ON Semiconductor Corp. (NASDAQ:ON) CEO Hassane El-Khoury expects rising compute requirements across AI data centers, automotive and industrial markets to drive semiconductor demand, while new technologies and the planned Synaptics Inc. (NASDAQ:SYNA) acquisition expand the company’s longer-term opportunity.
Compute Becomes Central To ON Semiconductor Strategy
El-Khoury told CNBC that ON Semiconductor currently sees a $213 billion total addressable market for its core business. That figure excludes the roughly $30 billion opportunity associated with its pending Synaptics acquisition.
Once the transaction closes, he expects the combined addressable market to exceed $243 billion.
“Compute is going to be at the center of everything we do here,” El-Khoury said.
He argued that combining Synaptics with ON Semiconductor would create complementary capabilities, saying the companies together could produce value where “1 + 1” becomes “more than 2.”
El-Khoury said integration planning is progressing well, although the companies must continue operating independently until the deal closes.
AI Data Center Demand Shows No Slowdown
El-Khoury pushed back against concerns that regulation or decisions by frontier AI companies could slow infrastructure spending.
“I don’t think a slowdown is anywhere on the horizon,” he said.
He pointed to committed data-center projects that provide visibility beyond the next couple of years, including ON Semiconductor’s view of its 2027 AI data-center revenue.
The company anchored its outlook to roughly 30% market growth and expects additional content growth as customers deploy more computing capacity.
El-Khoury said ON Semiconductor expects its AI data-center total addressable market to grow about 40%, while the business is growing more than 100% in 2026 and 2027.
He sees power semiconductors as a direct beneficiary because expanding compute infrastructure requires increasingly more power.
See More: Top Value Stocks
New Technologies Could Lift Margins
ON Semiconductor identified a 53% gross margin target, but El-Khoury characterized that level as a milestone rather than an endpoint.
He expects newly introduced technologies across automotive, AI data centers and industrial applications to represent a larger share of revenue over time and improve the company’s product mix.
El-Khoury said ON Semiconductor has already delivered step-function margin improvements as it ramps newer technologies and expects the company to reassess its margin opportunity once it reaches the 53% milestone.
ON Semiconductor Raises Long-Term Growth Outlook
ON Semiconductor is targeting about $11 billion in revenue by 2030, with a 12% to 14% compound annual growth rate, up from its previous 10% to 12% model.
Management expects AI data centers to drive much of that growth, with AI-related revenue potentially rising from about $500 million in 2026 to more than $2.5 billion by 2030, while automotive and industrial businesses are expected to grow about 9% and 10% annually, respectively.
Price Action
ON Price Action: ON Semiconductor shares were up 2.24% at $68.08 during premarket trading on Thursday, according to Benzinga Pro data.
Image via Shutterstock
Login to comment