Onsemi Sells Chip Fabs to Taiwan’s Greatek, Sweden’s Silex in Strategic ‘Fab Right’ Consolidation

Source: ETTelecom. Semiconductor power player Onsemi has announced the sale of two chip manufacturing facilities as part of its ongoing ‘Fab Right’ strategy, a move that will see its wafer fabrication plant in Pocatello, Idaho, USA, sold to Taiwan’s Greatek Electronics, and its backend facility in Niigata, Japan, sold to Sweden’s Silex Microsystems. The transactions, disclosed on July 8, 2026, are designed to streamline Onsemi’s operations, eliminate over $250 million in annualized operating expenses, and sharpen its focus on high-margin silicon carbide (SiC), power, and sensor solutions critical for the automotive, industrial, and energy infrastructure markets. For telecom network operators and infrastructure vendors, this consolidation signals a deliberate shift in supply chain dynamics for the power semiconductors that underpin 5G radios, data center power supplies, and fiber optic network equipment, potentially tightening supply for legacy nodes while freeing capital for advanced SiC production.

Technical & Strategic Deep Dive: The ‘Fab Right’ Rationale and Asset Details

Onsemi’s ‘Fab Right’ strategy is a multi-year initiative to transition from an integrated device manufacturer (IDM) with a broad manufacturing base to a more asset-light, fab-lite model focused on ownership of strategic fabs for its core technologies. The two divested facilities represent non-core, trailing-edge manufacturing assets.

The Pocatello, Idaho facility is a 150mm (6-inch) wafer fab. While 150mm is considered a legacy node for leading-edge logic, it remains a workhorse for many analog, power, and discrete semiconductors. The sale to Greatek Electronics, a major Taiwanese semiconductor packaging and testing (OSAT) service provider, is notable. Greatek is acquiring the facility not for its front-end manufacturing but to expand its advanced packaging and bumping capabilities, likely to serve the growing demand for heterogeneous integration and chiplet-based designs. This indicates a secondary market for older fabs being repurposed for the packaging-centric future of semiconductors.

The Niigata, Japan, site is a backend assembly and test facility. Its sale to Silex Microsystems, a global leader in MEMS (Micro-Electro-Mechanical Systems) foundry services, aligns with Silex’s expansion plans in the Asia-Pacific region. For Onsemi, this divestment removes the operational burden of a non-differentiated backend process. The company will transition the work to its other global assembly sites or to external partners, a common practice in the fab-lite model.

Financially, Onsemi expects these moves to reduce its annualized operating expenses by over $250 million. The company has not disclosed the sale prices but stated the transactions are expected to close in the second half of 2026, subject to regulatory approvals. This cost-cutting is directly aimed at improving gross margins, a key metric watched by investors and a critical factor in remaining competitive in the power semiconductor arena against rivals like Infineon, STMicroelectronics, and Wolfspeed.

Industry Impact: Supply Chain Recalibration for Telecom Power & Infrastructure

The telecom industry is a significant consumer of the power management, RF, and sensor chips that Onsemi specializes in. This strategic shift has several immediate and long-term implications for network operators and equipment manufacturers (OEMs).

1. Focus on Silicon Carbide (SiC) and Advanced Power Semiconductors: Onsemi is aggressively investing in SiC, a wide-bandgap semiconductor material that offers superior efficiency, higher switching frequencies, and better thermal performance than traditional silicon. This is critical for 5G massive MIMO radios, which require highly efficient power amplifiers and power supplies to manage heat and energy consumption. It is also vital for the power infrastructure in hyperscale data centers and for electric vehicle charging stations, which are becoming part of the telecom ecosystem. By selling legacy fabs, Onsemi frees up capital and management focus to ramp its SiC production capacity in facilities like its expanded fab in Hudson, New Hampshire, and its joint venture in South Korea. For telecom OEMs, this means a more reliable, long-term roadmap for the high-efficiency power components needed for next-generation, energy-conscious networks.

2. Potential for Legacy Node Supply Constraints: While Onsemi has stated it will ensure a smooth transition for customers, the sale of the Pocatello 150mm fab means it is exiting ownership of that specific manufacturing line. Many telecom-grade analog chips, voltage regulators, and discrete components are still produced on 150mm and 200mm wafers. The long-term supply of these components could become more concentrated among fewer foundries or IDMs. Operators planning decade-long lifecycle deployments for infrastructure (e.g., fiber line terminals, legacy radio units) must engage with their suppliers to understand the continuity-of-supply plans for components sourced from these divested lines.

3. Rise of the Specialized OSAT and Fab Repurposing: Greatek’s acquisition of the Pocatello fab for advanced packaging highlights a key trend: the increasing value of packaging technology (e.g., fan-out, 2.5D/3D integration) in system performance. As chiplet architectures become more prevalent in high-performance computing and networking ASICs, telecom OEMs will increasingly rely on a robust OSAT ecosystem. This move strengthens the US-based advanced packaging infrastructure, which is a strategic priority for many governments.

Regional & Global Telecom Implications: Geopolitics and Manufacturing Resilience

This transaction occurs against a backdrop of global efforts to re-shore and diversify semiconductor supply chains, particularly following the CHIPS Act in the United States and similar initiatives in Europe and Japan.

US Manufacturing Landscape: The sale of a US-based fab to a Taiwanese company (Greatek) will likely undergo scrutiny by the Committee on Foreign Investment in the United States (CFIUS). However, the outcome may be viewed favorably as it maintains manufacturing activity on US soil and potentially advances US capabilities in advanced packaging, a stated goal of the CHIPS Act. For US-based telecom infrastructure firms, having a domestic source for advanced packaging services could be a strategic advantage for defense or government-sensitive network projects.

Asia-Pacific Supply Chain Dynamics: The sale of the Japanese backend facility to Sweden’s Silex reinforces the globalization of the semiconductor supply chain. Japan remains a critical hub for materials, equipment, and specialized manufacturing. Silex’s expansion there strengthens the MEMS ecosystem, which is relevant for optical sensors used in fiber alignment and inertial sensors in satellite terminals. For telecom operators in Asia, this represents a continued deep and specialized supply base within the region.

Impact on African & MENA Telecom Rollouts:

For network operators in price-sensitive growth markets like Africa and the MENA region, the long-term impact of Onsemi’s strategy is twofold. First, the industry-wide push towards more efficient SiC-based power supplies will eventually lower the total cost of ownership for cell sites by reducing diesel generator run-time and grid power consumption, a major operational expense. However, this benefit may come with a higher upfront cost for equipment. Second, consolidation in the supply of legacy node components could affect the cost and availability of parts for cost-optimized network equipment popular in these markets. Operators should monitor whether equipment vendors (e.g., Huawei, ZTE, Nokia, Ericsson) are successfully managing this component transition without causing price inflation or shortages for 4G expansion and initial 5G deployments.

Forward-Looking Analysis: Telecom’s Semiconductor Dependencies in the Fab-Lite Era

Onsemi’s move is part of a broader industry trend where even large IDMs are becoming more selective about the manufacturing assets they own. This ‘fab-right’ or ‘fab-lite’ approach allows companies to concentrate R&D and capital on their true differentiators. For the telecom sector, this means:

• Closer Supplier Partnerships: Operators and OEMs will need deeper, more strategic relationships with semiconductor suppliers like Onsemi, Infineon, and NXP to secure capacity and influence roadmaps, especially for power and RF components that are becoming custom-designed for specific network architectures.
• Dual Sourcing Strategies: The reliance on a handful of focused suppliers for critical chips increases concentration risk. Network operators must pressure their OEMs to implement robust dual-source or multi-source component strategies to ensure supply chain resilience.
• Energy Efficiency as a Core Metric: The semiconductor industry’s pivot to SiC and gallium nitride (GaN) directly supports telecom’s ESG and net-zero goals. Procurement decisions will increasingly weigh the energy efficiency of the underlying semiconductors in network hardware, making partnerships with leaders in wide-bandgap technology essential.

In conclusion, Onsemi’s divestiture is not a retreat but a strategic recalibration. By shedding non-core manufacturing, it is doubling down on the high-value semiconductors that will power the connected, electrified, and automated future. Telecom network builders must understand this shift, as their infrastructure’s performance, efficiency, and reliability will be increasingly defined by the strategic choices of their silicon suppliers.

Tags: 5g, fab right, onsemi, power management, semiconductor, silicon carbide, supply chain, telecom infrastructure