Every week brings another congressional hearing about semiconductor supply chain security and Every month, the CHIPS Act cuts another ribbon at another American fab. And yet, on March 31, 2026, on a stage in Shanghai, a Nasdaq-listed US power chipmaker formally announced it was planting its flag deeper in China — not retreating from it.
That company is US chipmaker Onsemi, and its move deserves more attention than it's getting.
ON Semiconductor Corp — Onsemi — said it will establish a Greater China headquarters in Shanghai and invest about $50 million in the country over the next three years, stepping up local decision-making and investment as demand rises from electric vehicles, renewable energy, and AI data centers. The company also announced it would appoint a dedicated China general manager, a role that will simultaneously oversee systems engineering — a structural signal that China is no longer just a market to sell into, but a place to build from. Caixin Global
This is not a passive bet. It's a declaration.
What US Chipmaker Onsemi Actually Announced — and What It Didn't Say
The headline number — $50 million over three years — undersells the ambition. That's roughly $16 million per year for R&D, manufacturing infrastructure, and what the company calls "ecosystem building." For context, Onsemi posted approximately $6 billion in 2025 revenue. The investment is a rounding error financially. Strategically, it's something else entirely.
The core of Onsemi's new strategy is a shift from traditional product exports to deep local synergy, upgrading China from a single market into a key hub for global innovation and manufacturing. Anchored by four pillars — "Design in China, Make in China, Deeply Cultivate China, Go Global" — the move marks a deep upgrade to its presence in the country. Gasgoo
That framing — "Go Global" as the fourth pillar, not the first — is significant. It means the Chinese operations aren't a regional outpost shipping products inward. They're intended to become a platform from which Onsemi reaches the rest of the world.
Onsemi plans to expand its existing network of eight application joint laboratories in China by adding three more, aimed at accelerating localization. The initiative also encompasses a recently announced partnership with Innoscience to accelerate the global commercialization of gallium nitride products. The two sides had signed a memorandum of understanding in late 2025 to explore scaling production of GaN power devices using Innoscience's established 200mm GaN-on-silicon process. TrendForce
GaN — gallium nitride — is increasingly the material of choice for high-efficiency power conversion in EV charging systems and AI data center power supplies. Partnering with Innoscience, one of China's most advanced GaN manufacturers, gives Onsemi access to 200mm GaN process infrastructure it doesn't have to build from scratch. That's not a market access play. It's a manufacturing partnership with strategic IP implications.
Why China, Why Now
The easy read is that Onsemi is chasing growth. That's partially right but mostly incomplete.
Onsemi derives approximately 30% of its revenue from China. The company has design wins in 60% of Chinese EV models. Those aren't numbers you walk away from, regardless of what the CHIPS Act's guardrails say about domestic investment. Onsemi has been a CHIPS Act beneficiary — it received investment tax credits for its East Fishkill, New York fab — but nothing in the legislation prohibits it from continuing to invest in China for products sold into China. FinancialContent
The EV angle is where the business case becomes bulletproof. China revenue grew 23% sequentially in Q2 2025, driven by new electric vehicle ramps utilizing Onsemi's silicon carbide technology. Xiaomi's YU7 electric SUV integrates Onsemi's 1,200-volt EliteSiC M3e, offering leading performance and range in its class. Nio has expanded its supply deal with Onsemi to deploy EliteSiC M3e MOSFET technology across its 900-volt high-voltage architecture, set to debut in the ES9 flagship SUV. Substack Electric Vehicles
These aren't commodity relationships. Onsemi's third-generation silicon carbide MOSFETs are embedded in the drivetrains of aspirational Chinese EV brands. Switching costs are high. Design cycles are long. The closer Onsemi positions its engineering resources to the design centers of BYD, Nio, and Xiaomi, the harder it is for domestic Chinese suppliers or European competitors to displace it.
"What Onsemi is doing in Shanghai isn't a hedge against decoupling — it's a counter-strategy to it. By embedding R&D and systems engineering directly into the Chinese EV supply chain, they're making themselves structurally harder to cut out. The question isn't whether this carries geopolitical risk. It obviously does. The question is whether the alternative — ceding that ground to Infineon or domestic Chinese SiC players — carries more." — Power semiconductor industry analyst, speaking to StartupNews.fyi, April 2026
Onsemi Isn't Alone — But It's Moving More Deliberately Than Its Peers
Onsemi's strategic upgrade is not an isolated case, but a microcosm of a collective turn by global semiconductor giants. Since the start of 2026, foreign semiconductor firms have been making intensive and deep moves in China, shifting their core logic from "market penetration" to "ecological rooting." STMicroelectronics announced that STM32 wafers produced by Hua Hong Semiconductor had begun delivery to Chinese customers, with plans to achieve mass production of more series in China by 2026. Japan's Nagase signed an agreement in Wuxi in March, investing $30 million to build a high-purity semiconductor materials base. Gasgoo
Infineon Semiconductor is expanding its power semiconductor production base in Wuxi, introducing new generations of power devices and making the site one of its largest global hubs for insulated-gate bipolar transistors, aiming to localize coverage of major products by around 2027. STMicroelectronics is building an 8-inch silicon carbide joint-venture plant in Chongqing with Sanan Optoelectronics, with a total investment of about $3.2 billion. Caixin Global
Texas Instruments, notably, has taken the opposite path — focusing on expanding sales and applications support across multiple Chinese cities while concentrating recent wafer-fabrication investments in the US to shore up global supply-chain stability. TI is essentially treating China as a revenue destination, not a manufacturing partner. Onsemi is treating it as both. The performance divergence between those two strategies over the next five years will be instructive. Caixin Global
The competitive data is stark: 60% design-win penetration across Chinese EV models, 23% sequential revenue growth in China in Q2 2025, and a $50 million commitment to deepen that position — while the BOM localization rate has risen from low single digits to 50% in five years.
The BOM Localization Number That Should Alarm Competitors
The most significant data point in Onsemi's China announcement isn't the $50 million investment. With 4,000 employees, three factories, and 50% localized bill-of-materials — up from low single digits in five years — China is key for innovation. Caixin Global
Going from low-single-digit to 50% BOM localization in five years is a supply chain transformation, not an optimization. It means Onsemi has been systematically replacing globally sourced inputs with Chinese-sourced ones — qualifying local suppliers, building redundant production capacity within China, and reducing the percentage of its Chinese operations that can be disrupted by export controls applied to third-country components.
That's not market access. That's fortress-building. And it's happening quietly, announced in a Shanghai press conference that got a fraction of the attention of a CHIPS Act ribbon-cutting in upstate New York.
Skeptic's Corner
The geopolitical exposure here is real and shouldn't be hand-waved. Onsemi's 30% China revenue concentration is the same number that keeps other chipmakers up at night. If US-China trade tensions escalate to sector-level tariffs or if China retaliates against American semiconductor firms specifically, Onsemi's local-manufacturing bet could become a liability rather than a hedge. The Leshan joint venture — where Onsemi is committed to purchasing 80% of production capacity through 2026 — creates contractual exposure to a Chinese manufacturing partner even in scenarios where the company might prefer to pull back. The ITIF's 2025 analysisestimated that full decoupling would cost US chip firms $77 billion in annual revenues and $14 billion in annual R&D. Onsemi is betting that this extreme scenario never materializes. It might be right. It might not.
What to Watch
Whether Onsemi's new China general manager is announced before mid-2026, and whether their background is primarily commercial or technical — that distinction will reveal whether the Shanghai HQ is a customer relations move or a genuine R&D decentralization.
The GaN partnership with Innoscience. If Innoscience-produced GaN devices begin shipping into non-Chinese markets under Onsemi's commercial relationships, that's the "Go Global" pillar becoming real — and a potential flashpoint with US export regulators.
Whether BYD, currently the world's largest EV manufacturer, appears in Onsemi's design-win announcements over the next 12 months. A BYD design win using EliteSiC would cement Onsemi's position in a way that no competitor can easily dislodge.
How the US Department of Commerce responds to the trend of power semiconductor companies deepening China manufacturing ties. Power chips — SiC, GaN, IGBTs — are not currently subject to the same export controls as advanced logic chips. If that changes, the entire strategic rationale for Onsemi's Shanghai headquarters shifts overnight.
Key Takeaways
The $50 million is a signal, not the story. Onsemi's real bet is structural: 50% BOM localization, a dedicated China GM, three new application labs, a GaN manufacturing partnership with Innoscience, and design-win penetration in 60% of Chinese EV models. That's a company that has decided the cost of not being embedded in China's EV supply chain exceeds the cost of the geopolitical risk of being in it.
Whether that calculation holds is unknown and, frankly, unknowable given current US-China trade trajectories. What's not unknown is that US chipmaker Onsemi made a choice that most of its American peers are unwilling to make publicly — and that, in the semiconductor industry, public commitment is often the first step toward competitive moat.
