ON Semiconductor Corporation
CorpDigest
ON Semiconductor Corporation
Company History
Founded 1999 in Scottsdale, Arizona
Last reviewed: 2025-07-15 · By Swet Parvadiya
ON Semiconductor Corporation generated $7.08 billion in revenue for fiscal year 2024, a 14.2% decline from the prior year, yet produced $1.21 billion in free cash flow—a 3x year-over-year increase—while maintaining a 45.4% gross margin through a cyclical downturn that would have crushed margins in previous cycles. The 26-year-old semiconductor company, headquartered in Scottsdale, Arizona, is not a commodity chip supplier in managed decline—it is a power and sensing semiconductor specialist riding the electrification of vehicles and the power efficiency demands of AI data centers. CEO Hassane El-Khoury, who led Cypress Semiconductor through its $9.3 billion sale to Infineon before joining ON Semiconductor in December 2020, has restructured the company around silicon carbide (SiC) power semiconductors that are designed into the next-generation electric drivetrains of Volkswagen, BMW, Hyundai-Kia, Zeekr, and Stellantis. The company's 2027 financial model targets 10-12% revenue CAGR, 53% gross margins, and 40% operating margins—ambitious goals that depend on the cyclical recovery in automotive and industrial demand, the secular ramp of SiC adoption, and the successful execution of the $2 billion Czech Republic manufacturing expansion. With $2.69 billion in cash, $3.35 billion in low-cost long-term debt, and a $3 billion share repurchase authorization, ON Semiconductor's balance sheet supports both growth investment and aggressive capital return. The critical question is whether the downturn ends in 2025 and whether the company can fend off Infineon, STMicroelectronics, and Wolfspeed in the increasingly competitive SiC market.
Motorola Semiconductor Products Sector (SPS) was established in 1955 as the semiconductor division of Motorola Corporation, headquartered in Austin, Texas. The division was initially focused on discrete semiconductor devices such as transistors and diodes, but expanded into integrated circuits in the 1960s. In 1974, Motorola SPS released the 6800 microprocessor, which became widely used in automotive, industrial, and consumer electronics applications. Throughout the 1980s and 1990s, the division developed the PowerPC processor in collaboration with IBM and Apple, created the first integrated RF transceiver, and expanded manufacturing globally. By the late 1990s, SPS had become one of the world's largest semiconductor manufacturers but was increasingly seen as a non-core asset by Motorola's management, who wanted to focus on mobile phones and communications infrastructure. In 1999, Motorola spun off SPS into a separate publicly traded company called ON Semiconductor, which inherited the division's product portfolio, manufacturing assets, and customer relationships. The spin-off was one of the most successful semiconductor divestitures in history, creating a company that would grow from $1.2 billion in initial revenue to over $8 billion at its peak through a series of strategic acquisitions and organic growth initiatives.
Motorola established its Semiconductor Products Sector (SPS) in Austin, Texas, initially focused on discrete semiconductor devices including transistors and diodes, laying the foundation for what would become ON Semiconductor 44 years later.
Motorola SPS released the 6800 microprocessor, which became widely used in automotive, industrial, and consumer electronics applications and established Motorola as a major player in the emerging microprocessor market.
Motorola spun off its Semiconductor Products Sector into a separate publicly traded company called ON Semiconductor, creating a standalone entity with approximately $1.2 billion in initial revenue and manufacturing facilities across the US, Europe, and Asia.
ON Semiconductor acquired LSI Logic's consumer and computing products division, adding custom ASIC capabilities and expanding the company's presence in consumer electronics markets.
ON Semiconductor acquired Catalyst Semiconductor for approximately $115 million, expanding its portfolio of analog and memory products and adding manufacturing capabilities in the United States and Asia.
ON Semiconductor acquired SANYO Semiconductor, gaining significant manufacturing capacity in Japan, a foothold in the automotive and industrial markets, and approximately $800 million in annual revenue.
ON Semiconductor acquired California Micro Devices, adding protection and filtering products for mobile devices and expanding the company's presence in the smartphone and tablet markets.
ON Semiconductor completed its $2.4 billion cash acquisition of Fairchild Semiconductor, creating a top-10 non-memory semiconductor supplier with approximately $5 billion in pro forma revenue and a comprehensive power management portfolio. The acquisition added approximately 87.98 million shares tendered, representing 76.6% of Fairchild's outstanding stock.
Hassane El-Khoury was appointed president and CEO of ON Semiconductor in December 2020 after leading Cypress Semiconductor through its $9.3 billion acquisition by Infineon. El-Khoury launched the Fab Right strategy and pivoted the company toward silicon carbide power semiconductors and intelligent sensing.
ON Semiconductor reached a revenue peak of $8.33 billion in FY2022, up 23.5% from FY2021, driven by strong demand across all segments. The company also approved an exit plan to wind down Quantum Computing Solutions (QCS), recording $18.9 million in exit costs and impairing $18.6 million in assets.
ON Semiconductor's vehicle electrification revenue grew approximately 60% year-over-year, driven by rapid adoption of the company's EliteSiC power semiconductors in electric vehicle traction inverters, on-board chargers, and DC-DC converters.
Despite a 14.2% revenue decline to $7.08 billion, ON Semiconductor generated $1.21 billion in free cash flow—a 176.5% increase from $438.4 million in FY2023—demonstrating the structural cash flow transformation from the Fab Right manufacturing strategy. The company returned 54% of free cash flow to shareholders through $650 million in share repurchases.
ON Semiconductor acquired Qorvo's SiC JFET technology business for $118.8 million to address AI data center power supply needs, and announced plans for up to $2 billion in investment for a Czech Republic SiC semiconductor facility—potentially one of the largest private investments in Czech history.
ON Semiconductor acquired Fairchild Semiconductor for $2.4 billion in cash to create a top-10 non-memory semiconductor supplier with a comprehensive power management portfolio. Fairchild, founded in 1957, was a pioneer in power semiconductors that had invented the planar transistor and integrated circuit. The acquisition added approximately $1.5 billion in annual revenue and critical power semiconductor expertise.
ON Semiconductor acquired Qorvo's silicon carbide JFET technology business to address the AC-DC conversion stage in power supply units for AI data centers. The acquisition added JFET technology that enables high energy efficiency and power density in server power supplies, complementing ON Semiconductor's existing EliteSiC MOSFET portfolio.
ON Semiconductor acquired Aura Semiconductor's Vcore power technologies for up to $144 million to expand its power management portfolio for data center and AI applications. The acquisition added voltage regulator and power delivery technologies that complement the company's existing power management solutions.