ON Semiconductor 2025 Conference Summary Company Overview - **Company**: ON Semiconductor (NasdaqGS:ON) - **Date**: December 02, 2025 - **Speakers**: Hassane El-Khoury (President and CEO), Thad Trent (EVP and CFO) Key Industry Insights - **Demand Environment**: - Overall demand is stabilizing, which is viewed positively given previous fluctuations [5][6] - Improvement in ordering patterns noted over the past 90 days compared to the previous year [5] - Inventory levels are low, indicating a potential for a replenishment cycle as demand increases [6][7] - **Customer Behavior**: - Customers are hesitant to build inventory due to macroeconomic uncertainties, including geopolitical and tariff issues [9][10] - There is a need for certainty in demand before customers commit to building inventory [9][10] - **Pricing Environment**: - Pricing remains stable with low single-digit changes expected throughout the year [17][18] Company Performance and Strategy - **Operational Management**: - The company is well-positioned operationally with optimal inventory levels on the balance sheet [7] - Utilization can be increased immediately to match demand without waiting for inventory to be burned off [7] - **Silicon Carbide Market**: - ON Semiconductor has gained significant market share in North America and China, reaching 50% market share in China [22][26] - The company views silicon carbide as a core part of its business strategy, focusing on technology rather than pricing competition [26] - **Treo Platform**: - The Treo platform is ramping up quickly, with expectations to reach $1 billion in revenue by 2030 [60][61] - The platform is gaining traction across various markets, including industrial, automotive, and medical [61] Financial Outlook - **Gross Margin Projections**: - Gross margin is expected to improve with increased utilization, with every point of utilization contributing 25 to 30 basis points of margin improvement [33][34] - Current gross margin is at 74%, with potential to reach over 50% as market conditions improve [35] - **CapEx and OpEx Management**: - CapEx is focused on maintenance with a mid-single-digit intensity, avoiding large investments [41] - OpEx is expected to remain stable despite strategic investments, with a potential decline in 2026 as revenue grows [63][64] Non-Core Business and Strategic Focus - **Non-Core Exits**: - Approximately $300 million in revenue from non-core businesses will not repeat in 2026, primarily due to strategic repositioning [52][53] - The company is focusing on core competencies and exiting non-core segments to improve overall profitability [52] Conclusion - ON Semiconductor is navigating a stabilizing demand environment with a focus on operational excellence and strategic growth in key markets. The company is well-positioned to capitalize on future demand increases while managing inventory and operational costs effectively.