📉 ON Semiconductor failed: Weak results and uncertain outlook send shares down!💰

ON Semi$ON is a key player in the semiconductor industry, focusing on energy-efficient chips for electric vehicles, industrial automation, data centers and advanced sensors. Its components can be found in power electronics, vision systems and autonomous technologies, making it an important supplier to the automotive and high-tech industries.

The company reported worse-than-expected results for Q4 2024. In addition, the company provided a significantly weaker outlook for Q1 2025which has raised further concerns.

📌 Q4 key results:
Earnings per share (EPS): $0.95 (vs. expectations of $0.97)

Revenue: $1.72 billion (vs. expectations of $1.76 billion)

Year-over-year revenue decline: -18% ($2.1 billion last year)

📉 Q1 2025 outlook (well below estimates):
Expected EPS: $0.45-0.55 (vs. expectations of $0.89)

Revenue: $1.35-1.45 billion (vs. expectations of $1.69 billion)

What led to the weaker outlook:
Weakening demand for semiconductors - the sector is facing a downturn, especially in the automotive segment.

Gross margin declining - GAAP margin of 45.2%, indicating pricing pressure.

Slowing investment in EV and industrial electronics, Onsemi's key segments.

🔮 Long-term outlook: why does the CEO remain optimistic?
Despite the bad numbers, the CEO Hassane El-Khoury believes the company is structurally stronger than in the past:

Strong free cash flow - up year-on-year to USD 1.2 billion

Share buyback - 54% of free cash flow returned to shareholders

Long-term transformation of the company towards high-margin products

Short term: Weak outlook and uncertainty in the semiconductor market may lead to further share declines.

Long-term: If the market stabilizes and demand for automotive chips increases, Onsemi may offer an interesting comeback.

Since the beginning of the year, the company's share price has fallen by more than 23%!

What is your view on the future of the semiconductor sector and this company?