ON Semiconductor Corporation (ON)
OvervaluedFundamental
63
Price
$76.87
Market Cap
$28.48B
Part 1 · What the company is worth
Overview
onsemi designs and manufactures the power and sensing chips that control how electricity is converted, switched and measured — technology used in electric-vehicle powertrains, chargers, factory automation, solar and wind systems, and industrial equipment. Unlike a fabless chip designer, onsemi owns most of its own factories, giving it more control over cost and quality but also making it more exposed when demand for its chips slows and those factories run under capacity.
How it makes money
onsemi sells physical semiconductors to automakers, industrial equipment makers and their suppliers, either directly or through distributors, recognizing revenue when a customer or distributor takes delivery. Roughly 80% of sales go to the automotive and industrial end-markets, both of which order chips well in advance of when the finished product ships, so onsemi's revenue tends to lead — and swing more sharply than — the broader economic cycle.
Revenue by segment
Chips that convert and manage electrical power, including silicon carbide devices for electric-vehicle powertrains and chargers — onsemi's largest segment.
General-purpose analog and mixed-signal chips used across automotive, industrial and other electronics for signal processing and control.
Image sensors and other sensing chips used in advanced driver-assistance systems, industrial machine vision and other applications.
Competitive moat
Patents and licences · Narrowonsemi's silicon carbide technology for electric-vehicle powertrains took years and heavy capital investment to qualify with automakers, and once a chip is designed into a specific vehicle platform it typically stays there for the life of that model. The advantage is narrow, though: Infineon, STMicroelectronics and a wave of lower-cost Chinese silicon-carbide suppliers are all chasing the same automotive and industrial customers.
What drives demand
CyclicalAutomotive and industrial customers order chips based on their own forecasts of future demand, so orders overshoot on the way up and undershoot on the way down, amplifying swings in the real economy. 2025 illustrated the pattern directly: revenue fell 15% as automakers and industrial customers worked down chip inventories they had over-ordered in the prior upcycle.
Key risks
- Deep cyclicality in automotive and industrial demand — Revenue fell 15% in 2025 as automotive and industrial customers worked through excess chip inventory, showing how sharply onsemi's results can swing when its end markets pull back at the same time.
- Chinese competition in silicon carbide — Chinese manufacturers are rapidly expanding silicon-carbide production and competing aggressively on price, threatening the pricing and market share onsemi built in electric-vehicle power chips.
- Owning factories cuts both ways — Because onsemi manufactures most of its own chips, it carries the fixed cost of that capacity even when orders slow, unlike fabless competitors who can simply order less from a foundry.
- Electric-vehicle demand growing slower than expected — A meaningful share of onsemi's growth strategy depends on faster EV adoption; if automakers slow their electrification plans, the silicon-carbide business built around that transition grows more slowly too.
- Concentrated distributor relationship — A single distributor customer has represented around 12% of revenue in recent periods; a disruption to that relationship would have an outsized effect on reported sales.
Customer concentration
Top customers account for 12% of revenue
One distributor customer has accounted for around 12% of onsemi's total revenue in recent periods. A distributor resells to many end customers, so this is less concentrated than it looks, but it remains a meaningful single relationship.
The case for
Buyers argue that onsemi's silicon-carbide leadership positions it to benefit disproportionately once electric-vehicle and industrial demand recover, that owning its own factories gives it more control over quality and cost than fabless rivals, and that the current downturn is cyclical rather than a sign of lost market position.
The case against
Sellers worry that Chinese silicon-carbide suppliers are undercutting onsemi on price just as the industry needs pricing power to recover, that a 15% revenue decline shows how exposed the business is to automotive and industrial capital cycles, and that owning factories leaves onsemi carrying fixed costs through the downturn that fabless competitors avoid.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
Generated on September 19, 2026 with claude-haiku-4-5 — shared with all users
onsemi names Infineon first among the rivals of its Power Solutions Group, and the two sell competing silicon and silicon-carbide power devices to the same automotive and industrial customers.
Texas Instruments is listed by onsemi as a competitor of its Analog and Mixed-Signal Group, bidding for the same analog and power-management sockets in industrial and automotive designs.
NXP competes for the same automotive and industrial customers with overlapping analog, mixed-signal and power-management product lines.
STMicroelectronics competes head-on in silicon-carbide power modules for electric vehicles and in analog and mixed-signal chips, the two markets where onsemi earns most of its revenue.
Wolfspeed is a pure-play silicon-carbide maker that fights onsemi for the same electric-vehicle and industrial power design wins, from the substrate up to the finished device.
Renesas is named by onsemi as an Analog and Mixed-Signal Group competitor and sells rival analog, power and embedded-control devices into the same automotive and industrial sockets.
Balance Sheet & Liquidity
Revenue
$6.20B
Trailing 12 months (through 7/3/2026)
Net Income
$630M
Trailing 12 months (through 7/3/2026)
Free Cash Flow
$1.42B
Total Equity
$7.67B
Total Liabilities
$4.83B
Current Ratio
3.46
Interest Coverage
10.91
Debt/EBITDA
6.11
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$50.40
Current Price
$76.87
Margin of Safety
-52.5%
Fair Value Range
$32.76 - $68.05
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
50.91
ROE
1.6%
P/B Ratio
4.15
P/FCF
19.95
Gross Margin
37.7%
ROIC
4.7%
Profitability Radar
Value Creation (Economic Moat)
ROIC
4.7%
WACC
14.1%
ROIC − WACC
-9.4 pp
ROIC is below the cost of capital — the company is destroying value for every dollar invested.
Fundamental Analysis Criteria
Passed (16)
- EPS shows upward trend
- Price CAGR 19.24%
- Gross Margin 37.7%
- P/FCF 19.95
- Debt/Equity ratio
- Operating Margin 10.8%
- Positive Free Cash Flow
- CapEx intensity
- Current Ratio
- Interest Coverage
- Return on Tangible Assets
- ROE 8.4%
- Analyst Consensus 50% Buy
- Earnings Quality (OCF/NI) 2.65
- Share Dilution -3.7%
- Net Margin Trend 10.2% vs 7.3%
Failed (9)
- ROIC 4.6%
- P/B Ratio 4.15
- Debt/EBITDA
- Low reliance on intangibles
- Price below Graham Number
- DCF valuation (Overvalued)
- Revenue Growth 5Y 2.7%
- Earnings Surprise avg 1.8%
- Piotroski F-Score 4/9
Unavailable (2)
- Dividend Payout NaN%
- PEG Ratio (need PE > 0 and growth > 0)
Piotroski F-Score
Mixed signals: some areas need attention
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Hassane S. El-Khoury | President, CEO & Director | 45 |
| Mr. Thad Trent | Executive VP, CFO, Treasurer & Principal Accounting Officer | 57 |
| Mr. Sudhir Gopalswamy | Group President of Intelligent Sensing & Analog and Mixed Signal Group | 55 |
| Dr. Wei-Chung Wang Ph.D. | Executive Vice President of Operations | - |
| Mr. Parag Agarwal | Vice President of Investor Relations & Corporate Development | - |
| Mr. Paul Dutton | Senior VP, Chief Legal Officer & Secretary | - |
| Krystal Heaton | Director & Head of Public Relations | - |
| Ms. Felicity Carson | Senior VP & Chief Marketing Officer | - |
| Mr. Jon Imperato | Senior Vice President of Sales & Applications | 52 |
| Mr. Bert Somsin | Senior VP & Chief Human Resources Officer | - |
Audit Risk
5
Board Risk
3
Compensation Risk
1
Shareholder Rights Risk
6
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2026-02-09
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-08-03
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-08-13
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for ON, sourced from Markets Gazette.
- 4/27/2026NEUTRALHere's How Much You Would Have Made Owning ON Semiconductor Stock In The Last 15 Years
An analysis of ON Semiconductor Corporation's stock performance over the past 15 years reveals a significant upward trend. While specific return figures are not detailed in the provided snippet, the headline suggests substantial gains for long-term investors. This historical performance indicates the company's resilience and growth potential within the semiconductor industry, driven by factors such as product innovation, market demand, and strategic execution. Investors considering ON Semiconductor should evaluate its current market position, competitive landscape, and future growth prospects.
- 4/23/2026POSITIVE$1000 Invested In ON Semiconductor 15 Years Ago Would Be Worth This Much Today
An investment of $1000 in ON Semiconductor (ON) 15 years ago would have grown to a substantial amount today, reflecting the company's significant performance and market appreciation over the past decade and a half. While specific figures are not provided in the prompt, the implication of such a headline suggests a robust compound annual growth rate, likely driven by strategic shifts, product innovation in areas like automotive and industrial semiconductors, and successful market positioning. Investors who held ON Semiconductor stock through this period would have benefited from its expansion and increasing relevance in key technology sectors.
- 4/20/2026POSITIVEThis Week's Wolf Pick - ON Semiconductor; ON Gets 11x More Silicon Per Nvidia Rack
ON Semiconductor is poised for significant growth as NVIDIA's upcoming 800V racks, expected in 2027, will utilize approximately 11 times more ON silicon compared to the current 54V racks. This substantial increase in silicon demand per rack suggests a major upside potential that has yet to be fully factored into market consensus estimates. Investors should note this technological shift as a key driver for ON Semiconductor's future revenue and profitability, potentially leading to a re-evaluation of its stock valuation.
- 3/9/2026NEGATIVEDirector Sells 10,000 Shares of this Semiconductor Stock Down 25%. Should Investors Panic?
A director at ON Semiconductor Corporation has sold 10,000 shares, a move that comes as the semiconductor company's stock has already fallen 25% this year. The firm, which focuses on power conversion solutions, faces ongoing market pressures. While insider selling can sometimes signal a lack of confidence, the broader market conditions and the company's specific challenges in the power semiconductor segment warrant careful consideration by investors. The sale, though relatively small in the context of the company's market capitalization, adds to existing negative sentiment.
- 2/22/2026POSITIVEI Picked ON Semiconductor as My Top Stock for 2026. It's Up 53%, but Is It Still a Great Value?
ON Semiconductor stands out as a top investment pick for 2026, with a remarkable 53% gain drawing significant investor attention. The company is benefiting from recovering end markets and an excellent valuation. Notably, its growth in AI data center sales is a key driver of the stock's attractiveness. Despite the substantial increase, underlying demand and future growth prospects suggest that ON Semiconductor may still offer value for those seeking exposure to expanding sectors like AI and semiconductors.
via Markets Gazette