onsemi to Buy Ferric for $600 Million, Lift AI Target

By Sophie Lindqvist

ON Semiconductor, branded onsemi, agreed to acquire Ferric for $600 million in cash. It will pay up to $175 million more if revenue milestones are met. The company also raised its 2030 AI data-center revenue target by $500 million, to more than $3 billion.

Closing is targeted for the end of 2026. Onsemi expects about 50 Ferric engineers to join. They work in New York and Silicon Valley.

The deal uses cash on hand. Onsemi held more than $4 billion entering the quarter. The upfront payment is material, but the cash balance limits funding risk. The earnout leaves some performance risk with the sellers.

What does Ferric add to onsemi’s power portfolio?

Ferric builds integrated voltage regulators (IVRs) that combine a controller, switches, inductors and capacitors in a thin package for placement closer to an AI processor than conventional discrete components. The package can sit near the die. The aim is more usable power at the compute die.

AI accelerators swing power hard and fast. Greater distance increases resistance and slows response to load changes. Onsemi says Ferric’s architecture can cut board area by roughly 50% to 70% against conventional discrete regulators. That figure is a company claim. Onsemi cites more than 40 patents and a decade of development behind it. The announcement gives no independent benchmark, customer volumes, package pricing, capacity plan or yield data.

Onsemi already supplies power silicon from the grid edge into the data center. Ferric extends that reach toward the processor. Management calls the combined path “grid to core.” The acquisition targets power choices that hyperscalers and server OEMs must make.

CEO Hassane El-Khoury argues that processors keep consuming more power. His position is straightforward. Conversion must move closer to the die. Design-in can make that position difficult to displace.

How much AI revenue is booked today?

Onsemi reported about $180 million in AI data-center revenue in the third quarter of 2026, a small part of company sales but the segment investors are watching. That is a reported result, not the 2030 target. The business remains small within onsemi.

Management said AI data-center revenue more than doubled year over year in the quarter. It expects revenue to double again in 2027. That second figure remains a forecast. Onsemi called the third quarter solid and guided the fourth quarter higher. The item gives no numerical revenue or margin guidance for the fourth quarter.

The $3 billion-plus objective ties directly to the Ferric transaction. It is a roadmap, not booked revenue or an order backlog. The announcement supplies no capacity forecast. Reaching the target requires Ferric to win sockets and the existing AI data-center business to keep compounding.

How much risk sits in the earnout?

The $175 million earnout pays only if Ferric product and license revenue clears an undisclosed threshold for four consecutive quarters by the end of 2029. Sellers can receive the full $775 million. Buyers avoid paying the entire contingent amount unless the test is met.

That structure limits downside. It does not remove integration risk. Ferric remains private. Investors have no long public revenue history for judging product demand or margin performance.

Can Ferric convert technology into design wins?

Package-level power can become difficult to replace after a customer designs it in. A failed socket leaves little visible commercial trace. No named accelerator-platform win accompanies the announcement. The commercial claim remains unproven.

Competition is active. Every large power and analog vendor wants a credible position beside the GPU. Onsemi cites its breadth from facility power to the core and the planned addition of about 50 engineers. The cash deal offers direct control rather than a loose partnership. Gross margin and long-term growth targets still need to survive the acquisition.

What must happen before the 2030 target?

Investors should test three items before closing. AI data-center revenue must keep compounding. Named designs must place Ferric IVRs beside major accelerator platforms. Margins and growth targets must survive inclusion of the deal.

Power semiconductor stocks remain tied to automotive and industrial cycles as much as AI. After the latest results, investors continued the “is this already in the price” debate. That question requires sustained revenue, not another roadmap milestone. Through 2029, named design wins, sustained AI revenue growth and stable margins will show whether the $600 million purchase can support onsemi’s $3 billion-plus 2030 target.