ON Semiconductor CEO Hassan El-Khoury defended the company’s core business, with the stock suffering its worst day since March 2020 after the sensing solutions company announced its biggest acquisition in history.
The auto industry parts maker announced plans on Thursday to acquire an edge AI and wireless connectivity solutions company. synapse In all stock trading to leverage physical artificial intelligence.
ON Semiconductor said in a release that the pivot to physical AI will expand the addressable market by an additional $30 billion, or $243 billion, by 2030.
“This is the strategic value and it complements everything we’ve been doing on a very strong foundation,” El Khoury said Friday on CNBC’s “Squawk on the Street.”
The acquisition also opens up new markets for the company, such as AI-centric computing platforms, he said.
ON Semiconductor is betting on a world with physical systems, such as robots and self-driving cars, that can sense and make decisions in real time.
Synaptics’ Astra platform, which uses AI processors and wireless connectivity, powers edge AI capabilities, ON Semiconductor said. Edge AI refers to running AI locally on hardware.
“There is no duplication of products, so this deal is very exciting from a (research and development) and product perspective,” El Khoury said.
The executive told CNBC that the company’s data center business is operating well and accelerating.
“The foundation we have built is strong,” he said. “We continue to execute on that. We have no hesitation about our core business. It remains strong.”
ON Semiconductor expects the transaction to close in mid-2027 and generate annual synergies of $200 million within 18 months.
