| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 45.10 | -25 |
| Intrinsic value (DCF) | 21.50 | -64 |
| Graham-Dodd Method | 26.90 | -55 |
| Graham Formula | n/a |
ON Semiconductor Corporation (NASDAQ: ON) is a leading provider of intelligent sensing and power solutions, driving innovation in the semiconductor industry. Headquartered in Phoenix, Arizona, the company operates through three key segments: Power Solutions Group, Advanced Solutions Group, and Intelligent Sensing Group. ON Semiconductor specializes in analog, discrete, module, and integrated semiconductor products that enhance power efficiency, signal processing, and circuit protection. The company plays a pivotal role in the electrification of the automotive sector, enabling lighter and longer-range electric vehicles, fast-charging infrastructure, and sustainable energy solutions for solar and industrial applications. Additionally, it develops advanced CMOS image sensors, signal processors, and photodetectors for diverse markets, including automotive, industrial, and consumer electronics. With a strong focus on innovation and sustainability, ON Semiconductor is well-positioned in the high-growth semiconductor industry, catering to the increasing demand for energy-efficient and intelligent electronic systems.
ON Semiconductor presents a compelling investment opportunity due to its strong positioning in high-growth markets such as automotive electrification, industrial power, and sustainable energy solutions. The company's diversified product portfolio and technological leadership in power and sensing solutions provide a competitive edge. Financially, ON Semiconductor demonstrates robust revenue growth ($7.08B in FY 2023) and profitability ($1.57B net income), supported by strong operating cash flow ($1.91B). However, investors should consider the cyclical nature of the semiconductor industry and potential risks from supply chain disruptions or macroeconomic downturns. The company's zero dividend policy may also deter income-focused investors, but its reinvestment in R&D and capital expenditures ($694M) signals a commitment to long-term growth.
ON Semiconductor holds a strong competitive position in the semiconductor industry, particularly in power management and sensing technologies. Its focus on automotive electrification and energy-efficient solutions aligns with global trends toward sustainability and smart infrastructure. The company's competitive advantages include its diversified product portfolio, strong R&D capabilities, and strategic partnerships with key industry players. ON Semiconductor's vertical integration allows for cost efficiencies and supply chain resilience, which is critical in the semiconductor sector. However, it faces intense competition from larger players like Texas Instruments and Infineon, which have greater scale and broader product offerings. ON Semiconductor's niche focus on power and sensing solutions differentiates it but also limits its exposure to other high-growth semiconductor segments. The company's ability to innovate and maintain technological leadership will be crucial in sustaining its competitive edge amid rapid industry advancements.