onsemi (NASDAQ: ON) announced a strategic technology engagement with Subaru Corporation to evaluate its Embedded Power Platform (EPP) for future electrified vehicles. The collaboration aims to assess how advanced power integration can improve efficiency and simplify development.

Scottsdale-based onsemi unveiled the EPP architecture on Sept. 16, 2026. The platform uses the silicon wafer as the package foundation, integrating electrical, mechanical and thermal performance. This design increases power density by 3 – 5x compared with current solutions.

Architecture and Integration

EPP treats the silicon wafer as an active contributor to system performance rather than passive housing. It enables seamless integration of silicon, silicon carbide (SiC) and gallium nitride (GaN) technologies. Multiple devices, including FETs, drivers and controllers, are embedded in one package.

The platform leverages standard 12-inch silicon wafer manufacturing capabilities. Early sampling is expected in 2026 with strategic customers.

Application Benefits

The company highlights specific improvements for key sectors:

In AI racks, EPP reduces packaging overhead to support more compact power systems. For electric vehicles, it enables smaller traction inverters with improved efficiency.

Strategic Partnership

Subaru will evaluate the platform for future electrified vehicle architectures. The collaboration includes access to engineering samples and simulation models. Tamotsu Inui, Managing Executive Officer Chief General Manager of Engineering Div at Subaru, stated that the engagement allows evaluation of EPP’s integrated approach while drawing on onsemi’s modeling expertise.

Dinesh Ramanathan, Senior Vice President of Corporate Strategy at onsemi, noted that the transition to electrification is driving sophisticated vehicle architectures. He added that Subaru’s engagement brings valuable customer insight to EPP’s continued evolution.

What the Numbers Show

The source data reveals a significant divergence in performance metrics between AI and automotive applications. While AI infrastructure gains focus on physical footprint reduction (50% smaller) and thermal management (20% cooler), electric vehicle applications prioritize efficiency gains (15% lower losses) and density (4x higher). This suggests distinct optimization priorities for each end-market despite using the same underlying architecture.

onsemi reported second quarter 2026 revenue of $1,603.5 million, a 9% increase from $1,468.7 million in the prior year period, driven by accelerating adoption of its intelligent power solutions in AI data centers and automotive applications. The Scottsdale-based semiconductor manufacturer delivered non-GAAP diluted earnings per share of $0.74, significantly outpacing the $0.53 reported in the second quarter of 2025. This earnings growth was fueled by gross margin expansion to 39.3% on a non-GAAP basis, up from 37.6% year-over-year, and disciplined cost management that allowed earnings per share to grow four times faster than revenue.

The company’s operational performance improved markedly, with GAAP net income attributable to ON Semiconductor Corporation rising to $226.8 million from $170.3 million in the same quarter last year. Free cash flow quadrupled year-over-year to $425.4 million, reflecting a surge in cash from operations which increased by 150%. This liquidity strength enabled onsemi to execute share repurchases of $332 million during the quarter, bringing year-to-date shareholder returns to approximately 105% of free cash flow. The results exceeded the midpoint of management’s guidance across revenue, gross margin, and earnings per share metrics.

Segment Performance

Revenue growth was broad-based but led by the Power Solutions Group (PSG), which saw sales rise 19% year-over-year to $829.0 million. This segment benefited from increased customer adoption of Treo processors and high-voltage power solutions for AI infrastructure. The Analog Products Group (APG) generated $545.7 million in revenue, a slight decline of 2% from the previous year, while the Intelligent Sensor Solutions Group (ISG) posted revenue of $228.8 million, up 7% year-over-year. Total sequential revenue growth stood at 6%, indicating sustained momentum heading into the third quarter.

Strategic Developments

Beyond financial metrics, onsemi announced several strategic moves to expand its market position. The company confirmed plans to acquire Synaptics, aiming to enhance capabilities in connected compute at accretive gross margins. Additionally, onsemi expanded its role within the NVIDIA MGX ecosystem as AI infrastructure power demands accelerate. The firm also secured strategic platform wins with Great Wall, a leading China cloud infrastructure power supplier, expanding content for EliteSiC and silicon MOSFETs. New product launches included the GaNEXUS gallium nitride power portfolio, spanning 40V to 650V for AI data centers and robotics applications.

What the Numbers Show

A key analytical observation from the filing is the significant divergence between GAAP and non-GAAP profitability measures due to restructuring activities. While GAAP operating margin stood at 16.1%, non-GAAP operating margin reached 20.8%, excluding $75.5 million in special items such as restructuring charges and asset impairments. This suggests that core operational efficiency is improving rapidly, even as one-time costs pressure headline GAAP figures. Furthermore, the 150% jump in operating cash flow highlights strong working capital discipline, providing substantial flexibility for future capital allocation despite heavy investment in AI-related infrastructure.

Outlook

Looking ahead, onsemi provided guidance for the third quarter of 2026, projecting revenue between $1,650 million and $1,750 million. Management expects non-GAAP gross margin to range from 40.0% to 42.0%, indicating continued margin expansion. Non-GAAP diluted earnings per share are forecasted between $0.81 and $0.93. CEO Hassane El-Khoury noted that the AI data center business remains the fastest-growing segment, with expectations for full-year 2026 revenue in this area to more than double, underscoring the strength of the company’s intelligent power portfolio.