On Semiconductor (ON) Expands SiC Footprint in Czech Republic

Core Viewpoint - ON Semiconductor is significantly investing in silicon carbide (SiC) manufacturing in Europe to meet the growing global demand for energy-efficient power semiconductors, particularly in sectors like electric vehicles, renewable energy, and AI data centers [1][2]. Group 1: Investment and Expansion - The company plans to invest up to $2 billion (44 billion CZK) in a vertically-integrated SiC manufacturing facility in the Czech Republic [1]. - This multi-year investment highlights ON's commitment to enhancing its capabilities in SiC manufacturing and contributing to the semiconductor value chain in Europe [1]. Group 2: Market Demand and Performance - ON Semiconductor's SiC solutions are increasingly popular in automotive and industrial applications, driving significant growth [2]. - In Q1 2024, over 50% of the substrates for ON's silicon carbide business came from internal production, indicating strong operational performance [2]. Group 3: Strategic Partnerships - ON Semiconductor has extended its silicon carbide partnership with BorgWarner, integrating EliteSiC technology for improved efficiency in EV traction inverters [3]. - Volkswagen is utilizing ON's EliteSiC technology in its electric vehicles, specifically in the 1200 V silicon carbide power module for traction inverters [3]. - A long-term supply agreement with Magna International aims to incorporate ON's EliteSiC solutions into Magna's eDrive systems, enhancing electric vehicle performance [3]. Group 4: Financial Outlook - Despite a broadening portfolio and strong partnerships, ON Semiconductor faces macroeconomic uncertainties, with its stock declining 17.3% year to date compared to the Zacks Computer & Technology sector's growth of 25.7% [4]. - The company expects Q2 2024 revenues to be between $1.68 billion and $1.78 billion, with a consensus estimate of $1.73 billion, reflecting a year-over-year decline of 17.32% [4]. - Non-GAAP earnings are projected to be between 86 cents and 98 cents per share, with a consensus estimate of 93 cents, indicating a year-over-year fall of 30.8% [4].