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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 was driven by its robust AI-related growth prospects, with AI revenue doubling year-over-year every quarter and FY2025 guidance at $250M. The company's management reiterated ambitious FY2027 guidance, aided by growing design wins in automotive, renewables, and data centers. ON's entry into AI data center power management, including a partnership with Nvidia, adds secular growth potential beyond auto and industrial markets. The company's transformation into a focused power and sensing company centered on silicon carbide, high-voltage power devices, and industrial-grade reliability positions it for growth in EV powertrains, industrial automation, energy infrastructure, and datacenter power. ON's strong cash flows and large buyback program support its share price, and the company's recent earnings beat expectations, with revenue in line with estimates but down from the same period a year earlier.

1.c. Company Highlights

2. ON Semiconductor's Strong Q4 and Full-Year 2025 Results

ON Semiconductor Corporation reported a robust financial performance for the fourth quarter and full year 2025, with revenue of $1.53 billion and $6 billion, respectively. The company's non-GAAP gross margin stood at 38.2% and 38.4% for the quarter and full year, respectively, while earnings per share (EPS) came in at $0.64, beating estimates of $0.62. The company's strong performance was driven by its diversified portfolio, strategic investments, and partnerships.

Publication Date: Feb -11

📋 Highlights
  • Outperformed Q4 Revenue Guidance: Delivered $1.53 billion in revenue, surpassing the midpoint of guidance, with a non-GAAP gross margin of 38.2% and EPS of $0.64.
  • AI Data Center Growth: Generated over $250 million in AI data center revenue, with Q1 2026 expected to grow high teens percentage-wise and a broad portfolio of GaN/SiC solutions.
  • Product Innovation & Market Expansion: Doubled Treo platform product sampling YoY, introduced lateral GaN strategy, and secured $400 million in automotive design funnel for SmartFETs and Ethernet transceivers.
  • Cost Optimization & Shareholder Returns: $1.4 billion in free cash flow returned via share repurchases in 2025, with FabRite actions driving cost structure improvements and 700 bps headwind mitigation plans for 2026.
  • 2026 Revenue & Margin Outlook: Targets $1.44–$1.54 billion revenue, 37.5–39.5% non-GAAP gross margin, and $0.56–$0.66 EPS, with $35–$45 million in capital expenditures.

Segmental Performance

The company's AI data center business delivered over $250 million in revenue in 2025, driven by its broad portfolio of silicon, silicon carbide, and GaN products. The automotive segment also saw significant growth, with the company expanding its content for zonal architecture and software-defined vehicles. As Hassane El-Khoury noted, the company's overlap of products and opportunity has increased, driving growth in content per rack in the data center segment.

Guidance and Outlook

For 2026, the company expects revenue to be in the range of $1.44 billion to $1.54 billion, with non-GAAP gross margin between 37.5% and 39.5%. The company is well-positioned to drive growth, with a structurally different business model, a sharper product mix, and a clear strategy to expand margins and generate strong free cash flow. Analysts estimate next year's revenue growth at 10.2%, indicating a positive outlook for the company.

Valuation

Based on the current stock price, the company's P/E Ratio stands at 223.19, indicating a relatively high valuation. However, the company's Free Cash Flow Yield is 6.14%, which is a positive indicator. The EV/EBITDA ratio is 32.51, which is also relatively high. These valuation metrics suggest that the company's strong growth prospects are already priced in, and investors should be cautious.

Growth Drivers

The company is well-positioned to drive growth in the AI data center and automotive segments, driven by its innovative products and strategic partnerships. The company's focus on expanding its content in these segments is expected to drive high single-digit growth above SAAR in the automotive segment. With a strong product portfolio and a clear strategy, the company is poised for long-term success.

3. NewsRoom

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onsemi to Host Financial Analyst Day

Feb -24

Source: globenewswire.com

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3 Industrial Chip Stocks Riding a New Semiconductor Supercycle in 2026

Feb -24

Source: marketbeat.com

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I Picked ON Semiconductor as My Top Stock for 2026. It's Up 53%, but Is It Still a Great Value?

Feb -22

Source: fool.com

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ON Semiconductor: A Bargain Despite Outsized Rally - Reiterate Buy Upon Correction

Feb -12

Source: seekingalpha.com

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Onsemi Is Near a Breakout—And Free Cash Flow Could Fuel It

Feb -11

Source: marketbeat.com

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ON Semiconductor Q4 Earnings Call Highlights

Feb -11

Source: defenseworld.net

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Stock Market Today: Major Indexes Mixed; Dow Hits All-Time High for 3rd Straight Session; Delayed Retail Sales Data Comes in Below Expectations

Feb -10

Source: investopedia.com

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onsemi's Q4 Earnings Beat Estimates, Revenues Down Y/Y, Shares Drop

Feb -10

Source: zacks.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

Strength

Weaknesses

Opportunities

Threats

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

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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NVIDIA

A-Score: 5.4/10

Value: 0.3

Growth: 10.0

Quality: 9.2

Yield: 0.0

Momentum: 8.5

Volatility: 4.3

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Analog Devices

A-Score: 5.3/10

Value: 1.0

Growth: 5.3

Quality: 7.4

Yield: 4.0

Momentum: 7.0

Volatility: 7.0

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AMD

A-Score: 4.4/10

Value: 0.2

Growth: 6.8

Quality: 6.9

Yield: 0.0

Momentum: 9.5

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GLOBALFOUNDRIES

A-Score: 3.8/10

Value: 6.0

Growth: 5.0

Quality: 4.2

Yield: 0.0

Momentum: 3.0

Volatility: 4.7

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Intel

A-Score: 3.6/10

Value: 4.5

Growth: 1.2

Quality: 3.5

Yield: 1.0

Momentum: 9.0

Volatility: 2.7

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ON Semiconductor

A-Score: 3.4/10

Value: 2.7

Growth: 6.9

Quality: 5.3

Yield: 0.0

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

59.5$

Current Price

59.5$

Potential

-0.00%

Expected Cash-Flows