On Semiconductor expands margins and announces $7 billion Synaptics acquisition
The company reported second-quarter revenue of $1,604 million, a 9% increase from the prior year.
On Semiconductor (ON) reported second-quarter revenue of $1,604 million. The result reflects a 9% increase from the $1,469 million recorded in the second quarter of 2024 and a 6% sequential rise from $1,513 million in the first quarter of 2025.
The semiconductor maker showed a recovery in profitability across its margins. Non-GAAP operating margin expanded to 20.8%, up from 19.1% in the first quarter and 17.3% in the second quarter of 2024. GAAP operating margin returned to 16.1% after a loss of 3.5% in the previous quarter.
Growth was driven primarily by the Power Solutions Group (PSG) segment, which saw revenue grow 19% year-over-year and 13% sequentially to $829 million. Other segments showed mixed results; the Intelligent Sensing Group (ISG) revenue increased 7% year-over-year to $229 million despite a 3% sequential decline. The Automotive and Industrial Solutions Group (AMG) revenue fell 2% year-over-year to $546 million, though it rose 1% from the first quarter.
Cash generation improved significantly during the period. Free cash flow quadrupled year-over-year to $425.4 million. The company's free cash flow margin expanded to 27% from approximately 7% in the second quarter of 2024.
On Semiconductor expects revenue to grow further in the third quarter, projecting a range between $1,650 million and $1,750 million. The company forecasts non-GAAP gross margins between 40.0% and 42.0%, an increase from the 39.3% achieved in the second quarter.
AI data center revenue is expected to more than double in 2025. This follows a trend where that specific revenue stream grew more than 30% sequentially in the first quarter of 2025.
The company announced it will acquire Synaptics in an all-stock transaction with an enterprise value of approximately $7 billion. The acquisition is intended to expand its presence in "Physical AI".