Summary of ON's Q1 2025 Earnings Call Company Overview - The company discussed is ON Semiconductor (ON) Financial Overview - Q1 2025 revenue was $1.45 billion, down 22% year-over-year and down 16% quarter-over-quarter, exceeding the company's guidance of $1.35 to $1.45 billion and Bloomberg consensus of $1.40 billion [1] - Non-GAAP gross margin for the quarter was 40.0%, a decrease of 5.9 percentage points year-over-year and 5.3 percentage points quarter-over-quarter, within the guidance range of 39.0% to 41.0%, but below Bloomberg consensus of 40.1% [1] - Non-GAAP net income was $230 million, down 50% year-over-year and down 43% quarter-over-quarter, with an EPS of $0.55, at the upper end of the guidance of $0.45 to $0.55 and above Bloomberg consensus of $0.51 [1] Guidance - For Q2 2025, the company expects revenue of $1.4 to $1.5 billion, with the midpoint above Bloomberg consensus of $1.41 billion; Non-GAAP gross margin is expected to be 36.5% to 38.5%, below Bloomberg consensus of 38.97%; Non-GAAP EPS is projected to be $0.48 to $0.58, with the midpoint above Bloomberg consensus of $0.51 [2] Revenue Breakdown - By business segment: - Power Solutions Group (PSG) revenue was $645 million, down 26% year-over-year and down 20% quarter-over-quarter, below Bloomberg consensus of $674 million [3] - Analog and Mixed Signal Group (AMG) revenue was $566 million, down 19% year-over-year and down 7% quarter-over-quarter, above Bloomberg consensus of $535 million [3] - Intelligent Sensing Group (ISG) revenue was $234 million, down 20% year-over-year and down 23% quarter-over-quarter, below Bloomberg consensus of $246 million [3] - By end market: - Automotive and industrial sectors contributed 80% of total revenue, with automotive revenue at $762 million, down 26% quarter-over-quarter, in line with company expectations due to weak European market and seasonal factors in Asia [3] - Industrial revenue was approximately $400 million, down 4% quarter-over-quarter, better than company expectations, with growth in medical, aerospace, and defense sectors, while traditional industrial remained stable [3] Other Important Information - Business Progress: The company anticipates that about 50% of new vehicles in China will use its silicon carbide products. In Q1 2025, the company began shipping 8-megapixel image sensors to a Chinese OEM for ADAS platforms, and another Asian OEM selected the same sensor for next-generation ADAS [4] - Restructuring Measures: The company implemented two measures to boost gross margin and revenue: - Executing the Fab Right plan, reducing internal wafer fab capacity by 12% to lower fixed costs, expected to save approximately $22 million in depreciation annually, with benefits reflected in Q4 2025 [4] - A restructuring plan to reduce global headcount by 9% and further decrease non-manufacturing locations, expected to save $25 million in Q2 2025 compared to Q1 2025, and an additional $5 million per quarter in the second half of 2025 [4] - Inventory: The company continues to reduce inventory, with a dollar value decrease of $164 million quarter-over-quarter, and inventory days increased by 3 days to 219 days [4] - Share Buyback: The company plans to increase its stock buyback to 100% of free cash flow for 2025, with $1.5 billion of unused buyback authorization remaining [4]