The offer of $20 per share represents a premium of nearly 12 percent to Fairchild's Tuesday close. Shares of Fairchild were trading at $19 before the opening bell on Wednesday.
The deal will help the company bolster its semiconductor business that makes chips to improve power efficiency in products ranging from home appliances to automobiles.
The semiconductor industry is seeing a wave of deals as companies seek to meet demand for cheaper chips and diversify portfolios as Internet-connected devices gain popularity.
More than $80 billion in semiconductor M&A has been racked up so far this year, according to Thomson Reuters data.
Bloomberg reported in October that Fairchild Semiconductor had hired Goldman Sachs to find a buyer and Infineon Technologies was named as another suitor.
Deutsche Bank and Bank of America/Merrill Lynch are financial advisers to ON Semiconductor, while Morrison & Foerster are the legal adviser.
Goldman Sachs is financial adviser to Fairchild and Wachtell, Lipton, Rosen & Katz is the legal adviser.