time.

El-Khoury said EPP is already being sampled for automotive, industrial and AI data-center applications using the company’s existing 12-inch manufacturing process. He said the platform can be used with onsemi’s high-voltage technologies and its Treo intelligence platform, which is designed to support modular power-control solutions across voltage levels and end markets.

The company also highlighted vertical gallium nitride, or vGaN, technology. El-Khoury said onsemi has developed, sampled and manufactured vertical GaN devices that have been placed on customer boards for automotive, industrial and AI data-center applications. He said production is supported by the company’s Syracuse facility and would not require a new greenfield fab investment.

Subaru said it is evaluating onsemi’s embedded power module technology for future vehicle platforms. A Subaru representative said the technology could offer higher power density, dual-sided cooling, improved electrical control and system-level cost reductions, though the automaker said it continues to evaluate how the technology may fit into its vehicle plans.

AI data-center opportunity

Achyut Shah, president of onsemi’s Power Solutions Group, said AI processors are moving from consuming hundreds of watts toward kilowatt-scale power requirements, while rack-level power needs are rising from tens of kilowatts toward megawatts. He said this transition will require a shift from traditional AC distribution architectures to high-voltage DC systems extending from the grid to computing equipment.

Shah said the initial transition toward higher-voltage rack designs and sidecar architectures is expected to begin ramping in the next 12 to 18 months. He said broader adoption of solid-state transformers could begin around late 2028 or early 2029.

According to Shah, onsemi estimates its semiconductor content opportunity could increase from about $15,000 per rack to more than $115,000 per rack as data-center infrastructure transitions to higher-voltage architectures. He said the company expects AI data-center revenue to exceed $500 million in 2026, more than double from the prior year, and to double again in 2027. The company’s long-term model assumes AI data-center revenue grows at least 10 percentage points faster than the underlying market through 2030.

Using a hypothetical 40% market compound annual growth rate, Shah said onsemi projects its AI data-center revenue could grow at least 50% annually from a $500 million base in 2026 to more than $2.5 billion in 2030.

The company cited several claimed product-performance benchmarks, including an 800-volt-to-6-volt or 12-volt conversion system using vGaN that it said offers 20% better efficiency and 20% lower size than competing solutions. It also described an EPP-based silicon carbide JFET solid-state circuit-breaker design that it said is 50% smaller and operates 20% cooler than the nearest competing product.

Shah also announced that onsemi won a “major” Vcore socket, with revenue expected to begin by the end of 2026.

Automotive and industrial growth plans

Sudhir Gopalswamy, group president for Intelligent Sensing and Analog and Mixed-Signal Group, said onsemi expects automotive revenue to grow about 9% annually from 2026 through 2030, despite the company’s assumption that global light-vehicle production, or SAAR, remains flat during that period.

The automotive strategy is built around electrification, autonomous-driving content and software-defined vehicles using zonal electrical architectures. Gopalswamy said the company plans to continue advancing silicon carbide performance, increase device-voltage capability toward 1,400 volts to support 1,000-volt batteries, and introduce intelligent current controllers for traction inverters.

He said onsemi is sampling an intelligent silicon carbide current-controller solution this month. The company expects the pairing of current sensing and control capabilities to provide a “one-generation” performance improvement while reducing certain system bill-of-materials costs.

For EPP-based traction inverters, Gopalswamy said the platform could double power while using half the area, resulting in four times the power density. He also projected that onsemi’s opportunity across electrification, advanced driver-assistance systems and zonal architectures could reach up to $2,000 of content per vehicle.

In industrial markets, the company is targeting 10% growth through 2030, supported by grid upgrades, energy infrastructure, industrial automation and the broader AI-driven demand for power systems. Gopalswamy said Physical AI applications, excluding automotive, represent a potential $6 billion addressable market for onsemi by 2030. He said humanoid robots could represent about $900 of potential company content per unit by that year.

Financial targets and capital allocation

CFO Thad Trent said onsemi has invested $8.7 billion over the past five years, including $3.6 billion in research and development, $800 million for five tuck-in acquisitions and $4.3 billion in capital expenditures. He said the investments were directed toward power platforms, sensing, silicon carbide, vertical GaN and manufacturing capacity.

Trent said the company expects its addressable market to expand by $81 billion, including $45 billion related to AI data centers, $20 billion in automotive and $16 billion in industrial markets.

• Company revenue growth target of 12% to 14% annually from 2026 through 2030.
• Revenue of just under $11 billion in 2030, based on 2026 Street consensus as the baseline.
• Gross-margin target of 53%.
• Operating-margin target of 38%.
• Capital intensity of about 5% of revenue.
• Free-cash-flow margin target of 30% to 35%, with free cash flow exceeding $3.5 billion in 2030.

Trent said the financial model excludes the proposed Synaptics transaction. He said onsemi expects Synaptics, if the deal closes, to grow at more than 15% over the long term, generate gross margins above 55% and produce more than $200 million in synergies over the first 18 months.

The company said it plans to continue investing in organic growth and acquisitions, maintain balance-sheet flexibility and return 100% of free cash flow to shareholders after those priorities. Trent said onsemi has $5.3 billion remaining under its existing share-repurchase authorization.

About onsemi (NASDAQ:ON)

onsemi is engaged in disruptive innovations and also a supplier of power and analog semiconductors. The firm offers vehicle electrification and safety, sustainable energy grids, industrial automation, and 5G and cloud infrastructure, with a focus on automotive and industrial end-markets. It operates through the following segments: Power Solutions Group, Advanced Solutions Group, and Intelligent Sensing Group. The Power Solutions Group segment offers discrete, module, and semiconductor products that perform multiple application functions, including power switching, power conversion, signal conditioning, circuit protection, signal amplification, and voltage reference functions.

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