2024-03-12 06:44:20 ET
Summary
- The analog semiconductor market is currently in a cyclical downturn, but ON Semiconductor has successfully managed the decline in demand better than their peers.
- ON’s focus on power systems chips makes them a key supplier in the push towards electrification.
- Maximizing efficiency and client value has resulted in ON taking market share from their competitors and increasing revenue at twice the underlying market growth rate in silicon carbide power chips.
Investment Thesis
ON Semiconductor ( ON ) is a leading chip designer for power systems, image sensors, and complementary products. ON combines chip design with full vertically integrated manufacturing. ON has spent the last couple of years redefining what they are as a business. This includes the sale of multiple fabs, and low margin, high competition products (predominantly consumer related). The company has narrowed its focus to high growth sectors in automotive, industrial, and telecommunications/cloud. ON has also worked on the efficiency of their manufacturing by prioritizing expansions and refinements of existing facilities (brown fields) rather than spending heavily on new facilities (green fields)....
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ON Semiconductor: Perfectly Positioned For The Electrification Of Everything