Onsemi Acquires Synaptics in $7 Billion All-Stock Deal

An employee works with a wafer in a production line of Dutch semiconductor company Nexperia, in Hamburg, Germany, on June 27, 2024. Fabian Bimmer/ReutersSemiconductor supplier company Onsemi announced June 25 that it acquired chipmaker Synaptics in a $7 billion all-stock deal—its largest acquisition to date.Synpactis shareholders will receive 1.35 shares of Onsemi common stock for every Synaptics share—a 19 percent premium to the 10-day volume-weighted average closing price of the two companies’ stocks.“The next phase of innovation will depend on systems that can sense, decide, act and adapt in real time,” said Hassane El-Khoury, president and CEO of Onsemi. “This shift towards Physical AI will require Power, Sense, Connected Compute and Control to work together seamlessly. The addition of Synaptics helps position Onsemi at the intersection of these four pillars.”Onsemi said San Jose-based Synaptics, which develops chips that power how people interact with electronic devices, will boost Onsemi’s processing capabilities as the company pushes toward growth in physical artificial intelligence (AI), referring to AI embedded in machines.The company plans to use Synaptics’ edge AI chips—chips that process data locally that are used in many physical AI applications—and wireless connectivity chips to expand into physical AI products that process and act on information.Onsemi currently focuses on power chips and sensing chips for AI data centers, and the automotive and industrial industries.“Together with Onsemi, we will combine Synaptics’ strengths in AI-native compute, connectivity, and human-machine interface with Onsemi’s leadership in intelligent power and sensing to offer customers integrated solutions and development platforms across every layer of the Edge AI stack,” said Rahul Patel, Synaptics’ president and CEO.Onsemi said this move has the potential to add $30 billion to its market opportunity by 2030, bringing Onsemi’s total revenue opportunity to $243 billion. It added that it expects the deal to increase its earnings per share within 18 months of its closing date, which is projected to be mid-2027.“[This enables] us to capture a significantly larger AI opportunity that extends beyond AI data center[s],” El-Khoury said.Onsemi was spun out of Motorola in 1999 and became public a year later. It has approximately 26,000 employees and recorded $6 billion in revenue last year, according to the company’s website.Shareholders reacted poorly to the acquisition, as Onsemi stock fell more than 23 percent on Friday, the day after it was announced. However, shares of Onsemi are still up over 63 percent since the beginning of the year.Synaptics stock also fell following the acquisition, closing nearly 4 percent lower on Friday; however, the company’s stock is still up over 81 percent in the past year.Reuters contributed to this article.