ON Semiconductor Corporation (ON) | Investment Case

1. Company Snapshot

1.a. Company Description

ON Semiconductor Corporation provides intelligent sensing and power solutions worldwide.Its intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers fast-charging systems, and propels sustainable energy for the solar strings, industrial power, and storage systems.The company operates through three segments the Power Solutions Group, the Advanced Solutions Group, and the Intelligent Sensing Group segments.

It offers analog, discrete, module, and integrated semiconductor products that perform multiple application functions, including power switching and conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation functions.The company also designs and develops analog, mixed-signal, advanced logic, application specific standard product and ASICs, radio frequency, and integrated power solutions for end-users in end-markets, as well as provides foundry and design services for government customers.In addition, it develops complementary metal oxide semiconductor image sensors, image signal processors, and single photon detectors, including silicon photomultipliers and single photon avalanche diode arrays, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in various end-markets.

ON Semiconductor Corporation was incorporated in 1992 and is headquartered in Phoenix, Arizona.

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1.b. Last Insights on ON

ON Semiconductor's recent performance is driven by solid Q3 results, with revenue of $1,550.9 million and non-GAAP gross margin of 38.0%. The company's AI and data center exposure, including the Vcore Power acquisition, offer growth potential. A $6 billion share repurchase program, authorized by the board, demonstrates confidence in the business. Partnerships, such as with Innoscience to expand GaN power device production, also drive growth. ON Semiconductor's valuation appears attractive, with strong free cash flow and growth prospects. (Source: onsemi Reports Third Quarter 2025 Results)

1.c. Company Highlights

Last Price	54.79
Change Percentage	-4.13%
Open	56.94
Previous Close	57.15
Market Cap ( Millions)	22408
Volume	10836634
Year High	70.58
Year Low	31.04
M A 50	49.78
M A 200	48.19

FCF Yield	7.32%
Dividend Yield	0.00%
ROE	3.91%
Debt / Equity	42.72%
Net Debt / EBIDTA	98.70%
Price To Book	2.82
Price Earnings Ratio	69.87
Price To FCF	13.66
Price To sales	3.62
EV / EBITDA	25.43

2. onsemi Delivers Strong Q3 Earnings with Revenue and EPS Beating Guidance

onsemi reported Q3 revenue of $1.55 billion, non-GAAP gross margin of 38%, and earnings per share of $0.63, beating guidance. The company's revenue growth was driven by demand for high-efficiency power delivery in Automotive, Industrial, and AI markets. The actual EPS came out at $0.625, slightly higher than estimates of $0.6. The company's financial performance was strong, with revenue growth of 7% and 5% sequentially in Automotive and Industrial markets, respectively.

Publication Date: Nov -04

                                    📋 Highlights
                                    Q3 Financial Outperformance:
                                                Revenue hit $1.55 billion, non-GAAP gross margin at 38%, and EPS rose to $0.63, surpassing guidance.
AI Revenue Surge:
                                                AI revenue doubled YoY in Q3, projected to reach $250 million in 2025, driven by data centers and PSUs.
Technological Milestones:
                                                Launched Treo platform (>$1B design funnel), vertical GaN, SiC JFET, and expanded analog portfolio via Vcore acquisition.
Shareholder Returns:
                                                Repurchased $925 million of shares YTD, returning 100% of free cash flow, with Q4 revenue guidance at $1.48–1.58 billion.
Operational Efficiency:
                                                Utilization climbed to 74% in Q3, die bank inventory for mass markets grew 20% YoY, and inventory days target remains 110–120.

                                

Segment Performance

The company's AI revenue approximately doubled year-over-year in Q3 and is expected to reach $250 million in 2025. The Automotive market is seeing stabilization, but a restocking cycle has not yet occurred. onsemi is differentiating itself in the AI market through its ability to support power delivery from the wall to the core. As Hassane El-Khoury noted, "our ability to address the whole power tree is our differentiation."

Guidance and Outlook

Guidance for Q4 includes revenue of $1.48-1.58 billion, non-GAAP gross margin of 37-39%, and non-GAAP earnings per share of $0.57-0.67. The company expects normal seasonality in Q1, with revenue typically down 2% to 3%. The midpoint of Q4 guidance is down 1.3%, in line with normal seasonality.

Valuation

onsemi's valuation metrics indicate a premium valuation. The company's P/E Ratio is 44.91, P/B Ratio is 2.63, and P/S Ratio is 3.23. The EV/EBITDA is 17.08, and the Free Cash Flow Yield is 6.24%. Analysts estimate next year's revenue growth at 5.2%. The current valuation may be pricing in some of the growth expectations, but the company's strong financial performance and growth prospects in AI and Automotive markets may justify the premium.

Operational Highlights

The company is seeing customer diversification in the Automotive market, adding new customers, and reaching into the tail of OEMs. onsemi is also investing in differentiated technologies, including vertical GaN and silicon carbide. The company's utilization increased to 74% in Q3 due to building die bank inventory for the mass market. Utilization is expected to be down in Q4 as builds are completed, returning to a normalized rate.

3. NewsRoom

onsemi and Innoscience Announce Plans to Collaborate to Speed Global Rollout of GaN Power Portfolio

Dec -02

Source: globenewswire.com

What Is the Best Chip Stock to Own for the Next 10 Years?

Dec -01

Source: fool.com

Artificial Intelligence (AI) Could Be the Catalyst That Lifts These Undervalued Tech Stocks

Nov -24

Source: fool.com

onsemi Places a $6 Billion Bet on Its Own Stock

Nov -19

Source: marketbeat.com

ON Semiconductor (NASDAQ:ON) to Repurchase $6.00 billion in Outstanding Stock

Nov -19

Source: defenseworld.net

onsemi Announces $6 Billion Share Repurchase Authorization

Nov -18

Source: globenewswire.com

Here's My Top Stock to Buy for 2026

Nov -17

Source: fool.com

Nvidia Ownership Hits Record Levels -- Could NVDA Climb More Higher?

Nov -12

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.79%)

6. Segments

Power Solutions Group (PSG)

Expected Growth: 7.2%

Growing demand for high-performance computing and consumer electronics drives ON Semiconductor's Power Solutions Group's growth, fueled by increasing need for efficient power management and conversion in industrial applications.

Analog & Mixed-Signal Group (AMG)

Expected Growth: 8.4%

Automation and electrification in automotive, increasing adoption of IoT devices, and growth in industrial automation are driving demand for ON Semiconductor's Analog & Mixed-Signal Group.

Intelligent Sensing Group (ISG)

Expected Growth: 8.1%

Growing demand for autonomous vehicles, increasing adoption of IoT devices, and rising need for industrial automation drive the Intelligent Sens’ing Group’s growth.

7. Detailed Products

Power Management

Products include voltage regulators, MOSFETs, and DC-DC converters designed to efficiently manage and control power in electronic devices.

Connectivity Solutions

Offerings include Wi-Fi modules, Bluetooth chips, and RF devices for enabling wireless communication.

Sensors

Includes temperature, pressure, and motion sensors for detecting environmental changes.

Automotive Solutions

Provides components for ADAS, infotainment, and vehicle safety systems.

Advanced Manufacturing

Specialized semiconductors for industrial control and robotics to improve automation efficiency.

Renewable Energy Systems

Includes solar inverters and battery management systems for efficient energy handling.

8. ON Semiconductor Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for ON Semiconductor is medium. While there are alternative materials and technologies, they are not direct substitutes for semiconductors in most applications. The high specificity of semiconductor products reduces the likelihood of substitution, but emerging technologies could pose a moderate threat in the long term.

Bargaining Power Of Customers

Customers of ON Semiconductor, particularly large automotive and consumer electronics firms, have some bargaining power due to their large volume purchases. However, ON Semiconductor's strong market position and product differentiation mitigate this power, leading to a medium overall score.

Bargaining Power Of Suppliers

Suppliers in the semiconductor industry, especially those providing rare materials and advanced manufacturing equipment, have significant bargaining power. This is due to the specialized nature of the components and recent supply chain constraints, giving suppliers more leverage.

Threat Of New Entrants

The threat of new entrants is low. High capital requirements, complex manufacturing processes, and significant R&D investments create substantial barriers to entry. Established players like ON Semiconductor also benefit from economies of scale and patent protections.

Intensity Of Rivalry

The semiconductor industry is highly competitive, with major players like Intel and Texas Instruments. Intense competition in areas such as technology innovation, pricing, and market share drives this high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	27.68%
Debt Cost	4.25%
Equity Weight	72.32%
Equity Cost	11.43%
WACC	9.45%
Leverage	38.28%

11. Quality Control: ON Semiconductor Corporation passed 8 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

NVIDIA

A-Score: 5.3/10

Value: 0.0

Growth: 10.0

Quality: 9.2

Yield: 0.0

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

Analog Devices

A-Score: 4.8/10

Value: 1.1

Growth: 4.6

Quality: 7.3

Yield: 4.0

Momentum: 5.0

Volatility: 7.0

1-Year Total Return ->

GLOBALFOUNDRIES

A-Score: 3.7/10

Value: 5.4

Growth: 5.0

Quality: 4.2

Yield: 0.0

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

AMD

A-Score: 3.6/10

Value: 0.2

Growth: 6.8

Quality: 6.6

Yield: 0.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

Intel

A-Score: 3.5/10

Value: 4.1

Growth: 1.2

Quality: 3.2

Yield: 1.0

Momentum: 9.0

Volatility: 2.7

1-Year Total Return ->

ON Semiconductor

A-Score: 3.3/10

Value: 2.8

Growth: 6.9

Quality: 5.7

Yield: 0.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.16%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.45%

ON Semiconductor Corporation - US6821891057

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ON

1.c. Company Highlights

Better Quality

Higher Growth

Stable Momentum

Earnings Beats

Earnings Miss

Revenues Miss

Weak Momentum

Average Growth

Revenues Beats

Average Quality

Medium Volatility

Fairly Valued

2. onsemi Delivers Strong Q3 Earnings with Revenue and EPS Beating Guidance

Segment Performance

Guidance and Outlook

Valuation

Operational Highlights

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.79%)

6. Segments

Power Solutions Group (PSG)

Expected Growth: 7.2%

Analog & Mixed-Signal Group (AMG)

Expected Growth: 8.4%

Intelligent Sensing Group (ISG)

Expected Growth: 8.1%

7. Detailed Products

Power Management

Connectivity Solutions

Sensors

Automotive Solutions

Advanced Manufacturing

Renewable Energy Systems

8. ON Semiconductor Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: ON Semiconductor Corporation passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

54.79$

Current Price

54.79$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA