ON Semiconductor (ON): The Power of Silicon Carbide

1. Executive Summary

ON Semi has transformed from a commodity chipmaker to a strategic leader in Power Semiconductors, specifically Silicon Carbide (SiC). As EVs adopt 800V architectures for faster charging, SiC becomes mandatory. ON is one of the few vertically integrated players (growing their own crystals) capable of meeting this demand.

Key Thesis Points

1. SiC Vertical Integration: Unlike competitors who buy wafers, ON produces its own substrates. This yields margin advantages and supply security, critical for winning OEM contracts (Tesla, Hyundai).
2. Industrial & Auto Focus: With over 75% of revenue coming from Auto and Industrial, ON is less exposed to the volatile consumer electronics cycle.
3. Margin Expansion: Exiting low-margin legacy businesses (image sensors, commodity logic) has structurally raised gross margins from 30% to 45%+.

2. Business Overview

• Power Solutions: MOSFETs, IGBTs, SiC modules.
• Intelligent Sensing: Automotive cameras, LiDAR sensors.

3. Risks

• EV Slowdown: If EV adoption curves flatten, SiC demand will undershoot the massive capacity build-out currently underway.
• Chinese Competition: Domestic Chinese players (Sanan, BYD Semi) are aggressively entering the SiC market.