onsemi (ON), the company formerly known as ON Semiconductor, is one of those businesses that touches almost every modern machine without most people knowing it. Its chips manage power and capture images, and they show up in cars, factories, and, increasingly, the robots at the center of Brownstone Research’s “Elon Musk’s NEW AI Masterplan” pitch.
The pitch promises three “secret” stocks that could “unleash enough wealth to make every household in America $2.38 million,” and onsemi is the applications leg, the physical AI pick tied to Tesla’s Optimus robot. Here is what the company actually is, what it does well, and where the risks sit.
A Power and Sensing Franchise
onsemi is really two franchises under one roof. The first is power management, where it is the second-largest power chipmaker in the world, supplying the silicon that drives electric-vehicle drivetrains, automotive safety systems, and industrial energy infrastructure. The second is image sensing, where it is one of the biggest suppliers of automotive image sensors, the cameras that let modern cars read the road.
That combination matters because it spreads the company across two of the fastest-growing spots in the semiconductor market at once. A single customer can buy power chips and sensors from the same supplier, which makes onsemi a convenient one-stop shop for automakers.
The Moat in Automotive Sensors
The image sensor business is where onsemi’s durability really lives. Automotive qualification cycles are long, and once a sensor is designed into a vehicle platform, it tends to stay there for the life of that platform. That creates sticky, hard-to-replace revenue.
The Tesla relationship is the concrete proof point. The Masterplan ad states that onsemi is “already supplying Tesla with a key piece of sensor technology,” and that is a real, active relationship, not a hypothetical. It is the bridge the pitch uses to argue the same silicon will eventually flow into Tesla’s robots.
The Cyclical Risk
The honest caveat is that semiconductors are cyclical, and onsemi has felt that cycle before. In 2021 and 2022 it was the hot electric-vehicle story, the stock got well ahead of itself, and then gave most of those gains back. Its earnings per share today are about half of what they were at that peak, and the share price is roughly where it was five years ago.
That history is a useful reminder. The franchise is real and improving, but a compelling narrative can run ahead of the fundamentals, and the stock’s own record shows what happens when it does.
The Robot Option
The Masterplan’s forward-looking argument is that onsemi’s power and sensing silicon will be what lets Tesla’s Optimus robot move efficiently, stay cool, and run longer between charges. That is a real mechanism, and Morgan Stanley has flagged onsemi as a way to play the robotics trend. The editor packages the idea as the “Manifested AGI Revolution” report, a phrase we explain separately.
The catch is timing. The Optimus program is still years away from volume production, so the robot business is a future option rather than current revenue. In the meantime, what an investor owns is an automotive and industrial power and sensing company.
The Fine Print Worth Reading
Two numbers in the ad deserve scrutiny. The claim that a chip-equipment maker could be “on the receiving end of up to $500 billion in 2027 alone” is aimed at ASML, not onsemi, and it does not survive contact with reality, since ASML’s annual revenue is only about $30 billion. The “39 hedge funds are investing” line is filler, not a signal.
For onsemi itself, the honest read is a quality franchise trading at about 18 times forward earnings with a roughly $28 billion market cap, and a tease price of $71.67 that simply matches the current price. That is a fair price for the power and sensing business, with a free option on physical AI rather than a guarantee of one.
The rebrand from ON Semiconductor to onsemi, rolled out a few years ago, signaled the shift in how the company wants to be seen, less a commodity chipmaker and more a focused player in power and intelligent sensing for cars and industry. The strategy shows up in the portfolio: it has been pruning lower-margin legacy product lines and steering capital toward automotive and industrial, which carry longer design cycles and stickier revenue. That repositioning is part of why the company earns a premium look from investors today, and it is the same reason it fits the long-horizon framing of the Masterplan pitch.
The power chip market itself is fragmented enough that being number two still means a relatively small share of a very large pie, with rivals like Infineon, STMicroelectronics, and Texas Instruments competing across the same automotive and industrial sockets. That competition is healthy for customers and a reminder that no single supplier has the robot market locked up, even one with a head start on the Tesla relationship.
Ready to see the research? Click here to view the Elon Musk’s AI Masterplan presentation.
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