ON Semiconductor Corporation

ON Semiconductor Corporation (NASDAQ: ON) is developing next-generation technologies designed to support a more sustainable and interconnected global ecosystem. With a strong focus on automotive and industrial markets, the company is enabling key structural trends such as vehicle electrification, advanced safety systems, renewable energy deployment, industrial automation, and next-generation connectivity across 5G and cloud platforms. Leveraging its differentiated portfolio of intelligent power and sensing solutions, ON Semiconductor is well positioned to tackle complex global challenges while advancing the transition toward a cleaner, safer, and more intelligent world.

As per Kalkine’s Global Tariff Report published on ‘ON’ on Oct 27, 2025, Kalkine provided an ‘Buy’ stance on the stock at USD 52.26 based on fundamental analysis and the stock price has now moved up by ~ 15.58% since then.

Noted below are the details of support and resistance levels provided in our previous report:

Rationale:

• Margin Compression and Earnings Volatility: ON Semiconductor continues to face notable margin pressure compared with prior-year levels. In Q3 FY2025, GAAP gross margin declined to 37.9%, down sharply from 45.4% in Q3 FY2024, while GAAP operating margin fell to 17.0% from 25.3% a year earlier. This compression reflects a less favorable mix, lower utilization, and the lingering impact of restructuring and impairment charges, highlighting reduced operating leverage despite sequential improvement versus Q2 FY2025.
• Year-on-Year Revenue Decline Across Core Segments: While sequential growth was recorded, overall revenue remains materially below last year’s levels. Q3 FY2025 revenue of USD 1.55 billion declined 12% year-on-year from USD 1.76 billion in Q3 FY2024. All major segments—Power Solutions Group, Advanced Mobility Group, and Intelligent Sensing Group—posted double-digit year-on-year declines, underscoring ongoing demand softness in automotive and industrial end markets despite signs of stabilization.
• Elevated Restructuring Costs and Earnings Quality Concerns: Profitability continues to be distorted by elevated restructuring, asset impairment, and related charges. Over the first nine months of FY2025, restructuring and impairment expenses totaled USD 608.1 million, contributing to a GAAP operating loss of USD 115.9 million for the period. This divergence between GAAP and non-GAAP performance raises concerns around earnings quality and highlights that reported profitability improvements are partly dependent on adjusted measures.
• Capital Allocation and Balance Sheet Risks: ON Semiconductor has returned approximately 100% of free cash flow to shareholders through share repurchases, with USD 927 million repurchased year-to-date, even as revenue and margins remain below historical peaks. At the same time, the company carries USD 3.35 billion in long-term debt, while cash balances have trended lower versus year-end 2024. This aggressive capital return strategy may constrain financial flexibility if end-market recovery or margin expansion takes longer than anticipated.

Valuation (Using P/E Multiple)

Share Price Chart 

Conclusion

ON Semiconductor’s outlook remains challenged by persistent year-on-year weakness in financial performance despite sequential stabilization. Revenue in Q3 FY2025 declined 12% versus the prior year, while gross and operating margins contracted sharply, reflecting lower utilization, unfavorable mix, and ongoing cost pressures. Profitability continues to be distorted by sizable restructuring and impairment charges, resulting in a material gap between GAAP and non-GAAP earnings quality. Additionally, the company’s aggressive return of nearly 100% of free cash flow through share repurchases, alongside elevated debt levels, limits balance-sheet flexibility at a time when end-market recovery in automotive and industrial segments remains uncertain.

Based on the notional gains, valuation downside and price action stance, a "Sell" recommendation on ON Semiconductor Corporation (NASDAQ: ON) has been given at the current market price of USD 60.40 as on 08 January 2026 at 7:34 am PST.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 08 January 2026. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.