ON Semiconductor Corporation (ON)

onsemi makes power and sensing chips, mostly for cars and factories. Its Power Solutions Group (PSG) sells power semiconductors in silicon, silicon carbide (SiC) and gallium nitride, materials for high-efficiency, high-power conversion, as bare chips, packaged parts or complete power modules, for electric vehicle drivetrains and fast chargers, energy infrastructure and AI data centers. Its Analog and Mixed-Signal Group (AMG) sells power management chips, gate drivers, sensor interfaces and connectivity chips built on its Treo platform. Its Intelligent Sensing Group (ISG) sells CMOS image sensors, the camera chips behind driver assistance systems (ADAS), factory automation and robots. It earns its revenue mainly from selling chips, and to a much lesser extent from product development agreements. 181920212223

How it operates

onsemi makes power and sensing chips, mostly for cars and factories. Its Power Solutions Group (PSG) sells power semiconductors in silicon, silicon carbide (SiC) and gallium nitride, materials for high-efficiency, high-power conversion, as bare chips, packaged parts or complete power modules, for electric vehicle drivetrains and fast chargers, energy infrastructure and AI data centers. Its Analog and Mixed-Signal Group (AMG) sells power management chips, gate drivers, sensor interfaces and connectivity chips built on its Treo platform. Its Intelligent Sensing Group (ISG) sells CMOS image sensors, the camera chips behind driver assistance systems (ADAS), factory automation and robots. It earns its revenue mainly from selling chips, and to a much lesser extent from product development agreements. 181920212223

By its estimate, automotive brought in 51% of 2025 revenue, industrial 28% and other markets, among them AI data centers, computing and consumer, 21%. Distributors took about 54% of revenue and direct customers, mostly large multinationals and regional OEMs, about 46%; one unnamed distributor took about 11%, with sales across all three groups. Many customers sign multi-year long-term supply agreements with committed amounts; about $7.1 billion remained to be delivered under them at the end of 2025, some carry non-cancelable capacity payments that reserve production, and certain of them were modified during 2025 in response to changes in demand. 24252627282930

Counted by where sales are billed, Hong Kong brought in 1.6 billion dollars, 27.3% of 2025 revenue; the United Kingdom 1.3 billion, 22.5%; Singapore 1.3 billion, 20.9%, the steepest fall, down 27.7%; and the United States 1.2 billion, 20.5%. Its global distribution centers are in China, the Philippines and Singapore. 313233

Unlike most chip designers, onsemi makes most of its own chips. It runs wafer fabs in the United States, the Czech Republic, Japan, South Korea and Malaysia, the largest at East Fishkill, New York, at 2,724,137 square feet, and assembly and test plants in Canada, China, Malaysia, the Philippines, Vietnam and the United States. Its Hudson, New Hampshire plant grows SiC crystal boules and its plants in Rožnov pod Radhoštěm, Czech Republic and Bucheon, South Korea make silicon and SiC wafers, a vertically integrated SiC chain it credits with supply assurance and cost. The Leshan plant in China belongs to a joint venture, 80% owned, with Leshan Radio. Contract manufacturers, mainly for wafers and for assembly and test, still accounted for about 34% of manufacturing input costs in 2025. 3435363738394041

Its raw materials include silicon and SiC wafers, laminate substrates, gold, copper, lead frames, mold compound and ceramic packages. Some plants are the only source of the product they make, so the filing warns that a disruption at one would delay or stop production of that product. 4243

The specifics

ON Semiconductor Corporation was incorporated in Delaware in 1992. It keeps adding power technology by acquisition: in January 2025 it bought Qorvo's silicon carbide JFET business, a kind of SiC power switch, for $118.8 million in cash, to serve power supplies for AI data centers, and in October 2025 it acquired rights to Aura Semiconductor's Vcore power technologies for up to $144 million, most of it payable on product delivery and revenue milestones through 2030. 444546

2025 was a year of shrinking the factory base. Under its 2025 Manufacturing Realignment Program it cut about 2,400 jobs at a severance cost of $67.1 million, wrote down $496.0 million of manufacturing equipment now held for sale, booked $103.9 million of other exit costs, and charged $268.2 million for excess and obsolete inventory, $230.3 million of it in ISG. It is also exiting product lines that do not enhance gross margin or meet its strategic aims. 4748495017

It names its competitors: in power, Infineon, STMicroelectronics, Wolfspeed, ROHM Semiconductor and Nexperia; in analog, Texas Instruments, Analog Devices, Infineon, STMicroelectronics, Renesas, Monolithic Power Systems and NXP; in image sensors, Sony Semiconductor Manufacturing, Samsung and Omnivision. It says it was one of the earliest to commercialize CMOS active pixel sensors, and that its silicon, SiC and GaN power technologies are designed and made in house. It holds a substantial number of patents but does not consider its business substantially dependent on any single one. 515253545556

Trade tension reaches it through China. The filing warns that the Leshan plant may face higher costs or trade restrictions from the tension between the United States and China, and that new rules may require export licenses to supply certain products to customers in China, with no assurance they will be granted. 57

What drives growth, line by line

Power Solutions Group. The largest line: 2.8 billion dollars, 46.8% of 2025 revenue, down 16.2%. The filing puts the drop on automotive, down $438.0 million, and industrial, down $120.2 million, partly offset by $15.1 million more in other markets that include AI data centers. Gross margin fell to 24.5% from 41.3% on lower volume, underused factories, an unfavorable product mix and a $43.9 million write-off of consumables and supplies. 315859

Analog Mixed Signal Group. 2.3 billion dollars, 37.7% of revenue, down 13.3%. Automotive fell $204.1 million and other markets $161.5 million, mostly from the reduction of lower-margin manufacturing services revenue at the East Fishkill (EFK) fab, while industrial rose $18.4 million. Losing that low-margin work lifted AMG's gross margin to 51.1% from 50.1%, the only group to improve. 31606162

Intelligent Sensing Group. 928.4 million dollars, 15.5% of revenue, down 17.5%, mostly in automotive, down $177.9 million, with industrial down $24.2 million. Gross margin collapsed to 15.1% from 46.7%, mainly on $230.3 million of excess and obsolete inventory charges from strategy changes under the realignment program. 31636449

Altogether revenue fell 15.3% to $5,995.4 million, the second yearly fall in a row from 8.3 billion dollars in 2023. Gross margin fell to 33.1% from 45.4%, operating income to $84.2 million from $1,767.7 million, and net income attributable to onsemi to $121.0 million from $1,572.8 million. The filing blames the realignment charges and weaker automotive and industrial demand that left factories underused. 6566

What comes next, in the company's words: it intends to keep aligning manufacturing capacity and spending with forecast demand during 2026; it expects about 34% of the $7.1 billion under long-term supply agreements to become revenue over the next 12 months if products ship as contracted; and it has committed to buy about 80% of Leshan's expected production capacity in 2026. 672868

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What the desk infers Inferred

1. Inferred

   The factory capacity onsemi added when capital spending peaked in 2022 and 2023 ran well ahead of demand, and 2025 was the year it wrote part of that build-out down.

   Because

   • Capital spending rose to 1.0 billion dollars in 2022 and 1.5 billion in 2023, then fell to 341.2 million in 2025. 66
   • The $496.0 million impairment relates to previous investments in manufacturing equipment at certain facilities, now held for sale. 48
   • PSG's margin fell partly on underutilization of its manufacturing facilities, and the program aims to realign internal capacity with anticipated long-term needs. 5947
   Confidence 75 of 100Wrong if A filing showing that the impaired equipment was bought before 2022, or that the factories ran near full in 2025.
2. Inferred

   Most of the power group's automotive decline most likely came from silicon carbide sold for electric vehicle drivetrains, and the SiC JFET purchase is a move to find SiC buyers beyond cars, in AI data center power supplies.

   Because

   • PSG's automotive revenue fell $438.0 million, the largest drop in any group or end market in 2025. 58
   • The filing ties its power technologies to the electrification of the automotive drivetrain and names fluctuating demand for EVs as a risk to its automotive sales. 6970
   • It bought the SiC JFET business to address power supplies for AI data centers, and other markets including AI data centers were the one part of PSG that grew. 4558
   Confidence 55 of 100Wrong if A breakdown of PSG automotive revenue showing that silicon rather than silicon carbide products made up most of the 2025 decline.
3. Inferred

   The long-term supply agreements gave onsemi less protection in the downturn than their size suggests: customers, mostly automotive and industrial, reshaped them as demand fell, and revenue dropped anyway.

   Because

   • A significant portion of revenue comes from automotive and industrial customers, including revenue under long-term supply agreements. 71
   • Certain agreements were modified during 2025 in response to changes in demand, and some customers have sought to amend or cancel delivery terms. 3072
   • Revenue fell 15.3% in 2025 on lower volumes across all three groups. 65
   Confidence 65 of 100Wrong if A filing showing that the 2025 modifications were made at onsemi's request for supply reasons rather than at customers' request for lower demand.