ON Semiconductor Targets 11 Billion Revenue by 2030

ON Semiconductor raised its long-term revenue targets, aiming for approximately 11 billion dollars by 2030. The company set a compound annual growth rate of 12% to 14% for the period, a significant step up from its previous 10% to 12% model. This revised outlook reflects management's confidence in expanding market share within artificial intelligence infrastructure and high-growth industrial sectors.

The stock responded positively to the announcement, climbing more than 2% in premarket trading on Thursday. According to data from GN stocks/chips, this gain coincided with a broader rally in technology futures, where Nasdaq contracts rose 1.11%. However, the specific catalyst for ON Semiconductor was the detailed breakdown of its new growth drivers, particularly in power management solutions for AI racks.

AI Data Centers Drive Revenue Expansion

Management identified AI data centers as the primary engine for the revised forecast. The company expects its AI-related revenue to double in 2026 and double again in 2027. By 2030, ON projects this segment could contribute over 2.5 billion dollars to total revenue, up from an estimated 500 million dollars in 2026. This growth is tied to the rising power complexity of AI infrastructure, where ON expects its semiconductor content per rack to surge from 15,000 dollars to over 115,000 dollars.

A key commercial win supports this trajectory, as ON secured a major Vcore socket contract. Revenue from this specific business line is slated to begin by the end of 2026. The company also launched its Embedded Power Platform, which integrates multiple power technologies into a single silicon architecture. This platform aims to deliver three to five times higher power density for AI and electric vehicle applications, with sampling scheduled for 2026.

Automotive And Industrial Segment Projections

Beyond AI, ON forecasts steady growth in its core traditional markets. Automotive revenue is expected to grow at an annual rate of approximately 9% through 2030, despite flat industry production forecasts. The company attributes this to opportunities in electrification, autonomous driving, and software-defined vehicles. Industrial revenue is projected to expand by about 10% annually, driven by increased automation and power management requirements.

The company also highlighted a potential 6 billion dollar addressable market in physical AI, excluding automotive applications, by 2030. ON estimates it can capture up to 900 dollars in content value per humanoid robot. This segment represents a new frontier for the chipmaker, leveraging its power management expertise in robotics and other emerging hardware platforms.

Margin Targets And Capital Investment

To support these growth ambitions, ON outlined specific financial targets for 2030, including a 53% gross margin and a 38% operating margin. Capital expenditures are expected to remain modest at approximately 5% of revenue. CFO Thad Trent noted that recent price increases are helping to offset higher input costs, supporting margin stability over the coming quarters.

The company has already invested 8.7 billion dollars over the past five years, allocating 3.6 billion dollars to research and development and 4.3 billion dollars to capital expenditures. These investments are designed to position ON Semiconductor to capture growth across AI, automotive, and industrial markets. The strategic focus remains on high-value power semiconductors rather than volume-based commodity chips.