ON Semi reported a strong Q2 with revenue, margins, and EPS beating guidance, driven by surging AI data center demand. Management is very optimistic about the second half, guiding to further margin expansion and raising its full-year outlook for AI data center revenue to more than double. The company is prioritizing AI shipments, leading to near-term constraints in automotive/industrial, but expects this to rebalance. Q2 revenue of $1.6 bn, GM of 39.3%, EPS of $0.74, all above guidance midpoint.
ON Semi reported a strong Q2 with revenue, margins, and EPS beating guidance, driven by surging AI data center demand. Management is very optimistic about the second half, guiding to further margin expansion and raising its full-year outlook for AI data center revenue to more than double. The company is prioritizing AI shipments, leading to near-term constraints in automotive/industrial, but expects this to rebalance. Q2 revenue of $1.6 bn, GM of 39.3%, EPS of $0.74, all above guidance midpoint.
Management highlighted that AI data center revenue is expected to more than double in 2026, driven by broader customer wins and expanding content across the power tree, including design wins with NVIDIA MGX, Great Wall, and AWS. They also noted the AI halo effect is boosting…
Reported gross margin was 38.43%, reinforcing the quarter's better-than-guided profitability.
AI data center revenue expected to more than double in 2026; EV SiC revenue in China expected to grow 60-70% y/y; ESS revenue expected to grow ~40% y/y.
Management expressed strong confidence in demand recovery, highlighted multiple growth drivers, and raised full-year expectations for AI data center revenue.
Management highlighted that AI data center revenue is expected to more than double in 2026, driven by broader customer wins and expanding content across the power tree, including design wins with NVIDIA MGX, Great Wall, and AWS. They also noted the AI halo effect is boosting energy infrastructure demand.
Book-to-bill ratio significantly above 1 and strengthening. Management expressed strong confidence in demand recovery, highlighted multiple growth drivers, and raised full-year expectations for AI data center revenue.
Capital expenditures are expected to be below 5% of revenue for the year, with Q3 capex guided to $40-50 million. Investments are primarily maintenance-focused, reflecting a disciplined approach while still supporting growth.
Management expressed strong confidence in demand recovery, highlighted multiple growth drivers, and raised full-year expectations for AI data center revenue.
“Yeah, I mean, obviously when we have some technology specifically in power where we have constraint, we did see some orders come in, what I would say within lead time, and we had to make priority calls.”
“Given the accelerated ramp in AI data center demand, we prioritize shipments to AI data center over automotive and industrial. We expect this to normalize as supply rebalances to match demand.”
“So lead time stretched out from about 27 weeks to somewhere around 32 weeks on average... And we've got, in some situations, some customers ordering out into 28, trying to lock up supply.”
“We are implementing a second round of price increases to offset these costs and expect to see the benefit over the next several quarters.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2026 Q3 | $0.81–$0.93 | $0.87 | GUIDED |
| Gross margin | FY2026 Q3 | 40%–42% | 41% | GUIDED |
| Revenue | FY2026 Q3 | $1.65B–$1.75B | $1.7B | GUIDED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2026 Q1 | EPS | FY2026 Q2 | $0.65–$0.77 | $0.74 | Met / beat |
| FY2026 Q1 | Gross margin | FY2026 Q2 | 38%–40% | 38.43% | Met / beat |
| FY2026 Q1 | Revenue | FY2026 Q2 | $1.535B–$1.635B | $1.6035B | Met / beat |
| FY2025 Q4 | EPS | FY2026 Q1 | $0.56–$0.66 | $0.64 | Met / beat |
| FY2025 Q4 | Gross margin | FY2026 Q1 | 37.5%–39.5% | 38.53% | Met / beat |
| FY2025 Q4 | Revenue | FY2026 Q1 | $1.44B–$1.54B | $1.5133B | Met / beat |
| FY2025 Q3 | EPS | FY2025 Q4 | $0.57–$0.67 | $0.64 | Met / beat |
| FY2025 Q3 | Gross margin | FY2025 Q4 | 37%–39% | 34.92% | Missed |
| FY2025 Q3 | Revenue | FY2025 Q4 | $1.48B–$1.58B | $1.5301B | Met / beat |
Xiaomi's EV program is ramping with higher semiconductor content, indicating continued investment and scale in its automotive business.
“supported by expanding content per vehicle with customers like Geely Zeker and Xiaomi.”
… and resilience requirements are expanding our industrial portfolio into higher value infrastructure markets with greater semiconductor content. Turning to automotive, we continue to expand our content per vehicle through a growing portfolio of differentiated power, sensing, and connectivity solutions. In China, our automotive revenue increased 13% in the first half of 26 over the same period last year against a total vehicle sales number that was down 4%, supported by expanding content per vehicle with customers like Geely Zeker and Xiaomi. With our market share gains in China EVs, we now expect silicon carbide revenue in that market to increase between 60% and 70% year over year as our market share gains continue and programs ramp across existing platforms and newer vehicle launches. In the U.S., we continue to gain share across EV disruptors with a recent example of our power content on Rivian's R2 platform where our MOSFETs support power distribution throughout the vehicle's zonal controller architecture while our silicon carbide solutions are deployed in the onboard charging system. These wins highlight our ability to participate across multiple vehicle domains as EV …
ON's design win on the Rivian R2 platform signals that Rivian is advancing its vehicle architecture with more sophisticated power electronics.
“we continue to gain share across EV disruptors with a recent example of our power content on Rivian's R2 platform”
… first half of 26 over the same period last year against a total vehicle sales number that was down 4%, supported by expanding content per vehicle with customers like Geely Zeker and Xiaomi. With our market share gains in China EVs, we now expect silicon carbide revenue in that market to increase between 60% and 70% year over year as our market share gains continue and programs ramp across existing platforms and newer vehicle launches. In the U.S., we continue to gain share across EV disruptors with a recent example of our power content on Rivian's R2 platform where our MOSFETs support power distribution throughout the vehicle's zonal controller architecture while our silicon carbide solutions are deployed in the onboard charging system. These wins highlight our ability to participate across multiple vehicle domains as EV architectures continue to evolve. The demands of next-generation vehicle architecture around efficiency, power density, and reliability increasingly mirror the challenges being addressed in AI infrastructure and energy systems, enabling OnSemi to leverage decades of power expertise across multiple growth markets. A growing share of our recent design wins are …
ON is deliberately prioritizing AI data center shipments over automotive and industrial in the near term, but expects supply to normalize as manufacturing output catches up. — This suggests AI power is becoming a scarce resource, potentially creating short-term bottlenecks for other sectors but solidifying ON's role in AI infrastructure.
“we continue to add content in U.S. hyperscalers AI deployments with design wins supporting AWS power supply and battery backup systems.”
… content across the entire power tree. We have expanded our role in the NVIDIA MGX ecosystem to supply advanced power systems designed to support the next generation of AI data centers, broadening the number of platforms where our intelligent power solutions are designed in. In addition, we secured two power supply platform wins with Great Wall, a leading provider of power solutions for China's cloud and AI infrastructure market. In parallel, we continue to add content in U.S. hyperscalers AI deployments with design wins supporting AWS power supply and battery backup systems. These wins create additional content opportunities for our differentiated high voltage power portfolio, including silicon carbide solutions and reflect the value of our higher power efficiency and superior power density in next generation AI power architectures. In 2026, we expect our silicon carbide revenue in AI data center applications to go nearly 60% year over year. We expect our high-voltage revenue to accelerate as power requirements continue to rise and system architectures evolve towards 800-volt DC distribution, driving greater adoption of our intelligent power solutions from high-voltage …
ON is deliberately prioritizing AI data center shipments over automotive and industrial in the near term, but expects supply to normalize as manufacturing output catches up. — This suggests AI power is becoming a scarce resource, potentially creating short-term bottlenecks for other sectors but solidifying ON's role in AI infrastructure.
… per share of 74%, all above the midpoint of our guidance. These results reflect the operating leverage in our model with recovering demand driving accelerated margin expansion and earnings growth. AI Data Center remains our fastest growing market. We now expect AI Data Center revenue to more than double in 2026, driven by stronger demand, further accelerated by broader customer wins and expanding content across the entire power tree. We have expanded our role in the NVIDIA MGX ecosystem to supply advanced power systems designed to support the next generation of AI data centers, broadening the number of platforms where our intelligent power solutions are designed in. In addition, we secured two power supply platform wins with Great Wall, a leading provider of power solutions for China's cloud and AI infrastructure market. In parallel, we continue to add content in U.S. hyperscalers AI deployments with design wins supporting AWS power supply and battery backup systems. These wins create additional content opportunities for our differentiated high voltage power portfolio, including silicon carbide solutions and reflect the value of our higher power efficiency and superior power …
Synaptics is being acquired by ON, which will be a major corporate event for SYNA shareholders, expecting to close mid-2027.
… we are seeing across our key growth drivers. We now expect AI data center revenue to more than double for the year. At the same time, the AI halo effect continues to create incremental growth opportunities across energy infrastructure, where we expect ESS revenue to grow by approximately 40% this year. In automotive, we continue to gain content and share, particularly in China, where automotive silicon carbide revenue is expected to grow between 60 and 70%. As I wrap up, I want to I want to highlight our announced agreement to acquire Synaptics. Beyond the compelling strategic and financial rationale, we are excited about the opportunities this combination creates for all shareholders. Synaptics' market-leading connected compute capabilities complement our strength in power, sensing, and control at accretive gross margins. Our combination would leverage our manufacturing scale Global Sales Channel, and MassMarket Engine to drive growth across our highly complementary portfolio. We expect the transaction to close in mid-2027, subject to customary approvals. Let me now turn the call over to Thad to provide more details on our results and guidance for the third quarter. Thanks, …