ON Semiconductor Seals Multi-Year Deal with Volkswagen for Advanced EV Solutions; Stock Gains
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jul 22 2024
0mins
Source: Benzinga
ON Semiconductor and Volkswagen Partnership: ON Semiconductor has signed a multi-year agreement with Volkswagen Group to supply power solutions for their vehicle lineup, including a new traction inverter that enhances efficiency and EV range through advanced silicon carbide technology.
Market Performance and Analyst Insights: ON Semiconductor shares have risen 3.06% following the announcement, with analysts projecting an average price target of $86.53, indicating a potential upside, while opinions on the stock vary significantly among analysts.
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Analyst Views on ON
Wall Street analysts forecast ON stock price to fall
19 Analyst Rating
9 Buy
10 Hold
0 Sell
Moderate Buy
Current: 91.220
Low
50.00
Averages
61.25
High
80.00
Current: 91.220
Low
50.00
Averages
61.25
High
80.00
About ON
ON Semiconductor Corporation is engaged in providing intelligent power and intelligent sensing solutions. The Company’s intelligent power technologies enable the electrification of drivetrain in the automotive industry to allow for lighter and longer-range electric vehicles. Its segments include Power Solutions Group (PSG), the Analog and Mixed-Signal Group (AMG) and the Intelligent Sensing Group (ISG). PSG segment provides a portfolio of discrete, module, and integrated semiconductor devices designed to enable conversion across artificial intelligence (AI) data centers, energy infrastructure, automotive and industrial. AMG segment designs and develops a range of analog and mixed-signal solutions including power‑management, sensor‑interface, connectivity, and products that serve automotive, industrial automation, AI data center, computing, and mobile end markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
onsemi Sells Manufacturing Facilities to Optimize Costs
- Strategic Optimization: onsemi (ON) has signed definitive agreements to sell its manufacturing facilities in Tarlac, Philippines, and Mountain Top, Pennsylvania, as part of its ongoing Fab Right strategy aimed at optimizing its manufacturing cost structure and supporting sustained gross margin expansion.
- Cost Savings Expected: These transactions are projected to result in annual cost savings of approximately $35 million, with initial savings starting in 2027 and full savings realized by 2028, thereby enhancing the company's financial health and profitability.
- Long-Term Supply Agreement: The agreement with Taiwan-based Greatek Electronics ensures ongoing production and customer commitments post-transaction, demonstrating onsemi's commitment to maintaining strong customer relationships.
- Market Reaction: Despite the strategic asset disposals, onsemi's shares fell 2.4% in premarket trading, reflecting market caution regarding the company's future profitability.
See More
US Stocks Close Higher, Led by Tech Gains
- Strong Market Performance: The S&P 500 rose by 0.72%, reaching a 2.5-week high, while the Dow Jones Industrial Average increased by 0.29%, setting a new all-time high, reflecting robust confidence in tech stocks and chipmakers.
- Supportive Economic Data: The US June ISM services index stood at 54.0, meeting expectations, with the employment sub-index rising to 51.2, surpassing the anticipated 48.2, indicating ongoing economic expansion that may alleviate Fed rate hike pressures.
- Optimistic Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, close to Q1's 30% surge, primarily driven by strong performance in AI infrastructure stocks, expected to contribute nearly 60% of earnings growth, further boosting market sentiment.
- International Market Fluctuations: While US stocks rose, European markets generally declined, with Eurozone May retail sales increasing by only 0.2%, below the expected 0.3%, highlighting uneven global economic recovery that could impact investor confidence.
See More
Mixed Performance in US Stocks, Led by Chipmakers
- Chipmaker Rally: Chipmakers and AI infrastructure stocks are leading the market today, with the iShares Semiconductor ETF (SOXX) up over 3%, and Advanced Micro Devices (AMD) and Western Digital (WDC) rising more than 9%, indicating a resurgence of confidence in tech stocks that could drive overall market gains.
- Service Sector Expansion: The US June ISM services index fell to 54.0, meeting expectations, and although the pace of growth has slowed, the employment sub-index rose to 51.2, surpassing the expected 48.2, suggesting that companies are still hiring amid easing cost pressures, potentially supporting economic growth.
- Strong Q2 Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, close to Q1's 30% growth, primarily driven by AI spending, which is expected to account for nearly 60% of S&P 500 earnings-per-share growth, providing an optimistic outlook for investors.
- International Market Volatility: While US markets show positive performance, overseas markets are generally declining, with the Euro Stoxx 50 down 0.43%, reflecting global economic uncertainties that may impact investor sentiment.
See More
US Stocks Show Mixed Movement, Led by Chipmakers
- Market Performance: The S&P 500 Index rose by 0.43% and the Nasdaq 100 Index increased by 1.17%, driven by strong performances from chipmakers and AI infrastructure stocks, reflecting heightened investor confidence in technology shares.
- Oil Price Impact: WTI crude oil prices fell by 0.5% as Saudi Arabia and the UAE ramped up shipments to near pre-war levels, which eased inflation expectations and led to a 2 basis point drop in the 10-year T-note yield to 4.46%, providing support for the bond market.
- Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, close to Q1's 30% growth, indicating that AI spending will be a major driver, expected to contribute nearly 60% to the S&P 500's earnings-per-share growth.
- International Market Dynamics: European stock markets are generally down, with Eurozone May retail sales rising 0.2% month-over-month, below the expected 0.3%, while German May factory orders increased by 1.9%, exceeding the expected 1.1%, indicating a mixed economic recovery.
See More
Investment Comparison Between Broadcom and ON Semiconductor
- Broadcom Financial Performance: In FY 2025, Broadcom's revenue reached nearly $63.9 billion, reflecting a growth of approximately 23.9%, with a net income of about $23.1 billion and a net margin of 36.2%, indicating strong demand in cloud computing and AI sectors.
- ON Semiconductor Market Challenges: ON Semiconductor reported nearly $6.0 billion in revenue for FY 2025, a decline of 15.3%, with a net income of only $121 million and a net margin of 2%, highlighting its heavy reliance on the automotive market and the impact of market fluctuations.
- Financial Health Comparison: Broadcom's current ratio stands at approximately 1.7, indicating solid short-term debt coverage, while ON Semiconductor boasts a current ratio of 4.5, showcasing its strong ability to meet short-term obligations; however, Broadcom's debt-to-equity ratio of 0.8 suggests moderate reliance on borrowed funds.
- Acquisition Risks and Market Outlook: ON Semiconductor's plan to acquire Synaptics for about $7 billion aims to enhance its exposure to physical AI and AI-enabled devices, but this introduces integration risks, whereas Broadcom is expected to continue attracting investor interest in 2026 due to its robust performance in AI and data centers.
See More
Comparative Analysis of Broadcom and ON Semiconductor
- Broadcom Financial Performance: In FY 2025, Broadcom's revenue reached nearly $63.9 billion, reflecting a growth rate of approximately 23.9%, with a net income of about $23.1 billion and a net margin of 36.2%, showcasing strong growth driven by demand for AI-related semiconductor solutions.
- ON Semiconductor Market Challenges: ON Semiconductor reported nearly $6.0 billion in revenue for FY 2025, a decline of 15.3% year-over-year, resulting in a net income of approximately $121 million and a net margin of 2.0%, highlighting its heavy reliance on the automotive sector amid market fluctuations.
- Financial Health Comparison: Broadcom's current ratio stands at approximately 1.7, indicating solid short-term liquidity, while ON Semiconductor boasts a high current ratio of 4.5, reflecting strong short-term debt management; however, their debt-to-equity ratios are 0.8 and 0.5 respectively, indicating different levels of financial leverage.
- Industry Outlook and Risks: Broadcom benefits from robust demand in AI and data centers, enhancing its profitability and cash flow, yet its 40% revenue concentration among top customers poses risks; ON Semiconductor faces cyclical downturns in the automotive sector, and the Synaptics acquisition introduces potential integration risks.
See More
onsemi Sells Manufacturing Facilities to Optimize Costs
- Strategic Optimization: onsemi (ON) has signed definitive agreements to sell its manufacturing facilities in Tarlac, Philippines, and Mountain Top, Pennsylvania, as part of its ongoing Fab Right strategy aimed at optimizing its manufacturing cost structure and supporting sustained gross margin expansion.
- Cost Savings Expected: These transactions are projected to result in annual cost savings of approximately $35 million, with initial savings starting in 2027 and full savings realized by 2028, thereby enhancing the company's financial health and profitability.
- Long-Term Supply Agreement: The agreement with Taiwan-based Greatek Electronics ensures ongoing production and customer commitments post-transaction, demonstrating onsemi's commitment to maintaining strong customer relationships.
- Market Reaction: Despite the strategic asset disposals, onsemi's shares fell 2.4% in premarket trading, reflecting market caution regarding the company's future profitability.
See More
US Stocks Close Higher, Led by Tech Gains
- Strong Market Performance: The S&P 500 rose by 0.72%, reaching a 2.5-week high, while the Dow Jones Industrial Average increased by 0.29%, setting a new all-time high, reflecting robust confidence in tech stocks and chipmakers.
- Supportive Economic Data: The US June ISM services index stood at 54.0, meeting expectations, with the employment sub-index rising to 51.2, surpassing the anticipated 48.2, indicating ongoing economic expansion that may alleviate Fed rate hike pressures.
- Optimistic Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, close to Q1's 30% surge, primarily driven by strong performance in AI infrastructure stocks, expected to contribute nearly 60% of earnings growth, further boosting market sentiment.
- International Market Fluctuations: While US stocks rose, European markets generally declined, with Eurozone May retail sales increasing by only 0.2%, below the expected 0.3%, highlighting uneven global economic recovery that could impact investor confidence.
See More
Mixed Performance in US Stocks, Led by Chipmakers
- Chipmaker Rally: Chipmakers and AI infrastructure stocks are leading the market today, with the iShares Semiconductor ETF (SOXX) up over 3%, and Advanced Micro Devices (AMD) and Western Digital (WDC) rising more than 9%, indicating a resurgence of confidence in tech stocks that could drive overall market gains.
- Service Sector Expansion: The US June ISM services index fell to 54.0, meeting expectations, and although the pace of growth has slowed, the employment sub-index rose to 51.2, surpassing the expected 48.2, suggesting that companies are still hiring amid easing cost pressures, potentially supporting economic growth.
- Strong Q2 Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, close to Q1's 30% growth, primarily driven by AI spending, which is expected to account for nearly 60% of S&P 500 earnings-per-share growth, providing an optimistic outlook for investors.
- International Market Volatility: While US markets show positive performance, overseas markets are generally declining, with the Euro Stoxx 50 down 0.43%, reflecting global economic uncertainties that may impact investor sentiment.
See More
US Stocks Show Mixed Movement, Led by Chipmakers
- Market Performance: The S&P 500 Index rose by 0.43% and the Nasdaq 100 Index increased by 1.17%, driven by strong performances from chipmakers and AI infrastructure stocks, reflecting heightened investor confidence in technology shares.
- Oil Price Impact: WTI crude oil prices fell by 0.5% as Saudi Arabia and the UAE ramped up shipments to near pre-war levels, which eased inflation expectations and led to a 2 basis point drop in the 10-year T-note yield to 4.46%, providing support for the bond market.
- Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, close to Q1's 30% growth, indicating that AI spending will be a major driver, expected to contribute nearly 60% to the S&P 500's earnings-per-share growth.
- International Market Dynamics: European stock markets are generally down, with Eurozone May retail sales rising 0.2% month-over-month, below the expected 0.3%, while German May factory orders increased by 1.9%, exceeding the expected 1.1%, indicating a mixed economic recovery.
See More
Investment Comparison Between Broadcom and ON Semiconductor
- Broadcom Financial Performance: In FY 2025, Broadcom's revenue reached nearly $63.9 billion, reflecting a growth of approximately 23.9%, with a net income of about $23.1 billion and a net margin of 36.2%, indicating strong demand in cloud computing and AI sectors.
- ON Semiconductor Market Challenges: ON Semiconductor reported nearly $6.0 billion in revenue for FY 2025, a decline of 15.3%, with a net income of only $121 million and a net margin of 2%, highlighting its heavy reliance on the automotive market and the impact of market fluctuations.
- Financial Health Comparison: Broadcom's current ratio stands at approximately 1.7, indicating solid short-term debt coverage, while ON Semiconductor boasts a current ratio of 4.5, showcasing its strong ability to meet short-term obligations; however, Broadcom's debt-to-equity ratio of 0.8 suggests moderate reliance on borrowed funds.
- Acquisition Risks and Market Outlook: ON Semiconductor's plan to acquire Synaptics for about $7 billion aims to enhance its exposure to physical AI and AI-enabled devices, but this introduces integration risks, whereas Broadcom is expected to continue attracting investor interest in 2026 due to its robust performance in AI and data centers.
See More
Comparative Analysis of Broadcom and ON Semiconductor
- Broadcom Financial Performance: In FY 2025, Broadcom's revenue reached nearly $63.9 billion, reflecting a growth rate of approximately 23.9%, with a net income of about $23.1 billion and a net margin of 36.2%, showcasing strong growth driven by demand for AI-related semiconductor solutions.
- ON Semiconductor Market Challenges: ON Semiconductor reported nearly $6.0 billion in revenue for FY 2025, a decline of 15.3% year-over-year, resulting in a net income of approximately $121 million and a net margin of 2.0%, highlighting its heavy reliance on the automotive sector amid market fluctuations.
- Financial Health Comparison: Broadcom's current ratio stands at approximately 1.7, indicating solid short-term liquidity, while ON Semiconductor boasts a high current ratio of 4.5, reflecting strong short-term debt management; however, their debt-to-equity ratios are 0.8 and 0.5 respectively, indicating different levels of financial leverage.
- Industry Outlook and Risks: Broadcom benefits from robust demand in AI and data centers, enhancing its profitability and cash flow, yet its 40% revenue concentration among top customers poses risks; ON Semiconductor faces cyclical downturns in the automotive sector, and the Synaptics acquisition introduces potential integration risks.
See More
