On Aug. 3, Onsemi provided a Q3 revenue forecast that exceeded Wall Street expectations, attributing the upside to robust demand for power-management chips deployed in AI data centers. The company also noted a transformational acquisition and continued execution of cost-reduction measures.
Management put third-quarter revenue in a $1.65 billion to $1.75 billion range - a midpoint that sits above the average analyst estimate of $1.67 billion, per LSEG data. The firm emphasized that AI data center demand is accelerating and highlighted the segment as its fastest-growing business.
CEO Hassane El-Khoury said the company now expects revenue from AI data center applications to more than double in 2026, framing that outcome as validation of Onsemi's intelligent power product set and rising customer adoption across its power portfolio.
For the second quarter, Onsemi reported revenue of $1.6 billion, essentially matching the consensus expectation of $1.59 billion. Adjusted earnings per share for the period were $0.74, ahead of the $0.71 estimate.
Looking ahead, the company guided third-quarter adjusted EPS to a $0.81 to $0.93 range. The midpoint of that guidance is slightly above the street's estimate of $0.83. Despite the upbeat outlook, shares of the company fell 1.5% in after-hours trading.
On the strategic front, Onsemi reiterated its intent to expand into AI devices and robotics markets through a previously announced $7 billion all-stock acquisition of Synaptics, announced in June. Management is positioning the deal as a means to capture growing demand in those end markets.
In parallel, the company is implementing its "Fab Right" program to reduce costs. As part of that effort, Onsemi sold two of its manufacturing facilities in July, a step the company says is aligned with its broader cost-cutting plan.
Taken together, the revenue guidance, EPS outlook, corporate acquisition, and manufacturing rationalization describe the company’s current operating stance: leaning into AI-driven demand while reshaping its manufacturing footprint to control expenses.
Market implications: The developments bear on semiconductor suppliers to data centers, AI hardware makers, and robotics and device OEMs that rely on power-management components. Investors and industry participants will watch revenue execution, EPS delivery, and how the Synaptics transaction and Fab Right moves affect capacity and cost structure going forward.