onsemi’s first quarter results drew a negative market reaction, as the company reported a significant year-on-year sales decline. Management attributed the downturn primarily to ongoing inventory correction in automotive and industrial end markets, as well as persistent customer caution. CEO Hassane El-Khoury acknowledged, “Inventory digestion persists and customers remain cautious, as I described last quarter,” while also noting that early signs of stabilization had begun to appear in certain industrial segments. The company’s restructuring and manufacturing realignment efforts, including a 12% reduction in fab capacity and a 9% workforce reduction, were highlighted as key moves to manage costs during the extended downturn.
Is now the time to buy ON? Find out in our full research report (it’s free).
onsemi (ON) Q1 CY2025 Highlights:
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Revenue: $1.45 billion vs analyst estimates of $1.4 billion (22.4% year-on-year decline, 3.1% beat)
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Adjusted EPS: $0.55 vs analyst estimates of $0.50 (9.6% beat)
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Adjusted EBITDA: $432.2 million vs analyst estimates of $401 million (29.9% margin, 7.8% beat)
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Revenue Guidance for Q2 CY2025 is $1.45 billion at the midpoint, above analyst estimates of $1.41 billion
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Adjusted EPS guidance for Q2 CY2025 is $0.53 at the midpoint, above analyst estimates of $0.51
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Operating Margin: -39.7%, down from 28.2% in the same quarter last year
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Inventory Days Outstanding: 164, down from 216 in the previous quarter
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Market Capitalization: $22.46 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions onsemi’s Q1 Earnings Call
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Ross Seymore (Deutsche Bank) asked why onsemi’s sequential revenue guidance lagged peers. CEO Hassane El-Khoury explained it reflected the company’s greater focus on automotive, especially EVs, which have not yet recovered outside China.
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Vivek Arya (Bank of America) questioned the shift in pricing strategy and its impact. El-Khoury said pricing is being used defensively and opportunistically to maintain or grow share but is not tied to specific products or regions.
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Chris Danely (Citi) sought clarity on the plan to exit non-core businesses. CFO Thad Trent confirmed the company is still targeting roughly $300 million in non-core exits, modulating pace based on market conditions and margin impact.
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Gary Mobley (Loop Capital) pressed for details on silicon carbide market share and the impact of new wins in China. El-Khoury emphasized technology performance over pricing as the main differentiator and sees share gains in high-voltage applications.
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Tore Svanberg (Stifel) inquired about the outlook for the Treo platform’s revenue contribution. El-Khoury projected continued product expansion and high-margin growth, though material impact at the company level will take time as the platform scales.
Catalysts in Upcoming Quarters
Looking forward, we are closely monitoring (1) the pace of recovery in industrial and automotive demand, especially any acceleration in China’s electric vehicle market; (2) the tangible margin benefits from onsemi’s manufacturing realignment and cost reductions; and (3) the commercial traction and margin profile of new products, particularly silicon carbide devices and the Treo platform. The company’s ability to manage pricing and inventory amid uncertain global conditions will also be a key indicator of execution.
onsemi currently trades at $53.50, up from $41.92 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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