onsemi Q2 2026: revenue up 9% as AI data centre business doubles
onsemi (Nasdaq: ON) reported second-quarter 2026 revenue of $1.60 billion, a 9% increase year-on-year, with free cash flow of $425 million, four times the figure recorded in the same period a year earlier. Non-GAAP diluted earnings per share came in at $0.74, up from $0.53 in Q2 2025, while non-GAAP gross margin expanded to 39.3% from 37.6%.
The strongest segment performance came from the Power Solutions Group (PSG), which grew 19% year-on-year to $829 million, driven by demand for the company's silicon carbide and high-voltage power devices. The Analogue and Mixed Signal Group (AMG) was broadly flat at $546 million, slipping 2% year-on-year, while the Intelligent Sensing Group (ISG) grew 7% to $229 million.
AI data centre the standout growth driver
Chief executive Hassane El-Khoury said the AI data centre segment is now onsemi's fastest-growing business, with full-year 2026 revenue expected to more than double compared with 2025. The company cited expanding adoption of its EliteSiC silicon carbide devices and silicon MOSFETs, and confirmed a new platform win with Great Wall, described in the release as a leading Chinese cloud infrastructure power supplier. onsemi also said it has expanded its role within NVIDIA's MGX ecosystem as power demands across AI infrastructure continue to rise.
During the quarter, the company launched GaNEXUS, a gallium nitride power portfolio spanning 40V to 650V, targeting AI data centres, robotics and industrial infrastructure. Gallium nitride devices are increasingly favoured in high-density power conversion applications because of their switching speed and thermal efficiency compared with conventional silicon.
The company also announced a planned acquisition of Synaptics, a connected-compute chip specialist, saying the deal would expand its capabilities at margins accretive to the group and complement its existing power and sensing portfolio. No financial terms were disclosed in the earnings release.
On the automotive side, onsemi extended its position in zonal architecture with a supply arrangement for Rivian's R2 platform.
Market context and competitive landscape
onsemi sits within the power semiconductor segment alongside Infineon Technologies, STMicroelectronics and Wolfspeed, all of which are competing to supply the growing power conversion and management stack inside AI data centre racks. The AI infrastructure build-out has created unusually strong demand for high-efficiency power devices: rack power densities are rising sharply as GPU clusters scale, making silicon carbide and gallium nitride conversion stages increasingly critical to overall system efficiency.
The company's CFO Thad Trent noted that earnings per share grew four times faster than revenue over the year, with free cash flow margin expanding from approximately 7% to 27%, reflecting what management described as operating leverage in the business model. onsemi returned approximately 105% of year-to-date free cash flow to shareholders through buybacks, repurchasing $332 million of stock in Q2 alone.
For the third quarter of 2026, the company guided revenue of $1.65 billion to $1.75 billion, with non-GAAP gross margin of 40% to 42% and non-GAAP diluted EPS of $0.81 to $0.93. The guidance implies continued sequential revenue growth and further gross margin expansion.
The Chinese data centre win with Great Wall is worth monitoring from a geopolitical standpoint. US export controls on advanced semiconductors destined for China have tightened over successive rounds of BIS rulemaking; power management ICs and discrete power devices are currently outside the most restrictive controls, but the regulatory perimeter has broadened repeatedly since 2022, and any further expansion could affect onsemi's ability to serve this customer base.