Onsemi Reports Soft Q4 Outlook Citing Near-Term Macro Hesitation. Investors Still Turned On as Shares Rise

Today ON Semiconductor Corporation (ON) reported Q3 financial results with EPS beating consensus of $0.99 vs FactSet $0.97 and revenue of $1.76Bn vs FactSet $1.75Bn. While the Q3 report came in line with expectations, its quarterly guidance underwhelmed as its sales have continued to slide amid macro challenges.  Q4 revenue guidance was $1.76Bn at the midpoint, below analyst estimates of $1.78Bn and Q4 EPS guidance was $0.98 at the midpoint, below analyst estimates of $1.00.

In the company’s Q&A some positive takeaways included growth in its silicon carbide business that is driven by share gains in China and design wins in Europe however, overall demand was lower than expected. The company is focused on pricing based on value vs chasing market share and aims to maintain its target gross margin of 45%. Onsemi has been able to lower their long-term capital intensity target to the mid-single digit percentage range now that investments in capacity expansion are largely behind them. Additionally, the company is seeing strong growth in its mass market customer base, which is a high-margin business, and is carefully managing inventory levels in the distribution channel to avoid any overhang.

On the flip side some low points from the Q&A were the overall demand environment remains muted with ongoing inventory digestion and slow end demand across the automotive and industrial markets. Silicon carbide revenue is now only expected to grow in low to mid-single digit range in 2025 as the ramp of some programs has been slower than expected. Additionally, the company is cautious about the near-term macro environment, though it remains committed to its long-term strategy and investments in new products and technologies.

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Onsemi Reports Soft Q4 Outlook Citing Near-Term Macro Hesitation. Investors Still Turned On as Shares Rise

Ashlee Vogenthaler

Markets Editor