ON Semiconductor Corporation
CorpDigest
ON Semiconductor Corporation
Company History
Founded 1999 in Scottsdale, Arizona
Last reviewed: 2025-07-15 · By Swet Parvadiya
Across all segments, ON Semiconductor's revenue model combines direct sales to original equipment manufacturers (OEMs) and tier-1 suppliers with distribution through a global network of authorized distributors. ON Semiconductor's origin story begins not with a garage startup but with a corporate divestiture that became one of the most successful semiconductor spin-offs in history. He launched the "Fab Right" strategy to optimize the manufacturing footprint, pivoted the product portfolio toward silicon carbide power semiconductors for EVs, and positioned the company for the AI data center power opportunity.
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.
onsemi was created in August 1999 when Motorola spun off its Semiconductor Components Group from the broader Semiconductor Products Sector (SPS). Motorola sold an 81% interest in the unit to private-equity firm Texas Pacific Group for approximately $1.6 billion, while retaining a 19% interest, and the new company was incorporated as ON Semiconductor Corporation, headquartered in Phoenix, Arizona. The spun-off business comprised Motorola's standard-products and discrete-components portfolio — power MOSFETs, bipolar junction transistors, standard logic, voltage regulators, and analog ICs — along with manufacturing facilities in Phoenix, Arizona; Aizu, Japan; and several Asian assembly and test sites. Motorola retained its higher-margin custom-design semiconductor businesses (which would later become Freescale Semiconductor) within SPS. The strategic rationale for the spin-off was that standard-products semiconductors required scale and cost discipline rather than the design-intensive R&D model Motorola favored. ON Semiconductor inherited approximately 14,000 employees and roughly $2 billion in annual revenue at the time of separation, with TPG installing initial leadership focused on operational efficiency and preparation for an IPO.
ON Semiconductor completed its initial public offering on the NASDAQ in April 2000 at $16 per share, raising approximately $544 million. The IPO occurred at the absolute peak of the dot-com bubble and the semiconductor cycle, with the stock briefly trading above $30 before the 2001-2002 semiconductor downturn collapsed valuations across the sector. ON Semiconductor was particularly exposed because its standard-products portfolio depended on telecommunications-equipment demand that evaporated as carriers cut capex by 70% from peak. The stock traded below $1 for portions of 2002. The company carried significant debt from the leveraged-buyout spin-off structure, which compounded the cyclical pressure. Survival required aggressive restructuring: factory closures, headcount reductions, debt refinancing, and a sustained operational focus through 2003-2004. The recovery began as semiconductor demand rebounded in 2004 and ON Semi pivoted toward automotive and industrial end markets that offered more stable demand than telecommunications. The early-decade trauma shaped a long-running cultural emphasis on operational discipline, balance-sheet management, and end-market diversification that distinguishes onsemi through the present.
ON Semiconductor announced the acquisition of Fairchild Semiconductor in November 2015 for approximately $2.4 billion in cash and closed the transaction in September 2016. Fairchild was the legendary Silicon Valley pioneer founded in 1957 by the 'Traitorous Eight' from Shockley Semiconductor, including Robert Noyce and Gordon Moore who later founded Intel; by the 2010s it had repositioned as a power-semiconductor specialist focused on power discrete components, MOSFETs, IGBTs, and AC-DC power solutions. The acquisition was strategically transformative for ON Semi: it added approximately $1.4 billion of revenue, established the combined entity as the second-largest power-semiconductor supplier globally behind Infineon, and added engineering and manufacturing depth in power technology that would prove central to the subsequent EV and renewable-energy strategy. Integration was managed across roughly two years and produced approximately $200 million of annual cost synergies. The combined company's automotive and industrial end-market exposure increased materially, accelerating the strategic pivot away from consumer and computing markets that would be formalized under CEO Hassane El-Khoury after 2020.
The company unveiled the 'onsemi' lowercase brand in August 2021 as part of a broader strategic repositioning under CEO Hassane El-Khoury, who had taken the role in December 2020. The rebrand signaled three shifts. First, a focus narrowing: from a broadly diversified standard-products supplier across consumer, industrial, automotive, and computing to a focused player in 'intelligent power and sensing' for automotive and industrial end markets. Second, exit of non-core businesses: divestitures of consumer Image Sensor lines, factory closures in standard-products manufacturing, and headcount realignment freed capital for strategic investment. Third, a more aggressive product-portfolio mix: silicon carbide (SiC) for EV powertrain efficiency, sensing for automotive ADAS, and intelligent power modules for industrial automation, replacing commodity legacy products that had constrained gross margin. The rebrand was accompanied by capital-allocation changes including the cancellation of the dividend and the redirection of cash to growth investments and share repurchases. The strategic narrative resonated with investors and the share price tripled from late 2020 lows to peak levels in 2024 before correcting on automotive cyclical concerns.
onsemi built end-to-end silicon-carbide manufacturing capability through a sequence of capacity acquisitions. In 2019 the company acquired GlobalFoundries' Fab 10 in East Fishkill, New York for approximately $430 million; the 300mm-wafer facility had been producing logic chips for AMD and IBM and was repurposed for SiC and silicon power-semiconductor production. In November 2021 onsemi announced the acquisition of GT Advanced Technologies for $415 million, gaining captive SiC boule and substrate-growing capability that gave the company control of the most constrained step in the SiC supply chain. Subsequent expansions in the Czech Republic Roznov fab and a New Hampshire SiC fab brought the SiC supply chain in-house from substrate growth through epitaxy, device fabrication, and module assembly. The vertical integration was strategically critical: SiC supply has been chronically constrained, and competitors like Wolfspeed and STMicroelectronics control substantial substrate capacity. By 2024 onsemi had become a top-three global SiC supplier, with EV-powertrain customers including Tesla, BYD, and Volkswagen, and SiC revenue scaling toward an estimated $1 billion-plus annual run rate before the 2024 EV demand correction.