Onsemi to buy Ferric for $600 million, shares fall 2.8% after hours

onsemi (ON) said on Nov. 2 it would buy Ferric, Inc., an innovator in integrated voltage regulator technology, for $600 million in cash, to strengthen its leadership in power delivery to AI processors.

Shares fell 2.8% in after-hours trading as of 5:24 p.m. ET, from a regular-session close of $70.12.

The deal also includes up to $175 million in additional cash, payable to Ferric's eligible securityholders if certain revenue milestones are achieved, as set out in the merger agreement.

Under the agreement, Semiconductor Components Industries, LLC, a wholly owned subsidiary of onsemi, will merge Forge Merger Sub, Inc. into Ferric. Ferric will survive as a wholly owned subsidiary of the subsidiary.

The purchase price is subject to customary adjustments for Ferric's cash, indebtedness, transaction costs and working capital.

The company said the transaction will be funded with cash on hand.

onsemi said the acquisition raises its 2030 AI data center revenue target by $500 million, to greater than $3 billion, with accelerated growth expected after that.

"The rapid growth of AI is reshaping the requirements for power delivery to increasingly capable and power-intensive processors," said Hassane El-Khoury, President and CEO of onsemi. "Combined with onsemi's broad power portfolio, this strategic acquisition will strengthen our leadership position while expanding our content opportunity and ability to support customers as AI processor architectures continue to evolve."

Ferric integrates the power controller, FETs, inductors and capacitors into a single compact package. The company said this reduces board area by 50-70% compared with conventional discrete voltage regulator solutions.

The press release said Ferric brings more than a decade of engineering expertise in integrated voltage regulation and advanced magnetics, backed by more than 40 patents.

"Ferric was founded to rethink how power is delivered at the point of compute," said Noah Sturcken, Founder and Chief Executive Officer of Ferric. "Joining onsemi gives us the scale, manufacturing capabilities and customer reach needed to accelerate adoption and bring these technologies into the mainstream."

Approximately 50 Ferric employees, primarily in New York and Silicon Valley, are expected to join onsemi.

The transaction is expected to close by the end of 2026, subject to customary closing conditions, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. onsemi currently expects the merger to close in the fourth quarter of 2026.

onsemi expects the acquisition to be accretive to its long-term revenue growth, gross margin and EPS targets at scale. It expects no meaningful near-term financial impact.

Barclays served as exclusive financial advisor to onsemi, and Morrison & Foerster LLP served as its legal counsel. UBS Investment Bank served as exclusive financial advisor to Ferric, and Cooley LLP served as its legal counsel.