Onsemi beats expectations, but recovery remains selective
Onsemi reported quarterly results that are slightly above expectations, although not enough to sustain the stock's strong momentum, which fell over 5% in after-hours trading on Monday, after a YTD surge of about 85%. The group posted revenue of $1.51bn, compared to the $1.49bn expected by the consensus, while adjusted EPS came in at $0.64, above the anticipated $0.613.
This release confirms the beginning of a turnaround after several challenging quarters, with revenue up 4.7% y-o-y and adjusted EPS increasing 16.4%. Management believes that the group has passed its cyclical trough, driven notably by strengthening demand in AI-related data centers, where revenues grew by over 30% Q-o-Q and more than doubled y-o-y.
However, the recovery profile remains uneven, as revenue still declined slightly compared to Q4 (-1%), while analog (-3%) and sensor (-5%) businesses contracted sequentially. Free cash flow also dropped sharply to $217.2m from $485.4m in the previous quarter (-55%), while GAAP results continue to be weighed down by significant restructuring charges.
For Q2, onsemi is targeting revenue between $1.535bn and $1.635bn, along with adjusted EPS of $0.65 to $0.77, both above current expectations. The market will now be watching to see if the improvement broadens beyond AI-related power applications.
ON Semiconductor Corporation (onsemi) is specialized in designing, manufacturing and marketing semiconductor electronic components. Net sales are divided by product family as follows:
- solutions for power systems (46.8%): field-effect transistors, discrete and power modules, regulators, controllers, commutators, isolation components, etc.;
- solutions for advanced electronic systems (37.7%): analog components, application-specific and high-speed integrated circuits, connectivity components, large-scale integrated circuits, etc.;
- solutions for smart sensor systems (15.5%): image sensors, actuator drivers, image signal processors, photon detectors, etc.
Net sales are divided by market between automotive (51.4%), industrial (27.9%), and other (20.7%).
Net sales are distributed geographically as follows: the United States (20.5%), Hong Kong (27.3%), the United Kingdom (22.5%), Singapore (20.9%), and other (8.8%).
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