ON semiconductor to buy Synaptics in $7 billion deal, joins "Edge AI" market

Semiconductor technology firm, Onsemi, will acquire chipmaker Synaptics in an all-stock transaction valued at about $7 billion, both companies announced on Wednesday. This combination of power semiconductors with edge computing will position the merger at the center of what both companies have referred to as “Physical AI.”

Under the agreement, Synaptics shareholders will receive 1.350 onsemi shares for each share they hold, a ratio representing an almost 19% premium average closing prices weighted against volume for both stocks in the last 10 trading days, according to the merger’s joint press release. Synaptics investors would end up owning approximately 12% of the combined company on a fully diluted basis.

Edge AI and what it means to Onsemi

Onsemi has built its business around power management and sensor chips for multiple customers including automobiles and data centers. Synaptics occupies a different semiconductor sector, ranging from edge AI processors to wireless connectivity (Wi-Fi, Bluetooth, GPS) and human-machine interface technology.

Onsemi CEO Hassane El-Khoury has framed the deal as centering on the idea that AI applications are migrating out of cloud data centers and into cars, factories, and consumer devices. These real-world AI systems need chips that the requirements of a single integrated platform.

In the Onsemi announcement, El-Khoury stated that the shift towards Physical AI will require “Power, Sense, Connected Compute and Control to work together seamlessly.” He added that the acquisition would give Onsemi “immediate connected compute capabilities” and further expand its reach in computing ecosystems.

Synaptics CEO Rahul Patel stated that the merger was a way to pair his company’s Astra AI compute platform with Onsemi’s semiconductor capacities, offering customers “integrated solutions and development platforms across every layer of the Edge AI stack.”

Timeline and financial details

Onsemi expects the merger deal to add an estimated $30 billion to the company’s total addressable market, pushing this market’s value to $243 billion by year 2030.

The deal is expected to be closed by mid-2027, pending Synaptics shareholder approval and regulatory clearance. One of Synaptics’ directors is also expected to join Onsemi’s board after the deal closes.

Morgan Stanley and J.P. Morgan Securities advised Onsemi on the transaction, with Skadden Arps as the firm’s legal counsel. Qatalyst Partners served as Synaptics’ financial advisor, and Baker McKenzie provided legal advice, according to the press release.

The smartest crypto minds already read our newsletter. Want in? Join them.