ON Semiconductor's Q1 2025: Diverging Views on Automotive Recovery, Pricing Strategies, and Silicon Carbide Growth
Earnings DecryptMonday, May 5, 2025 9:11 pm ET
2min read
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Revenue and Earnings Performance:
- Onsemi reported Q1 revenue of $1.45 billion, exceeding the midpoint of their guidance, with non-GAAP earnings per share of $0.55.
- The earnings were higher than expected due to strong performance in certain parts of the industrial market and automotive segments.
Manufacturing and Operational Efficiencies:
- Onsemi reduced internal fab capacity by 12%, which is expected to lower ongoing depreciation costs by approximately $22 million annually.
- The reduction was part of their Fab Right initiative and aimed to improve operating efficiencies and gross margin expansion.
Silicon Carbide and Product Wins:
- Onsemi won a 750-volt PHEV design with a major U.S. automotive OEM, signaling a transition from silicon to silicon carbide in new PHEV platforms.
- The adoption of silicon carbide is expected to broaden the company's penetration in full battery electric vehicles (BEVs) and contribute to future growth.
Prudent Cash Flow Management:
- Onsemi increased its share buyback to 66% of free cash flow in Q1 and plans to increase it to 100% for the year.
- This move demonstrates confidence in their liquidity and strong balance sheet, emphasizing a focus on shareholder value.
Revenue and Earnings Performance:
- Onsemi reported Q1 revenue of $1.45 billion, exceeding the midpoint of their guidance, with non-GAAP earnings per share of $0.55.
- The earnings were higher than expected due to strong performance in certain parts of the industrial market and automotive segments.
Manufacturing and Operational Efficiencies:
- Onsemi reduced internal fab capacity by 12%, which is expected to lower ongoing depreciation costs by approximately $22 million annually.
- The reduction was part of their Fab Right initiative and aimed to improve operating efficiencies and gross margin expansion.
Silicon Carbide and Product Wins:
- Onsemi won a 750-volt PHEV design with a major U.S. automotive OEM, signaling a transition from silicon to silicon carbide in new PHEV platforms.
- The adoption of silicon carbide is expected to broaden the company's penetration in full battery electric vehicles (BEVs) and contribute to future growth.
Prudent Cash Flow Management:
- Onsemi increased its share buyback to 66% of free cash flow in Q1 and plans to increase it to 100% for the year.
- This move demonstrates confidence in their liquidity and strong balance sheet, emphasizing a focus on shareholder value.
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