What we think about onsemi (ON)
onsemi in Three Words: Diversified Analog Chipmaker
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Background
Onsemi makes a boatload of chips, selling 37,000 unique products and 50 billion total units each year to all corners of the globe. As a diversified semiconductor company, it designs power modules, intelligent sensors, and silicon carbide products and then manufactures and sells them to the energy, automotive, and industrial markets.
Pretty boring stuff, right? Nothing will put you to sleep faster than reading about yet another slow-growing chipmaker. The cure for insomnia should be reading investing reports about the chip industry.
But onsemi knows that and doesn’t want to be one of those companies. Its CEO Hassane El-Khoury has a vision of accelerating the journey towards a sustainable ecosystem.
More than just a marketable corporate slogan, onsemi is hand-selecting the markets it wants to play in while exiting those it doesn’t care for.
It is specifically targeting automotive and industrial, such as the power modules required for battery charging stations or the inverters required to convert DC to AC in electric vehicles. Its vast manufacturing capacities and its diversified IP library allow onsemi to piece together multiple chips into bespoke final products to perfectly serve their customers’ needs.
That has resulted in trust and long-term supply agreements with large customers, including BMW, NIO, Tesla, and several industrial customers.
Onsemi was spun-out from Motorola’s Semiconductor Components Group in 1999 and then went public eight months later in April 2000 (narrowly escaping the carnage of the dot-com bubble bursting!). Originally named ON Semiconductor, it rebranded in 2021 to the lower-case “onsemi” to emphasize its more strategic focus on the industrial and automotive markets. It does $8 billion in annual revenue and employs 30,000 people.
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