Onsemi Forecasts Strong Q3 Revenue on Surging AI Data Center Chip Demand

Chipmaker Onsemi (ON) on Monday forecast third-quarter revenue and profit above Wall Street estimates, signaling robust demand for its intelligent power management chips, particularly from the rapidly expanding AI data center market.

Upbeat Guidance and Q2 Results

Onsemi projected its revenue for the upcoming third quarter to be in the range of $1.65 billion to $1.75 billion. The midpoint of this forecast is above the average analyst estimate of $1.67 billion, according to LSEG data. The company also expects third-quarter adjusted earnings per share (EPS) between $0.81 and $0.93, with the midpoint also exceeding the consensus estimate of $0.83.

The positive outlook follows a solid second-quarter performance. Onsemi reported revenue of $1.6 billion, which was in line with expectations, and an adjusted EPS of $0.74, beating estimates of $0.71.

AI a Key Growth Driver

The company's guidance is heavily influenced by the boom in artificial intelligence infrastructure. "AI data center remains our fastest-growing business and we now expect revenue to more than double in 2026," CEO Hassane El-Khoury said in a statement. He attributed the growth to the strength of the company's intelligent power portfolio and its adoption across the data center power tree.

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These specialized chips are critical for managing the high energy consumption of servers running complex AI models, making them an essential component of the AI supply chain. Onsemi is also moving to bolster its position in this space through its pending $7 billion all-stock acquisition of Synaptics, announced in June, which aims to expand its reach into AI devices and robotics.

Strategy and Market Reaction

Alongside its growth initiatives, Onsemi is pursuing its "Fab Right" strategy to optimize manufacturing and reduce costs. As part of this plan, the company sold two of its manufacturing facilities in July.

Despite the strong forecast, shares of Onsemi were down 1.5% in after-hours trading following the announcement.