Can onsemi's Treo Platform Unlock New Automotive Opportunities?
onsemi's ON Treo platform is gaining momentum as automakers transition toward software-defined vehicles, creating a significant opportunity for it to expand automotive footprint. During the first-quarter 2026 earnings call, management highlighted strong adoption of Treo across automotive, industrial and AI applications, with platform revenues rising more than 2.5 times sequentially.
A major catalyst is the industry's shift to zonal vehicle architectures, which require faster communication, simplified wiring and centralized computing. onsemi recently began production shipments of its Treo-based 10BASE-T1S Ethernet solutions for a leading North American automaker's next-generation zonal platform. The design incorporates more than 30 Treo devices, enabling efficient in-zone connectivity and supporting the move toward software-defined vehicles.
The platform's opportunity extends beyond networking. Management noted growing design activity in ADAS park-assist systems using ultrasonic sensing, SmartFET-enabled zonal architectures and other automotive applications. These solutions help automakers reduce complexity while accelerating vehicle development cycles.
Treo is expected to contribute not only to revenue growth but also to profitability. Management indicated that Treo products carry gross margins in the 60-70% range, significantly above the company's current corporate margin profile. As adoption increases through 2026 and beyond, Treo could become a meaningful contributor to both top-line expansion and margin improvement.
With automakers embracing connected, software-centric vehicle platforms, Treo appears well positioned to help onsemi capture higher semiconductor content per vehicle and strengthen its long-term automotive growth story.
How Do Rivals Compare in the Software-Defined Vehicle Race?
onsemi faces strong competition from NXP SemiconductorsNXPI and Texas InstrumentsTXN as automakers accelerate the adoption of software-defined vehicles and zonal architectures.
NXP Semiconductors is a leading automotive chip supplier with a broad portfolio spanning automotive Ethernet, vehicle networking, microcontrollers and domain controllers. The company is deeply involved in enabling centralized vehicle computing and high-speed in-vehicle communications, making it a direct competitor to onsemi's Treo-based connectivity solutions.
Texas Instruments is another major player, offering automotive processors, connectivity chips, power-management devices and sensing technologies used in ADAS and next-generation vehicle platforms. TXN’s extensive analog and embedded processing expertise positions it well to benefit from the increasing semiconductor content in modern vehicles.
While NXP Semiconductors and Texas Instruments possess strong automotive ecosystems, onsemi aims to differentiate itself through the Treo platform, which combines connectivity, power management and sensing capabilities on a scalable mixed-signal platform. As automakers migrate toward zonal architectures and software-defined vehicles, Treo's integrated approach could help onsemi win additional programs, increase semiconductor content per vehicle and support long-term automotive growth.
ON’s Price Performance, Valuation & Estimates
Shares of onsemi surged 108.5% year to date compared with the industry’s 63.2% rise.
ON’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ON trades at a forward price-to-earnings (P/E) multiple of 30.72, a discount to the industry’s average of 33.42.
ON’s P/E Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ON’s 2026 earnings per share has increased in the past 60 days, as shown below. The company is likely to report strong earnings, with projections indicating a 31.5% year-over-year rise in 2026 and 41.1% in 2027.
Image Source: Zacks Investment Research
onsemi currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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