Market Performance - Onsemi was the worst-performing stock in the S&P 500 on Monday [1] Industry Outlook - The chipmaker's CEO warned about ongoing "uncertainty in the automotive market" [1]

Core Viewpoint - ON Semiconductor's recent financial results indicate a contraction in revenue but suggest that the bottom of the business cycle has been reached, with expectations for recovery and sequential growth moving forward [1][4][7]. Financial Performance - For FQ2, ON Semiconductor reported revenue of $1.47 billion, a year-over-year contraction of 15.5%, but slightly better than expected and showing sequential growth [4][6]. - The company generated $106.1 million in free cash flow and reported adjusted earnings of $0.53 [7]. Segment Performance - Improvement was noted across all segments, particularly in the Power Solutions Group (PSG), which grew by 2% year-over-year. The Analog and Mixed-Signal Group (AMG) and Intelligent Sensing Group (ISG) showed signs of improvement, with AMG down only 2% and ISG's contraction slowing to 8% [5]. Margin and Cash Flow - Margins contracted significantly due to business deleveraging, but the company continues to generate sufficient cash flow to support its turnaround and financial health [6][10]. - The long-term debt stands at $3.3 billion, with a healthy balance sheet characterized by ample cash and low leverage [10]. Stock Performance and Forecast - The current stock price is $47.97, with a 12-month price target of $56.13, indicating a potential upside of 17% [10]. - Analysts maintain a Hold rating with a bullish bias, suggesting a fair value for the stock and potential for a 15% to 35% increase by year-end [12]. Institutional Confidence - Institutional investors, owning over 97% of the stock, have reverted to buying shares, indicating confidence in the company's ability to sustain its stock price and potentially reverse its trend [11].

Core Insights - ON Semiconductor (ON) reported second-quarter 2025 non-GAAP earnings of 53 cents per share, missing the Zacks Consensus Estimate by 1.85% and declining 44.8% year over year [1][7] - Revenues reached $1.47 billion, exceeding the Zacks Consensus Estimate by 1.5% but down 15.4% year over year, surpassing the company's guidance range of $1.4 to $1.5 billion [1][7] Revenue Breakdown - Automotive segment, accounting for 50% of revenues, generated $733.2 million, a decrease of 19.2% year over year [2] - Industrial segment, representing 27.7% of revenues, saw revenues decline 13.2% year over year to $406.2 million [2] - Other segments, making up 2.4% of revenues, reported a decline of 8.6% year over year to $329.3 million [2] Segment Performance - Power Solutions Group revenues were $698.2 million, contributing 47.5% to total revenues, down 16.4% year over year [3] - Analog & Mixed Group revenues totaled $555.9 million, accounting for 37.8% of revenues, declining 14.2% year over year [3] - Intelligent Sensing Group revenues reached $214.6 million, representing 14.6% of revenues, falling 14.9% year over year [3] Margin and Expenses - Non-GAAP gross margin contracted by 770 basis points year over year to 37.6%, slightly above the management's guidance range of 36.5% to 38.5% [3] - Non-GAAP operating expenses decreased 3.5% year over year to $297.7 million, exceeding the guidance of $285-$300 million [4] - Non-GAAP operating margin was reported at 17.3%, down from 27.5% in the same quarter last year [4] Balance Sheet and Cash Flow - As of July 4, 2025, ON had cash and cash equivalents of $2.83 billion, down from $3.01 billion as of April 4, 2025 [5] - Long-term debt remained unchanged at $3.35 billion [5] - Cash flow from operations for the second quarter of 2025 was $465.8 million, down from $602.3 million in the previous quarter [5] - Free cash flow amounted to $304.1 million, compared to $454.7 million in the previous quarter [5] Q3 Guidance - For Q3 2025, ON expects revenues between $1.465 billion and $1.565 billion [6] - Non-GAAP gross margin is projected to be in the range of 36.5% to 38.5% [6] - Non-GAAP operating expenses are anticipated to be between $280 million and $295 million [8] - Non-GAAP earnings are expected to range from 54 cents to 64 cents per share [8]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $1.47 billion, exceeding the midpoint of guidance and increasing by 1.6% from Q1 [8][18] - Non-GAAP gross margin was 37.6%, above the midpoint of guidance, while diluted non-GAAP earnings per share (EPS) was $0.53, down from $0.96 year-over-year [19][20] - GAAP operating expenses decreased to $359 million from $396 million in the previous quarter, reflecting the benefits of restructuring efforts [18][19] Business Line Data and Key Metrics Changes - Automotive revenue was $733 million, down 4% sequentially, but expected to grow in Q3 due to continued electric vehicle (EV) ramps [9][18] - Industrial revenue increased by 2% quarter-over-quarter, while revenue for AI Data Center nearly doubled year-over-year, indicating strong growth in this segment [10][18] - Power Solutions Group (PSG) revenue was $698 million, up 8% quarter-over-quarter, while Analog and Mixed Signal Group (AMG) revenue decreased by 2% [18] Market Data and Key Metrics Changes - China revenue grew 23% sequentially, driven by silicon carbide products and new EV ramps, highlighting China as a growth driver for the company [9][10] - The automotive market outside of China, particularly in North America and Europe, remains weak, contributing to the overall decline in automotive revenue [41][44] Company Strategy and Development Direction - The company is focused on strategic investments in automotive, industrial, and AI data center sectors to enhance competitive edge and deepen customer relationships [6][8] - Ongoing transformation includes exiting non-core businesses and repositioning the image sensing portfolio towards higher value segments like ADAS and machine vision [12][24] - The company aims to rationalize its product portfolio to shift towards higher value and higher margin products, with expectations of a $200 million revenue impact from exits in 2025 [22][100] Management's Comments on Operating Environment and Future Outlook - Management noted signs of stabilization in demand across end markets, with cautious optimism for recovery, particularly in automotive [28][29] - The company expects Q3 revenue to be in the range of $1.465 billion to $1.565 billion, with non-GAAP gross margin projected between 36.5% and 38.5% [22][24] - Management remains focused on operational efficiencies and disciplined capital allocation to enhance long-term shareholder value [16][24] Other Important Information - The company has increased its share repurchase target to 100% of free cash flow for 2025, having repurchased an additional $300 million in Q2 [17][20] - Capital expenditures in Q2 were $78 million, representing 5% of revenue, with expectations for continued investment in next-generation technologies [21][23] Q&A Session Summary Question: What are the current cyclical trends and headwinds? - Management noted stabilization in the automotive sector, with expectations for growth in Q3, but remains cautious due to uncertainties in the market [28][29] Question: What is the outlook for gross margins? - Management indicated that margin expansion is tied to utilization rates, with expectations for improvement as the market recovers [33][35] Question: What drove the softness in industrial revenue? - The decline was primarily due to traditional industrial sectors, which have stabilized but are experiencing fluctuations [39] Question: How is the automotive recovery progressing? - Management highlighted weakness in North America and Europe, but expects growth in Q3 as the company moves past the trough [44][45] Question: What is the impact of exiting non-core businesses? - The company anticipates a $200 million impact from exits in 2025, with a focus on higher value segments [100] Question: How is the company preparing for potential tariff impacts? - Management emphasized maintaining flexibility and focusing on controllable factors within their manufacturing footprint [107][108] Question: What is the status of the East Fishkill facility? - The facility is operational with qualified products, contributing to the overall utilization and production capacity [102][103]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $1.47 billion, exceeding the midpoint of guidance, with a non-GAAP gross margin of 37.6% and EPS of $0.53 [6][17][22] - Automotive revenue was $733 million, down 4% sequentially, while industrial revenue increased by 2% quarter over quarter [18][19] - Non-GAAP operating expenses were $298 million, down from $318 million year over year, reflecting cost management efforts [20][21] Business Line Data and Key Metrics Changes - Power Solutions Group (PSG) revenue was $698 million, up 8% quarter over quarter but down 16% year over year [19] - Analog and Mixed Signal Group (AMG) revenue was $556 million, down 2% quarter over quarter and 14% year over year [19] - Intelligent Sensing Group (ISG) revenue was $215 million, an 8% decrease quarter over quarter and 15% year over year [19] Market Data and Key Metrics Changes - Automotive revenue in China grew 23% sequentially, driven by silicon carbide and new electric vehicle ramps [8][18] - The company noted stabilization in demand across end markets, with expectations for automotive growth in Q3 [6][33] - AI Data Center revenue nearly doubled year over year, indicating strong growth in this segment [9][46] Company Strategy and Development Direction - The company is focusing on strategic investments in automotive, industrial, and AI data centers to enhance competitive edge and customer relationships [5][6] - Plans include exiting non-core businesses and repositioning the ISG towards higher value segments like ADAS and machine vision [11][26] - The company aims to double the number of products sampling from last year, with a revenue target of $1 billion for the Trejo platform [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding stabilization in the automotive sector, while acknowledging ongoing uncertainties [33][50] - The company expects automotive revenue to grow in Q3, with a focus on high-value products and operational efficiencies [6][33] - Management highlighted the importance of maintaining flexibility in operations amid tariff uncertainties and market fluctuations [108] Other Important Information - The company has increased its share repurchase target to 100% of free cash flow for 2025, having repurchased $300 million in Q2 [16][22] - Inventory levels are expected to peak in Q2 and decline through the rest of the year, with a focus on burning through strategic inventory [23][96] - The company anticipates a reduction in depreciation starting in Q4, contributing to improved financial performance [20] Q&A Session Summary Question: What are the current cyclical trends and headwinds? - Management noted signs of stabilization in the market, with automotive hitting a low in Q2 and expected growth in Q3, but remains cautious due to uncertainties [33][34] Question: What is the outlook for gross margins? - Management indicated that margin expansion is tied to utilization rates, with expectations for flat to slightly up margins in Q3 as inventory is managed [38][39] Question: What drove the softness in industrial revenue? - The decline in traditional industrial revenue was attributed to stabilization at low levels, with expectations for gradual recovery [44] Question: Where does the automotive recovery stand? - The automotive sector outside of China remains weak, with management expecting growth to begin in Q3 as the market stabilizes [50][51] Question: What is the impact of exiting non-core businesses? - The company expects a revenue headwind of approximately $200 million in 2025 due to exits, with a focus on higher value products [101] Question: How is the company preparing for potential tariff impacts? - Management emphasized maintaining flexibility and focusing on controllable factors within their manufacturing footprint [108][109] Question: What is the status of the East Fishkill facility? - The facility is operational with qualified products, contributing to overall utilization and production goals [103][104]

Core Viewpoint - ON Semiconductor reported Q2 revenue of $1.47 billion, exceeding market expectations but down 15.5% year-over-year. Non-GAAP adjusted earnings per share were $0.53, consistent with market expectations [1][2]. Financial Performance - Q2 2025 revenue was $1,468.7 million, compared to $1,735.2 million in Q2 2024, reflecting a 15.5% decline [2]. - Gross margin for Q2 was 37.6%, down from 45.2% in the same quarter last year [2]. - Operating margin was 13.2%, a significant drop from 22.4% year-over-year [2]. - Net income attributable to ON Semiconductor was $170.3 million, recovering from a loss of $486.1 million in Q1 2025 [2]. - Diluted earnings per share were $0.41 under GAAP and $0.53 under Non-GAAP, compared to $0.78 in Q2 2024 [2]. Future Outlook - The company expects Q3 revenue to be in the range of $1.47 billion to $1.57 billion, with earnings per share projected between $0.54 and $0.64 [3]. - CEO Hassan El-Houry stated that the ongoing transformation is leading to a more predictable business model, indicating confidence in long-term value creation and market recovery [3][4].

Q2 2025 Financial Highlights - Revenue reached $1.47 billion, a 2% increase Q/Q[14] - Gross margin was 37.6%, a decrease of 240 bps Q/Q[14] - Operating margin was 17.3%, a decrease of 90 bps Q/Q[14] - Diluted EPS was $0.53, a decrease of $0.02 Q/Q[14] Revenue Breakdown by Segment - Automotive revenue was $733 million, a 4% increase Q/Q[14] - Industrial revenue was $406 million, a 2% increase Q/Q[14] - Other revenue was $329 million, a 16% increase Q/Q[14] Q3 2025 Guidance - Revenue is expected to be between $1.465 billion and $1.565 billion[18] - Non-GAAP gross margin is expected to be between 36.5% and 38.5%[18] - Non-GAAP operating expenses are projected to be between $280 million and $295 million[18] - Non-GAAP diluted EPS is expected to be between $0.54 and $0.64[18] Long-Term Financial Targets (2027) - Revenue is targeted to grow at a CAGR of 10-12%[79, 86] - Gross margin is targeted to reach 53%[36, 79, 86] - Operating margin is targeted to reach 40%[79, 86] - Free cash flow is targeted to be 25-30% of revenue[37, 79, 86]

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Exhibit 99.1 onsemi Reports Second Quarter 2025 Results Returned over 100% of free cash flow year-to-date through share repurchases SCOTTSDALE, Ariz., – Aug. 4, 2025 – onsemi (the "Company") (Nasdaq: ON) today announced its second quarter 2025 results with the following highlights: "Our ongoing transformation is resulting in a more predictable business model, reflecting the strength of our strategy and our commitment to long-term value creation. We are beginning to see signs of stabilization across our end ...