Company Reports

ON Semiconductor hosted its 2026 analyst day, reiterating its growth strategy across automotive, industrial, and data center power chips and updating its revenue growth target to 12%-14%, excluding the pending Synaptics acquisition.

We believe Onsemi is a power chipmaker aligning itself to the differentiated parts of its portfolio in order to accelerate growth and margin expansion. We expect the firm to outpace the growth of its underlying markets over the next five years as it tailors its portfolio of chips and sensors to pursue secular trends toward electrification and connectivity that allow it to sell into new sockets. Onsemi is the top supplier of image sensors to automotive applications like advanced driver-assist systems, or ADAS, and its semiconductors enable power transfer and conversion in electric vehicles and renewable energy—all of which we expect to keep Onsemi’s sales growth above that of its underlying markets.

ON Semiconductor's June-quarter results and guidance were positive. June revenue rose 9% year over year to $1.6 billion, while September guidance implies 10% growth. June gross margin ticked up 170 basis points year over year to 39.3%, and September gross margin guidance is 41% at the midpoint.

We believe Onsemi is a power chipmaker aligning itself to the differentiated parts of its portfolio in order to accelerate growth and margin expansion. We expect the firm to outpace the growth of its underlying markets over the next five years as it tailors its portfolio of chips and sensors to pursue secular trends toward electrification and connectivity that allow it to sell into new sockets. Onsemi is the top supplier of image sensors to automotive applications like advanced driver-assist systems, or ADAS, and its semiconductors enable power transfer and conversion in electric vehicles and renewable energy—all of which we expect to keep Onsemi’s sales growth above that of its underlying markets.

ON Semiconductor's first-quarter results and second-quarter guidance were positive. March-quarter sales rose 5% year over year to $1.51 billion. June quarter's sales guide is $1.585 billion, implying 9% growth. Onsemi raised its 2026 AI revenue guide to more than $500 million, implying a 100% rise.

We believe Onsemi is a power chipmaker aligning itself to the differentiated parts of its portfolio in order to accelerate growth and margin expansion. We expect the firm to outpace the growth of its underlying markets over the next five years as it tailors its portfolio of chips and sensors to pursue secular trends toward electrification and connectivity that allow it to sell into new sockets. Onsemi is the top supplier of image sensors to automotive applications like advanced driver-assist systems, or ADAS, and its semiconductors enable power transfer and conversion in electric vehicles and renewable energy—all of which we expect to keep Onsemi’s sales growth above that of its underlying markets.

ON Semiconductor's fourth-quarter results were solid, with automotive and industrial revenue both rising sequentially, but with noncore product exits leading to a slight sequential decline for total sales. Guidance implies another sequential decline, due to market seasonality and more product exits.

ON Semiconductor shares have risen 37% since a nadir on Nov. 20, 2025, well outperforming the Morningstar US Semiconductors Index, which has risen 1% over that period. ON reports its fourth-quarter results after market close on Feb. 9.

ON Semiconductor's third-quarter results were at the high ends of guidance, with sales declining 12% year over year but rising 6% sequentially to $1.55 billion. Fourth-quarter guidance calls for roughly flat sequential growth, which is in line with typical seasonality.

Onsemi's second-quarter results came in line with guidance. Revenue rose 2% sequentially (down 15% year over year) to $1.47 billion. Non-GAAP operating margin declined 240 basis points sequentially to 37.6%. Third-quarter guidance calls for modest sequential revenue growth and margin expansion.

Onsemi's first-quarter revenue declined 22% year over year and 16% sequentially to $1.45 billion, while non-GAAP gross margin compressed 530 basis points sequentially to 40%. Second-quarter guidance calls for flat revenue growth and 250 basis points of gross margin contraction, sequentially.

We believe Onsemi is a power chipmaker aligning itself to the differentiated parts of its portfolio in order to accelerate growth and margin expansion. We expect the firm to outpace the growth of its underlying markets over the next five years as it tailors its portfolio of chips and sensors to pursue secular trends toward electrification and connectivity that allow it to sell into new sockets. Onsemi is the top supplier of image sensors to automotive applications like advanced driver-assist systems, or ADAS, and its semiconductors enable power transfer and conversion in electric vehicles and renewable energy—all of which we expect to keep Onsemi’s sales growth above that of its underlying markets.

Battery electric vehicle sales stalled in the US and Europe in 2024 after a postpandemic rise. With sales growing in China and globally, many companies throughout the EV supply chain stand to benefit from the transition to EVs.

On March 5, Onsemi announced an all-cash offer of $35.10 per share for Allegro MicroSystems, which implies an enterprise value of $6.9 billion. This valuation is a 57% premium to Allegro's share price at the end of February, before rumors of a deal first circulated.

Onsemi's fourth-quarter revenue declined 15% year over year and 2% sequentially to $1.72 billion. Management's outlook for the first quarter was weak, implying revenue declines of 25% year over year and 19% sequentially along with 500 basis points of sequential gross margin compression.

We believe Onsemi is a power chipmaker aligning itself to the differentiated parts of its portfolio in order to accelerate growth and margin expansion. We expect the firm to outpace the growth of its underlying markets over the next five years as it tailors its portfolio of chips and sensors to pursue secular trends toward electrification and connectivity that allow it to sell into new sockets. Onsemi is the top supplier of image sensors to automotive applications like advanced driver-assist systems, or ADAS, and its semiconductors enable power transfer and conversion in electric vehicles and renewable energy—all of which we expect to keep Onsemi’s sales growth above that of its underlying markets.

We maintain our $86 fair value estimate for shares of narrow-moat Onsemi after third-quarter results and fourth-quarter guidance fit with our longer-term expectations. Onsemi has been hampered by cyclically weak automotive and industrial chip demand in 2024 and customers working down their own inventories. We believe the current softness is short-term in nature, and we expect a return to growth in 2025. Long term, we remain bullish on Onsemi's growth prospects as electrical architectures grow more complex in high-voltage applications like electric vehicles. We also like that the firm has structurally improved its margin profile, even during a downturn. We see shares as undervalued, and we believe investors should look to returning growth in 2025 as a positive catalyst.

We maintained our $86 fair value estimate for shares of narrow-moat ON Semiconductor as we maintain our long-term recovery thesis for the firm. Onsemi’s second-quarter results met our expectations, and we view guidance for sequential growth in the third quarter positively. Automotive and industrial chip demand remains soft, in part due to customers working through built-up excess inventories. We agree with Onsemi’s cautious outlook for the second half of 2024, which matched commentary from peers like STMicro and NXP earlier in July. We don’t foresee a significant improvement in this demand in 2024, but we do model a rebound in 2025. Still, the market viewed guidance positively, likely due to being better than feared after downside in NXP and STMicro’s reports. Shares rose 12% after results reported, but we continue to see modest upside for investors at current levels.

We lower our fair value estimate for shares of narrow-moat Onsemi to $86, from $94, as we trim our short-term forecast to reflect a higher impact from the ongoing power chip downturn. We continue to like Onsemi’s ability to navigate the current period of weaker demand, especially on the profitability front. We also see softer demand as a short-term dynamic, resulting from overordering at customers in 2023, and we maintain our confidence in Onsemi’s long-term growth opportunity in electric vehicles and renewable energy. Nonetheless, we now model a greater decline in sales in 2024 after second-quarter guidance missed our expectations. We continue to model a rebound in 2025. We still see shares as undervalued and see cyclical weakness as a buying opportunity for long-term investors.

We believe Onsemi is a power chipmaker aligning itself to the differentiated parts of its portfolio in order to accelerate growth and margin expansion. We expect Onsemi to outpace the growth of its underlying markets over the next five years as it tailors its portfolio of chips and sensors to pursue secular trends toward electrification and connectivity that allow it to sell into new sockets. Specifically, Onsemi is the top supplier of image sensors to automotive applications like advanced driver-assist systems, or ADAS, and its semiconductors enable power management and conversion in electric vehicles, or EVs, and renewable energy—all of which we expect to keep Onsemi’s sales growth above that of the broader semiconductor industry.