onsemi's Q2 2026 revenue rose 9.2% to $1.60B and GAAP EPS climbed to $0.56 from $0.41; the AI-data-center-bearing 'Other' market grew 21% while automotive slipped 2% sequentially.
Revenue
$1.6B
+9.2% YoY
Net income
$227M
+33.2% YoY
Diluted EPS
$0.56
+36.6% YoY
Operating margin
16.1%
Headline: revenue up 9%, profit up a third, and the growth came from AI data centers rather than cars
onsemi (ON Semiconductor) reported second-quarter 2026 revenue of $1,603.5 million, up 9.2% from $1,468.7 million a year earlier. GAAP diluted earnings per share rose to $0.56 from $0.41 (+36.6%). The 10-Q gives one cause for the revenue gain, "increased demand across all end-markets." The end-market split is less even than that sentence suggests. Automotive, which is still almost half of revenue, grew 6.6%. The "Other" bucket, which includes AI data center power products, grew 21.3%. Compared with the first quarter, every dollar of growth came from "Other."
Earnings per share grew about four times faster than revenue. Gross margin rose 0.8 points, operating expenses stayed flat in dollars while revenue climbed, and the share count kept shrinking because of buybacks.
This is the fiscal quarter ended July 3, 2026, reported in the 10-Q filed August 3, 2026.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$1,603.5M
$1,468.7M
+9.2%
Gross margin (GAAP)
38.4%
37.6%
+0.8 pts
Gross margin (non-GAAP)
39.3%
37.6%
+1.7 pts
Operating margin (GAAP)
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GAAP figures follow standard accounting rules. The company's "non-GAAP" figures leave out restructuring charges, amortization of acquired intangibles, deal costs and similar items; this quarter they added $75.5 million back to operating income. End-market revenue comes from the notes to the financial statements. Year-over-year percentages and the free-cash-flow change are our calculations from the filing's figures.
Where the growth came from: end markets
onsemi sells power chips (which convert and switch electricity efficiently) and image sensors, mostly into cars and factories. The end-market split shows which of those customers drove the quarter:
End market
Q2 2026
Q1 2026
Q2 2025
QoQ
YoY
Automotive
$781.3M
$797.3M
$733.2M
-2.0%
+6.6%
Industrial
$422.7M
$417.0M
$406.2M
+1.4%
+4.1%
Other (computing incl. AI data center, consumer, networking, comms)
$399.5M
$299.0M
$329.3M
+33.6%
+21.3%
Total
$1,603.5M
$1,513.3M
$1,468.7M
+6.0%
+9.2%
The 10-Q discloses Q2 and six-month figures by end market. We derived the Q1 2026 column by subtracting Q2 from the six-month totals.
Revenue rose $90.2 million from Q1 to Q2. "Other" rose $100.5 million over the same period, industrial added $5.7 million, and automotive fell $16.0 million. So the sequential growth came from the data center side of the business, and the car business actually shrank a little from Q1.
Automotive was up 6.6% from a year ago but down 2.0% from Q1. Over the past two years car-chip makers went through an inventory correction: automakers and their suppliers had over-ordered, then bought less while they worked through the chips they already held. The filing says nothing specific about auto inventory in Q2. The numbers show year-over-year recovery from a weak 2025 base, with no sign yet of a sharp sequential rebound.
Industrial grew only 4.1%. The gain came from the power segment. The analog/mixed-signal segment (AMG) lost $11.5 million of industrial revenue "due to lower demand."
Other is the growth engine. Management says AI data center is its "fastest-growing business" and now expects that revenue "to more than double in 2026." onsemi does not break AI data center out as its own line, so that claim can't be checked against a reported figure. It is consistent with the 33.6% sequential jump in the bucket that contains it.
Silicon carbide (SiC): SiC is a material used for high-voltage power chips in EV drivetrains and chargers, and a few years ago it was onsemi's main growth story. The Q2 10-Q and earnings release give no separate SiC revenue figure. SiC appears in this filing mainly in a note on securities class-action and derivative litigation about the SiC business. The release mentions EliteSiC only as content in an AI data center power-supply design win. Anyone tracking SiC as a separate line gets no disclosed number from this filing.
Segments: fastest growth in the lowest-margin unit
Segment
Q2 2026 revenue
YoY
Q2 2026 gross margin
Q2 2025 gross margin
PSG (Power Solutions)
$829.0M
+19%
27.8%
25.9%
AMG (Analog & Mixed-Signal)
$545.7M
-2%
53.4%
50.7%
ISG (Intelligent Sensing)
$228.8M
+7%
41.4%
41.6%
PSG, the power business, grew 19% and supplied almost all of the growth: $44.5 million from automotive, $22.4 million from industrial and $63.9 million from "Other." It is also the lowest-margin segment by a wide margin. Its 27.8% gross margin is about half of AMG's 53.4%. (Gross margin is the share of revenue left after the direct cost of making the chips.) When the low-margin segment grows fastest, the company-wide margin would normally fall. It rose anyway because margins improved inside each segment:
The 10-Q attributes PSG's 1.9-point margin gain to "improved utilization and operating leverage on higher volumes." Chip factories have large fixed costs. When they run closer to full, each chip carries a smaller share of those costs, which the filing calls better "absorption."
AMG revenue fell 2%, but its margin rose 2.7 points "due to a more favorable product mix, including a higher proportion of higher-margin products."
The low PSG margin is where the future upside sits. If AI data center volume keeps filling PSG's factories, utilization gains could keep lifting its margin. onsemi's Q3 guidance of 40.0-42.0% non-GAAP gross margin assumes that continues.
From gross profit to EPS: flat costs and fewer shares
Operating expenses held flat. GAAP opex was $357.7 million, compared with $358.5 million a year earlier, on 9% more revenue. R&D fell 2% ("a decrease in production material costs and other variable expenses"). G&A rose 12% to $101.9 million, which the 10-Q attributes to "third-party acquisition costs for the proposed Synaptics Merger and higher payroll-related expenses." Operating margin (the share of revenue left after running the business, before interest and tax) rose 2.9 points to 16.1%.
Restructuring charges are still running. Restructuring, asset impairments and other came to $41.2 million, plus $13.4 million of restructuring-related charges in cost of revenue. Both belong to the 2025 and 2026 Manufacturing Realignment Programs, which are closing or consolidating factories. The 2026 program includes cutting about 650 jobs at an expected severance cost of about $25 million. Q1 carried $329.3 million of these charges, which is why Q1 showed a GAAP loss of $0.08 per share. Q2's charges were much smaller.
Buybacks shrank the share count. onsemi repurchased 3.1 million shares for $334.7 million in the quarter and 8.8 million for $683.3 million in the first half. Basic weighted shares fell 5.9% to 390.3 million. GAAP diluted shares fell less, 2.5% to 404.4 million, because they now include 7.4 million shares of potential dilution from convertible notes. That gap is why GAAP diluted EPS grew 36.6% while net income grew 33.2%.
Interest income fell 31% to $17.4 million "due to lower interest rates earned on cash equivalents and short-term investments." Lower rates on cash are a small headwind to the bottom line.
Cash flow: a strong quarter, partly because capital spending was low
Operating cash flow was $459.7 million, compared with $184.3 million a year earlier. Free cash flow (operating cash flow minus spending on factories and equipment) quadrupled to $425.4 million, 26.5% of revenue compared with about 7%. Some of that improvement came from spending less. Capital expenditure was just $34.3 million, about 2% of revenue, down from $78.2 million. That is the flip side of the factory consolidation: onsemi is shrinking its manufacturing footprint rather than adding to it. Working capital also turned from a $199.8 million cash drain a year ago to a $44.6 million inflow.
Inventory stayed flat at $2,047.5 million, compared with $2,049.2 million at the end of Q1. At the Q2 cost-of-revenue run rate that is roughly 189 days of inventory by our calculation. That is a heavy stockpile for the business to work through, and it is the main reason gross margin is not yet higher.
Balance sheet: new convertible debt and the Synaptics deal
New $1.5 billion of 0% convertible notes due 2031 were issued on May 11, 2026. A convertible note is a bond that can later be exchanged for shares. Net proceeds were $1,472.9 million. onsemi paid $351.6 million for a hedge that limits dilution from future conversions and received $281.0 million from selling warrants, a net cost of $70.6 million. It used $331.9 million of the proceeds to buy back 3.1 million shares. Cash and equivalents rose to $3,514.5 million from $2,003.6 million at the end of Q1. Total long-term debt, including the $802.1 million now due within a year, was $4,459.4 million.
Synaptics acquisition. On June 25, 2026, onsemi agreed to buy Synaptics, a maker of connectivity and embedded-processing chips, in an all-stock deal. Each Synaptics share becomes 1.350 onsemi shares, so Synaptics holders would own about 12% of the combined company. Closing is expected in mid-2027, subject to shareholder and regulatory approvals. onsemi owes a $320 million termination fee if regulators block the deal. The 10-Q's risk factors note that onsemi may have to repay or assume Synaptics' debt, including its convertible notes.
Contracted demand: long-term supply agreements carried about $6.1 billion of remaining committed revenue at quarter-end. About 37% is expected to be recognized over the next 12 months. The filing warns these amounts "may be modified or canceled in certain circumstances."
Takeaway: onsemi's recovery is being carried by its smallest end market. "Other," which includes AI data center, supplied more than all of the $90 million sequential revenue gain, while automotive (almost half of sales) fell 2% from Q1. Margin expansion came from fuller factories and a richer mix inside each segment, not from the car business rebounding. The durability of the recovery depends on whether automotive rejoins it before the AI data center lift fades.
Outlook
Management's Q3 2026 guidance (from the earnings release):
Item
GAAP
Non-GAAP
Revenue
$1,650-$1,750M
$1,650-$1,750M
Gross margin
39.9%-41.9%
40.0%-42.0%
Operating expenses
$318-$333M
$303-$318M
Diluted EPS
$0.79-$0.91
$0.81-$0.93
The $1,700 million midpoint implies about 6% sequential growth and about 9.6% year-over-year growth against Q3 2025's $1,550.9 million. The guided gross margin is about 1.7 points above Q2's non-GAAP 39.3% at the midpoint, which assumes utilization keeps improving.
Our read: The gross margin guide is the number to watch. PSG's margin is still under 28%, and roughly 189 days of inventory are still on the books. Management is guiding to margin gains that depend on volume filling factories that are also being consolidated. If AI data center demand keeps growing as guided while automotive only holds steady, that plan works mechanically. The risk is concentration. "Other" is now about a quarter of revenue, and its customers (AI server power-supply makers) can change orders as fast as the car market did in 2024-25. Separately, the Synaptics deal will raise costs such as G&A deal fees before it adds revenue in mid-2027. GAAP results will also keep carrying restructuring charges through the rest of 2026, so expect the GAAP to non-GAAP gap to stay wide.
Source: onsemi Form 10-Q for the quarter ended July 3, 2026 (filed August 3, 2026) and the Q2 2026 earnings release (Form 8-K Exhibit 99.1, August 3, 2026).