onsemi Q3 2026 slides: AI data center surges as auto softens

Onsemi reported its Q3 2026 results on November 2, surpassing analyst expectations with $1.72 billion in revenue and $0.90 non-GAAP earnings per share. The semiconductor manufacturer emphasized a strategic shift towards high-growth AI data center markets, with AI data center revenue surging 175% year-over-year to $180 million. Automotive revenue, however, declined 1% sequentially to $777 million.

Despite the near-term challenges in the automotive sector, management attributed the decline to a deliberate supply reallocation towards higher-demand AI data center markets.

The company's improved financial performance was evident in multiple metrics. Revenue grew 7% sequentially and 11% year-over-year, while non-GAAP gross margin expanded 190 basis points sequentially to 41.2%. Operating margin increased a dramatic 240 basis points quarter-over-quarter to 23.2%. Operating cash flow margin reached 25.4%, up 350 basis points year-over-year, highlighting onsemi's improving capital efficiency.

AI data center and industrial segments showed strength, while automotive faced near-term pressure. The company's commitment to the automotive sector remained strong, despite the short-term supply constraints. CEO Hassane El-Khoury reassured investors that automotive remained a strategic end market, with the weakness being supply-driven rather than strategically driven.

Onsemi announced three major strategic milestones: the revision of the Synaptics acquisition from $7 billion to $5.7 billion, the introduction of the Embedded Power Platform (EPP) designed for the AI era, and Subaru's evaluation of the EPP for future electric vehicles. The EPP technology represents a breakthrough architecture for power system design, delivering 3-5x higher power density by embedding heterogeneous dies on the silicon wafer.

The platform offers faster time to market and superior thermal performance. Onsemi's Vertical GaN technology, with 180+ patents and manufacturing capacity, enables higher current density, higher voltage handling, and faster switching for AI data centers, renewable energy, electric vehicles, and aerospace/defense applications.