ON Semiconductor (ON) 10-K risk factor changes: FY2017 vs FY2016

This Annual Report on Form 10-K includes “forward-looking statements,” as that term is defined in Section 27A of the Securities Act and Section 21E of the [removed: Securities] Exchange [removed: Act of 1934, as amended (the “Exchange Act”).][added: Act.]

These factors [removed: included,] [added: include,] among [removed: others,] [added: others:] our revenues and operating [removed: performance,] [added: performance;] economic conditions and markets (including current financial [removed: conditions), risk] [added: conditions); risks] related to our ability to meet our assumptions regarding outlook for revenues and gross margin as a percentage of [removed: revenue,] [added: revenue;] effects of exchange rate [removed: fluctuations,] [added: fluctuations;] the cyclical nature of the semiconductor [removed: industry,] [added: industry;] changes in demand for our [removed: products,] [added: products;] changes in inventories at our customers and [removed: distributors,] [added: distributors;] technological and product development [removed: risks,] [added: risks;] enforcement and protection of our IP rights and related [removed: risks,] [added: risks;] risks related to the security of our information systems and secured [removed: network,] [added: network;] availability of raw materials, electricity, gas, water and other supply chain [removed: uncertainties,] [added: uncertainties;] our ability to effectively shift production to other facilities when required in order to maintain supply continuity for our [removed: customers,] [added: customers;] variable demand and the aggressive pricing environment for semiconductor [removed: products,] [added: products;] our ability to successfully manufacture in increasing volumes on a cost-effective basis and with acceptable quality for our current [removed: products,] [added: products;] risks associated with [added: acquisitions and dispositions including our acquisition of Fairchild (including our ability to realize the anticipated benefits of our acquisitions and]

[removed: acquisitions and dispositions including our acquisition of Fairchild (including our ability to realize the anticipated benefits of our acquisitions and dispositions,] [added: dispositions;] risks that acquisitions or dispositions disrupt our current plans and operations, the risk of unexpected costs, charges or expenses resulting from acquisitions or dispositions and difficulties encountered from integrating and consolidating and timely filing financial information with the SEC for acquired businesses and accurately predicting the future financial performance of acquired [removed: businesses),] [added: businesses);] competitor actions, including the adverse impact of competitor product [removed: announcements,] [added: announcements;] pricing and gross profit [removed: pressures,] [added: pressures;] loss of key [removed: customers,] [added: customers;] order cancellations or reduced [removed: bookings,] [added: bookings;] changes in manufacturing [removed: yields,] [added: yields;] control of costs and expenses and realization of cost savings and synergies from [removed: restructurings,] [added: restructurings;] significant [removed: litigation,] [added: litigation;] risks associated with decisions to expend cash reserves for various uses in accordance with our capital allocation policy such as debt prepayment, stock repurchases, or acquisitions rather than to retain such cash for future [removed: needs,] [added: needs;] risks associated with our substantial leverage and restrictive covenants in our debt agreements that may be in place from time to [removed: time,] [added: time;] risks associated with our worldwide operations including foreign employment and labor matters associated with unions and collective bargaining arrangements as well as man-made and/or natural disasters affecting our [removed: operations and finances/financials,] [added: operations, or financial results;] the threat or occurrence of international armed conflict and terrorist activities both in the United States and [removed: internationally,] [added: internationally;] risks [added: of changes in U.S. or international tax rates or legislation, including the impact of the new U.S. tax legislation; risks] and costs associated with increased and new regulation of corporate governance and disclosure [removed: standards,] [added: standards;] risks related to new legal [removed: requirements] [added: requirements;] and risks involving environmental or other governmental regulation.

We cannot accurately predict the timing of future downturns and upturns in the semiconductor industry [removed: and] [added: or] how severe and prolonged these conditions might be.

The semiconductor industry is characterized by rapid innovation and short product life cycles, which often results in price erosion, especially with respect to products containing [removed: outdated] [added: older] technology.

Volatile and/or uncertain economic conditions can adversely impact sales and profitability and make it difficult [added: for us and our competitors to accurately forecast and plan our future business activities.]

We routinely incur significant costs to implement new manufacturing and information technologies, to increase our productivity and efficiency, to upgrade equipment and to expand production [removed: capacity] [added: capacity,] and there can be no assurance that we will realize a return on the capital expended.

Successful acquisitions and alliances in the semiconductor industry are difficult to accomplish because they require, among other things, efficient integration and aligning of product offerings and manufacturing operations and coordination of sales and marketing and research and development efforts, often in markets or regions in which we have [removed: limited experience.][added: less experience than others.]

For example, we may anticipate [removed: tax] [added: rationalization of a combined infrastructure and] savings through integration of a newly acquired business into our [removed: business and rationalization of a combined infrastructure,] [added: business,] and our estimates could turn out to be incorrect.

In addition, we may incur unexpected costs, such as operating or restructuring costs (including severance payments to departing [removed: employees).][added: employees) or taxes resulting from the acquisition or integration of the newly acquired business.]

[added: Missteps or delays in integrating our acquisitions, which could] be caused by factors outside of our control, or our failure to realize the expected benefits of the acquisitions on the timeline we anticipate or at all, could materially adversely affect our results of operations and financial condition.

The acquired businesses may not have independent audited financial [removed: statements or] [added: statements,] such statements may not be prepared in accordance with GAAP or the acquired businesses may have financial controls and systems that are not compatible with our financial controls and systems, any of which could materially impair our ability to properly integrate such businesses into our consolidated financial statements on a timely basis.

[removed: Any revisions to,] inaccuracies in or restatements of our consolidated financial statements due to accounting for our acquisitions could have a material adverse effect our financial condition and results of operations.

In the event of any such operational disruption, we may experience difficulty in beginning production of replacement components or products at new facilities (for example, due to construction delays) or transferring production to other existing facilities (for example, due to capacity [added: constraints or difficulty in transitioning to new manufacturing processes), any of which could result in a loss of future revenues and materially adversely affect our business and results of operations.]

[removed: From time to time, we have implemented cost reduction initiatives in response to significant downturns in our industry, including relocating manufacturing to lower cost regions, transitioning higher-cost external supply to] internal manufacturing, working with our material suppliers to lower costs, implementing personnel reductions and voluntary retirement programs, reducing employee compensation, temporary shutdowns of facilities with mandatory vacation and aggressively streamlining our overhead.

We cannot assure you that our cost reduction and restructuring initiatives will be successfully or timely [removed: implemented,] [added: implemented] or that they will materially and positively impact our profitability.

_We may be unable to develop new products to [removed: satisfy, or we may develop products that misalign with,] [added: satisfy] changing customer [removed: demands,] [added: demands or regulatory requirements,] which may materially adversely affect our business and results of operations._

The semiconductor industry is characterized by rapidly changing [removed: technologies] [added: technologies, evolving regulatory] and industry [removed: standards, together with] [added: standards and certifications, changing customer needs and] frequent new product introductions.

We focus our independent new product development efforts on market segments and applications that we anticipate will experience growth, but there can be no assurance that we will be successful in identifying high-growth [removed: areas.][added: areas or develop products that meet industry standards or certification requirements in a timely manner.]

A fundamental shift in [removed: technologies] [added: technologies, the regulatory climate] or consumption patterns and preferences in our existing product markets or the product markets of our customers or end-users could make our current products [removed: obsolete and could make] [added: obsolete, prevent or delay the introduction of] new products that we planned to [removed: introduce no longer relevant] [added: make or render our current or new products irrelevant] to our customers’ needs.

If our new product development efforts fail to align with the needs of our customers, including due to circumstances outside of our control like a fundamental shift in the product markets of our customers and end [removed: users,] [added: users or regulatory changes,] our business and results of operations could be materially adversely affected.

Unsold inventory, [removed: cancelled] [added: canceled] orders and cancellation penalties may materially adversely affect our results of operations, and inventory write-downs may materially adversely affect our financial condition.

[added: We also may be unable to market and sell our products if they are] not competitive on the basis of price, quality, technical performance, features, system compatibility, customized design, innovation, availability, delivery timing and reliability.

In addition, we may be at a competitive disadvantage to our peers if we fail to identify attractive opportunities to [removed: consolidate with larger or smaller] [added: acquire] companies to expand our business.

_Natural disasters and other business disruptions could cause significant harm to our business operations and facilities and could adversely affect our supply chain and our customer base, any of which may materially adversely affect our business, results of [removed: operation] [added: operation,] and financial condition._

[removed: The occurrence of natural disasters in any of the regions in which we operate could severely] disrupt the operations of our businesses by negatively impacting our supply chain, our ability to deliver products, and the cost of our products.

For instance, for the years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] revenue from our 10 largest [removed: end customers][added: end-customers collectively represented approximately 24% and 24%, respectively, of our total revenues for those years.]

_Because a significant portion of our revenue is derived from customers in the [removed: automotive] [added: automotive, industrial] and communications industries, a downturn or lower sales to customers in either industry could materially adversely affect our business and results of operations._

A significant portion of our sales are to customers within the [removed: automotive] [added: automotive, industrial (including medical, aerospace] and [added: defense) and] communications industries (including networking).

Sales into these industries represented approximately [removed: 34%] [added: 31%, 25%,] and [removed: 19%] [added: 20%] of our revenue, respectively, for the year ended December 31, [removed: 2016,] [added: 2017,] and those percentages will vary from quarter to quarter.

[removed: Both] [added: Each of] the [removed: automotive] [added: automotive, industrial] and communications industries [removed: are] [added: is] cyclical, and, as a result, our customers in these industries are sensitive to changes in general economic conditions, disruptive innovation and end-market preferences, which can adversely affect sales of our products and, correspondingly, our results of operations.

Lower sales to customers in the [removed: automotive] [added: automotive, industrial] or communications industry may have a material adverse effect on our business and results of operations.

[removed: If we are unable to obtain adequate supplies of raw materials in a timely manner,] the costs of our raw materials increases significantly, their quality deteriorates or they give rise to compatibility or performance issues in our products, our results of operations could be materially adversely affected.

Our tax filings are subject to review or audit by the Internal Revenue Service [added: (the “IRS”)] and state, local and foreign taxing authorities.

While we devote a great deal of our attention to designing competitive compensation programs aimed at [removed: accomplishing this goal,] [added: attracting and retaining personnel,] specific elements of our compensation programs may not be competitive with those of our [removed: competitors] [added: competitors,] and there can be no assurance that we will be able to retain our current personnel or recruit the key personnel we require.

We have [added: issued] in the [removed: past] [added: past,] and expect to continue to [removed: issue] [added: issue,] RSUs with time-based vesting, performance-based awards and common stock options that generally have exercise prices at the market value at the time of the grant and that are subject to vesting over time as compensation tools.

[removed: The various laws and regulations governing our registered and unregistered IP assets, patents,] trade secrets, trademarks, mask works and copyrights to protect our products and technologies are subject to legislative and regulatory change and interpretation by courts.

Further, we may be subject to IP litigation, which could cause us to incur significant expense, materially adversely affect sales of the challenged product or [removed: technologies and divert the efforts of our technical and management personnel, whether or not such litigation is resolved in our favor.]

| | • | | changes in U.S. and international environmental or health and safety laws or [removed: regulations;] [added: regulations, including, but not limited to, future laws or regulations imposed in response to climate change concerns;] |

To the extent that we face unforeseen environmental or health and safety compliance costs or remediation expenses or liabilities that are not covered by indemnities or insurance, we may bear the full effect of such costs, expense and [removed: liabilities] [added: liabilities,] which could materially adversely affect our results of operations and financial condition.

Any revisions to,

technologies and divert the efforts of our technical and management personnel, whether or not such litigation is resolved in our favor.

There are several civil litigation proceedings with Power Integrations, Inc. (“PI”), many of which were pending prior to the Fairchild Transaction, and there are also over two dozen outstanding administrative proceedings between the parties at the United States Patent and Trademark Office (the “USPTO”) in which each party is challenging the validity of the other party’s patents.

Please see Note 12: “Commitments and Contingencies” in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for a more detailed description of the litigation and related administrative matters with PI and other legal matters we are currently engaged in.

From time to time, we have implemented cost reduction initiatives in response to significant downturns in our industry, including relocating manufacturing to lower cost regions, transitioning higher-cost external supply to

Additionally, the emergence of new industry or regulatory

standards and certification requirements may adversely affect the demand for our products.

The occurrence of natural disasters in any of the regions in which we operate could severely

If we are unable to obtain adequate supplies of raw materials in a timely manner,

_The impact of new U.S. tax legislation is uncertain and could have a material adverse impact on our cash flows and results of operations._

On December 22, 2017, the U.S. enacted comprehensive tax legislation, H.R.1, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

The Tax Act makes broad and complex changes to the U.S. tax code, and it will take time for additional clarifying guidance and legislation to be issued, and this guidance will be required for the interpretation of these comprehensive changes.

Based on our current understanding of the law following a preliminary review, we estimated significant impacts to our fourth quarter and full year 2017 earnings.

The impact of the Tax Act may differ from this estimate, possibly materially, due to, among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued and actions the Company may take as a result of the Tax Act.

The Tax Act could have a material benefit or material adverse impact and could result in volatility in our effective tax rate, tax expense and cash flow.

We are in the process of analyzing the potential aggregate current

and future impacts of the Tax Act relative to how we do business, cash flows and results of operations.

Any benefit associated with the lower U.S. corporate tax rate could be reduced or outweighed by other adverse changes enacted in the Tax Act or by the cost of compliance.

The various laws and regulations governing our registered and unregistered IP assets, patents,

their recall.

In addition, computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our products, or that otherwise exploit any security vulnerabilities, and any such attack, if successful, could expose us to liability to customer claims.

business.

_The failure to comply with the terms and conditions of our contracts could result in, among other things, damages, fines or other liabilities._

We have a diverse customer base consisting of both private sector clients and public sector clients, including the U.S. government.

Sales to our private sector clients are generally based on stated contractual terms, the terms and conditions on our website or terms contained in purchase orders on a transaction-by-transaction basis.

Sales to our public sector clients are generally derived from sales to federal, state and local governmental departments and agencies through various contracts and programs which may require compliance with regulations covering many areas of our operations, including, but not limited to, accounting practices, IP rights, information handling, and security.

Noncompliance with contract terms, particularly with respect to highly-regulated public sector clients, or with government procurement regulations could result in fines or penalties against us, termination of such contracts or civil, criminal and administrative liability to the Company.

With respect to public sector clients, the government’s remedies may also include suspension or debarment from future government business.

In addition, almost all of our contracts have default provisions, and certain of our contracts in the public sector are terminable at any time for convenience of the contracting agency.

The effect of any of these possible actions or the adoption of new or modified procurement regulations or practices could materially adversely affect our business, financial position and results of operations.

_The Company is subject to governmental laws, regulations and other legal obligations related to privacy and data protection._

The legislative and regulatory framework for privacy and data protection issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.

The Company collects personally identifiable information (“PII”) and other data as part of its business processes and activities.

This data is subject to a variety of U.S. and international laws and regulations, including oversight by various regulatory or other governmental bodies.

Many foreign countries and governmental bodies, including the European Union and other relevant jurisdictions where the Company conducts business, have laws and regulations concerning the collection and use of PII and other data obtained from their residents or by businesses operating within their jurisdictions that are currently more restrictive than those in the U.S. Additionally, in May 2016, the European Union adopted the General Data Protection Regulation that will impose more stringent data protection requirements and will provide for greater penalties for noncompliance beginning in May 2018.

While the Company has developed and is executing plans to meet these requirements, these plans are subject to many variables that could delay or otherwise affect implementation.

Any inability, or perceived inability, to adequately address privacy and data protection concerns, even if unfounded, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, could result in additional cost and liability to the Company or company officials, damage our reputation, inhibit sales and adversely affect our business.

other purposes, and if we incur additional debt, the related risks that we now face could intensify.

Our acquisition-related financing could have a material adverse effect on our business and financial condition, including, among other things, our ability to obtain

| | • | | settle a conversion of our 1.00% and 1.625% Notes in whole or in part with cash; |

_We may fail to realize the benefits expected from the Fairchild Transaction, which could have a material adverse effect on our financial condition and results of operations._

Although we expect significant benefits to result from the Fairchild Transaction, there can be no assurance that we will actually realize these or any other anticipated benefits of the Fairchild Transaction, and our financial condition and results of operations may be materially adversely affected by our ability to achieve such benefits.

Achieving the benefits of the Fairchild Transaction depends, in part, on our ability to integrate Fairchild’s business successfully and efficiently with our business.

The challenges involved in this integration, which are complex and time consuming, include the following: (1) demonstrating to our and Fairchild’s customers that the Fairchild Transaction will not adversely affect our ability to address the needs of customers; (2) coordinating and integrating research and development and engineering teams across technologies and product platforms to enhance product development while reducing costs; (3) consolidating and integrating corporate, information technology, finance and administrative infrastructures; (4) coordinating sales and marketing efforts to effectively position our capabilities and the direction of product development; and (5) minimizing the diversion of management attention from other important business objectives.

If we do not successfully manage these issues and the other challenges inherent in integrating Fairchild, then we may not achieve the anticipated benefits of the Fairchild Transaction, which could materially adversely affect our business, financial condition and results of operations.

for us and our competitors to accurately forecast and plan our future business activities.

Missteps or delays in integrating our acquisitions, which could

constraints or difficulty in transitioning to new manufacturing processes), any of which could result in a loss of future revenues and materially adversely affect our business and results of operations.

We also may be unable to market and sell our products if they are

collectively represented approximately 24% and 22%, respectively, of our total revenues for those years.

In the United States, a number of proposals for broad reform of the corporate tax system are under evaluation by various legislative and administrative bodies, but it is not possible to accurately determine the overall impact of such proposals on our effective tax rate at this time.

_The distribution of any earnings of our foreign subsidiaries to the United States may be subject to United States income taxes, thus reducing our net income and materially adversely affecting our results of operations._

We hold a significant amount of cash and cash equivalents outside the United States in various foreign subsidiaries.

We require a substantial amount of cash in the United States for operating requirements, debt repurchases and repayments, acquisitions, and stock repurchases.

If we are unable to address our U.S. cash requirements through operations, borrowings under our current debt agreements or other sources of cash obtained at an acceptable cost, it may be necessary for us to consider repatriation of foreign earnings, and we may be required to pay additional taxes under current tax laws, which could have a material effect on our results of operations.

In addition, to the extent we sell products containing bugs or viruses to our customers, we may be exposed to liability from the end-users of such products.

100% of the principal amount of the 1.00% Notes, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date.

In the event the conditional conversion feature of the 1.00% Notes is triggered, holders of the 1.00% Notes will be entitled to convert the notes at any time during specified periods at their option.

Thus, small

As of December 31, [removed: 2016,] [added: 2017,] our long-term debt (including current maturities) totaled [removed: $3,622.3] [added: $3,175.0] million.

We have no interest rate exposure to rate changes on our fixed rate debt, which totaled [removed: $1,098.7 million.][added: $2,053.5 million (excluding the SMBC note of $122.7 million which was paid on January 2, 2018).]

[added: We do have interest] rate exposure with respect to the [removed: $2,708.1] [added: $998.8] million balance [removed: on] [added: of] our variable interest rate debt outstanding as of December 31, [removed: 2016.][added: 2017.]

A 50 basis point increase in interest rates would impact our expected annual interest expense for the next 12 months by approximately [removed: $13.5] [added: $5.0] million.

However, some of this impact [removed: may] [added: would] be offset by additional interest earned on our cash and cash equivalents should rates on deposits and investments also increase.

We [removed: enter] [added: entered] into interest rate swaps to hedge [added: some of] the risk of variability in cash flows resulting from future interest payments on our variable interest rate [removed: debt.][added: debt under the Term Loan “B” Facility.]

However, given the inherent limitations of forecasting and the anticipatory nature of exposures intended to be hedged, we cannot [removed: assure] [added: provide any assurances] that such programs will offset more than a portion of the adverse financial impact resulting from unfavorable movements in foreign exchange rates.

The notional amount of foreign currency contracts at December 31, [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] was [removed: $95.9] [added: $130.5] million and [removed: $89.8] [added: $95.9] million, respectively.

For example, we determined that based on a hypothetical weighted-average change of 10% in currency exchange rates, our results would have impacted our income before taxes by approximately [removed: $68.7] [added: $101.2] million for the year ended December 31, [removed: 2016,] [added: 2017,] assuming no offsetting hedge positions.

We do have interest

ON Semiconductor Corporation, which was incorporated under the laws of the state of Delaware in 1999, together with its subsidiaries (“we,” “us,” “our,” “ON Semiconductor,” or the “Company”), is driving innovation in [removed: energy efficient] [added: energy-efficient] electronics.

Our custom ASICs [added: and SoC devices] use analog, MCU, DSP, mixed-signal and advanced logic capabilities to [removed: act as] [added: enable] the [removed: brain behind] [added: application and uses of] many of our automotive, medical, aerospace/defense, consumer and industrial customers’ products.

Our growing portfolio of sensors, including [removed: a leadership position in] image sensors, optical image stabilization and auto focus [removed: devices] [added: devices,] provide advanced solutions for automotive, wireless, industrial and consumer applications.

These various products fall into the logic, analog, discrete, image sensors, [removed: IoT,] [added: IoT] and memory categories used by the WSTS group.

Our devices are found in a wide variety of end products including automobiles, smartphones, media tablets, wearable electronics, personal computers, servers, industrial building and home automation systems, factory automation, consumer white goods, security and surveillance systems, machine vision, LED lighting, power supplies, networking and telecom equipment, medical diagnostics, imaging and hearing health, sensor [removed: networks, robotics] [added: networks] and [removed: the IoT.][added: robotics.]

Each of our major product lines has been assigned to a segment, as illustrated in the table below, based on our operating [removed: strategy.][added: strategy:]

| [removed: | |] (1) ASIC products | | (8) Discrete products | [added: | |]

| [removed: | |] (2) Analog products | | (9) Memory products | [added: | |]

| [removed: | |] (3) TMOS products | | (10) HD products | [added: | |]

| [removed: | |] (4) ECL products | | (11) IPM products | [added: | |]

| [removed: | |] (5) Foundry products / services | | (12) LSI products | [added: | |]

| [removed: | |] (6) Standard logic products | | (13) Other sensor products | [added: | |]

| [removed: | |] (7) Image sensor / ASIC products | | (14) PIM Products | [added: | |]

We also have foreign design operations in Belgium, Canada, China, the Czech Republic, France, Germany, India, Ireland, [added: Israel,] Japan, Korea, Philippines, Romania, [added: Singapore,] Slovakia, Slovenia, Switzerland, Taiwan and [removed: The Netherlands.][added: the United Kingdom.]

Additionally, we currently operate domestic manufacturing facilities in Idaho, Maine, Pennsylvania, New York and Oregon and have foreign manufacturing facilities in Belgium, Canada, China, Czech Republic, Japan, Korea, Malaysia, [added: the] Philippines and Vietnam.

We also have global distribution centers in China, [removed: Hong Kong,] [added: the] Philippines and Singapore.

_Company Highlights for the year ended December 31, [removed: 2016_][added: 2017_]

| | • | | Total revenues of [removed: $3,906.9] [added: $5,543.1] million |

| | • | | Gross margin of [removed: 33.2%] [added: 36.7%] |

| | • | | Net income of [removed: $0.43] [added: $1.89] per diluted share |

| | • | | Cash and cash equivalents of [removed: $1,028.1] [added: $949.2] million |

On September 19, 2016, we completed our acquisition of Fairchild [removed: Semiconductor International, Inc., a Delaware corporation (“Fairchild”),] pursuant to the Agreement and Plan of Merger with each of Fairchild and Falcon Operations Sub, Inc., a Delaware corporation and our wholly-owned subsidiary, pursuant to which Fairchild became our wholly-owned subsidiary (the “Fairchild Transaction”).

See Note 4: [removed: “Acquisitions] [added: “Acquisitions, Divestitures] and [removed: Divestitures”] [added: Licensing Transactions”] in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information.

The advancement of existing volt electrical infrastructure, electrification of power train in the form of EV/HEV, higher trench density enabling lower losses in power efficient packages and lower capacitance and integrated signal conditioning products to support faster data transmission [removed: rates,] [added: rates] significantly increase the use of high power [removed: semiconductor solutions.]

| | [removed: _•_] [added: •] | | _Automotive [removed: electronics_] [added: Electronics_] |

[removed: Over 5,000] AEC qualified products, covering the spectrum from discrete to integrated, as well as automotive modules and known good die to support automotive modules.

| | [removed: _•_] [added: •] | | _Industrial [removed: electronics_] [added: Electronics_] |

[removed: Focused on advanced] [added: Advanced] power technologies to support high performance power conversion for high-end power supply/UPS, alternative energy, and industrial motors.

| | [removed: _•_] [added: •] | | _Computing_ |

| | [removed: _•_] [added: •] | | _Communications_ |

[removed: Continue to introduce world’s] [added: World’s] smallest packages: DFN MOSFETs, [removed: Chip Scale Package] [added: CSP] (MOSFET/EEPROMs), EEPROMs and LDOs, [removed: DFN 01005 and] X4DFN [added: 01005] for small signal devices and protection.

The Analog Solutions Group designs and develops analog, [removed: mixed-signal,] [added: mixed-signal] and advanced logic ASICs and ASSPs, and power solutions for a broad base of end-users in the automotive, consumer, computing, industrial, communications, medical and aerospace/defense markets.

Additionally, the Analog Solutions Group offers [removed: Trusted Foundry, Trusted Design,] [added: trusted foundry] and [added: design services for certain of our government customers, as well as,] manufacturing services, and IPD products technology, which leverage the Company’s broad range of manufacturing, IC design, packaging, and [added: silicon technology offerings to provide turn-key solutions for our customers.]

Energy efficient solutions that reduce emissions, improve fuel economy and safety, enhance [removed: lighting,] [added: lighting] and make possible an improved driving experience.

High efficiency mixed-signal, power [removed: management,] [added: management] and RF products that enable our customers to maximize the performance of their products while preserving critical battery life.

Fast charging (wall-to-battery including wireless charging), [removed: multi-media,] [added: multi-media] and ambient awareness system solutions to address increasing customer desire for innovation.

Solutions for a wide range of voltage and current options ranging from multi-phase 30 volt power for [removed: VCOR] [added: VCORE] processors, power stage and single cell battery point of load.

Power efficient communication and sensor interface [removed: products,] [added: products] and motor control products.

Residential [removed: &] [added: and] commercial grade circuit breaking products for GFCI & AFCI applications.

The Image Sensor Group designs and develops CMOS and CCD image sensors, as well as proximity sensors, image signal [removed: processors,] [added: processors] and actuator drivers for autofocus and image stabilization for a broad base of end-users in the automotive, industrial, consumer, wireless, [removed: medical,] [added: medical] and aerospace/defense markets.

We shipped approximately 72.8 billion units in 2017, as compared to 59.4 billion units in 2016.

_Completed Acquisitions_

The aggregate purchase price of the Fairchild Transaction was approximately $2,532.2 million and was funded with cash on hand and by borrowings under a Credit Agreement, dated as of April 15, 2016, by and among the Company, as borrower, the several lenders party thereto, Deutsche Bank AG, New York Branch , as administrative agent and collateral agent, and certain other parties (as subsequently amended, the “Amended Credit Agreement”) which provided for a $600 million revolving credit facility (the “Revolving Credit Facility”) and a $2.4 billion term loan “B” facility (the “Term Loan “B” Facility”).

semiconductor solutions.

and supply, but typically do not require minimum purchase commitments.

Our standard warranty extends for a period of two years from the date of delivery, except in the case of Image Sensor products, which are warrantied for one year from the date of delivery.

We include the data relating to the Medical, Aerospace and Defense end-markets as part of our Industrial end-market and the data relating to the Networking and Wireless end-markets as part of our Communications end-market.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Approximate percentage of 2017 Revenue | | 31% | | 25% | | 20% | | 14% | | 10% |

| | | | | | | | | | | |

| _Sample applications_ | | EV/HEV | | Hearing Health | | Tablets | | Gaming, Home Entertainment Systems, & Set Top Boxes | | Notebooks, Ultrabooks, & 2-in-1s |

| | | | | | | | | | | |

| | | Power Management | | Smart Cities & Buildings | | Smart phones | | White Goods | | Desktop PCs & All-in-Ones |

| | | | | | | | | | | |

| | | Powertrain | | Security & Surveillance | | RF Tuning | | USB Type C | | USB Type C |

| | | | | | | | | | | |

| | | In-Vehicle Networking | | Machine Vision | | Switches | | Power Supplies | | Graphics |

| | | | | | | | | | | |

| | | Body & Interior | | Motor Control | | Routers | | Drones | | Power Supplies |

| | | | | | | | | | | |

| | | Lighting | | Robotics | | Base Stations | | AR/VR | | AI |

| | | | | | | | | | | |

| | | Automated Driving | | Power Solutions | | Power Supplies | | Wearable Devices | | Cloud Computing |

| | | | | | | | | | | |

| | | | | | | | | | | |

| | | | | AR/VR | | | | Robotics | | |

| | | | | | | | | | | |

| | | | | AI | | | | | | |

| | | | | | | | | | | |

| | | | | Diagnostic, Therapy, & Monitoring | | | | | | |

| | | | | | | | | | | |

| | | | | | | | | | | |

| | | Continental Automotive Systems | | Boston Scientific | | Cisco | | Facebook | | Dell Computer |

| | | Delphi | | Delta Electronics | | Ericsson | | Google | | Delta Electronics, Inc. |

| | | Denso Corporation | | Emerson Electric Co | | Huawei Tech Co., Ltd. | | Gree, Inc. | | Foxconn |

| | | Hella | | General Electric Co | | Lenovo | | Microsoft | | Google |

| | | Magna International | | Honeywell Inc. | | Samsung Electronics | | Philips | | Nvidia |

| | | Magneti Marelli | | Medtronic | | Sony Mobile | | Samsung Electronics | | Microsoft |

| | | Tesla | | Philips | | ZTE Hong Kong Ltd | | Sony Corp | | Quanta |

Our extensive product portfolio consisted of approximately 84,000 products in 2016, and we shipped approximately 59.4 billion units in 2016 as compared to 49.0 billion units in 2015.

| --- | --- | --- | --- |

| | • | | Closed the Fairchild acquisition for $2,532.2 million |

_2016 Acquisition Activity_

We have historically pursued strategic acquisitions to leverage our existing capabilities and further build our business.

Such activities continued during 2016.

The aggregate purchase price of the Fairchild Transaction was approximately $2,532.2 million and was funded by the borrowings under our Term Loan “B” Facility and a partial draw of our Revolving Credit Facility (as such terms are defined below under “Management’s Discussion and Analysis of Results of Operations - Key Financing and Capital Events - Fairchild Transaction Financing”) and with cash on hand.

We believe that the Fairchild Transaction creates a power semiconductor leader with strong capabilities in a rapidly consolidating semiconductor industry.

Ultimately, we believe that the combination of Fairchild operations with our existing operations will provide complementary product lines to offer customers the full spectrum of high, medium and low voltage products.

We will continue to pioneer technology and design innovation in efficient energy consumption to help our customers achieve success and drive value for our partners and employees around the world.

We believe the acquisition of Fairchild also expands our footprint in wireless communication products, particularly in high efficiency power conversions and USB Type C communication and power delivery.

See Notes 4: “Acquisitions and Divestitures,” 6: “Restructuring, Asset Impairments and Other, Net,” 7: “Balance Sheet Information,” 8: “Long-Term Debt,” and 15: “Income Taxes” in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information about the Fairchild Transaction.

silicon technology offerings to provide turn-key solutions for our customers.

Subject to certain exceptions, our standard warranty extends for a period of two years.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Approximate percentage of 2016 Revenue | | 12% | | 12% | | 34% | | 19% | | 16% | | 3% | | 1% | | 3% |

| _Sample applications_ | | Notebooks, Ultrabooks, & 2-in-1s | | Music Players, Digital Cameras & Video Recorders | | Fuel Economy & Emission Reduction | | Smart Grid & Metering | | Tablets | | Switches | | Cockpit Displays | | Hearing Health |

| | | Desktop PCs & All-in-Ones | | Flat TVs & Set-Top Boxes | | Active Safety (ADAS and Viewing) | | Security & Surveillance | | Smart phones | | Routers | | Guidance Systems | | Imaging |

| | | USB Type C | | Gaming & Home Entertainment Systems | | Body Electronics & Lighting | | Machine Vision | | Back lighting & Display Control | | Base Stations | | Infrared Imaging | | Diagnostic, Therapy, & Monitoring |

| | | Graphics | | White Goods | | Infotainment & Connectivity | | Motor Control | | RF Tuning | | Power Supplies | | Image Sensors | | Implantable Devices |

| | | Servers & Workstations | | USB Type C | | Power Supplies | | Smart Buildings | | | | | | Machine Vision | | Wearable Devices |

| | | Power Supplies | | Power Supplies | | EV/HEV | | Robotics | | | | | | | | |

| | | | | Drones | | | | Power Supplies | | | | | | | | |

| | | | | Wearable Devices | | | | Drones | | | | | | | | |

| | | | | | | | | AR/VR | | | | | | | | |

| | | Dell Computer | | Gree, Inc. | | Continental Automotive Systems | | Dahua Technology | | Huawei Tech Co., Ltd. | | Cisco | | British Aerospace | | General Electric Co. |

| | | Delta Electronics, Inc. | | LG Electronics | | Delphi | | Delta Electronics | | Lenovo | | Delta Electronics | | General Electric Co. | | Intricon Corp |

| | | Foxconn | | Microsoft | | Denso Corporation | | Emerson Electric Co | | LG | | Ericsson | | Honeywell Inc | | Medtronic |

| | | Gigabyte | | Midea | | Fujitsu Ten LTD | | Grundfos | | Samsung Electronics | | Huawei | | L-3 Communications | | Philips |

| | | Lenovo | | Philips | | Hyundai Mobis Co., Ltd. | | Honeywell Inc. | | ZTE Hong Kong Ltd | | ZTE Hong Kong LTD | | Raytheon Co | | Starkey Laboratories |

| | | Quanta | | Samsung Electronics | | Magna International | | Kionix INC | | | | | | Rockwell Collins | | |

| | | Seagate Technology | | Sony Corp | | Magneti Marelli | | Philips | | | | | | Sofradir | | |

| | | Western Digital Corporation | | Whirlpool Corp | | TRW Inc | | Schneider Electric | | | | | | | | |

| | | | | | | Visteon | | | | | | | | | | |

_Distributors_ Sales to distributors accounted for approximately 56% of our revenues in 2016, 54% of our revenues in 2015 and 50% of our revenues in 2014.

Due to current limitations on the feasibility of estimating the upfront effect of returns and allowances with these distributors, we defer recognition of revenue and gross profit on sales to these distributors until these distributors resell the product.

As a result, sales returns have minimal impact on our results of operations.

| Gunma, Japan (1) (3) | | Power Solutions Group | | 514,854 |

Consists of one leased and one owned building.

For the fiscal year ended December 31, [removed: 2016][added: 2017]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was [removed: $3,601,740,218] [added: $5,851,728,750] as of July 3, [removed: 2016,] [added: 2017,] based on the closing sales price of such stock on the NASDAQ Global Select Market.

The number of shares of the registrant’s common stock outstanding at February [removed: 17, 2017] [added: 16, 2018] was [removed: 419,610,858.][added: 425,440,679.]

Portions of the registrant’s Definitive Proxy Statement relating to its [removed: 2017] [added: 2018] Annual Meeting of Stockholders, which is expected to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year ended December 31, [removed: 2016,] [added: 2017,] are incorporated by reference into Part III of this Form 10-K.

| _Item 1._ | | [removed: [Business](#tx332046_1)] [added: [Business](#tx508456_1)] | | | 5 | |

| | | [Business [removed: Overview](#tx332046_2)] [added: Overview](#tx508456_2)] | | | 5 | |

| | | [Products and [removed: Technology](#tx332046_3)] [added: Technology](#tx508456_3)] | | | 7 | |

| | | [End-Markets for Our [removed: Products](#tx332046_5)] [added: Products](#tx508456_5)] | | | 11 | |

| | | [Manufacturing [removed: Operations](#tx332046_6)] [added: Operations](#tx508456_6)] | | | 12 | |

| | | [Raw [removed: Materials](#tx332046_7)] [added: Materials](#tx508456_7)] | | | 14 | |

| | | [Sales, Marketing and [removed: Distribution](#tx332046_8)] [added: Distribution](#tx508456_8)] | | | 14 | |

| | | [Patents, Trademarks, Copyrights and Other Intellectual Property [removed: Rights](#tx332046_9)] [added: Rights](#tx508456_9)] | | | 14 | |

| | | [Backlog and [removed: Inventory](#tx332046_11)] [added: Inventory](#tx508456_11)] | | | 15 | |

| | | [Research and [removed: Development](#tx332046_13)] [added: Development](#tx508456_13)] | | | [removed: 17] [added: 16] | |

| | | [Government [removed: Regulation](#tx332046_14)] [added: Regulation](#tx508456_14)] | | | 17 | |

| | | [Executive Officers of the [removed: Registrant](#tx332046_16)] [added: Registrant](#tx508456_16)] | | | 19 | |

| | | [Geographical [removed: Information](#tx332046_17)] [added: Information](#tx508456_17)] | | | [removed: 21] [added: 22] | |

| | | [Available [removed: Information](#tx332046_18)] [added: Information](#tx508456_18)] | | | 22 | |

| _Item 1A._ | | [Risk [removed: Factors](#tx332046_19)] [added: Factors](#tx508456_19)] | | | 22 | |

| _Item 1B._ | | [Unresolved Staff [removed: Comments](#tx332046_20)] [added: Comments](#tx508456_20)] | | | [removed: 44] [added: 45] | |

| _Item 2._ | | [removed: [Properties](#tx332046_21)] [added: [Properties](#tx508456_21)] | | | [removed: 44] [added: 45] | |

| _Item 3._ | | [Legal [removed: Proceedings](#tx332046_22)] [added: Proceedings](#tx508456_22)] | | | [removed: 45] [added: 46] | |

| _Item 4._ | | [Mine Safety [removed: Disclosures](#tx332046_23)] [added: Disclosures](#tx508456_23)] | | | [removed: 45] [added: 46] | |

| _Item 5._ | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx332046_24)] [added: Securities](#tx508456_24)] | | | [removed: 46] [added: 47] | |

| _Item 6._ | | [Selected Financial [removed: Data](#tx332046_25)] [added: Data](#tx508456_25)] | | | [removed: 46] [added: 49] | |

| _Item 7._ | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx332046_26)] [added: Operations](#tx508456_26)] | | | [removed: 47] [added: 49] | |

| _Item 7A._ | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#tx332046_27)] [added: Risk](#tx508456_27)] | | | [removed: 72] [added: 76] | |

| _Item 8._ | | [Financial Statements and Supplementary [removed: Data](#tx332046_28)] [added: Data](#tx508456_28)] | | | [removed: 73] [added: 77] | |

| _Item 9._ | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#tx332046_29)] [added: Disclosure](#tx508456_29)] | | | [removed: 73] [added: 77] | |

| _Item 9A._ | | [Controls and [removed: Procedures](#tx332046_30)] [added: Procedures](#tx508456_30)] | | | [removed: 74] [added: 78] | |

| _Item 9B._ | | [Other [removed: Information](#tx332046_31)] [added: Information](#tx508456_31)] | | | [removed: 75] [added: 79] | |

| _Item 10._ | | [Directors, Executive Officers and Corporate [removed: Governance](#tx332046_32)] [added: Governance](#tx508456_32)] | | | [removed: 76] [added: 80] | |

| _Item 11._ | | [Executive [removed: Compensation](#tx332046_33)] [added: Compensation](#tx508456_33)] | | | [removed: 76] [added: 80] | |

| _Item 12._ | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx332046_34)] [added: Matters](#tx508456_34)] | | | [removed: 76] [added: 80] | |

| _Item 13._ | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx332046_35)] [added: Independence](#tx508456_35)] | | | [removed: 78] [added: 80] | |

| _Item 14._ | | [Principal Accountant Fees and [removed: Services](#tx332046_36)] [added: Services](#tx508456_36)] | | | [removed: 78] [added: 80] | |

| _Item 15._ | | [Exhibits and Financial Statement [removed: Schedules](#tx332046_37)] [added: Schedules](#tx508456_37)] | | | [removed: 79] [added: 81] | |

| _Item 16._ | | [Form 10-K [removed: Summary](#tx332046_38)] [added: Summary](#tx508456_38)] | | | [removed: 90] [added: 92] | |

| [removed: 1.875%] [added: 1.625%] Notes | | [removed: 1.875%] [added: 1.625%] Convertible Senior [removed: Subordinated] Notes due [removed: 2025] [added: 2023] |

| Amended and Restated SIP | | ON Semiconductor Corporation Amended and Restated Stock Incentive [removed: Plan] [added: Plan, as amended] |

10-K 1 d508456d10k.htm 10-K

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| | | [Customers](#tx508456_4) | | | 9 | |

| | | [Seasonality](#tx508456_10) | | | 14 | |

| | | [Competition](#tx508456_12) | | | 15 | |

| | | [Employees](#tx508456_15) | | | 18 | |

| [Signatures](#tx508456_39) | | | | | 93 | |

| AI | | Artificial intelligence |

| GFCI | | Ground Fault Circuit Interrupter |

| LIBO Rate | | A base rate per annum equal to the London Interbank Offered Rate as administered by ICE Benchmark Administration |

| MCU | | Microcontroller Unit |

10-K 1 d332046d10k.htm FORM 10-K

| | | [Customers](#tx332046_4) | | | 10 | |

| | | [Seasonality](#tx332046_10) | | | 14 | |

| | | [Competition](#tx332046_12) | | | 15 | |

| | | [Employees](#tx332046_15) | | | 18 | |

| [Signatures](#tx332046_39) | | | | | 91 | |

| 2.625% Notes | | 2.625% Convertible Senior Subordinated Notes due 2026 |

| eFuse | | Proprietary IBM technology |

| FS IGBT | | Field stop insulated-gate bipolar transistor |

| HE FETs | | High efficiency MOSFETs |

| HV FETS | | High voltage MOSFETs |

| LIBO Rate | | London Interbank Offered Rate |

| OPAmps | | Operational amplifiers |

| PSRR | | Power supply rejection ratio |

| SANYO Semiconductor | | SANYO Semiconductor Co., Ltd. |

Our corporate headquarters as well as certain design center and research and development operations are located in approximately [removed: 1.4 million] [added: 600,000] square feet of building space on property that we own in Phoenix, Arizona.

We also [added: own and] lease properties around the world for use as sales offices, design centers, research and development labs, warehouses, logistic centers, trading offices and manufacturing support.

See “Business - Manufacturing Operations” included elsewhere in this Form 10-K for information on properties used in our [removed: manufacturing operations.]

Additionally, we own research and development facilities located in Belgium, Canada, China, the Czech Republic, France, Germany, Hong Kong, India, [removed: Ireland,] Japan, [removed: the Netherlands,] Singapore, South Korea, Romania, the Slovak Republic, Switzerland, Taiwan and the United States.

manufacturing operations.

As of February [removed: 17, 2017,] [added: 16, 2018,] there were approximately [removed: 247] [added: 246] holders of record of our common stock and [removed: 419,610,858] [added: 425,440,679] shares of common stock outstanding.

[removed: Our Amended Credit Agreement permits us to] [added: Additionally, we may] pay [removed: cash] dividends [removed: to our common stockholders, if] [added: in an unlimited amount so long as,] after giving effect thereto, the consolidated total net leverage ratio (calculated in accordance with our Amended Credit Agreement) does not exceed 2.50 to 1.00.

As of December 31, [removed: 2016,] [added: 2017,] we were permitted to pay [removed: up to $100.0 million] [added: an unlimited amount] in cash dividends [removed: under our Amended Credit Agreement] based on the [added: current] consolidated total net leverage ratio.

[removed: There were no] [added: The following table provides information regarding] repurchases of our common stock during the [removed: three months] [added: quarter] ended December 31, [removed: 2016.][added: 2017.]

| 2017 | | | | | | | | |

| First Quarter | | $ | 16.06 | | | $ | 12.37 | |

| Second Quarter | | $ | 16.93 | | | $ | 13.77 | |

| Third Quarter | | $ | 18.49 | | | $ | 13.65 | |

| Fourth Quarter | | $ | 22.15 | | | $ | 18.52 | |

Our outstanding debt facilities may limit the amount of dividends we are permitted to pay.

So long as no default has occurred and is continuing or results therefrom, our Amended Credit Agreement permits us to pay cash dividends to our common stockholders of up to $100.0 million.

##### [Table of Contents](#toc)

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period (1) | | Total Number of Shares Purchased (2) | | | | Average Price Paid per Share (3) | | |

| _September 30, 2017 - October 27, 2017_ | | | 67,748 | | | $ | 18.94 | |

| _October 28, 2017 - November 24, 2017_ | | | 12,095 | | | | 21.48 | |

| _November 25, 2017 - December 31, 2017_ | | | 83,018 | | | | 19.63 | |

| | | | | | | | | |

| _Total_ | | | 162,861 | | | | 19.48 | |

| | | | | | | | | |

| (1) | These time periods represent our fiscal month start and end dates for the fourth quarter of 2017. |

| --- | --- |

| (2) | The number of shares purchased represents shares of common stock held by employees who tendered owned shares of common stock to the Company to satisfy the employee withholding taxes due upon the vesting of RSUs. |

| --- | --- |

| (3) | The price per share is based on the fair market value at the time of tender. |

| --- | --- |

_Share Repurchase Program_

The Company did not repurchase any of our common stock under our share repurchase program during the quarter ended December 31, 2017.

Under the share repurchase program we announced in December 2014 (the “2014 Share Repurchase Program”), we may repurchase up to $1.0 billion (exclusive of fees, commissions and other expenses) of our common stock over a period of four years from December 1, 2014, subject to certain contingencies.

We may repurchase our common stock from time to time in privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act, or by any combination of such methods or other methods.

The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions under our debt obligations, other market and economic conditions.

The 2014 Share Repurchase Program does not require us to purchase any particular amount of common stock and is subject to a variety of factors including the Board’s discretion.

As of December 31, 2017, $603.2 million remained of the total authorized amount to purchase common stock pursuant to the 2014 Share Repurchase Program.

See Note 9: “Earnings Per Share and Equity” of the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for further information on shares of common stock tendered to the Company by employees to satisfy applicable employee withholding taxes due upon vesting of RSUs and the 2014 Share Repurchase Program.

##### [Table of Contents](#toc)

| 2015 | | | | | | | | |

| First Quarter | | $ | 13.31 | | | $ | 9.65 | |

| Second Quarter | | $ | 13.50 | | | $ | 11.31 | |

| Third Quarter | | $ | 11.48 | | | $ | 8.40 | |

| Fourth Quarter | | $ | 11.62 | | | $ | 9.53 | |

Our outstanding debt facilities may restrict our ability to pay dividends from time to time.

The statement of operations and balance sheet data set forth below for the years ended and as of December 31, [added: 2017,] 2016, 2015, [removed: 2014, 2013] [added: 2014] and [removed: 2012] [added: 2013] are derived from our audited consolidated financial statements.

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Revenues | | $ | [removed: 3,906.9] [added: 5,543.1] | | | $ | [removed: 3,495.8] [added: 3,906.9] | | | $ | [removed: 3,161.8] [added: 3,495.8] | | | $ | [removed: 2,782.7] [added: 3,161.8] | | | $ | [removed: 2,894.9] [added: 2,782.7] | |

| Restructuring, asset impairments and other, net [removed: (1)] | | | [removed: 33.2] [added: 20.8] | | | | [removed: 9.3] [added: 33.2] | | | | [removed: 30.5] [added: 9.3] | | | | [removed: 33.2] [added: 30.5] | | | | [removed: 163.7] [added: 33.2] | |

| Goodwill and intangible asset impairment charges [removed: (2)] | | | [removed: 2.2] [added: 13.1] | | | | [removed: 3.8] [added: 2.2] | | | | [removed: 9.6] [added: 3.8] | | | | [removed: —] [added: 9.6] | | | | [removed: 49.5] [added: —] | |

| Net income [removed: (loss)] | | | [removed: 184.5] [added: 813.0] | | | | [removed: 209.0] [added: 184.5] | | | | [removed: 192.1] [added: 209.0] | | | | [removed: 153.6] [added: 192.1] | | | | [removed: (92.9] [added: 153.6] | [removed: )] |

| Diluted net income [removed: (loss)] per common share attributable to ON Semiconductor Corporation | | | [removed: 0.43] [added: 1.89] | | | | [removed: 0.48] [added: 0.43] | | | | [removed: 0.43] [added: 0.48] | | | | [removed: 0.33] [added: 0.43] | | | | [removed: (0.21] [added: 0.33] | [removed: )] |

| Total assets [added: (1)] | | $ | [removed: 6,924.4] [added: 7,195.1] | | | $ | [removed: 3,869.6] [added: 6,924.4] | | | $ | [removed: 3,822.1] [added: 3,869.6] | | | $ | [removed: 3,292.5] [added: 3,822.1] | | | $ | [removed: 3,374.1] [added: 3,292.5] | |

| [removed: Long-term] [added: Net long-term] debt, including current maturities, less capital lease obligations [added: (1)] | | | [removed: 3,609.3] [added: 2,947.6] | | | | [removed: 1,365.7] [added: 3,609.3] | | | | [removed: 1,150.9] [added: 1,365.7] | | | | [removed: 887.5] [added: 1,150.9] | | | | [removed: 918.6] [added: 887.5] | |

| Capital lease obligations | | | [removed: 13.0] [added: 4.2] | | | | [removed: 28.2] [added: 13.0] | | | | [removed: 40.8] [added: 28.2] | | | | [removed: 53.4] [added: 40.8] | | | | [removed: 91.1] [added: 53.4] | |

| Total stockholders’ equity | | | [removed: 1,845.0] [added: 2,801.0] | | | | [removed: 1,631.9] [added: 1,845.0] | | | | [removed: 1,647.4] [added: 1,631.9] | | | | [removed: 1,523.6] [added: 1,647.4] | | | | [removed: 1,427.9] [added: 1,523.6] | |

[removed: | (1) |] [added: See “Results of Operations -] Restructuring, asset impairments and other, [removed: net primarily includes employee severance and other exit costs associated] [added: net” below, along] with [removed: our worldwide cost reduction and profitability enhancement programs, asset impairments and any other infrequent or unusual items. See] Note 6: “Restructuring, Asset Impairments and Other, Net” in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for [removed: additional information. |][added: information relating to our most recent cost-saving initiatives.]

According to WSTS (an industry research firm), worldwide semiconductor industry sales were [removed: $338.9] [added: $412.2] billion in [removed: 2016,] [added: 2017,] an increase of approximately [removed: 1.1%] [added: 21.6%] from [removed: $335.2] [added: $338.9] billion in [removed: 2015.][added: 2016.]

The following table sets forth total worldwide semiconductor industry revenues and revenues in our Serviceable Addressable Market (“SAM”) since [removed: 2012:][added: 2013:]

| (1) | Based on shipment information published by WSTS. [removed: WSTS collects this information based on product shipments, which differs from how we recognize revenue on shipments to certain distributors as described in Note 2: “Significant Accounting Policies—Revenue Recognition” in the notes to our audited consolidated financial statements contained elsewhere in this Form 10-K.] We believe the data provided by WSTS is reliable, but we have not independently verified it. WSTS periodically revises its information. We assume no obligation to update such information. |

| (2) | Our SAM comprises the following specific WSTS product categories: (a) discrete products (all discrete semiconductors other than sensors, microwave power transistors/modules, microwave diodes, [removed: and] microwave transistors, power modules, logic and optoelectronics); (b) standard analog products (amplifiers, VREGs and references, comparators, ASSP consumer, ASSP communications, ASSP computer, ASSP automotive and ASSP industrial and others); (c) standard logic products (general purpose logic); (d) standard product logic (consumer other, computer other peripherals, wired / wireless communications, automotive, industrial and multipurpose); (e) CMOS and CCD image sensors; (f) memory; (g) microcontrollers and (h) motor control modules. Our SAM is derived using the most recent information available, excluding foundry exposure, at the time of the filing of each respective period’s annual report and is revised in subsequent periods to reflect final results. |

As indicated above, worldwide semiconductor sales increased from [removed: $291.6] [added: $305.6] billion in [removed: 2012] [added: 2013] to [removed: $338.9] [added: $412.2] billion in [removed: 2016.][added: 2017.]

The increase of [removed: 1.1%] [added: 21.6%] from [removed: 2015 to] 2016 [added: to 2017] reflected improving macroeconomic conditions in the second half of [removed: 2016.][added: 2017.]

Sales in our SAM increased from [removed: $103.7] [added: $104.3] billion in [removed: 2012] [added: 2013] to [removed: $118.9] [added: $133.7] billion in [removed: 2016.][added: 2017.]

The increase of [removed: 2.6%] [added: 12.4%] from [removed: 2015 to] 2016 [added: to 2017] is consistent with the trend in the worldwide semiconductor market.

The most recently published estimates of WSTS project a compound annual growth rate in our SAM of approximately [removed: 4.0%] [added: 5.0%] for the next three years.

In response to such declines, manufacturers have [added: reduced or shut down production capacity.]

We are driving innovation in [removed: energy efficient] [added: energy-efficient] electronics.

Our custom ASICs [added: and SOC devises] use analog, MCU, DSP, mixed-signal and advanced logic capabilities to act as the brain behind many of our automotive, medical, aerospace/defense, consumer and industrial customers’ products.

These various products fall into the logic, analog, discrete, image [removed: sensors, IoT] [added: sensors] and memory categories used by the WSTS group.

Our new product development efforts continue to be focused on building solutions in product areas that appeal to customers in focused market segments and across multiple [removed: high growth] [added: high-growth] applications.

It is our practice to regularly re-evaluate our research and development spending, to assess the deployment of resources and to review the funding of [removed: high growth] [added: high-growth] technologies.

Our design expertise in analog, digital, mixed signal and imaging ICs, combined with our extensive portfolio of standard products enable the company to offer comprehensive, [removed: value added] [added: value-added] solutions to our global customers for their electronics systems.

| | • | | Our acquisition of Fairchild and our integration of Fairchild’s business into our [removed: operations, including through the segment realignment described below;] [added: operations;] |

| | • | | [removed: An uncertain] [added: The impact of U.S.] corporate tax [removed: environment, both in the U.S.] [added: reform] and [added: an uncertain corporate tax environment] abroad; |

| | • | | The effects of trends in the automotive [removed: industry] [added: and industrial end-markets] on our revenues; and |

The purchase price totaled $2,532.2 million and was funded by the borrowings against our Term Loan “B” Facility and a partial draw of our [added: revolving] Revolving Credit Facility and with cash on hand.

We believe that this acquisition [removed: creates] [added: has created] a power semiconductor leader with strong capabilities in a rapidly consolidating semiconductor industry.

[removed: Ultimately, we believe that the] [added: The] combination of Fairchild operations with our own [removed: will provide] [added: has provided] complementary product lines to offer customers the full spectrum of high, medium and low voltage products, and we will continue to pioneer technology and design innovation in efficient energy consumption to help our customers achieve success and drive value for our partners and employees around the world.

[removed: We believe the] [added: The] acquisition also [removed: expands] [added: expanded] our footprint in wireless communication products, particularly in high efficiency power conversions and USB Type C communication and power delivery.

See Note 4: [removed: “Acquisitions] [added: “Acquisitions, Divestitures] and [removed: Divestitures”] [added: Licensing Transactions”] in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information.

Our total revenues for the year ended December 31, [removed: 2016] [added: 2017] were [removed: $3,906.9] [added: $5,543.1] million, an increase of approximately [removed: 11.8%] [added: 41.9%] from [removed: $3,495.8] [added: $3,906.9] million from the year ended December 31, [removed: 2015.][added: 2016.]

During [removed: 2016,] [added: 2017,] we reported net income attributable to ON Semiconductor of [removed: $182.1] [added: $810.7] million compared to [removed: $206.2] [added: $182.1] million in [removed: 2015.][added: 2016.]

Our gross margin [removed: decreased] [added: increased] by approximately [removed: 90] [added: 350] basis points to [removed: 33.2%] [added: 36.7%] in [removed: 2016] [added: 2017] from [removed: 34.1%] [added: 33.2%] in [removed: 2015.][added: 2016.]

[removed: Excluding the expensing of the fair market value of inventory step-up, the] [added: The] increase in gross margin was primarily [removed: driven by] [added: due to] higher factory [removed: utilization and] [added: utilization,] product [removed: mix.][added: mix and contributions from the acquired Fairchild business.]

| (1) | Increased in 2016 primarily due to the Fairchild transaction. See Note 4: “Acquisitions, Divestitures and Licensing Transactions” and Note 8: “Long-Term Debt” in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information. |

| 2017 | | $ | 412.2 | | | | 21.6 % | | | $ | 133.7 | | | | 12.4 % | |

The increase was attributable to the impact of the U.S. tax reform, as well as improved results and contributions from the acquired Fairchild business.

We have historically taken significant actions to align our overall cost structure with our expectations of market conditions and by focusing on synergies-related cost reductions arising from each of our acquisitions.

_Anticipated Impact of U.S. Tax Reform_

On December 22, 2017, the U.S. enacted the Tax Act.

The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one- time mandatory repatriation tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain future foreign earnings.

Our income tax benefit for the year ended December 31, 2017 includes a provisional income tax benefit of $449.9 million as a result of the Tax Act.

This benefit includes charges related to the mandatory repatriation tax and the remeasurement of deferred tax assets for the new, lower U.S. statutory rate of 21%, offset by a reduction of our deferred tax liability for undistributed current and prior years’ earnings of our foreign subsidiaries.

Our provisional estimate of the mandatory repatriation tax is $219.4 million, which we believe can be offset, in part, by $191.1 million of existing U.S. tax credit carryforwards.

After utilization of our tax credits, the remaining cash tax payable is expected to be $28.3 million, which would be payable over eight years with $2.3 million due in 2018.

| Licensing income | | | 47.6 | | | | — | | | | — | | | | 47.6 | | | | — | |

The increase of $1,636.2 million, or approximately 42%, in 2017 compared to 2016 was primarily attributable to approximately 65% and 32% increases in revenue in our Power Solutions Group and Analog Solutions Group, respectively, which included an entire twelve-month period of Fairchild revenues in 2017 and $155.1 million in revenues due to the change in revenue recognition on distributor sales during the first quarter of 2017.

The 2017 increase is primarily attributable to the acquisition of Fairchild, which had a full year contribution in 2017, as well as a $107.8 million impact due to the change in revenue recognition on distributor sales during the first quarter of 2017.

These two factors contributed to increases in substantially all of the divisions within this segment, which resulted in a $417.8 million increase in revenues in our Power MOSFET division, a $327.8 million increase in revenues in our High Power division, and, to a lesser extent, $132.9 million increase in revenues in our Integrated Circuits division and $120.7 million increase in revenues in our Protection and Signal division.

This was due to a $149.5 million increase in revenues in our Power MOSFET division, a $79.5 million increase in revenues in our High Power division, and to a lesser extent, a $47.7 million increase in revenues in our Integrated Circuits division and an $18.5 million increase in revenues in our Protection and Signal division.

The 2017 increase is primarily attributable to the acquisition of Fairchild, which had a full year contribution in 2017, as well as a $42.1 million impact due to the change in revenue recognition on distributor sales during the first quarter of 2017.

These two factors contributed to increases in substantially all of the divisions within this segment, which resulted in a $150.6 million increase in revenues in our Mobile Solutions division, a $100.3 million increase in revenues in our Automotive division, a $97.5 million increase in revenues in our Digital and DC/DC division and a $81.3 million increase in revenues in our Industrial and Offline Power division.

This was due to a $72.7 million increase in revenues in our Mobile Solutions division, and to a lesser extent, $33.1 million increase in revenues in our Digital and DC/DC division and $29.8 million increase in revenues in our Automotive division.

The 2017 increase is primarily attributable to a $84.9 million, or 29% increase in revenues in our Automotive Solutions division, which was partially offset by a $39.6 million, or approximately 13% decrease in revenues in our Consumer Solutions division as a result of the exit of the Mobile CIS business which occurred during the fourth quarter of 2016.

For further information on the Mobile CIS business exit see Note 4: “Acquisitions, Divestitures and Licensing Transactions”.

The 2016 decrease was primarily attributable to a $100.1 million, or 24% decrease in revenues in our Consumer Solutions division due to the exit of the Mobile CIS business, offset by a $57.7 million, or 24% increase in revenues in our Automotive Solutions division, and a $11.8 million, or 12% increase in revenues in our Industrial Solutions division.

The gross profit increase of $736.9 million, or approximately 57%, for 2017 compared to 2016 was primarily due to an increase in gross profit in our Power Solutions Group and Analog Solutions group, which included a full-year of contributions from the acquired Fairchild business.

ISG gross profit improvement of $65.5 million was due to increased revenue in higher margin automotive and industrial markets offsetting decreased revenue on the exit of the Mobile CIS business.

Gross margin increased to approximately 36.7% during 2017 compared to approximately 33.2% during 2016.

Excluding the expensing of the fair market value of inventory step-up from the Fairchild acquisition, gross margin increased to approximately 36.9% during 2017 compared to approximately 34.9% during 2016.

The increase was primarily due to higher factory utilization, product mix, which included the mix shift in imaging products to higher margin automotive and industrial imaging products, and the exit of the lower margin Mobile CIS business.

The increase in research and development expenses of $142.1 million, or approximately 31%, during 2017 compared to 2016 was primarily associated with the acquisition of Fairchild, which added several categories of research and development expenses.

Research and development expenses unrelated to Fairchild increased primarily in the area of payroll, including incentive compensation and payroll related costs as well as an overall increase in variable compensation for the combined company.

The increase in selling and marketing expenses of $77.9 million, or approximately 33%, during 2017 compared to 2016 was primarily associated with the acquisition of Fairchild, primarily in the area of payroll, including incentive compensation and payroll related costs as well as an overall increase in variable compensation for the combined company.

There were also increases in expenses related to commissions and advertising.

The increase in general and administrative expenses of $54.6 million, or approximately 24%, during 2017 compared to 2016 was primarily associated with the acquisition of Fairchild, primarily in the area of payroll, including incentive compensation and payroll related costs, as well as an overall increase in variable compensation for the combined company.

The increase of $19.0 million during 2017 compared to 2016 was primarily associated with the amortization of our intangible assets acquired from the Fairchild acquisition, partially offset by the declining amortization of our Aptina intangible assets.

_2017_

During 2017, we recorded approximately $20.8 million of net charges related to our restructuring programs, consisting primarily of $9.7 million of post-Fairchild acquisition restructuring costs, $2.2 million of the former System Solutions Group voluntary workforce reduction program costs, $7.3 million of asset impairment charges primarily for assets held-for-sale and $3.7 million of other costs, partially offset by a reversal of $2.1 million relating to manufacturing relocation program costs.

_Intangible Asset Impairment_

_2017_

During 2017, we recorded $13.1 million of intangible asset impairment charges consisting of $7.7 million of charges relating to abandoned IPRD projects and $5.4 million relating to the impairment in the value of certain IPRD projects as a result of the annual impairment test performed during the fourth quarter of 2017.

Interest expense decreased by $4.1 million, or approximately 2.8%, to $141.2 million during 2017 compared to $145.3 million in 2016, primarily due to the interest rate reduction under our Amended Credit Agreement.

Gain on divestiture of business was $12.5 million, $92.2 million and zero for 2017, 2016 and 2015, respectively.

| | | | | | | | | | | | | | | | | | | | | |

| (2) | For the year ended December 31, 2014, we recorded $9.6 million of goodwill and intangible asset impairment charges on our Consolidated Statements of Operations and Comprehensive Income relating to a reporting unit in our Analog Solutions Group. For the year ended December 31, 2012, we recorded $49.5 million of goodwill and intangible asset impairment charges on our Consolidated Statements of Operations and Comprehensive Income relating to certain reporting units in our Power Solutions Group and former System Solutions Group segment. See Note 5: “Goodwill and Intangible Assets” in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information on goodwill and intangible asset impairments. |

In recent years, worldwide semiconductor industry sales have tracked the impact of the financial crisis, subsequent recovery and persistent economic uncertainty.

| 2012 | | $ | 291.6 | | | | (2.6)% | | | $ | 103.7 | | | | (3.4)% | |

reduced or shut down production capacity.

On September 19, 2016, we completed our acquisition of Fairchild, pursuant to the Agreement and Plan of Merger (the “Fairchild Agreement”) with each of Fairchild and Falcon Operations Sub, Inc., a Delaware corporation and our wholly-owned subsidiary, which provided for the acquisition of Fairchild by us (the “Fairchild Transaction”).

The increase was attributable to the acquisition of Fairchild_,_ partially offset by lower revenues in our Image Sensor Group.

The decrease was due to the expensing of the fair market value of inventory step-up from the Fairchild acquisition of $67.5 million.

Backlog levels for the first quarter of 2017 represent approximately 80% to 85% of our anticipated first quarter 2017 revenues.

For the first quarter of 2017, we estimate that gross margin as a percentage of revenues will be approximately 33.4% to 34.8%.

Additionally, we have historically pursued, and expect to continue to pursue, other cost

_Segment Realignment in 2016_

During the third quarter of 2016, we realigned our operating and reporting segments into the following three operating and reporting segments to optimize anticipated efficiencies resulting from our acquisition of Fairchild: Power Solutions Group, Analog Solutions Group and Image Sensor Group.

The operating results of the System Solutions Group, which was previously our fourth operating and reporting segment, and which did not have goodwill, are now assigned among the three current operating and reporting segments.

Prior year periods of segment information presented below reflect the current three operating and reporting segments.

Our Power Solutions Group and Analog Solutions Group operating and reporting segments include the business acquired in the Fairchild Transaction.

The increase in revenues from 2015 compared to 2014 of $334.0 million, or approximately 11%, was primarily attributed to $411.0 million of additional revenue in the Image Sensor Group provided by a full year of operations from the 2014 acquisitions of Aptina and Truesense, partially offset by decreased revenue from our former System Solutions Group segment and a decrease in average selling prices of approximately 8%.

Revenues from our discrete products increased by $215.0 million, or approximately 35%, revenues from our new IPMS and Optoelectronics products increased by $45.8 million and $20.8 million, respectively, and revenues from our analog products increased by $20.5 million, or approximately 6%.

The 2015 decrease resulted from a decrease in revenues from our IPM products of $14.1 million, or approximately 13%, and a decrease in revenues from TMOS products of $14.6 million, or approximately 6%, partially offset by an increase in revenues from memory products of $16.7 million, or approximately 24%.

Additionally, revenues from our legacy analog products increased $19.9 million, or approximately 5%, partially offset by decreased revenue in our LSI products of $15.0 million, or approximately 5%.

The 2015 decrease resulted from a decrease in revenues from our LSI products of $62.0 million, or approximately 18%, and a decrease in revenues from analog products of $18.5 million, or approximately 5%.

The 2016 decrease was primarily attributable to a decrease in revenues from our consumer products of $57.6 million, or approximately 9%, offset by an increase in revenues from our LSI products of $15.2 million, or approximately 51%, and an increase in revenues from our ASIC products of $11.8 million, or approximately 12%.

The 2015 increase was primarily attributable to $409.6 million of additional revenue generated by Aptina and Truesense during their first full year of operations after acquisition, as compared to 2014, in which the two businesses generated $262.4 million of revenue during the period of 2014 after the closing of the acquisitions.

The gross profit increase of $108.3 million, or approximately 10%, for 2015 compared to 2014 was primarily due to the contributions of acquisitions during 2014, including $27.0 million for the amortization of the fair market value of inventory step-up from our acquisitions during 2014 for which there was no amortization during 2015, and manufacturing and cost improvements that were partially offset by decreased average selling prices.

Gross margin decreased to approximately 34.1% during 2015 compared to approximately 34.3% during 2014.

This decrease was primarily driven by a larger proportion of our revenues provided by our Image Sensor Group which generates lower gross margin levels than our Analog Solutions Group and Power Solutions Group.

The increase in research and development expenses of $30.1 million, or approximately 8%, during 2015 compared to 2014 was primarily associated with an increase of $50.4 million from expenses attributable to the operations of Aptina and Truesense for the full period in 2015.

These expenses were partially offset by lower payroll costs, including incentive compensation and payroll related costs, in our Analog Solutions Group and former System Solutions Group segment.

The increase in selling and marketing expenses of $4.3 million, or approximately 2%, during 2015 compared to 2014 was primarily associated with an increase of $23.5 million for expenses attributable to the operations of Aptina and Truesense for the full period in 2015.

These expenses were significantly offset by lower payroll costs, including incentive compensation and payroll related costs in our Analog Solutions Group, Power Solutions Group and former System Solutions Group segment.

The increase in general and administrative expenses of $1.4 million, or approximately 1%, during 2015 compared to 2014 includes an increase of approximately $14.6 million for expenses attributable to the operations of Aptina and Truesense for the full period in 2015, partially offset by lower payroll, including incentive compensation and payroll related costs in our Power Solutions Group, Analog Solutions Group and former System Solutions Group.

Amortization of acquired intangible assets from the Fairchild Transaction was $12.6 million between September 19, 2016 and December 31, 2016.

The increase in amortization of acquisition-related intangible assets during 2015 compared to 2014 was attributable to a full period of the amortization of intangible assets assumed as a result of our acquisitions of Aptina and Truesense.

System Solutions Group segment voluntary workforce reduction program costs, and $2.1 million of manufacturing relocation program costs.

Total Restructuring, asset impairments and other, net, was partially offset by a $3.4 million gain from the sale of assets.

During the first quarter of 2015, we announced that we would relocate our European customer marketing organization from France to Slovakia and Germany.

As a result, six positions are expected to be eliminated.

We recorded $3.5 million of related employee separation charges during 2015.

The impacted employees left the Company during the second half of 2016.

During the third quarter of 2015, management approved and commenced implementation of restructuring actions, primarily targeted workforce reductions.

_Evaluation of Disclosure Controls and [removed: Procedures_.][added: Procedures._]

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and [removed: 15d-15(e))] [added: 15d-15(e)] of the Exchange [removed: Act.][added: Act).]

[removed: There] [added: Other than as described above, there] have been no other changes to our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the [added: fiscal] quarter ended December 31, [removed: 2016] [added: 2017] which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2016.][added: 2017.]

In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (“COSO”)] in _Internal [removed: Control] [added: Control_] - [removed: Integrated] [added: _Integrated] Framework 2013_.

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, [removed: 2016.][added: 2017.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in “Exhibits and Financial Statement Schedules” of this Form 10-K.

We also carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended December 31, 2017.

On September 19, 2016, we acquired Fairchild, which operated under its own set of systems and internal controls.

Fairchild’s systems and control environment have been integrated into the Company’s systems and control environment as of October 30, 2017.

During 2016, we continued to enhance our controls over revenue to estimate the effects of returns and allowances provided to distributors in anticipation of recording revenue at the time of sale to the distributor originating through the ON Semiconductor processes and aligning our revenue recognition processes between the acquired Fairchild operations and ON Semiconductor in the first half of 2017.

We continue to integrate Fairchild’s operations into our systems and internal control environment, and expect to complete the integration by the fourth quarter of 2017.

Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2016 excluded Fairchild, which was acquired by the Company on September 19, 2016.

Excluded assets of Fairchild as of December 31, 2016 represent approximately 25% of consolidated assets, and Fairchild’s revenues for the period from September 19, 2016 through December 31, 2016 represents approximately 11% of consolidated revenues.

Information concerning directors and persons nominated to become directors and executive officers is incorporated by reference from the text under the captions “Management Proposals - Proposal [removed: 1 -] [added: No. 1:] Election of Directors,” “The Board of Directors and Corporate Governance,” “Section 16(a) Reporting Compliance” and “Miscellaneous Information - Stockholder Nominations and Proposals” in our Proxy Statement to be filed pursuant to Regulation 14A within 120 days after our year ended December 31, [removed: 2016] [added: 2017] in connection with our [removed: 2017] [added: 2018] Annual Meeting of Stockholders (“Proxy Statement”).

Information concerning executive compensation is incorporated by reference from the text under the captions “The Board of Directors and Corporate Governance - [added: 2017] Compensation of Directors,” “Compensation of Executive Officers,” “Compensation Committee Report,” “Compensation Discussion and [removed: Analysis,”] [added: Analysis”] and “Compensation Committee Interlocks and Insider Participation” in our Proxy Statement.

The information incorporated by reference under the caption “Compensation Committee Report” in our Proxy Statement shall be deemed furnished, and not filed, in this Form 10-K and shall not be deemed incorporated by reference into any filing under the Securities [removed: Act,] [added: Act] or the Exchange [removed: Act,] [added: Act] as a result of this furnishing, except to the extent that we specifically incorporate it by reference.

Information concerning security ownership of certain beneficial owners and management is incorporated by reference from the text under the captions “Principal [removed: Stockholders” and] [added: Stockholders,”] “Share Ownership of Directors and Officers” [added: and “Share-Based Compensation Plan Information”] in our Proxy Statement.

##### [Table of Contents](#toc)

_Share-Based Compensation Plan Information_

The following table sets forth share-based compensation plan information as of December 31, 2016:

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | | | | | | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (4) | | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | | | | | | |

| | | (a) | | | | | | | | (b) | | | | (c) | | | | | | |

| Plan Category | | | | | | | | | | | | | | | | | | | | |

| Share-Based Compensation Plans Approved By Security Holders (1) | | | 12,754,394 | | | | (3 | ) | | $ | 7.69 | | | | 24,730,914 | | | | (5 | ) |

| Share-Based Compensation Plans Not Approved By Security Holders (2) | | | 245,031 | | | | | | | $ | 8.47 | | | | — | | | | | |

| Total | | | 12,999,425 | | | | | | | | | | | | 24,730,914 | | | | | |

| (1) | Consists of the ON Semiconductor Corporation 2000 Stock Incentive Plan (the “2000 SIP”), the Amended and Restated SIP and the ESPP. |

| --- | --- |

| (2) | We have assumed awards in accordance with applicable NASDAQ listing standards under the AMIS Holdings, Inc. Amended and Restated 2000 Equity Incentive Plan, which has not been approved by our stockholders, but which was approved by AMIS stockholders. We have also assumed awards in accordance with applicable NASDAQ listing standards under the following plans, which have not been approved by our stockholders but which were approved by Catalyst stockholders: the Catalyst Options Amended and Restated 2003 Stock Incentive Plan; and the Catalyst 1998 Special Equity Incentive Plan. We have also assumed awards in accordance with applicable NASDAQ listing standards under the following plans, which have not been approved by our stockholders but which were approved by CMD stockholders: the California Micro Devices Corporation 2004 Omnibus Incentive Compensation Plan; the California Micro Devices Corporation 1995 Employee Stock Option Plan; and options granted under agreements between California Micro Devices and certain employees. Also included are shares that were added to the 2000 SIP as a result of the assumption of the number of shares remaining available for grant under the AMIS Holdings, Inc. Employee Stock Purchase Plan and AMIS Holdings Inc. Amended and Restated 2000 Equity Incentive Plan. |

| (3) | Includes 9,677,310 shares of common stock subject to time-based and performance-based restricted stock units (collectively “RSUs”), which entitle each holder to one share of common stock for each unit that vests over the holder’s period of continued service or based on the achievement of certain performance criteria. This amount excludes purchase rights accruing under the ESPP that has a stockholder-approved reserve of 23,500,000 shares. As of December 31, 2016, there were approximately 4.9 million shares available for issuance under the ESPP. |

| (4) | Calculated without taking into account shares of common stock subject to outstanding RSUs that will become issuable as those units vest, without any cash consideration or other payment required for such shares. |

| (5) | Includes 4,885,059 shares of common stock reserved for future issuance under the ESPP and 19,845,055 shares of common stock available for issuance under the Amended and Restated SIP, as adjusted to account |

| | for full value awards which reduce the shares of common stock available for future issuance at a fungible ratio of 1:1.58 for each full value award previously awarded pursuant to the plan document. The 2000 SIP terminated on February 17, 2010, and, accordingly, there are no available shares for future grants under the 2000 SIP as of December 31, 2016. However, if an award under the Amended and Restated SIP or under the 2000 SIP is forfeited, terminated, canceled, expires or is paid in cash, the shares subject to such award, to the extent of the forfeiture, termination, cancellation, expiration or cash payment, may be added back to the shares available for issuance under the Amended and Restated SIP on a one for one basis for options and stock appreciation rights and on the basis of 1.58 to one for other awards. |

Information concerning certain relationships and related transactions involving us and certain others is incorporated by reference from the text under the captions “Management Proposals - Proposal No. [removed: 1 -] [added: 1:] Election of Directors,” “The Board of Directors and Corporate Governance,” “Compensation of Executive Officers” and “Relationships and Related Transactions” in our Proxy Statement.

Information concerning principal accounting fees and services is incorporated by reference from the text under the caption “Management Proposals - Proposal No. [removed: 4 -] [added: 3:] Ratification of Appointment of Independent Registered Public Accounting Firm - Audit and Related Fees” in our Proxy Statement.

| [Report of Independent Registered Public Accounting [removed: Firm](#tx332046_40)] [added: Firm](#tx508456_1011)] | | | [removed: 92] [added: 94] | |

| [Consolidated Balance Sheets as of December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015](#tx332046_41)] [added: 2016](#tx508456_1012)] | | | [removed: 93] [added: 96] | |

| [Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#tx332046_42)] [added: 2015](#tx508456_1013)] | | | [removed: 94] [added: 97] | |

| [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#tx332046_43)] [added: 2015](#tx508456_1014)] | | | [removed: 95] [added: 98] | |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#tx332046_44)] [added: 2015](#tx508456_1015)] | | | [removed: 96] [added: 99] | |

| [Notes to Consolidated Financial [removed: Statements](#tx332046_45)] [added: Statements](#tx508456_1016)] | | | [removed: 97] [added: 100] | |

| [Schedule II - Valuation and Qualifying [removed: Accounts](#tx332046_46)] [added: Accounts](#tx508456_1017)] | | | [removed: 168] [added: 170] | |

[removed: | |] (3) [removed: |] Exhibits: [removed: |]

| 2.1 | | [removed: Reorganization] [added: [Reorganization] Agreement, dated as of May 11, 1999, among Motorola, Inc., SCG Holding Corporation and Semiconductor Components Industries, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement filed with the Commission on November 5, 1999 (File No. [removed: 333-90359))†] [added: 333-90359))†](http://www.sec.gov/Archives/edgar/data/1097864/000091205799003561/0000912057-99-003561.txt)] |

| 2.2(a) | | [removed: Agreement] [added: [Agreement] and Plan of Recapitalization and Merger, as amended, dated as of May 11, 1999, among SCG Holding Corporation, Semiconductor Components Industries, LLC, Motorola, Inc., TPG Semiconductor Holdings LLC, and TPG Semiconductor Acquisition Corp. (incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement filed with the Commission on November 5, 1999 (File No. [removed: 333-90359))†] [added: 333-90359))†](http://www.sec.gov/Archives/edgar/data/1097864/000091205799003561/0000912057-99-003561.txt)] |

| 2.2(b) | | [removed: Amendment] [added: [Amendment] No. 1 to Agreement and Plan of Recapitalization and Merger, dated as of July 28, 1999, among SCG Holding Corporation, Semiconductor Components Industries, LLC, Motorola, Inc., TPG Semiconductor Holdings LLC, and TPG Semiconductor Acquisition Corp. (incorporated by reference to Exhibit 2.3 to the Company’s Registration Statement filed with the Commission on November 5, 1999 (File No. [removed: 333-90359))†] [added: 333-90359))†](http://www.sec.gov/Archives/edgar/data/1097864/000091205799003561/0000912057-99-003561.txt)] |

| 2.3(a) | | [removed: Purchase] [added: [Purchase] Agreement by and among ON Semiconductor Corporation, Semiconductor Components Industries, LLC and SANYO Electric Co., Ltd. dated July 15, 2010 (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 4, [removed: 2010)†] [added: 2010)†](http://www.sec.gov/Archives/edgar/data/1097864/000119312510248237/dex21.htm)] |

| 2.3(b) | | [removed: Amendment] [added: [Amendment] No. 1 to Purchase Agreement by and among ON Semiconductor Corporation, Semiconductor Components Industries, LLC and SANYO Electric Co., Ltd. dated November 30, 2010 (incorporated by reference to Exhibit [removed: 2.1] [added: 2.2] to the Company’s Current Report on Form 8-K filed with the Commission on January 6, [removed: 2011)†] [added: 2011)†](http://www.sec.gov/Archives/edgar/data/1097864/000119312511002665/dex22.htm)] |

| 2.4 | | [removed: Agreement] [added: [Agreement] and Plan of Merger by and among ON Semiconductor Benelux B.V., Alpine Acquisition Sub, Aptina, Inc. and Fortis Advisors LLC, as Equityholder Representative, dated as of June 9, 2014 (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 1, [removed: 2014) †] [added: 2014)†](http://www.sec.gov/Archives/edgar/data/1097864/000119312514290065/d760205dex21.htm)] |

| 2.5 | | [removed: Agreement] [added: [Agreement] and Plan of Merger, dated November 18, 2015, by and among Fairchild Semiconductor International, Inc., ON Semiconductor Corporation and Falcon Operations Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 18, [removed: 2015) †] [added: 2015)†](http://www.sec.gov/Archives/edgar/data/1097864/000119312515380168/d46684dex21.htm)] |

| 2.6 | | [removed: Asset] [added: [Asset] Purchase Agreement, dated as of March 11, 1997, between Fairchild Semiconductor Corporation and National Semiconductor Corporation (incorporated by reference to Exhibit 2.02 to Fairchild Semiconductor Corporation’s Registration Statement filed with the Commission on May 12, 1997 (File No. [removed: 333-26897)) †] [added: 333-26897))†](http://www.sec.gov/Archives/edgar/data/1036960/0000912057-97-016828.txt)] |

| [removed: 3.1] [added: 3.1(a)] | | [removed: Amended and Restated Certificate] [added: [Certificate] of Incorporation of ON Semiconductor Corporation, as further amended through March 26, 2008 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 7, [removed: 2008)] [added: 2008)](http://www.sec.gov/Archives/edgar/data/1097864/000119312508104433/dex31.htm)] |

| [removed: 3.2] [added: 3.1(b)] | | [removed: Certificate] [added: [Certificate] of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 3, [removed: 2014)] [added: 2014)](http://www.sec.gov/Archives/edgar/data/1097864/000119312514223896/d738311dex31.htm)] |

| [removed: 3.3] [added: 3.2] | | [removed: By-Laws] [added: [By-Laws] of ON Semiconductor Corporation as Amended and Restated on November 21, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 25, [removed: 2013)] [added: 2013)](http://www.sec.gov/Archives/edgar/data/1097864/000119312513453007/d633825dex31.htm)] |

| 4.1 | | [removed: Specimen] [added: [Specimen] of share certificate of Common Stock, par value $0.01, ON Semiconductor Corporation (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K filed with the Commission on March 10, [removed: 2004)] [added: 2004)](http://www.sec.gov/Archives/edgar/data/1097864/000119312504038086/dex41.htm)] |

| 4.2(a) | | [removed: Indenture] [added: [Indenture] regarding the [removed: 2.625%] [added: 1.00%] Convertible Senior [removed: Subordinated] Notes due [removed: 2026, Series B,] [added: 2020,] dated [removed: as of December 15, 2011] [added: June 8, 2015,] among [removed: the] ON Semiconductor Corporation, the guarantors party thereto and [removed: Deutsche Bank Trust Company Americas,] [added: Wells Fargo Bank, National Association,] as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on [removed: December 19, 2011)] [added: June 8, 2015)](http://www.sec.gov/Archives/edgar/data/1097864/000119312515216536/d939149dex41.htm)] |

| 4.2(c) | | [removed: Supplemental] [added: [Supplemental] Indenture to the [removed: 2.625%] [added: Indenture regarding the 1.00%] Convertible Senior [removed: Subordinated] Notes due [removed: 2016, Series B,] [added: 2020,] dated [removed: as of] March 11, 2016, among ON Semiconductor Corporation, the guarantors party thereto and [removed: Deutsche Bank Trust Company Americas,] [added: Wells Fargo Bank, National Association,] as trustee (incorporated by reference to Exhibit [removed: 4.2] [added: 4.1] to the Company’s Current Report on Form 8-K filed with the Commission on March 17, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516508595/d149160dex41.htm)] |

| 4.2(d) | | [removed: Second] [added: [Second] Supplemental Indenture to the [removed: 2.625%] [added: Indenture regarding the 1.00%] Convertible Senior [removed: Subordinated] Notes [removed: due 2026,] [added: 2020,] dated [removed: as of] April 14, 2016, among ON Semiconductor Corporation, [added: ,] the guarantors party thereto and [removed: Deutsche Bank Trust Company Americas,] [added: Wells Fargo Bank, National Association,] as trustee (incorporated by reference to Exhibit [removed: 4.2] [added: 4.1] to the Company’s Current Report on Form 8-K filed with the Commission on April 15, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex41.htm)] |

| 4.2(e) | | [removed: Third] [added: [Third] Supplemental Indenture to the [removed: 2.625%] [added: Indenture regarding the 1.00%] Convertible Senior [removed: Subordinated] Notes due [removed: 2026, Series B,] [added: 2020,] dated [removed: as of] November 21, 2016, among ON Semiconductor Corporation, the guarantors party thereto and [removed: Deutsche Bank Trust Company,] [added: Wells Fargo Bank, National Association,] as trustee (incorporated by reference to Exhibit [removed: 4.2] [added: 4.1] to the Company’s Current Report on Form 8-K filed with the Commission on November 21, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516773790/d293684dex41.htm)] |

| 4.3(a) | | [removed: Indenture] [added: [Indenture] regarding the [removed: 1.00%] [added: 1.625%] Convertible Senior Notes due [removed: 2020,] [added: 2023,] dated [removed: June 8, 2015,] [added: as of March 31, 2017] among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on [removed: June 8, 2015)] [added: April 3, 2017)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm)] |

| [removed: 4.3(b)] [added: 4.2(b)] | | [removed: Form] [added: [Form] of Global 1.00% Convertible Senior Note due 2020 (included in Exhibit [removed: 4.3(a))] [added: 4.2(a))](http://www.sec.gov/Archives/edgar/data/1097864/000119312515216536/d939149dex41.htm)] |

| 10.1 | | [removed: Amended] [added: [Amended] and Restated Intellectual Property Agreement, dated August 4, 1999, among Semiconductor Components Industries, LLC and Motorola, Inc. (incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the Company’s Registration Statement filed with the Commission on January 11, 2000 (File No. [removed: 333-90359))] [added: 333-90359))](http://www.sec.gov/Archives/edgar/data/1097864/000091205700000782/0000912057-00-000782.txt)] |

| 10.2 | | [removed: Lease] [added: [Lease] for 52nd Street property, dated July 31, 1999, among Semiconductor Components Industries, LLC as Lessor, and Motorola, Inc. as Lessee (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement filed with the Commission on November 5, 1999 (File No. [removed: 333-90359))] [added: 333-90359))](http://www.sec.gov/Archives/edgar/data/1097864/000091205799003561/0000912057-99-003561.txt)] |

| 10.3 | | [removed: Declaration] [added: [Declaration] of Covenants, Easement of Restrictions and Options to Purchase and Lease, dated July 31, 1999, among Semiconductor Components Industries, LLC and Motorola, Inc. (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement filed with the Commission on November 5, 1999 (File No. [removed: 333-90359))] [added: 333-90359))](http://www.sec.gov/Archives/edgar/data/1097864/000091205799003561/0000912057-99-003561.txt)] |

| 10.4(a) | | [removed: Joint] [added: [Joint] Venture Contract for Leshan-Phoenix Semiconductor Company Limited, amended and restated on April 20, 2006 between SCG (China) Holding Corporation (a subsidiary of ON Semiconductor Corporation) and Leshan Radio Company Ltd. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on July 28, [removed: 2006)] [added: 2006)](http://www.sec.gov/Archives/edgar/data/1097864/000119312506155889/dex103.htm)] |

| 10.4(b) | | [removed: Amendment] [added: [Amendment] Agreement, dated September 29, 2014, to Joint Venture Contract for Leshan-Phoenix Semiconductor Company Limited between ON Semiconductor (China) Holding, LLC (a subsidiary of ON Semiconductor Corporation) and Leshan Radio Company Ltd. (incorporated by reference to Exhibit 10.5(b) to the Company’s Annual Report on Form 10-K filed with the Commission on February 27, [removed: 2015)] [added: 2015)](http://www.sec.gov/Archives/edgar/data/1097864/000119312515069358/d875301dex105b.htm)] |

| 10.5(a) | | [removed: Credit] [added: [Credit] Agreement, dated April 15, 2016, among ON Semiconductor Corporation, as borrower, the several lenders party thereto, Deutsche Bank AG New York Branch, as administrative agent and collateral agent, Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO Capital Markets Corp., HSBC Securities (USA) Inc. and Sumitomo Mitsui Banking Corporation, as joint lead arrangers and joint bookrunners, Barclays Bank PLC, Compass Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Morgan Stanley Senior Funding, Inc., BOKF, NA and KBC Bank N.V., as co-managers, and HSBC Bank USA, N.A. and Sumitomo Mitsui Banking Corporation, as co-documentation agents (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 15, [removed: 2016).] [added: 2016).](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex101.htm)] |

| 10.5(b) | | [removed: Guarantee] [added: [Guarantee] and Collateral Agreement, dated April [removed: 25,] [added: 15,] 2016, made by ON Semiconductor Corporation and the other signatories thereto in favor of Deutsche Bank AG New York Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on form 8-K filed with the Commission on April 15, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex102.htm)] |

| 10.5(c) | | [removed: Escrow] [added: [Escrow] Agreement, dated April 15, 2016, among ON Semiconductor Corporation, MUFG Union Bank, N.A., as escrow agent, and Deutsche Bank AG New York Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on April 15, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex103.htm)] |

| 10.5(d) | | [removed: Joinder] [added: [Joinder] to Amended and Restated Guaranty, dated March 15, 2016, among the guarantors party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on March 17, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516508595/d149160dex101.htm)] |

| 10.5(e) | | [removed: Joinder] [added: [Joinder] to Amended and Restated Guaranty, dated April 14, 2016, among the guarantors party thereto (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on April 15, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex104.htm)] |

| 10.5(f) | | [removed: Assumption] [added: [Assumption] Agreement, dated September 19, 2016, by and between ON Semiconductor (China) Holdings, LLC and Deutsche Bank AG New York Branch (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 23, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516718453/d265766dex101.htm)] |

| 10.5(g) | | [removed: Pledge] [added: [Pledge] Supplement, dated September 19, 2016, by ON Semiconductor (China) Holdings, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on September 23, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516718453/d265766dex102.htm)] |

| 10.5(h) | | [removed: Assumption] [added: [Assumption] Agreement, dated September 19, 2016, by and among Fairchild Semiconductor International, Inc., Fairchild Semiconductor Corporation, Fairchild Semiconductor Corporation of California, Giant Holdings, Inc., Fairchild Semiconductor West Corporation, Kota Microcircuits, Inc., Silicon Patent Holdings, Giant Semiconductor Corporation, Micro-Ohm Corporation, Fairchild Energy, LLC and Deutsche Bank AG New York Branch (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on September 23, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516718453/d265766dex103.htm)] |

| 10.5(i) | | [removed: Pledge] [added: [Pledge] Supplement, dated September 19, 2016, by Fairchild Semiconductor International, Inc., Fairchild Semiconductor Corporation, Fairchild Semiconductor Corporation of California, Giant Holdings, Inc., Fairchild Semiconductor West Corporation, Kota Microcircuits, Inc., Silicon Patent Holdings, Giant Semiconductor Corporation, Micro-Ohm Corporation and Fairchild Energy, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on September 23, [removed: 2016)] [added: 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516718453/d265766dex104.htm)] |

| 3.1(c) | | [Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated May 17, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 10-Q filed with the Commission on August 7, 2017)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517249592/d428805dex31.htm) |

| 4.3(b) | | [Form of Global 1.625% Convertible Senior Note due 2023 (included in Exhibit 4.3(a))](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm) |

| 10.5(k) | | [Second Amendment to Credit Agreement, dated March 31, 2017, among ON Semiconductor Corporation, as borrower, certain subsidiaries thereof, as guarantors, the several lenders party thereto, and Deutsche Bank AG New York Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 3, 2017)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex101.htm) |

| 10.5(l) | | [Third Amendment to Credit Agreement, dated November 30, 2017, among ON Semiconductor Corporation, as borrower, certain subsidiaries thereof, as guarantors, the several lenders party thereto, and Deutsche Bank AG New York Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 4, 2017)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517359440/d501457dex101.htm) |

| 10.7(s) | | [Performance Based Restricted Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2017 form of Performance Based Award for Senior Vice Presidents and Above) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 7, 2017)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517249592/d428805dex103.htm) |

| 10.7(t) | | [Third Amendment to the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan, effective May 17, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 7, 2017)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517249592/d428805dex101.htm) |

| 10.8(d) | | [Amendment to the ON Semiconductor Corporation 2000 Employee Stock Purchase Plan, as amended as of May 17, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 7, 2017)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517249592/d428805dex102.htm) |

| 10.12 | | [Amended and Restated Employment Agreement, effective June 1, 2017, by and between Semiconductor Components Industries, LLC and George H. Cave (1)(2)](https://www.sec.gov/Archives/edgar/data/1097864/000119312518051397/d508456dex1012.htm) |

| 10.13(c) | | [Amendment No. 2 to Employment Agreement by and between Semiconductor Components Industries, LLC and William M. Hall, dated as of June 1, 2017 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 8-K filed with the Commission on June 2, 2017)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517193065/d400280dex103.htm) |

| 10.15(b) | | [Amendment No. 1 to Employment Agreement by and between Semiconductor Components Industries, LLC and Robert Klosterboer, effective June 1, 2017 (1)(2)](https://www.sec.gov/Archives/edgar/data/1097864/000119312518051397/d508456dex1015b.htm) |

| 10.17 | | [Key Officer Severance and Change of Control Agreement with Mamoon Rashid dated as of June 1, 2017 (incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K filed with the Commission on June 2, 2017)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517193065/d400280dex105.htm) |

| 10.21(b) | | [Amendment No. 1 to Employment Agreement by and between Semiconductor Components Industries, LLC and Paul Rolls, effective June 1, 2017 (1)(2)](https://www.sec.gov/Archives/edgar/data/1097864/000119312518051397/d508456dex1021b.htm) |

| 21.1 | | [List of Significant Subsidiaries(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312518051397/d508456dex211.htm) |

| 24.1 | | [Powers of Attorney(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312518051397/d508456dex241.htm) |

| --- | --- | --- |

| | | |

| Exhibit No. | | Exhibit Description |

| 4.2(b) | | Form of Note for the 2.625% Convertible Senior Subordinated Notes due 2026, Series B (included in Exhibit 4.2(a)) |

| 4.3(c) | | Supplemental Indenture to the 1.00% Convertible Senior Notes due 2020, dated March 11, 2016, among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on March 17, 2016) |

| 4.3(d) | | Second Supplemental Indenture to the 1.00% Convertible Senior Notes 2020, dated April 14, 2016, among ON Semiconductor Corporation, , the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 15, 2016) |

| 4.3(e) | | Third Supplemental Indenture to the 1.00% Convertible Senior Notes due 2020, dated November 21, 2016, among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 21, 2016) |

| 10.11(b) | | Letter Agreement dated as of November 19, 2002, between ON Semiconductor Corporation and Keith Jackson (incorporated by reference to Exhibit 10.50(b) to the Company’s Annual Report on Form 10-K filed with the Commission on March 25, 2003)(2) |

| 10.11(c) | | Amendment No. 2 to Employment Agreement between ON Semiconductor Corporation and Keith Jackson dated as of March 21, 2003 (incorporated by reference to Exhibit 10.18(c) to the Company’s Annual Report on Form 10-K filed with the Commission on February 22, 2006)(2) |

| 10.11(f) | | Amendment No. 5 to Employment Agreement between ON Semiconductor Corporation and Keith Jackson executed on September 1, 2006 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 8, 2006)(2) |

| 10.11(g) | | Amendment No. 6 to Employment Agreement with Keith Jackson executed on April 23, 2008 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 6, 2008)(2) |

| 10.11(h) | | Amendment No. 7 to Employment Agreement with Keith Jackson executed on April 30, 2009 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 7, 2009)(2) |

| 10.11(i) | | Amendment No. 8 to Employment Agreement with Keith Jackson executed on March 24, 2010 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10- Q filed with the Commission on May 5, 2010)(2) |

| 10.12(b) | | Amendment No. 1 to Employment Agreement with George H. Cave executed on April 23, 2008 (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 6, 2008)(2) |

| 10.12(c) | | Amendment No. 2 to Employment Agreement with George H. Cave executed on April 30, 2009 (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 7, 2009)(2) |

| 10.12(d) | | Amendment No. 3 to Employment Agreement with George H. Cave executed on March 24, 2010 (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10- Q filed with the Commission on May 5, 2010)(2) |

| 10.19 | | Retention Bonus Agreement, effective January 7, 2013, by and among Semiconductor Components Industries, LLC, SANYO Semiconductor Co., Ltd. and Mamoon Rashid (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 2, 2014)(2) |

| 10.24(a) | | Amended and Restated AMIS Holdings, Inc. 2000 Equity Incentive Plan (incorporated by reference to Exhibit 10 to AMIS Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2003)(2) |

| 10.24(b) | | Form of 2000 Equity Incentive Plan Stock Option Agreement (Nonstatutory Stock Option Agreement) (incorporated by reference to Exhibit 10.1 to AMIS Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on February 7, 2005)(2) |

| 10.24(c) | | Form of U.S. Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.4 to AMIS Holdings, Inc. ’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2006)(2) |

| 21.1 | | List of Significant Subsidiaries(1) |

| 24.1 | | Powers of Attorney(1) |

| | | /s/ KEITH D. JACKSON | | President, Chief Executive Officer | | February [removed: 28, 2017] [added: 21, 2018] |

| | | /s/ BERNARD GUTMANN | | Executive Vice President, Chief | | February [removed: 28, 2017] [added: 21, 2018] |

| | | /s/ BERNARD R. COLPITTS, JR. | | Chief Accounting Officer | | February [removed: 28, 2017] [added: 21, 2018] |

| | | * | | [removed: Chairman] [added: Chair] of the Board of Directors | | February [removed: 28, 2017] [added: 21, 2018] |

| | | * | | Director | | February [removed: 28, 2017] [added: 21, 2018] |

| | | Gilles [removed: S.] Delfassy | | | | |

| *By: | | /s/ BERNARD GUTMANN | | Attorney in Fact | | February [removed: 28, 2017] [added: 21, 2018] |

ON Semiconductor [removed: Corporation:][added: Corporation]

In our opinion, the consolidated financial statements [removed: listed in the index appearing under Item 15(a)(1)] [added: referred to above] present fairly, in all material respects, the financial position of [removed: ON Semiconductor Corporation and its subsidiaries at] [added: the Company as of] December 31, [removed: 2016] [added: 2017] and [removed: December 31, 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2016] [added: 2017] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in _Internal [removed: Control - Integrated Framework 2013_] [added: Control_—_Integrated Framework_ (2013)] issued by the [removed: Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

The Company’s management is responsible for these [removed: financial statements and] [added: consolidated] financial [removed: statement schedule,] [added: statements,] for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on [removed: these financial statements, on] the [added: Company’s consolidated] financial [removed: statement schedule,] [added: statements] and on the Company’s internal control over financial reporting based on our [removed: integrated] audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

[removed: ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES][added: _ON Semiconductor Corporation and Semiconductor Components Industries, LLC v.]

| | | December 31, [added: 2017 | | | | December 31,] 2016 | | | | December 31, 2015 | | |

| Cash and cash equivalents | | $ | [removed: 1,028.1] [added: 949.2] | | | $ | [removed: 617.6] [added: 1,028.1] | |

| Receivables, net | | | [removed: 629.8] [added: 701.5] | | | | [removed: 426.4] [added: 629.8] | |

| Inventories | | | [removed: 1,030.2] [added: 1,089.5] | | | | [removed: 750.4] [added: 1,030.2] | |

| Other current assets | | | [removed: 181.0] [added: 193.0] | | | | [removed: 97.1] [added: 181.0] | |

| Total current assets | | | [removed: 2,869.1] [added: 2,933.2] | | | | [removed: 1,891.5] [added: 2,869.1] | |

| Property, plant and equipment, net | | | [removed: 2,159.1] [added: 2,279.1] | | | | [removed: 1,274.1] [added: 2,159.1] | |

| Goodwill | | | [removed: 924.7] [added: 916.9] | | | | [removed: 270.6] [added: 924.7] | |

| Intangible assets, net | | | [removed: 762.1] [added: 628.3] | | | | [removed: 325.8] [added: 762.1] | |

| Deferred tax assets | | | [removed: 138.9] [added: 339.1] | | | | [removed: 44.5] [added: 138.9] | |

| Other assets | | | [removed: 70.5] [added: 98.5] | | | | [removed: 63.1] [added: 70.5] | |

| Total assets | | $ | [removed: 6,924.4] [added: 7,195.1] | | | $ | [removed: 3,869.6] [added: 6,924.4] | |

| Accounts payable | | $ | [removed: 434.0] [added: 548.0] | | | $ | [removed: 337.7] [added: 434.0] | |

| Accrued expenses | | | [removed: 405.0] [added: 612.8] | | | | [removed: 246.2] [added: 405.0] | |

| Deferred income on sales to distributors | | | [removed: 109.8] [added: —] | | | | [removed: 112.0] [added: 109.8] | |

| Current portion of long-term debt | | | [removed: 553.8] [added: 248.1] | | | | [removed: 543.4] [added: 553.8] | |

| Total current liabilities | | | [removed: 1,502.6] [added: 1,408.9] | | | | [removed: 1,239.3] [added: 1,502.6] | |

| Long-term debt | | | [removed: 3,068.5] [added: 2,703.7] | | | | [removed: 850.5] [added: 3,068.5] | |

| Deferred tax liabilities | | | [removed: 288.9] [added: 55.1] | | | | [removed: 17.3] [added: 288.9] | |

| Other long-term liabilities | | | [removed: 186.5] [added: 226.4] | | | | [removed: 130.6] [added: 186.5] | |

| Total liabilities | | | [removed: 5,046.5] [added: 4,394.1] | | | | [removed: 2,237.7] [added: 5,046.5] | |

| Commitments and contingencies [added: (Note 12)] | | | | | | | | |

| 2.625% Notes, Series B - Redeemable conversion feature | | | [removed: 32.9] [added: —] | | | | [removed: —] [added: 32.9] | |

| Common stock ($0.01 par value, [added: 1,250,000,000 and] 750,000,000 shares authorized, [removed: 542,317,788] [added: 551,873,115] and [removed: 534,134,721] [added: 542,317,788] shares issued, [removed: 418,941,713] [added: 425,118,194] and [removed: 412,039,805] [added: 418,941,713] shares outstanding, respectively) | | | [removed: 5.4] [added: 5.5] | | | | [removed: 5.3] [added: 5.4] | |

February 21, 2018

| | | * | | Director | | February 21, 2018 |

| | | * | | Director | | February 21, 2018 |

| | | * | | Director | | February 21, 2018 |

| | | * | | Director | | February 21, 2018 |

| | | * | | Director | | February 21, 2018 |

| | | * | | Director | | February 21, 2018 |

_Opinions on the Financial Statements and Internal Control over Financial Reporting_

We have audited the accompanying consolidated balance sheets of ON Semiconductor Corporation and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations and comprehensive income, of stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2017 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in _Internal Control_—_Integrated Framework_ (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

_Change in Accounting Principle_

As discussed in Note 3: “Recent Accounting Pronouncements” to the consolidated financial statements, the Company changed the manner in which it accounts for excess tax benefits from share-based compensation in 2017.

_Basis for Opinions_

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

_Definition and Limitations of Internal Control over Financial Reporting_

February 21, 2018

We have served as the Company’s auditor since 1999.

| Licensing income | | | 47.6 | | | | — | | | | — | |

| Comprehensive (loss) income | | | — | | | | — | | | | — | | | | 9.6 | | | | 810.7 | | | | — | | | | — | | | | 2.3 | | | | 822.6 | |

| Stock option exercises | | | 2,213,859 | | | | — | | | | 18.0 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18.0 | |

| RSUs and stock grant awards issued | | | 5,427,940 | | | | 0.1 | | | | (0.1 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |

| Shares withheld for employee taxes on RSUs | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,750,182 | ) | | | (28.1 | ) | | | — | | | | (28.1 | ) |

| Repurchase of common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,628,664 | ) | | | (25.0 | ) | | | — | | | | (25.0 | ) |

| Repayment of 2.625% Notes, Series B - Equity Portion | | | — | | | | — | | | | (55.7 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (55.7 | ) |

| Impact of the adoption of ASU 2016-09 | | | — | | | | — | | | | — | | | | — | | | | 68.1 | | | | — | | | | — | | | | — | | | | 68.1 | |

| Warrants and bond hedge, net | | | — | | | | — | | | | (59.5 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (59.5 | ) |

| Issuance of 2023 convertible notes | | | — | | | | — | | | | 113.1 | | | | — | | | | | | | | — | | | | — | | | | — | | | | 113.1 | |

| Tax impact of 2023 convertible notes, warrants and bond hedge | | | — | | | | — | | | | 11.0 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11.0 | |

| Balance at December 31, 2017 | | | 551,873,115 | | | $ | 5.5 | | | $ | 3,593.5 | | | $ | (40.6 | ) | | $ | 351.5 | | | | (126,754,921 | ) | | $ | (1,131.1 | ) | | $ | 22.2 | | | $ | 2,801.0 | |

| Net income | | $ | 813.0 | | | $ | 184.5 | | | $ | 209.0 | |

| Purchase of convertible note hedges | | | (144.7) | | | | — | | | | (108.9) | |

| Payment of contingent consideration | | | (3.9) | | | | — | | | | — | |

Additional information about the Company’s operating and reporting segments is included in Note 18: “Segment Information”.

All dollar amounts in tabular presentations are in millions, except per share amounts and unless otherwise noted.

The accompanying consolidated financial statements include the assets, liabilities, revenues and expenses of all wholly-owned and majority-owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest or is the primary beneficiary.

Management evaluates these estimates and judgments on an ongoing basis and base its estimates on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances.

Actual results may differ from the estimates and assumptions used in the consolidated financial statements and related notes.

February 28, 2017

| | | |

| --- | --- | --- |

| | | | | | | |

| | | J. Daniel McCranie | | | | |

In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

As described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A, management has excluded Fairchild Semiconductor International, Inc. and its subsidiaries (“Fairchild”) from its assessment of internal control over financial reporting as of December 31, 2016 because Fairchild was acquired by the Company in a purchase business combination during 2016.

We have also excluded Fairchild from our audit of internal control over financial reporting.

Fairchild is a wholly-owned subsidiary whose total assets and total revenues represent 25% and 11%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2016.

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at December 31, 2013 | | | 515,888,942 | | | $ | 5.2 | | | $ | 3,210.8 | | | $ | (47.4 | ) | | $ | (1,105.3 | ) | | | (75,638,654 | ) | | $ | (572.5 | ) | | $ | 32.8 | | | $ | 1,523.6 | |

| Comprehensive (loss) income | | | — | | | | — | | | | — | | | | 5.9 | | | | 189.7 | | | | — | | | | — | | | | 2.4 | | | | 198.0 | |

| Stock option exercises | | | 3,735,048 | | | | — | | | | 24.9 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 24.9 | |

| Shares withheld for employee taxes on restricted stock units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (976,786 | ) | | | (9.1 | ) | | | — | | | | (9.1 | ) |

| Repurchase of common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (13,900,105 | ) | | | (121.2 | ) | | | — | | | | (121.2 | ) |

| Acquisition of non-controlling interest | | | — | | | | — | | | | (10.3 | ) | | | — | | | | — | | | | — | | | | — | | | | (10.1 | ) | | | (20.4 | ) |

| Restricted stock units and stock grant awards issued | | | 4,519,501 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |

| Purchase of cost method investment | | | — | | | | — | | | | (5.8) | |

| Acquisition of non-controlling interest | | | — | | | | — | | | | (20.4) | |

The operating results of the System Solutions Group, which was previously the Company’s fourth operating and reporting segment, and which did not have goodwill, are now assigned among the three current operating and reporting segments, and previously reported information has been presented to reflect the current three operating and reporting segments.

The Company’s Power Solutions Group and Analog Solutions Group operating and reporting segments include the business acquired in the Fairchild Transaction.

_Acquisition of Fairchild_

On September 19, 2016, the Company completed its acquisition of Fairchild Semiconductor International, Inc., a Delaware corporation (“Fairchild”), pursuant to the Agreement and Plan of Merger (the “Fairchild Agreement”) with each of Fairchild and Falcon Operations Sub, Inc., a Delaware corporation and the Company’s wholly-owned subsidiary (“Merger Sub”), which provided for the acquisition of Fairchild by the Company (the “Fairchild Transaction”).

Fairchild is a semiconductor company that delivers energy-efficient, easy-to-use and value-added semiconductor solutions for power and mobile designs.

The accompanying consolidated financial statements include the accounts of the Company, including its wholly-owned and majority-owned subsidiaries.

Actual results could differ from these estimates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Expenditures for

The Company considers other valuation methods, such

If the carrying value of the net assets associated with the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step of the goodwill impairment test in order to determine the implied fair value of the reporting unit’s goodwill.

If, during this second step, the Company determines that the carrying value of a reporting unit’s goodwill exceeds its implied value, the Company would record an impairment loss equal to the difference.

For products sold to distributors who are entitled to returns and allowances (generally referred to as “ship and credit rights” within the semiconductor industry), the Company recognizes the related revenue and cost of revenues depending on if the sale originated through an ON Semiconductor or legacy Fairchild systems and processes.

If the sale originated through an ON Semiconductor system and process, revenue is recognized when ON Semiconductor is informed by the distributor that it has resold the products to the end-user.

As a result of the Company’s inability to reliably estimate up front the effects of the returns and allowances with these distributors for sales originating through an ON Semiconductor system and process, the Company defers the related revenue and gross margin on sales to these distributors until it is informed by the distributor that the products have been resold to the end-user, at which time the ultimate sales price is known.

The Company’s standard warranty extends

for a period that is the greater of (i) two years from the date of shipment or (ii) the period of time specified in the customer’s standard warranty (provided that the customer’s standard warranty is stated in writing and extended to purchasers at no additional charge).

in tax law, correspondence with tax authorities during the course of tax audits and effective settlement of audit issues.

the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:

ASU’s Adopted: