ON Semiconductor Corporation

ON · NASDAQ · USD

Analysis

Last 4 earnings calls · through Q2 FY2026

onsemi's three-year downturn has ended, and two engines are pulling: a recovering auto and industrial market, and an AI data center business that keeps beating its own raised targets. The open question is whether profit follows the volume as fast as management promises.

  • The three-year downturn is over and the recovery is broadening now.

    Q3 FY2025 showed automotive and industrial stabilizing, and Q4 delivered the first year-over-year industrial growth in eight quarters. By Q1 FY2026 management called it "a clear inflection point", with lead times stretching since. How does its automotive content growth compare with peers this cycle?

  • AI data centers turned into a second growth engine.

    Sized at roughly $250 million for 2025, the business was guided to double in 2026 and has since been raised to more than double, led by silicon carbide for AI power supplies. It is growth that does not depend on car sales. How much of the AI pipeline sits in power supplies versus near the processor?

  • Profit is recovering, but it is still far below where it sat.

    Gross margin has risen four quarters running, still well below what onsemi earned on similar revenue two years ago. Closing the gap needs factories running near full, and costs are rising faster than the price increases that offset them. How far must factory utilisation rise before the long-term margin goal is met?

Bullish
  • AI data center power content
    The bull case is that AI data centers need more power conversion per rack and ON sells across the whole chain, so it gains content as voltages rise.
  • Automotive content per vehicle
    A second pillar is content growth in vehicles, where zonal wiring, sensors and silicon carbide add dollars per car even when vehicle production is flat.
  • Factory utilization and margins
    Management expects margins to keep expanding as factory utilization rises and cost cuts land, which would make recovering revenue much more profitable.
Bearish
  • Automotive restocking delay
    The bear case is that automakers and their suppliers stay cautious and never rebuild inventory, leaving ON shipping only to end demand with little upside surprise.
  • Margins below long-term target
    Gross margin is still far below the company's long-term goal, and closing the gap depends on filling factories that are running well under capacity.
  • Cost inflation and pricing
    Raw material and foundry costs are rising and price increases take quarters to land, so margin progress could stall if costs keep climbing faster.
See the full bull & bear case
PoliticiansInstitutionsInsiders
PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Purchase≥$15KMar 23May 13
Donald Trump
Republican · Executive
Purchase≥$15KMar 12May 13
Donald Trump
Republican · Executive
Purchase≥$15KMar 11May 13
Donald Trump
Republican · Executive
Purchase≥$50KMar 2May 13
Donald Trump
Republican · Executive
Purchase≥$1KFeb 19May 13

Congressional trading data provided by QuiverQuant

See all
Product segmentsGeography
FY2025 · USD

How ON Semiconductor turned $6.0B of revenue into $84.2M of operating income.

Revenue
PSG$2.8B
AMG$2.3B
ISG$928.4M
Total revenue$6.0B
Gross profit$2.0B33.1%
Operating income$84.2M1.4%
See all