Onsemi Strikes GaN Chip Deal to Target EV and AI Growth Markets
Company signs non-binding agreement with Innoscience to scale production of high-efficiency gallium nitride power devices, aiming to lower costs and accelerate adoption.
Onsemi (Nasdaq: ON) has entered into a strategic collaboration with Innoscience to ramp up production of high-efficiency gallium nitride (GaN) power devices, a critical component for managing power in electric vehicles, AI data centers, and renewable energy systems.
The semiconductor firm announced Tuesday it had signed a non-binding memorandum of understanding with Innoscience, a leading GaN-on-silicon device manufacturer. The partnership is designed to create a high-volume, cost-effective manufacturing source for onsemi’s GaN portfolio, addressing two of the main barriers to the technology's widespread adoption: scale and price.
Despite the long-term strategic significance of the announcement, the market's immediate reaction was muted. Shares of onsemi traded down about 1.1% to $49.86 in Tuesday afternoon trading, suggesting investors may be waiting for the non-binding agreement to yield definitive production and revenue milestones.
Gallium nitride is a next-generation semiconductor material poised to displace traditional silicon in high-power applications due to its superior efficiency, smaller size, and lighter weight. The collaboration will focus on low- and medium-voltage applications, specifically onsemi’s 40V to 200V GaN devices. These components are essential for improving energy conversion in data centers supporting artificial intelligence, electric vehicle charging infrastructure, and solar power inverters.
This move deepens onsemi’s commitment to the GaN market, which is projected to grow into a $2.9 billion industry by 2030. By partnering with Innoscience, a company Jefferies analysts previously noted for its strong growth potential in the GaN space, onsemi gains access to a dedicated GaN specialist to accelerate its product roadmap.
“This collaboration allows us to combine our strengths in design and manufacturing with Innoscience’s high-volume GaN production capabilities,” the companies outlined in their joint press release. The goal is to provide a reliable and diversified supply chain for customers in key high-growth sectors.
For onsemi, a company with a market capitalization of approximately $20.5 billion, the partnership is a strategic step to fortify its position in the competitive power semiconductor market. The company has been increasingly focused on intelligent power and sensing technologies for the automotive and industrial segments, which represent its largest end markets. Securing a scalable source for GaN devices is critical to servicing the growing demand for electrification and energy efficiency in those areas.
The agreement with Innoscience provides onsemi with a capital-light approach to expanding its GaN capacity, avoiding the significant investment required to build its own GaN-specific fabrication facilities from scratch. This strategy allows for greater flexibility and a faster path to market for its next-generation power products.
Analysts view the expansion into GaN as a key growth driver for power semiconductor firms. While this specific deal has yet to generate revised analyst price targets, the broader sentiment around GaN technology remains bullish. The ability to produce these high-performance chips at scale and at a competitive cost will be crucial for companies looking to capture share in the rapidly evolving markets for electric vehicles and AI infrastructure.