ON Semiconductor Investment Thesis

ON Semiconductor Corporation provides intelligent sensing and power solutions worldwide. Its intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers fast-charging systems, and propels sustainable energy for the solar strings, industrial power, and storage systems. The company operates through three segments the Power Solutions Group, the Advanced Solutions Group, and the Intelligent Sensing Group segments. It offers analog, discrete, module, and integrated semiconductor products that perform multiple application functions, including power switching and conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation functions. The company also designs and develops analog, mixed-signal, advanced logic, application specific standard product and ASICs, radio frequency, and integrated power solutions for end-users in end-markets, as well as provides foundry and design services for government customers. In addition, it develops complementary metal oxide semiconductor image sensors, image signal processors, and single photon detectors, including silicon photomultipliers and single photon avalanche diode arrays, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in various end-markets. ON Semiconductor Corporation was incorporated in 1992 and is headquartered in Phoenix, Arizona.

ON Semiconductor (ON): The Power of Silicon Carbide

1. Executive Summary

ON Semi has transformed from a commodity chipmaker to a strategic leader in Power Semiconductors, specifically Silicon Carbide (SiC). As EVs adopt 800V architectures for faster charging, SiC becomes mandatory. ON is one of the few vertically integrated players (growing their own crystals) capable of meeting this demand.

Key Thesis Points

SiC Vertical Integration: Unlike competitors who buy wafers, ON produces its own substrates. This yields margin advantages and supply security, critical for winning OEM contracts (Tesla, Hyundai).
Industrial & Auto Focus: With over 75% of revenue coming from Auto and Industrial, ON is less exposed to the volatile consumer electronics cycle.
Margin Expansion: Exiting low-margin legacy businesses (image sensors, commodity logic) has structurally raised gross margins from 30% to 45%+.

2. Business Overview

Power Solutions: MOSFETs, IGBTs, SiC modules.
Intelligent Sensing: Automotive cameras, LiDAR sensors.

3. Risks

EV Slowdown: If EV adoption curves flatten, SiC demand will undershoot the massive capacity build-out currently underway.
Chinese Competition: Domestic Chinese players (Sanan, BYD Semi) are aggressively entering the SiC market.

ON Semiconductor Investment Thesis

ON Semiconductor (ON): The Power of Silicon Carbide

1. Executive Summary

Key Thesis Points

2. Business Overview

3. Risks

ON Valuation Model

Investment Idea: ON Semiconductor

Sony Group Corporation (SONY)

ON Semiconductor (ON): Powering the Electrification Revolution

ON Semiconductor (ON): Powering the Electrification Revolution