Onsemi outlined plans to expand gross margins beyond 50% by 2030 as demand from AI data centers and automotive applications pushes capacity utilization to 83%, up from 68% at the end of 2025. The company, presenting at the Deutsche Bank Technology Conference 2026, reported that every 1 percentage point increase in utilization translates into 25 to 30 basis points of gross margin improvement.
Capacity utilization has risen 1,500 basis points in six months, with peak levels approaching 92% to 93%. The margin bridge to the 50%+ target includes 650 basis points from higher utilization, 200 basis points from manufacturing improvements, 200 basis points from product mix, and 200 basis points from inventory reduction. Current gross margins stand in the low 40% range, while free cash flow margins reached 24% during the recent downturn.
AI data center revenue is projected to more than double in 2026, while the energy infrastructure business is expected to grow 40% year-over-year. Automotive revenue, which grew 72% from late 2019 to early 2026, is forecast to expand about 6% annually alongside global vehicle sales. The company completed $900 million in annualized divestitures and expects capital expenditure intensity to remain in the mid-single-digit percentage range.
Operational updates included the first round of price adjustments implemented in April 2026, with a second round underway. Channel inventory is stable at 10 to 11 weeks, while intermediate inventory days fell to 67 from a mid-2025 peak, with full clearance expected over two years. Visibility into demand has extended to 2027 and 2028, compared with roughly 90 days a year ago.
Onsemi also highlighted progress on its Treo platform, a 65-nanometer analog mixed-signal BCD platform capable of up to 90 volts, with development cycles reduced from two years to six to nine months. The company’s vertical GaN technology is targeting 800-volt power delivery systems starting in late 2027 or early 2028, supported by a factory in Syracuse, New York. The planned acquisition of Synaptics remains on track for mid-2027, with an analyst day scheduled for September 16, 2026.
