ON Semiconductor stock tanks 24% following Synaptics deal

ON Semiconductor CEO Hassane El-Khoury defended the company’s core business as shares tumbled 24 percent and had its worst day since March 2020 after announcing its biggest acquisition yet.

A maker of power and sensing components for the automotive industry announced Thursday that it plans to acquire the advanced artificial intelligence and wireless connectivity solutions company Synaptics in an all-stock deal to leverage physical AI.

The shift to physical AI will grow its addressable market by another $30 billion, or $243 billion, by 2030, On Semiconductor said in a statement.

“This is the strategic value that complements everything we do on a very strong foundation,” El-Khoury told CNBC’s “Squawk on the Street” on Friday.

He said the acquisition also opens up new markets for the company, including an AI-centric computing platform.

ON Semiconductor is investing in a world where physical systems, such as robots and autonomous vehicles, are capable of real-time sensing and decision-making.

ON Semiconductor said it will power the Edge AI capabilities of Synaptics’ Astra platform, which uses AI processors and wireless connectivity. Edge AI means running artificial intelligence natively on hardware.

“There is no overlap in product, so this deal is very exciting in a way. [research and development] and a product perspective,” El-Khoury said.

The executive also told CNBC that the company’s data center business is running smoothly and moving quickly.

“The foundation we have built is solid,” he said. “We will continue to deliver. We have no hesitation about our core business remaining strong.”

ON Semiconductor expects the deal to close in mid-2027 and generate $200 million in annual synergies within 18 months.