Core Viewpoint - Onsemi has faced a challenging 2024 with a 12% decline in share price, underperforming compared to the Invesco PHLX Semiconductor ETF, which is up 22% this year. However, there are indicators suggesting potential recovery for the company [1]. Company Overview - Onsemi, formerly known as ON Semiconductor, primarily manufactures chips for automotive (52% of revenue) and industrial (28% of revenue) applications, with the remaining 20% from data centers, 5G, and other sources [1]. - The company is a leader in silicon carbide chips, which are more energy-efficient than traditional silicon, particularly beneficial for electric vehicles (EVs) [2]. Market Position and Growth Potential - Silicon carbide is currently used in only 22% of EV production, and without Tesla, the penetration drops to 6%. This indicates significant growth potential for Onsemi's silicon carbide products [2]. - Despite a 1% revenue drop in 2023 and a 17% decline in Q2 2024, the overall EV market is showing resilience, with global EV sales volumes up 22% in the first half of 2024 compared to the same period in 2023 [4][5]. Financial Performance - Onsemi has maintained a gross margin of 45%, with a decrease of less than 200 basis points since Q1 2023, showcasing its ability to remain profitable despite production declines [6]. - The company's utilization rate has decreased nearly 20% from its peak to 65%, yet it has managed to sustain higher gross margins compared to historical lows [6]. Strategic Partnerships - A recent deal with Volkswagen positions Onsemi as the primary supplier of power box solutions, which is a positive indicator for future demand, given Volkswagen's status as a top EV seller [7]. Valuation and Analyst Outlook - Onsemi's forward P/E ratio of 18x is 35% below the median of a peer group of 43 large-cap semiconductor companies, suggesting a favorable valuation [8]. - The average price target for Onsemi implies an upside of 18%, with some analysts projecting an upside of 43% [9].

On Semiconductor (NASDAQ: ON ), also known by Onsemi, has been struggling (Figure 1) more than its peers. Q2 2024 revenue was $1.735 billion, a 17% decrease from the same quarter in 2023. The industry faces problems because auto manufacturers invested in excess inventory after theInvesting in high-growth opportunities across industries, employing a value investing approach that prioritizes robust business models and strategic foresight. Focusing on companies with the potential to profoundly influence the gl ...

The latest trading session saw ON Semiconductor Corp. (ON) ending at $70.37, denoting a -1.88% adjustment from its last day's close. The stock's change was less than the S&P 500's daily gain of 0.13%. On the other hand, the Dow registered a gain of 0.55%, and the technology-centric Nasdaq decreased by 0.52%.Shares of the semiconductor components maker witnessed a loss of 5.43% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 1.56% and the S&P 500's gai ...

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?Let's take a look at what these Wall Street heavyweights have to say about ON Semiconductor Corp. (ON) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.ON Semiconductor Corp ...

Core Insights - ON Semiconductor Corporation is experiencing stabilization in the automotive market, with demand being flat to slightly up, attributed to inventory adjustments by customers rather than a full recovery [5][6][7] - The company emphasizes the importance of long-term supply agreements (LTSAs) in managing customer relationships and inventory levels, allowing for better visibility and proactive adjustments [10][12][16] - The automotive supply chain is characterized by customer-specific inventory levels, with some Tier 1 suppliers holding insufficient inventory, raising concerns among OEMs [21][22][24] - The company has a significant presence in the electric vehicle (EV) market, with average content of $750 per EV compared to $50 for internal combustion engine (ICE) vehicles, indicating a strong growth potential in the EV segment [27][28][30] - The silicon carbide market is expected to grow, with ON Semiconductor positioned to benefit from increased penetration in EVs and industrial applications [52][62] Automotive Market Trends - The automotive market is currently mixed, with varying demand trends among competitors, but ON Semiconductor sees some positive signs of stabilization [4][5] - The company has proactively lowered utilization rates in anticipation of market corrections, allowing for better management of inventory and customer demand [9][13] - OEMs are increasingly concerned about low inventory levels among Tier 1 suppliers, which could lead to production disruptions if demand suddenly increases [21][22] Long-Term Supply Agreements (LTSAs) - LTSAs provide ON Semiconductor with a competitive advantage by ensuring ongoing communication with customers regarding demand, allowing for timely adjustments to production [11][12][16] - The number of LTSAs has remained relatively flat, indicating continued customer value in these agreements [16] - The company believes that LTSAs help mitigate the risks associated with inventory management and demand fluctuations [12][16] Electric Vehicle (EV) Market - The average content for EVs is significantly higher than for ICE vehicles, with ON Semiconductor's content for EVs averaging $750, compared to $50 for ICE [27][28] - The company anticipates that the long-term trend will favor EVs, despite short-term challenges such as high interest rates and affordability issues [30][33] - ON Semiconductor is well-positioned in the Chinese EV market, with over 60% of new vehicles featuring its silicon carbide technology [40][41] Silicon Carbide Market - The silicon carbide market is expected to grow, with ON Semiconductor's design wins indicating a strong future demand [52][62] - The company is focused on increasing its market share in both the automotive and industrial sectors, with a significant portion of its revenue coming from silicon carbide products [61][62] - The gross margin for silicon carbide is expected to improve as production scales up, with the company confident in its pricing strategy [56][58]

ON Semiconductor Corporation (NASDAQ:ON) Citi's 2024 Global TMT Conference Call September 4, 2024 3:00 PM ET Company Participants Hassane El-Khoury - Chief Executive Officer Thad Trent - Chief Financial Officer Conference Call Participants Chris Danely - Citi Chris Danely Thanks for coming, everyone. Thanks for being here on this afternoon of the Annual Citi TMT Conference. I'm Chris Danely, your friendly neighborhood semiconductor analyst. It's our pleasure next to have ON Semi, the dream team. We have Has ...

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility: ASML produces cutting-edge machines used to make semiconductors. The Dutch government announced Friday broader restrictions on exports of semiconductor-making machines produced by sector heavyweight ASML, aligning itself with US curbs on technology at the center of trade tensions with China. The measure, which will take effect on ...

Core Viewpoint - ON Semiconductor is well-positioned to benefit from future technological advancements, particularly in autonomous vehicles, AI server energy solutions, and robotics, supported by a strong financial position that allows for quick adaptation to growth opportunities [1][2]. Company Overview - ON Semiconductor is a significant player in the semiconductor industry, focusing on intelligent power and sensing technologies, serving automotive, industrial, and consumer electronics markets [2]. - The company emphasizes sustainability and efficiency across its global manufacturing facilities, which include 7 front-end and 10 back-end facilities across 9 countries [2]. Product Lines - ON's product lines are categorized into three groups: Power Solutions (PSG), Advanced Solutions (ASG), and Intelligent Sensing (ISG), each critical for various applications in automotive, industrial, and IoT devices [3][4]. Market Opportunities Electric Vehicles (EVs) - The EV market is rapidly growing, with over 40 million registered EVs globally and a 35% year-over-year sales increase in 2023, indicating significant future growth potential for ON's products [5]. Data Centers - ON develops innovative power supply solutions for high-density servers, essential for AI applications, with data center power demand expected to rise significantly by 2030 [7]. Smart Buildings - The smart building market is projected to grow at a 25% CAGR, reaching a $570 billion opportunity by 2030, with ON positioned to provide critical sensors and connectivity solutions [8]. Recent Developments Government Relations - ON plans to invest $2 billion in the Czech Republic to enhance semiconductor output, supported by government incentives potentially covering up to $550 million of the investment [10]. Robotics - The global autonomous mobile robot (AMR) market is growing at a 22% CAGR, with ON's products positioned to meet various needs in robotics applications [10]. Financial Highlights - From FY 2020 to FY 2023, ON experienced a revenue CAGR of 16.2%, although FY 2023 saw a slight revenue decrease of 0.88% compared to the previous year [11]. - Net income has shown a CAGR of 110.5%, with a 14.8% increase in FY 2023 compared to FY 2022, despite a decrease in net income when excluding a prior capital asset impairment [11]. - ON's balance sheet is strong, with cash and short-term investments totaling $2.6 billion and a current ratio of 3.02, indicating good financial health [11]. Valuation - A discounted cash flow (DCF) model estimates ON's fair value at $115 per share, suggesting a potential 64% increase from its current price, based on conservative growth estimates [12][13].

ON Semiconductor Corporation (NASDAQ:ON) Deutsche Bank 2024 Technology Conference August 29, 2024 1:00 PM ET Company Participants Hassane El-Khoury - CEO Thad Trent - CFO Conference Call Participants Ross Seymore - Deutsche Bank Ross Seymore We're very pleased to have ON Semi up on stage. We have both the CEO, Hassane El-Khoury, as well as the CFO, Thad Trent. I'll be asking questions of them. I don't know if we're doing the raising your hand if you have questions. If you do, feel free to raise your hand. S ...

Market Recovery and Demand Outlook - The company maintains an L-shaped recovery outlook, emphasizing the need for steady end-demand recovery rather than short-term backlog improvements [3] - Stabilization in automotive markets is observed, with some areas showing flat to positive growth, while energy infrastructure has seen strong recovery [5] - Industrial markets remain soft, with structural changes made in previous years contributing to current results [5] Inventory Management and Customer Behavior - The company has been aggressive in inventory management, starting earlier than peers, but customer behavior varies widely, with some taking inventory down to low single-digit weeks [7] - Long-term agreements (LTSAs) provide visibility into demand and pricing, with some customers now seeking LTSAs to secure future supply [11][16] Pricing Strategy and Product Value - The company does not follow a cost-plus pricing model, focusing instead on value-based pricing, with recent pricing actions in 2022 setting a baseline [9] - New product generations offer cost efficiencies and higher margins, with customers benefiting from conversion to newer, more efficient products [10] Silicon Carbide and EV Market Dynamics - Silicon carbide penetration in EVs is at 6%, with significant growth potential as most new designs are now silicon carbide-based [18][21] - The company sees lumpy growth in EV adoption, driven by factors like charging infrastructure and battery technology advancements [19] - Hybrid vehicles, particularly range extenders, offer significant content opportunities, with China leading in this segment [25] Commoditization and Substrate Supply - The company does not view silicon carbide as a commodity, emphasizing the importance of device and package technology over substrate availability [29] - Internal substrate production provides flexibility, allowing the company to navigate geopolitical risks and supply chain challenges [31] Vertical Integration and Strategic Wins - The company's vertical integration, from substrate to system-level solutions, has been key to winning major contracts like VW, highlighting its capability to deliver high-value products [32][33] Gross Margin and Structural Improvements - The company has set a new gross margin target of 53%, driven by utilization improvements, the roll-off of dilutive contracts, and the monetization of divested fabs [39][41] - New products are designed to meet or exceed corporate average margins, contributing to favorable mix and long-term margin expansion [41]