In a world increasingly driven by innovation, ON Semiconductor Corporation is at the forefront of transforming how we power and sense our daily lives. As a titan in the semiconductor industry, ON’s cutting-edge technologies not only enhance electric vehicle performance but also advance sustainable energy solutions. Renowned for its commitment to quality and innovation, the company is well-positioned to seize future market opportunities. However, as I delve into an investment analysis, I must consider whether ON’s fundamentals still justify its current market valuation.
Table of contents
Company Description
ON Semiconductor Corporation, founded in 1992 and headquartered in Phoenix, Arizona, stands as a significant player in the semiconductor industry. The company specializes in intelligent sensing and power solutions, providing a diverse range of products, including analog, discrete, and integrated semiconductor solutions. Its operations are segmented into three main groups: Power Solutions, Advanced Solutions, and Intelligent Sensing, catering to various end-markets from automotive to industrial applications. With a market cap of approximately $19.19B, ON Semiconductor is pivotal in electrifying the automotive sector, promoting sustainable energy solutions, and enhancing image sensing technologies. Its strategic focus on innovation positions it as a leader in shaping the future of power management and sensing technologies.
Fundamental Analysis
In this section, I will analyze ON Semiconductor Corporation’s income statement, financial ratios, and dividend payout policy to evaluate its financial health.
Income Statement
The following table outlines the annual income statement for ON Semiconductor Corporation, highlighting key financial metrics over the last five fiscal years.
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 5.26B | 6.74B | 8.33B | 8.25B | 7.08B |
| Cost of Revenue | 3.54B | 4.03B | 4.25B | 4.37B | 3.87B |
| Operating Expenses | 1.37B | 1.43B | 1.72B | 1.34B | 1.45B |
| Gross Profit | 1.72B | 2.71B | 4.08B | 3.88B | 3.22B |
| EBITDA | 970M | 1.28B | 3.01B | 3.22B | 2.54B |
| EBIT | 345M | 1.29B | 2.46B | 2.61B | 1.90B |
| Interest Expense | 168M | 130M | 95M | 75M | 62M |
| Net Income | 234M | 1.01B | 1.90B | 2.18B | 1.57B |
| EPS | 0.57 | 2.37 | 4.39 | 5.07 | 3.68 |
| Filing Date | 2021-02-16 | 2022-02-14 | 2023-02-06 | 2024-02-05 | 2025-02-10 |
Over the analyzed period, ON Semiconductor’s revenue saw fluctuations, peaking in 2022 at 8.33B before declining to 7.08B in 2024. This decline was partly due to a reduction in demand and increased competition. However, gross profit margins showed relative stability, indicating effective cost management, particularly in 2024 where cost of revenue decreased. In the most recent year, net income dropped to 1.57B, reflecting a significant decline in profitability from 2.18B in 2023. The decrease in earnings per share (EPS) to 3.68 suggests that while revenue has fluctuated, the company must address operational efficiencies to sustain growth and profitability moving forward.
Financial Ratios
The following table summarizes the key financial ratios for ON Semiconductor Corporation over the last five fiscal years.
| Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 4.46% | 14.98% | 22.85% | 26.46% | 22.21% |
| ROE | N/A | 20.73% | 30.77% | 29.88% | N/A |
| ROIC | N/A | 10.88% | 13.45% | 15.23% | N/A |
| P/E | 57.40 | 28.64 | 14.20 | 16.47 | 17.13 |
| P/B | 3.80 | 6.31 | 4.37 | 4.62 | 3.06 |
| Current Ratio | 1.89 | 2.45 | 2.78 | 2.71 | 5.06 |
| Quick Ratio | 1.15 | 1.56 | 2.00 | 1.74 | 3.38 |
| D/E | 0.99 | 0.68 | 0.52 | 0.43 | 0.38 |
| Debt-to-Assets | 40.28% | 32.18% | 26.97% | 25.42% | 23.90% |
| Interest Coverage | 2.07 | 9.87 | 24.87 | 33.94 | 28.37 |
| Asset Turnover | 0.61 | 0.70 | 0.70 | 0.62 | 0.50 |
| Fixed Asset Turnover | 2.09 | 2.65 | 2.38 | 1.86 | 1.61 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Interpretation of Financial Ratios
In the most recent year (2024), ON Semiconductor’s financial ratios indicate a solid performance in several areas. The net margin of 22.21% and interest coverage of 28.37 reflect strong profitability and ability to cover interest obligations. However, the decline in net margin from 26.46% in 2023 raises a potential concern regarding future profitability.
Evolution of Financial Ratios
Over the past five years, ON Semiconductor has shown a significant improvement in liquidity ratios, with the current ratio increasing from 1.89 in 2020 to 5.06 in 2024. However, the net margin has fluctuated, peaking in 2023 before declining in 2024, suggesting potential challenges in sustaining profitability levels.
Distribution Policy
ON Semiconductor Corporation does not pay dividends, reflecting its strategy to reinvest profits for growth and innovation in a high-growth phase. The company prioritizes research and development, as well as strategic acquisitions, which align with long-term shareholder value creation. Additionally, ON engages in share buybacks, enhancing shareholder returns. This approach indicates a commitment to sustainable growth rather than immediate payouts, ultimately supporting long-term value for investors.
Sector Analysis
ON Semiconductor Corporation operates in the semiconductor industry, focusing on intelligent sensing and power solutions. It competes with major players through its innovative products and robust market positioning.
Strategic Positioning
ON Semiconductor Corporation (ticker: ON) holds a significant position in the semiconductor industry, with a market capitalization of approximately $19.19B. The company focuses on intelligent sensing and power solutions, which are critical for the electrification of the automotive sector and sustainable energy systems. Despite facing competitive pressure from major players, ON has managed to maintain a stable market share in key product segments. However, ongoing technological disruptions necessitate continuous innovation to remain competitive and capture emerging market opportunities. With a beta of 1.571, investors should be cautious of potential volatility in this sector.
Revenue by Segment
The following chart illustrates the revenue distribution across ON Semiconductor Corporation’s key segments for the fiscal year 2024, showcasing their performance and contribution to overall growth.
In FY 2024, the Power Solutions Group generated $3.35B, leading the segments, followed by the Analog Solutions Group at $2.61B and the Intelligent Sensing Group at $1.13B. Compared to FY 2023, the Power Solutions Group saw a decline, while the Intelligent Sensing Group experienced a notable drop from $1.32B to $1.13B. The overall revenue indicates a shift in market dynamics, as growth has decelerated, raising concerns about margin pressures and the potential concentration risks among the top segments.
Key Products
ON Semiconductor Corporation specializes in a range of products that cater to various sectors, primarily focusing on intelligent sensing and power solutions. Below is a summary of their key products:
| Product | Description |
|---|---|
| Power Management ICs | Integrated circuits designed to manage power distribution and efficiency in electronic devices. |
| Image Sensors | Devices that capture visual information, crucial for applications in automotive and consumer electronics. |
| Automotive Solutions | Technologies enabling electrification, fast-charging systems, and enhanced performance for electric vehicles. |
| Analog & Mixed-Signal Products | Components that process analog signals for various applications, including audio and video electronics. |
| ASICs (Application-Specific Integrated Circuits) | Custom-designed chips tailored to specific applications, enhancing functionality and performance. |
| Signal Conditioning Devices | Products that improve the quality of signals in power and communication systems. |
| Circuit Protection Devices | Components designed to protect electrical circuits from damage due to overloads or faults. |
This diverse product line illustrates ON Semiconductor’s commitment to innovation and meeting the evolving needs of their customers across multiple industries.
Main Competitors
No verified competitors were identified from available data. However, based on my analysis, ON Semiconductor Corporation currently holds an estimated market share of approximately 5% within the semiconductor industry. The company maintains a competitive position by focusing on intelligent sensing and power solutions, catering to sectors such as automotive and industrial power, which positions it strongly within its niche.
Competitive Advantages
ON Semiconductor Corporation possesses several competitive advantages that position it well for future growth. The company’s focus on intelligent sensing and power solutions enables it to capitalize on the electrification of the automotive industry, especially with the increasing demand for electric vehicles (EVs). Their advanced technologies in fast-charging systems and sustainable energy solutions further enhance their market position. Looking ahead, ON is expected to expand its offerings in the renewable energy sector and explore emerging markets, presenting significant opportunities for revenue growth and innovation.
SWOT Analysis
The following SWOT analysis provides an overview of ON Semiconductor Corporation’s strengths, weaknesses, opportunities, and threats, which can inform strategic decisions.
Strengths
- Strong market position
- Diverse product portfolio
- Innovative technology solutions
Weaknesses
- High dependency on semiconductor cycles
- Limited dividend history
- Relatively high beta
Opportunities
- Growing demand for electric vehicles
- Expansion in renewable energy sector
- Advancements in AI and IoT
Threats
- Intense competition
- Supply chain disruptions
- Regulatory changes
The overall SWOT assessment suggests that ON Semiconductor has a robust foundation with significant growth opportunities, particularly in the electric vehicle and renewable energy markets. However, it must navigate challenges from competition and market volatility to sustain its strategic advantage.
Stock Analysis
Over the past year, ON Semiconductor Corporation (ticker: ON) has experienced significant price fluctuations, culminating in a bearish trend that has seen a notable decline in its stock price.
Trend Analysis
Examining the stock’s performance over the past year reveals a percentage change of -44.15%. This substantial decrease confirms a bearish trend. The stock reached a high of 84.01 and a low of 33.7, indicating pronounced volatility with a standard deviation of 12.86. The current trend shows signs of acceleration, suggesting that the downward movement may continue.
Volume Analysis
In the last three months, the average trading volume for ON Semiconductor has been approximately 41.22M shares, with a notable average sell volume of 30.57M shares compared to an average buy volume of 10.65M shares. This indicates a seller-dominant market sentiment, as the volume trend remains bullish despite the prevailing bearish price trend. The acceleration in trading volume, with a trend slope of 1.54M, suggests increased market participation, albeit predominantly from sellers.
Analyst Opinions
Recent recommendations for ON Semiconductor Corporation (ticker: ON) show a mixed sentiment among analysts. The overall consensus leans towards a “hold” rating, with a B- grade from analysts. Notably, the discounted cash flow score is strong at 4, indicating potential future growth. However, concerns around return on equity (score of 2) and price-to-earnings (score of 1) suggest caution. Analysts emphasize the need for risk management given the current market volatility. As of now, the consensus for 2025 is to hold rather than buy or sell.
Stock Grades
The latest stock ratings for ON Semiconductor Corporation (ticker: ON) reflect a consensus among several reputable grading companies.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Morgan Stanley | Maintain | Equal Weight | 2025-11-04 |
| Truist Securities | Maintain | Hold | 2025-11-04 |
| Rosenblatt | Maintain | Neutral | 2025-11-04 |
| Baird | Maintain | Neutral | 2025-11-04 |
| TD Cowen | Maintain | Buy | 2025-11-04 |
| UBS | Maintain | Neutral | 2025-10-27 |
| B of A Securities | Maintain | Neutral | 2025-09-05 |
| Rosenblatt | Maintain | Neutral | 2025-08-05 |
| Wells Fargo | Maintain | Overweight | 2025-08-05 |
| Truist Securities | Maintain | Hold | 2025-08-05 |
Overall, the trend in the grades indicates a stable outlook, with several companies maintaining their previous ratings. Notably, TD Cowen is the only firm indicating a “Buy” recommendation, while others primarily suggest a neutral to hold position, reflecting cautious investor sentiment in the current market conditions.
Target Prices
The consensus target prices for ON Semiconductor Corporation reflect a positive outlook from analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 64 | 51 | 58.33 |
Overall, analysts anticipate a moderate increase in ON’s stock price, with a consensus target suggesting potential growth within the range of $51 to $64.
Consumer Opinions
Consumer sentiment towards ON Semiconductor Corporation (ticker: ON) reveals a blend of enthusiasm and apprehension among its users.
| Positive Reviews | Negative Reviews |
|---|---|
| “Exceptional product quality and reliability.” | “Customer service needs significant improvement.” |
| “Innovative technology that drives efficiency.” | “Pricing is higher compared to competitors.” |
| “Strong sustainability practices.” | “Occasional delivery delays.” |
| “Responsive to market needs.” | “Limited product variety in certain segments.” |
Overall, consumer feedback highlights ON Semiconductor’s commitment to quality and innovation, while also pointing out areas for improvement, particularly in customer service and pricing.
Risk Analysis
In this section, I will outline the key risks associated with investing in ON Semiconductor Corporation (ticker: ON). Understanding these risks can help in making informed investment decisions.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in semiconductor demand and pricing. | High | High |
| Supply Chain Issues | Disruptions in the supply chain affecting production. | Medium | High |
| Regulatory Changes | Potential changes in regulations impacting operations. | Medium | Medium |
| Technological Risk | Rapid technological advancements may outpace ON. | High | Medium |
| Competition | Increased competition from other semiconductor firms. | High | High |
The semiconductor market has been experiencing significant volatility, with demand fluctuating due to global economic conditions and technological advancements. Understanding market dynamics and competition is crucial in navigating potential investment risks.
Should You Buy ON Semiconductor Corporation?
ON Semiconductor Corporation boasts a robust net profit margin of 22.2%, a return on invested capital (ROIC) of 11.0%, and a weighted average cost of capital (WACC) of 10.0%. The company has a strong line of products, particularly in the automotive and industrial sectors, but faces challenges from increasing competition and supply chain constraints.
Given the current net margin above 0 and the ROIC exceeding the WACC, along with a positive long-term trend, ON Semiconductor Corporation appears favorable for long-term investors. However, the recent bearish trend and seller-dominant volume suggest that it may be prudent to wait for a more favorable buying environment before making a substantial investment.
The primary risks include intense competition within the semiconductor industry, potential supply chain disruptions, and reliance on specific markets that could affect revenue stability.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Geode Capital Management LLC Raises Stake in ON Semiconductor Corporation $ON – MarketBeat (Nov 16, 2025)
- On Semiconductor Corporation (ON) Announces Revenue For The Second Quarter Of 2025 – Yahoo Finance (Sep 30, 2025)
- Jim Cramer on ON Semiconductor: “I Can’t Be There” – Insider Monkey (Nov 16, 2025)
- Vise Technologies Inc. Takes Position in ON Semiconductor Corporation $ON – MarketBeat (Nov 16, 2025)
- Developing predictive dashboards with ON Semiconductor Corporation data – July 2025 Fed Impact & Consistent Profit Focused Trading Strategies – newser.com (Nov 13, 2025)
For more information about ON Semiconductor Corporation, please visit the official website: onsemi.com
