As of February 9, 2026, ON Semiconductor (Nasdaq: ON), now officially rebranded as onsemi, stands as a primary architect of the global energy transition. Once known as a broad-market supplier of commodity components, the Scottsdale, Arizona-based company has undergone one of the most aggressive structural transformations in the semiconductor industry. Today, onsemi is a specialized leader in intelligent power and intelligent sensing, focusing specifically on the high-growth "megatrends" of vehicle electrification, industrial automation, and the massive power requirements of AI-driven data centers.

The company is currently in sharp focus as it navigates the transition from 150mm to 200mm Silicon Carbide (SiC) production—a technical leap that separates the market leaders from the laggards in the power semiconductor space. With AI GPUs demanding unprecedented levels of power density and electric vehicles (EVs) moving toward 800V architectures, onsemi's "EliteSiC" ecosystem has become a critical bottleneck for innovation, making it a central figure in the portfolios of institutional and retail investors alike.

Historical Background

The story of onsemi is one of strategic evolution. The company was born in 1999 as a spinoff of Motorola’s Semiconductor Components Group, focused primarily on discrete, logic, and standard analog devices. For its first decade, it operated as a high-volume, low-margin manufacturer.

The transformation into a power powerhouse began with a series of calculated acquisitions:

• SANYO Semiconductor (2011): This acquisition expanded its footprint in the Japanese market and automotive sector.
• Fairchild Semiconductor (2016): A $2.4 billion deal that instantly vaulted onsemi into the top tier of global power semiconductor suppliers.
• GT Advanced Technologies (2021): Perhaps the most pivotal move under current leadership, this acquisition secured the internal supply of Silicon Carbide (SiC) boules, allowing onsemi to control its supply chain from "substrate to system."

Under the leadership of CEO Hassane El-Khoury, who took the helm in December 2020, the company shed its "commodity" identity. El-Khoury initiated a "Fab-Lite" to "Fab-Right" strategy, divesting underperforming manufacturing plants and doubling down on high-margin, differentiated technologies that are difficult for competitors to replicate.

Business Model

onsemi operates through three core business segments, each aligned with long-term secular growth drivers:

1. Power Solutions Group (PSG): The largest revenue contributor, PSG provides high-performance power semiconductors (SiC, IGBTs, and MOSFETs). These are the "muscles" of an EV’s drivetrain and the high-efficiency components in solar inverters and AI server power supplies.
2. Analog and Mixed-Signal Group (AMG): Reorganized in early 2024, this group focuses on the "brains" of power management. It develops gate drivers, DC-DC converters, and integrated circuits that manage the flow of electricity within complex systems like AI GPU racks.
3. Intelligent Sensing Group (ISG): A world leader in automotive and industrial image sensors. onsemi currently holds over 60% of the market share for ADAS (Advanced Driver Assistance Systems) sensors. Its sensors are designed to provide the high-dynamic-range (HDR) data necessary for AI-driven autonomous driving platforms.

The company’s model is increasingly vertically integrated, meaning they grow their own crystals, slice their own wafers, and package their own modules, ensuring higher quality control and better margins than competitors who rely on external substrate suppliers.

Stock Performance Overview

Over the past decade, onsemi has transformed from a cyclical laggard into a high-growth tech darling.

• 10-Year Horizon: Investors who bought in 2016 have seen gains exceeding 900%, as the company successfully pivoted away from consumer electronics toward automotive and industrial markets.
• 5-Year Horizon: The period from 2021 to 2026 has been characterized by high volatility but strong overall growth. The stock reached record highs in 2023, followed by a significant correction in 2024 as the EV market experienced a temporary "inventory digestion" phase.
• 1-Year Horizon (2025-2026): Over the last 12 months, the stock has staged a robust recovery. As of February 2026, ON shares are trading in the $105–$120 range, up approximately 35% from the 2024 lows. This rally has been fueled by the company’s expansion into AI data center power and the successful ramp-up of its 200mm SiC production facility in Bucheon, South Korea.

Financial Performance

onsemi’s financials reflect a company prioritizing "structural profitability" over raw volume.

• Revenue: After a slight contraction in 2024 (down to ~$7.8 billion), revenue has stabilized and is projected to grow toward $9 billion in the 2026 fiscal year.
• Margins: A key metric for onsemi is its gross margin. Despite the capital-intensive nature of semiconductor manufacturing, the company has maintained non-GAAP gross margins above 45%. Its long-term target of 53% remains a focal point for analysts, expected to be reached by 2027 as 200mm SiC utilization hits its stride.
• Capital Allocation: In late 2025, the board authorized a $6 billion share buyback program, signaling management's belief that the stock remains undervalued relative to its dominance in the SiC market.
• Debt: The company maintains a healthy balance sheet with a net debt-to-EBITDA ratio well below 1.5x, providing flexibility for future M&A.

Leadership and Management

Hassane El-Khoury (President and CEO): Often described as a "turnaround specialist," El-Khoury has been the primary architect of onsemi’s modern identity. His "Fab-Right" strategy focused on divesting four older fabs and focusing internal production on 300mm silicon and 200mm SiC wafers.

The leadership team is regarded as highly disciplined, with a reputation for meeting or exceeding margin guidance even in down cycles. Governance at onsemi is rated highly, with a board that has successfully balanced aggressive R&D spending (roughly 10% of revenue) with shareholder returns.

Products, Services, and Innovations

onsemi’s competitive edge lies in its EliteSiC brand. Silicon Carbide is superior to traditional silicon for high-voltage applications because it is more efficient, can operate at higher temperatures, and allows for smaller, lighter components.

• 200mm SiC Wafers: In 2025, onsemi became one of the few companies to successfully mass-produce SiC on 200mm (8-inch) wafers. This transition increases the number of chips per wafer by roughly 80% compared to the older 150mm standard, drastically lowering the cost per chip.
• Hyperlux Image Sensors: These sensors are optimized for AI. They feature "super-exposure" technology that allows cameras to see clearly in extreme lighting conditions, a necessity for Level 3 and Level 4 autonomous driving systems.
• AI Data Center "Power Tree": As AI clusters require kilowatts of power, onsemi has innovated in vertical power delivery and Gallium Nitride (GaN) technologies to minimize energy loss from the grid to the GPU.

Competitive Landscape

The power semiconductor market is a "clash of titans":

• STMicroelectronics (NYSE: STM): onsemi’s primary rival in the SiC space, with a strong foothold in European automotive (notably Tesla).
• Infineon Technologies (OTC: IFNNY): The global leader in power semiconductors by total revenue, though onsemi is often viewed as more agile in the SiC transition.
• Wolfspeed (NYSE: WOLF): A pure-play SiC materials leader. While Wolfspeed has a head start in material science, onsemi has outpaced them in high-volume device manufacturing and reliability.
• Chinese Competitors: Firms like Sanan Optoelectronics are flooding the market with low-end SiC, but onsemi's focus on high-performance 800V EV modules provides a technical "moat" against commoditization.

Industry and Market Trends

The semiconductor industry is currently defined by three major trends that favor onsemi:

1. The Shift to 800V EV Systems: To enable "fast charging" (10% to 80% in under 18 minutes), EVs are moving from 400V to 800V battery systems. This requires the high-voltage resilience that only SiC can provide.
2. AI Power Infrastructure: AI data centers are expected to consume 10% of global electricity by 2030. onsemi’s ability to improve power efficiency by even 1-2% across a data center results in millions of dollars in energy savings for hyperscalers like Amazon and Microsoft.
3. Regionalization of Supply Chains: There is a massive push to onshore chip production in the US and Europe, a trend onsemi is capitalizing on via government incentives.

Risks and Challenges

No investment is without risk, and onsemi faces several headwinds:

• China's SiC Surge: Domestic Chinese capacity for SiC is growing rapidly. While onsemi leads in quality, a price war in the low-to-mid-tier industrial segment could squeeze margins.
• EV Adoption Friction: If the transition to electric vehicles slows further due to high interest rates or charging infrastructure gaps, onsemi’s largest growth engine could stall.
• Manufacturing Complexity: Moving to 200mm SiC is technically difficult. Any yield issues (the percentage of functional chips per wafer) at their new fabs could lead to earnings misses.

Opportunities and Catalysts

• Expansion into AI Cooling/Power: Beyond just chips, onsemi is exploring integrated liquid-cooling power modules for AI servers, a high-margin niche.
• Energy Infrastructure: The global upgrade of the "smart grid" to handle renewable energy (solar/wind) requires massive amounts of the power semiconductors that onsemi specializes in.
• Strategic M&A: With a strong cash position, onsemi is rumored to be looking at specialized AI software or Gallium Nitride (GaN) startups to further round out its "Intelligent Power" portfolio.

Investor Sentiment and Analyst Coverage

Wall Street remains generally bullish on onsemi, with a "Moderate Buy" consensus. Analysts from Goldman Sachs and Morgan Stanley have highlighted the company’s "structural margin expansion" as a reason for its premium valuation compared to traditional analog chipmakers like Texas Instruments (Nasdaq: TXN).

Institutional ownership is high at approximately 95%, indicating that "smart money" views onsemi as a core long-term holding for exposure to the electrification of the global economy. Retail sentiment, while more volatile, often tracks the news cycle of major EV makers like Tesla and Rivian.

Regulatory, Policy, and Geopolitical Factors

onsemi is a strategic beneficiary of current geopolitical shifts:

• US CHIPS Act: onsemi has secured significant federal funding to expand its manufacturing sites in East Fishkill, New York, and Mountain Top, Pennsylvania, reducing its reliance on Asian foundries.
• EU Chips Act: The company’s $2 billion investment in the Czech Republic is bolstered by European subsidies aimed at securing a domestic supply of power electronics for the EU’s automotive industry.
• Export Controls: Tightening US restrictions on the export of high-efficiency SiC technology to China act as a protective barrier for onsemi’s intellectual property and market share.

Conclusion

As of February 9, 2026, ON Semiconductor has successfully shed its past as a commodity chipmaker to become an indispensable pillar of the high-voltage future. By vertically integrating its Silicon Carbide supply chain and pivoting toward the power-hungry needs of AI data centers, management has insulated the company from many of the cyclical pressures that plague the broader semiconductor industry.

While the "China factor" and the pace of EV adoption remain valid concerns, onsemi’s transition to 200mm manufacturing and its dominance in automotive sensing provide a robust moat. For investors, onsemi represents a high-conviction play on the fundamental thesis that the world of tomorrow will require more efficient power management than the world of today. The key to its future success will lie in its ability to maintain its technological lead in SiC while executing its "Fab-Right" efficiency gains.

This content is intended for informational purposes only and is not financial advice.