Semiconductor components maker ON Semiconductor (ON) is in talks to acquire 16-year-old chip startup Ferric in a deal valued at nearly $1 billion, according to people familiar with the matter.
The deal reflects steadily rising demand for technology capable of meeting the enormous energy consumption needs of AI chips.
Onsemi's negotiations with Ferric come shortly after rival Analog Devices (ADI) pursued a similar acquisition. Analog Devices held talks in May to acquire 12-year-old startup Empower Semiconductor, whose products can help AI chips achieve more efficient power management.
The structure of Onsemi's deal is not yet clear, and it may include earnout provisions tied to performance targets. The sources said a deal for Ferric could be finalized within the next few days, but talks are still ongoing and terms could change or negotiations could fall apart.
Onsemi is scheduled to report quarterly earnings on Monday. A company spokesperson did not respond to a request for comment, while a Ferric spokesperson declined to comment.
Onsemi currently has a market value of about $30 billion. The company designs and manufactures a wide range of semiconductor devices for automotive and factory applications, and increasingly for AI data centers.
As AI data centers' power consumption surges, major chipmakers are seeking entirely new technologies to reduce energy loss when delivering power to chips.
Under the traditional approach, chip designers such as Onsemi and Analog Devices place power management chips on the circuit board around the processor, allowing current to travel laterally across the board to manage power consumption. These chips act as a central system responsible for monitoring and distributing power.
Startups like Ferric, however, are developing integrated voltage regulators that can deliver power directly to tiny silicon cores beneath or inside AI chips. This design shortens the current transmission path and reduces energy loss during delivery.
Headquartered in Scottsdale, Arizona, Onsemi generated $6 billion in revenue last year and has been actively expanding its business. This month, the company agreed to acquire publicly traded Synaptics for $5.7 billion in cash, a deal that will help Onsemi expand sales of sensors and processor products for smart devices.
According to PitchBook data, Ferric was founded in New York in 2010, with investors including New Science Ventures, and has also received research grants from the U.S. federal government. For a startup with modest revenue, an acquisition valuation of nearly $1 billion is already quite high.
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