On Semiconductor to Acquire Synaptics for $7B in Physical AI Push

On Semi Makes Biggest Bet Yet on Physical AI

On Semiconductor has struck a deal to acquire Synaptics for approximately $7 billion in an all-stock transaction, the Arizona-based chipmaker's largest acquisition as it positions itself in the physical artificial intelligence market.

The transaction values Synaptics shareholders at 1.350 shares of On Semiconductor common stock for each share they hold. On Semi expects the deal to close by mid-2027, pending regulatory approvals. One Synaptics board member will join On Semiconductor's board as part of the agreement, according to details first reported by CNBC.

Market reaction was split: On Semiconductor shares dropped roughly 6% in after-hours trading while Synaptics stock surged approximately 13%.

Strategic Rationale Behind the Deal

On Semiconductor CEO Hassane El-Khoury framed the acquisition as a move to capture growing demand for intelligent systems. The deal brings immediate connected compute capabilities and expands On Semi's software and ecosystem presence, he said.

The company projects the acquisition will expand its total addressable market by $30 billion, reaching $243 billion by 2030. The addition strengthens On Semi's intelligence systems portfolio beyond its core business in silicon carbide production and power and sensing solutions for automotive and electric vehicle applications.

Why it matters

This transaction reflects intensifying consolidation in the semiconductor industry as companies race to build comprehensive AI capabilities. Physical AI—systems that interact with and respond to the real world—requires tight integration between sensors, processors, and software. By combining On Semi's automotive and power expertise with Synaptics' connected compute technology, the merged entity aims to deliver complete intelligent system solutions rather than discrete components. The $7 billion price tag signals how seriously established chipmakers are taking the threat of being left behind in the AI transition.

Broader M&A Wave in AI Sector

The On Semiconductor-Synaptics combination joins a recent surge of AI-focused acquisitions. Earlier this week, Qualcomm acquired infrastructure startup Modular to enhance its software capabilities. Salesforce announced plans this month to purchase AI customer service platform Fin for approximately $3.6 billion.

These deals underscore how technology companies are prioritizing acquisition strategies to rapidly assemble AI capabilities rather than building them organically—a recognition that speed to market matters in the current competitive landscape.

CNBC first reported the transaction details.