ON Semiconductor (ON -11.77%), a supplier focused on automotive, industrial, and cloud infrastructure semiconductor solutions, reported its latest financial results for the quarter ended June 30, 2025, on August 4, 2025. The standout news was that the company delivered GAAP revenue of $1,468.7 million in Q2 2025, surpassing analyst expectations by $16.5 million, or 1.1%. Non-GAAP earnings per share landed at $0.53, aligning exactly with consensus forecasts. Compared to Q2 2024, GAAP revenue tumbled 15.4%, with profitability metrics showing similar downward pressure. While the business demonstrated signs of stabilization in key end markets, the quarter was characterized by ongoing margin compression and weak demand across several segments.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.53 | $0.53 | $0.96 | (44.8%) |
| Revenue (GAAP) | $1,468.7 million | $1,452.16 million | $1,735.2 million | (15.3%) |
| Gross Margin (Non-GAAP) | 37.6% | 45.3% | (7.7 pp) | |
| Operating Margin (Non-GAAP) | 17.3% | 27.5% | (10.2 pp) | |
| Free Cash Flow (Non-GAAP) | $106.1 million | $221.1 million | (52.0%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding ON Semiconductor’s Business and Recent Priorities
ON Semiconductor develops and manufactures analog, power, and sensor semiconductor products. Its chips are used across a wide range of applications, including electric vehicles (EVs), factory automation, and cloud power infrastructure. The company’s intelligent power and sensing solutions enable technologies for automotive safety systems, electric powertrains, and efficient high-speed charging.
The business strategy focuses on fast-growing sectors like automotive electrification, industrial automation, and artificial intelligence (AI) data centers. Recent priorities have included expanding its silicon carbide (SiC) power product portfolio, strengthening operational efficiency through restructuring, and refining its product mix to emphasize high-margin strategic platforms like the Treo analog/power integrated circuits and EliteSiC power solutions.
Quarter in Review: Segment Trends, Operational Moves, and Financial Shifts
GAAP revenue dropped 15% year-over-year but increased 2% sequentially in Q2 2025. This mild improvement from Q1 2025 was one of the first hints of stabilization in the company’s end markets. The Power Solutions Group, which produces power management chips for applications like EVs and renewable energy, generated $698.2 million in GAAP revenue in Q2 2025. This represented an 8% sequential increase but remained 16% below the total from Q2 2024. The Analog & Mixed Signal Group, focused on analog devices and mixed-signal chips for power and connectivity applications, recorded $555.9 million in GAAP revenue in Q2 2025, declining both sequentially (2%) and year over year (14%). The Intelligent Sensing Group, which makes image sensors and related devices for automotive and industrial use, generated $214.6 million in GAAP revenue, down 8% sequentially and 15% year over year in Q2 2025.
The automotive segment continued to be a focal point, especially in China, where ON Semiconductor’s SiC solutions have achieved notable design wins. According to management, the company expects its silicon carbide technology to feature in about half of the new electric vehicle models debuted at the recent Shanghai Auto Show, with these designs due to scale up in late 2025 and beyond. EV demand remains cyclical, with regional disparities — China is proving resilient while softness persists elsewhere. In industrial markets, the business noted an improved sequential trend and the beginning of a recovery in some sub-segments, including factory automation and aerospace, during Q1 2025.
Profitability metrics (GAAP and non-GAAP) weakened sharply year-over-year in Q2 2025. Non-GAAP gross margin slipped from 45.3% in Q2 2024 to 37.6% in Q2 2025, as under-absorption and lower factory utilization weighed on results. Management attributed this to a combination of cyclical market sluggishness and deliberate cost-saving moves in Q1 2025, such as reducing internal manufacturing capacity by 12%, eliminating nearly one in ten jobs (9%), and exiting certain non-core product lines. The company recorded approximately $22 million in annualized depreciation savings as a result of its Fab Right initiative, with further structural cost benefits expected to materialize in future quarters.
Product development remained front and center. The company continued to double down on its Treo platform, a family of high-performance analog and power integrated circuits, and expanded the EliteSiC silicon carbide offering for automotive, energy, and AI-intensive applications. ON Semiconductor announced new SiC product wins for both Chinese automotive original equipment manufacturers (OEMs) and AI data center platforms, positioning itself to capture growth as demand for electrification and efficient power management climbs. Management highlighted the Treo platform’s high gross margin profile (management claims 60% to 70%), though it currently contributes only modestly to company-wide results.
Non-GAAP free cash flow dropped to $106.1 million in Q2 2025, a sharp decrease from $221.1 million in Q2 2024. Despite this, the company returned more than 100% of free cash flow to shareholders via share repurchases year-to-date through Q2 2025, reflecting confidence in its liquidity and future cash generation. The company continues to keep capital expenditures low, with capex running at about 5.3% of revenue in Q2 2025 and ongoing efforts to reduce fixed costs through its “Fab Right” manufacturing strategy. No dividend was declared or changed, as ON does not currently pay a dividend.
Products and Portfolio: Adding Context for Non-Experts
The company's strategic push in electric vehicles is powered by its silicon carbide (SiC) devices — advanced materials that make power electronics more efficient, durable, and energy-saving, especially in high-voltage platforms like new-generation EVs. The Treo product family consists of analog and power integrated circuits (ICs) used in vehicles and cloud data centers. The company also produces high-resolution image sensors, such as 8-megapixel devices for automotive advanced driver-assistance systems (ADAS), enabling features like collision avoidance and lane-keeping.
To expand its portfolio, ON Semiconductor has acquired silicon carbide junction field-effect transistor (JFET) technology from Qorvo, allowing it to make more competitive high-power devices for energy-hungry sectors. These products complement its existing lineup and are central to securing new design wins with automotive OEMs and global cloud infrastructure providers.
Looking Forward: Management Guidance and Key Items to Watch
Management provided guidance for Q2 2025 that suggests a continued period of stabilization rather than growth. GAAP and non-GAAP revenue for Q3 2025 is expected to range from $1,465 million to $1,565 million, implying a flat result compared to the current period at the midpoint. Non-GAAP gross margin is guided between 36.5% and 38.5% in Q2 2025, holding close to current levels. Non-GAAP earnings per share are projected between $0.54 and $0.64 in Q3 2025. Management attributes restrained guidance in Q2 2025 to persistent muted demand, ongoing under-absorption (lowered profitability due to underused manufacturing capacity), and careful pricing discipline.
Leadership did not announce any new or adjusted dividends for shareholders. With the business continuing to exit lower-margin product lines and focus on structural cost reduction, investors should monitor trends in factory utilization, progression of Treo and EliteSiC product sales, and market recovery in key sectors such as EVs and industrial automation. Management emphasizes that long-term growth rests on recovery in demand, improved utilization of facilities, and continued momentum in higher-margin next-generation products.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
