Recently, the semiconductor industry has been abuzz with a significant rumor: Onsemi, a global leading supplier of semiconductor solutions, is reportedly considering acquiring Allegro MicroSystems, a renowned IC design company. This news has attracted widespread attention in the industry. If the deal is finalized, it could further reshape the competitive landscape of the global semiconductor industry.

According to Reuters, Onsemi initially expressed an informal acquisition interest to Allegro in early February 2025, after which both parties initiated due diligence. Sources say that Onsemi aims to accelerate its technological layout in automotive electronics, industrial automation, and renewable energy through this acquisition. Although Allegro's management has not yet responded explicitly, the company's stock price surged by 12% on the day the news broke, indicating a positive market reaction.

Onsemi and Allegro

Onsemi is a semiconductor manufacturer focused on automotive, industrial, cloud computing, and consumer electronics. Its products cover multiple areas, including power management, sensors, and analog ICs. In recent years, Onsemi has strengthened its position in the automotive electronics and industrial automation markets through a series of acquisitions and strategic adjustments.

Allegro MicroSystems, on the other hand, is an IC design company specializing in high-performance power and sensing technologies. Its products are widely used in automotive, industrial, and consumer electronics. Allegro has a leading technological edge in motor control, power management, and magnetic sensors, and it has particularly excelled in the markets for electric vehicles (EVs) and Advanced Driver Assistance Systems (ADAS).

The Logic Behind the Merger Rumors

If Onsemi successfully acquires Allegro, it will be a strategic move combining two strong players.

Firstly, Onsemi is well-known for its power management chips and MOSFETs, while Allegro is a global leader in automotive-grade MOSFETs, IGBTs (Insulated Gate Bipolar Transistors), and sensors, especially in the fields of electric vehicle drive systems and motor control. The two companies' businesses are highly complementary, and the merger would cover the entire power device industry chain from consumer electronics to industrial and automotive-grade applications.

Secondly, with the global penetration rate of electric vehicles surpassing 30%, the demand for automotive-grade semiconductors has surged. Allegro's customers in the new energy vehicle market include leading automakers such as Tesla and BYD, and its high-precision current sensor technology is an industry benchmark. Onsemi's previous acquisition moves, such as the acquisition of Fairchild Semiconductor, have already shown its ambition to transform towards automotive electronics. This merger could potentially make it a core IC supplier in Tesla's supply chain.

Importantly, in recent years, the United States has continuously tightened its export restrictions on semiconductor products to China. As a US-based company, Onsemi could further strengthen its domestic technological reserves and reduce external dependencies through the acquisition of Allegro. Meanwhile, Allegro's partial production capacity is located in Taiwan, China, and Singapore, and this transaction may trigger new thinking about the regional layout of the semiconductor industry chain.

Industry Impact and Future Outlook

If the acquisition is realized, it will have a profound impact on the semiconductor industry. On one hand, the integration of Onsemi's MOSFETs with Allegro's GaN and SiC technologies will accelerate innovation in electric vehicles, ADAS, and industrial automation. On the other hand, this merger may also trigger a chain reaction among other companies in the industry, further fueling the wave of consolidation in the semiconductor sector.

Moreover, with the continuous growth in global demand for semiconductors, especially driven by emerging technologies such as 5G, the Internet of Things (IoT), and artificial intelligence (AI), competition in the semiconductor industry will become even more intense. Onsemi's acquisition of Allegro is undoubtedly aimed at securing a more advantageous position in future technological competition.

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