on-semi ON’s share price rose 5.4% year-to-date, outpacing declines of 58.3% and 30.4% for Sachs Semiconductors – Analog & Mixed Industries and Sachs Computer & Technology Sectors respectively.
The semiconductor-analog and mixed industries as a whole have been hit hard by a number of macroeconomic turmoil, including persistent supply chain constraints, blistering inflation, the ongoing Russian-Ukrainian war, foreign exchange market volatility and a looming recession. , which suffers from various operational challenges.
However, by investing in strategic areas such as intelligent power and sensing products, onsemi has been able to beat the cyclical downtrend, helping to expand its gross margin and operating margin. ON set out to build these products to take advantage of rising trends in the vehicle electrification, ADAS, energy infrastructure and factory automation markets.
onsemi has a very diverse business. The company generates a significant percentage of its revenue from each of the computing, consumer, industrial, communications, and automotive markets. Onsemi last reported his third quarter of 2022, when he reported revenue of $2.19 billion. That beats the Zacks Consensus Estimate by 3.6% for him, and a 26% improvement over the previous year.
The company is re-allocating capacity to strategic, high-margin products to drive favorable mix shifts and eliminate price/value mismatches. To that end, onsemi is expanding capacity in strategic locations and closing regional fab sites, while price spikes at operations in these regions are negatively impacting margin growth.
ON Semiconductor Pricing and Consensus
ON Semiconductor Corporation Price Consensus Chart | ON Semiconductor Quote
Reduce costs by relocating onsemi fab locations
onsemi has expanded its silicon carbide (SiC) facilities domestically and internationally to diversify its product portfolio. Per onsemi, the total addressable market for SiC is projected to grow from $2 billion in 2021 to $6.5 billion in 2026, at a CAGR of 33%.
The company recently expanded its Hudson, New Hampshire facility. This will quintuple the production capacity of SiC boules year-on-year. This will help meet the growing demand for SiC-based solutions, which are essential for the development of EVs and energy infrastructure and make a significant contribution to decarbonisation.
ON recently expanded its SiC facility in Roznov, Czech Republic, increasing its SiC production capacity by a factor of 16. So far, ON has invested more than $150 million in his Roznov site and plans to invest another $300 million by 2023.
Currently holding Zack Rank 3 (Hold), onsemi is not only expanding its production capacity. The company recently completed the sale of its Niigata factory in Japan. This is consistent with a fab liter strategy to expand gross margins and reduce fixed cost footprints.you can see Here is the complete list of today’s #1 (strong buy) Zachs stocks..
A further positive impact on onsemi’s decision to close its operations in Japan is that President Biden signed the CHIPS and Science Act, which will support investment in domestic semiconductor manufacturing and increase the investment in countries such as China and Japan. reducing its dependence on foreign markets.its peer microchip technology MCHP is also looking to benefit from recent declarations by the government.
The government’s recent declaration will help Microchip diversify revenues from its microcontroller business, which has been plagued by supply chain disruptions. continues to develop and introduce a wide range of innovative and proprietary new linear, mixed signal, power, interface and timing products.
However, ON faces stiff competition. texas instruments TXN and ST Microelectronics STM.
STMicroelectronics’ 3rd generation STPOWER SiC MOSFETs help meet energy efficiency requirements for EVs and are ONSEMI’s main competitors in the EV market. STMicroelectronics’ solutions help EV manufacturers achieve faster charging and lighter EVs, helping STM gain a significant market share in the industry.
Texas Instruments is also successful in certain fast-growing automotive market segments. TXN focuses on infotainment, safety, ADAS, body electronics (including lighting), hybrid electric vehicles, and the powertrain segment of the automotive market. We are also experiencing significant traction from the EV megatrend.
However, onsemi has signed long-term supply agreements with various customers over the next three years and is expected to help secure $1 billion in SiC revenues in 2023.
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Out of thousands of stocks, each of our five Zacks experts picked their favorites to surge +100% or more in the coming months. Out of these five, research director Heraz Mian chose her one with the most explosive advantages.
A little-known chemical company, up 65% from last year, but still cheap. With relentless demand, his skyrocketing earnings forecast for 2022, and a $1.5 billion stock buyback, retail investors are ready to jump in.
The company matches other recent Zacks stock doublings as Boston Beer Company surges +143.0% in just over nine months and NVIDIA surges +175.9% in a year. or may exceed it.
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