- Financial Performance: Earnings Per Share (EPS): $1.39, GAAP EPS: $1.29, Revenue: $2.18 billion.
- Collaboration with Magna: ON Semiconductor\’s partnership with Magna aims to revolutionize electric vehicles, enhancing EV efficiency and extending driving range.
- Silicon Carbide Business: Expected to be a major growth driver, with anticipated growth at a rate of 2x the market in 2024.
ON Semiconductor Corporation (NASDAQ: ON) has achieved solid financial performance in the latest quarter, surpassing market expectations in terms of earnings and revenue. The company reported an EPS of $1.39, exceeding the consensus estimate by $0.05, and a GAAP EPS of $1.29, surpassing the estimate by $0.02. Additionally, ON Semiconductor recorded $2.18 billion in revenue, surpassing market expectations by $32.72 million. ON Semiconductor\’s strategic initiatives, strong performance in key segments, and commitment to customer collaboration have contributed to its success. The company has demonstrated resilience and adaptability amidst challenges, particularly in the automotive and industrial sectors.
Segments Contributing to Growth
The automotive segment has been a key driver for ON Semiconductor, with record revenue of nearly $1.2 billion in the third quarter. The increasing demand for silicon and silicon carbide solutions in response to the rising need for vehicle electrification and advanced features has fueled this growth. Despite pockets of softness with Tier 1 customers in Europe and potential risks to automotive demand due to high-interest rates, ON Semiconductor has showcased its ability to navigate the dynamic market environment successfully. The industrial segment has also demonstrated strength, with record revenue of $616 million in the third quarter. Growth in this segment is driven by continued adoption in energy infrastructure and medical applications. ON Semiconductor\’s expertise in sensor technologies and power management positions it well to capitalize on the increasing demand for renewable energy and medical devices.
| End-Markets | Quarters Ended September 29, 2023 (in millions) | Quarters Ended September 30, 2022 (in millions) | % Change |
| Automotive | $1,157.8 | $873.6 | +32.5% |
| Industrial | $615.8 | $613.2 | +0.4% |
| Other | $407.2 | $705.8 | -42.3% |
| Total | $2,180.8 | $2,192.6 | -0.5% |
Strategic Alliances and Partnerships Boost ON Semiconductor\’s Market Position
ON Semiconductor\’s strategic alliances and partnerships have further bolstered its position in the market. The collaboration with Magna, one of the world\’s largest automotive suppliers, aims to revolutionize electric vehicles. This partnership enables Magna to integrate ON Semiconductor\’s EliteSiC MOSFET technology into its eDrive systems, enhancing EV efficiency and extending driving range. Additionally, ON Semiconductor has secured long-term supply agreements (LTSAs) with prominent global solar inverter manufacturers, further solidifying its position as the top power semiconductor supplier in the solar inverter market.
Silicon Carbide Business: A Key Driver for ON Semiconductor\’s Future Growth
Looking ahead, the growth of ON Semiconductor\’s silicon carbide business is expected to be a major driver for the company. The company anticipates growing its silicon carbide business at a rate of 2x the market in 2024, driven by the increasing adoption of silicon carbide in electric vehicles and other applications. Furthermore, the company\’s focus on renewable energy and medical applications provides stability and growth opportunities within the industrial sector.
Conclusion
ON Semiconductor\’s stellar financial performance, resilience across key segments, and strategic partnerships highlight its promising trajectory. With the current stock price at $76.14, the bull case projects an optimistic surge to $120.00, driven by potential market expansion and continued strategic collaborations. In the bear case, holding steady at $65.00, the company\’s robust fundamentals offer stability. Given these factors, we assign a \”Buy\” rating to ON Semiconductor\’s stock. Investors are advised to conduct thorough due diligence, considering both optimistic and pessimistic scenarios, to make informed decisions aligned with their risk tolerance and investment objectives.
Disclosure: We don’t hold any position in the stock and this is not a recommendation of any kind as investing carries risk.
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