ON Semiconductor Targets Physical AI with $7 Billion Synaptics Buyout

Under the terms of the agreement, ON Semiconductor will issue 1.35 shares for each Synaptics share, representing a 19% premium based on the volume-weighted average price of the two stocks over the trailing 10 trading sessions. Investors reacted sharply to the announcement, sending ON Semiconductor shares down 7.3% to $110.12 in after-hours trading.

Chief Executive Hassane El-Khoury framed the acquisition as a necessity for the company’s evolution into "Physical AI," an environment where power, sensing, and compute must function in unison. By absorbing Synaptics, the company aims to extend its reach into edge computing, moving beyond the centralized processing currently dominating the industry. The deal is slated to close by mid-2025, with one Synaptics board member joining the ON Semiconductor board upon completion.

Financial projections suggest the integration will generate $200 million in annual synergies and boost gross margins. The company anticipates the move will become accretive to adjusted earnings per share within 18 months of the transaction’s close.