ON SemiconductorNASDAQ: ON

Look into how ON Semiconductor Corp.'s (ON) international revenue has changed over time and how this impacts Wall Street's predictions and the future of the stock.

ON Semiconductor's strong performance in FQ3'24 and positive guidance for FQ4'24 show that demand is stabilizing, which is also reflected in their steady gross margins. The management has suggested that FY2025 could be particularly strong, thanks to successful designs with three major North American companies. Additionally, they are seeing growth in electric vehicle designs in China and with VWAGY, as well as an increase in industrial silicon carbide customers in solar and energy storage markets.

OnSemi is still considered undervalued because of declines in the automotive and industrial sectors, which are leading to lower revenue and weak profits. Their silicon carbide technology makes electric vehicles more affordable by cutting down on battery size and weight, while also speeding up charging and improving efficiency, which helps more people adopt EVs. The company is increasing its market presence in China, Europe, and North America, setting itself up for growth as the electric vehicle market starts to bounce back.

The price of Onsemi (NASDAQ: ON) has dropped 40% from its peak, but this situation is expected to change soon due to a return to normal market conditions and increasing demand for its high-power semiconductors in 2025. Although the results for 2024 are not impressive, the Q3 results suggest that growth is likely to start again in the first quarter of fiscal 2025 and will speed up throughout the year.

In the third quarter, ON Semi reported a 1.5% increase in revenue compared to the previous quarter and exceeded expectations with a normalized earnings per share (EPS) of $0.02. The company's management predicts that the total addressable market for its combined segments will reach $44 billion by 2027, growing at an annual rate of 18% from 2022. Considering the cyclical risks in the industry and a modest outlook for the next 12 months, I recommend holding ON Semi shares, expecting more significant gains in late 2025 and 2026.

In the third quarter of 2024, ON Semiconductor's revenue fell by 19.3% compared to the same period last year, mainly because of lower demand for electric vehicles and too much inventory. However, their free cash flow margins increased to 16.7% thanks to lower capital spending and better cost management. The company is also making progress in securing silicon carbide supply agreements, including an important deal with Volkswagen for electric vehicle traction inverters.

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--onsemi (Nasdaq: ON) has announced that its wafer fabrication facility in East Fishkill, New York, has received accreditation from the Defense Microelectronics Activity (DMEA) of the U.S. Department of Defense (DoD) as a Category 1A Trusted Supplier. This accreditation allows onsemi to produce secure advanced semiconductors for important aerospace and defense uses at this location. The East Fishkill fab is the only facility of its kind that manufactures 300 mm power discrete and image sensors.

ON Semiconductor Corporation was among the first to predict a drop in demand, which enabled it to swiftly modify its factory usage and manage costs effectively. The results for the third quarter indicate steady revenue compared to the previous quarter, even though it has decreased year-on-year, supporting expectations of a slow recovery. Additionally, OnSemi's investment in SiC technology has made it a leader in the market, particularly for electric vehicle power applications.

ON's performance in the third quarter of 2024 shows a high demand for products in both the business sector and the end market.