ON Semiconductor (ON) 10-K risk factor changes: FY2020 vs FY2019

All statements, other than statements of historical facts, included or incorporated in this Form 10-K could be deemed forward-looking statements, particularly statements about our plans, strategies and prospects under the [removed: heading “Management’s] [added: headings "Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations”] [added: Operations"] and [removed: “Business.”] [added: "Business."] Forward-looking statements are often characterized by the use of words such as [removed: “believes,” “estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans,”] [added: "believes," "estimates," "expects," "projects," "may," "will," "intends," "plans," "anticipates," "should"] or [removed: “anticipates,”] [added: similar expressions,] or by discussions of strategy, plans or intentions.

Changes [removed: in] [added: in, and the regulatory implementation of,] tariffs or other government trade policies [added: could reduce demand for our products, limit our ability to sell our products to certain customers or comply with applicable laws and regulations, which] may materially adversely affect our business and results of [removed: operations, including by reducing demand for our products.][added: operations.]

For example, in [removed: 2018 and 2019,] [added: recent years,] the U.S. government imposed and proposed, among other actions, new or higher tariffs on specified imported products originating from [added: the People's Republic of] China [added: (the "PRC")] in response to what it [removed: characterizes] [added: characterized] as unfair trade practices, and [removed: China has] [added: the PRC] responded by imposing and proposing new or higher tariffs on specified products, including some semiconductors fabricated in the United States and certain transistors, diodes, ICs and other products that we import into [removed: China] [added: the PRC] as part of our supply chain.

These tariffs, and the related geopolitical uncertainty between the United States and [removed: China,] [added: the PRC,] may cause decreased end-market demand for our products from distributors and other customers, which could have a material adverse effect on our business and results of operations.

In addition, tariffs on components that we import from [removed: China] [added: the PRC] or other nations that have imposed, or may in the future impose, tariffs will adversely affect our profitability unless we are able to exclude such components from the tariffs or we raise prices for our products, which may result in our products becoming less attractive relative to products offered by our competitors.

Future actions or escalations by either the United States or [removed: China] [added: the PRC] that affect trade relations may also impact our business, or that of our suppliers or customers, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.

[removed: The] [added: Additionally,] U.S. [removed: Congress] or [removed: U.S. regulatory] [added: China governmental] authorities [added: have taken, and] may [removed: take] [added: continue to take,] administrative, legislative or regulatory action that could materially interfere with our ability to make sales to certain of our [removed: customers, particularly in China.][added: customers.]

We could experience unanticipated [added: export bans or other] restrictions on our ability to sell to certain [removed: foreign] customers where sales of products and the provision of services may require export licenses or are prohibited by government action.

Export restrictions may also include technical discussions with customers that can impede our ability to pursue design-wins with customers and [removed: thus] may impact future sales.

[removed: For example, in] [added: In] May 2019, the U.S. Department of Commerce added Huawei Technologies Co., Ltd. and [added: certain of] its non-U.S. affiliates and [removed: subsidiaries,] [added: subsidiaries (collectively, "Huawei")] and certain [added: of our] other [removed: customers,] [added: customers] to the U.S. Department of Commerce’s Bureau of Industry and [removed: Security’s] [added: Security (the "BIS")] Entity [removed: List,] [added: List (the "Entity List"),] imposing [removed: significant] restrictions on the export and transfer of [removed: U.S.] goods and technologies to such [removed: entities, and the U.S. may ban the export of U.S. products, goods and technologies to additional foreign customers.][added: entities.]

The terms and duration of any such restrictions may not be known to us in advance and may be subject to ongoing [removed: modifications.][added: modifications, including modifications that impose more stringent restrictions or conditions on our ability to sell our products and services to certain foreign customers.]

Even to the extent such restrictions are subsequently [added: modified,] lifted or temporarily suspended, any financial or other penalties imposed on affected foreign customers could have a negative impact on future orders.

[removed: Such] [added: These] foreign customers may also respond to sanctions or the threat of sanctions by employing their own solutions to address the impacts of restrictions.

In recent years, worldwide semiconductor industry sales have tracked the [removed: impact] [added: impacts] of [removed: the] financial [removed: crisis,] [added: crises,] subsequent [removed: recovery] [added: recoveries] and persistent economic uncertainty.

We believe that the state of global economic conditions [removed: is] [added: are] particularly [removed: uncertain due to recent and expected shifts in political, legislative and regulatory conditions concerning, among other matters, international trade] [added: volatile] and [removed: taxation,] [added: uncertain,] and that an uneven recovery or a renewed global downturn may put pressure on our sales due to reductions in customer [removed: demand as well as customers deferring purchases.][added: demand.]

Volatile or uncertain economic conditions, as well as continuing political unrest in markets in which we conduct significant business, [removed: including Hong Kong,] can adversely impact sales and profitability and make it difficult for us and our competitors to accurately forecast and plan our future business activities.

[removed: As experienced in 2019,] [added: However,] we could [removed: again] experience period-to-period fluctuations in operating results due to general industry or economic conditions.

Significant downturns [removed: often occur in connection with, or in anticipation of, maturing product cycles (for semiconductors and for the end-user products in which they are used) or declines in general economic conditions and] can result in reduced product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices, any of which could materially adversely affect our operating results as a result [removed: of] [added: of:] increased operating expenses outpacing decreased revenue, reduced margins, underutilization of our manufacturing capacity and/or asset impairment charges.

In the event of such an upturn, we may not be able to expand our workforce and operations in a sufficiently timely manner, procure adequate resources and raw materials, or locate suitable third-party suppliers to respond effectively to changes in demand for our [removed: existing products or to the demand for new products requested by our customers,] [added: products,] and our business and results of operations could be materially and adversely affected.

[removed: The loss of one of our largest customers, or] [added: Because] a significant [removed: reduction in the] [added: portion of our] revenue [removed: we generate] [added: is derived] from [added: customers in the automotive, industrial and communications industries, a downturn or lower sales to customers in one or more of] these [removed: customers,] [added: industries] could materially adversely affect our [removed: revenue, profitability,] [added: business] and results of operations.

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

Sales into these industries represented approximately [removed: 33%, 26%,] [added: 32%, 25%,] and [removed: 19%] [added: 20%] of our revenue, respectively, for the year ended December 31, [removed: 2019,] [added: 2020,] and those percentages will vary from quarter to quarter.

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

[removed: Shortages or increased prices of raw materials] [added: - *Our debt] could materially adversely affect our [added: financial condition and] results of [removed: operations.][added: operations.*]

Many of our facilities and processes are interdependent and an operational disruption at any particular facility could have a material adverse effect on our ability to produce many of our products, which could materially adversely affect our business and results of [removed: operations.][added: operations]

[removed: We utilize an integrated] [added: Our] manufacturing platform [removed: in which] [added: includes] multiple [removed: facilities] [added: owned and third-party facilities, which] may each produce one or more components necessary for the assembly of a single product.

As a result of [removed: the necessary interdependence within our network of manufacturing facilities,] [added: this interdependence,] an operational disruption at a facility [removed: toward the front-end of our manufacturing process] may have a disproportionate impact on our ability to produce many of our products.

The failure to obtain a license from a [removed: third-party] [added: third party] for IP we use could cause us to incur substantial liabilities or to suspend the manufacture or shipment of products or our use of processes requiring such technologies.

The outcome of IP litigation is inherently uncertain and, if not resolved in our favor, could materially [removed: and] adversely affect our business, financial condition and results of operations.

If we are unable to identify and make the substantial research and development investments [added: or develop new products] required to [added: satisfy customer demands or regulatory requirements as required to] remain competitive in our business, our business, financial condition and results of operations may be materially adversely affected.

[removed: Risks related to successful integration of an acquisition include, but are not limited to: (1) the ability to integrate information technology and other systems; (2) unidentified issues not discovered in our due diligence; (3) customers] responding by changing their existing business relationships with us or the acquired company; (4) diversion of management’s attention from our day to day operations; and (5) loss of key employees due to uncertainty about positions post-integration.

Semiconductor manufacturing requires advanced equipment and significant capital investment, leading to high fixed costs [removed: which] [added: that] include depreciation expense.

[added: Our manufacturing efficiency is] and will continue to be an important factor in our future profitability, and we cannot assure you that we will be able to maintain our manufacturing efficiency, increase manufacturing efficiency to the same extent as our competitors, or be successful in our manufacturing rationalization plans.

If we are unable to utilize our manufacturing [removed: and] [added: facilities,] testing facilities [added: and external manufacturers] at expected [added: or minimum purchase obligation] levels, or if production capacity increases while revenue does not, the fixed costs and other operating expenses associated with these facilities [added: and arrangements] will not be fully absorbed, resulting in higher average unit costs and lower gross profits, which could have a material adverse effect on our results of operations.

From time to time, we have implemented cost reduction [removed: initiatives in response to significant downturns in our industry,] [added: initiatives,] 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 [added: or permanent] shutdowns of [removed: facilities with mandatory vacation] [added: facilities,] and aggressively streamlining our overhead.

The semiconductor industry is characterized by rapidly changing technologies, [added: innovation, short product life cycles,] evolving regulatory and industry standards and certifications, changing customer needs and frequent new product introductions.

A fundamental shift in technologies, [added: excess inventory levels for our or our competitors’ products,] the regulatory climate or consumption patterns and preferences in our existing product markets or the product markets of our customers or [removed: end-users] [added: end-users,] could [removed: make] [added: result in, or accelerate, price erosion for] our [removed: current] products [added: or make them] obsolete, prevent or delay the introduction of new products that we planned to 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 [removed: control] [added: control,] like a fundamental shift in the product markets of our customers and [removed: end users] [added: end-users] or regulatory changes, our business and results of operations could be materially adversely affected.

[added: As] markets level off and supply capacity begins to match actual market demands, we could experience an increased risk of inventory write-downs, which may materially adversely affect our results of operations and our financial condition.

The cancellation or deferral of product orders, the return of previously sold products, or overproduction of products due to the failure of anticipated orders to materialize could result in excess obsolete inventory, which could result in write-downs of inventory or the incurrence of significant cancellation penalties under [removed: our arrangements with our raw materials and equipment suppliers.]

Summary Risk Factors

An investment in the Company’s stock involves a certain measure of risk.

Some of the factors that could materially and adversely affect our business, financial condition, results of operations, liquidity, and prospects for future growth include, but are not limited to, the following.

If any of the factors listed below occurs, the market price of our shares could decline, and you may lose some or all of your investment.

You should read this summary together with the more detailed description of each risk factor contained in "Risk Factors" in this Annual Report on Form 10-K.

- *Changes in, and the regulatory implementation of, tariffs or other government trade policies could reduce demand for our products, limit our ability to sell our products to certain customers or comply with applicable laws and regulations.*

- *Many of our facilities and processes are interdependent and an operational disruption at any particular facility could have a material adverse effect on our ability to produce many of our products.*

- *The effects of the COVID-19 pandemic have had, and could continue to have, an adverse impact on our business, results of operations and financial condition.*

- *We may be unable to identify and make the substantial research and development investments or develop new products required to satisfy customer demands or regulatory requirements as required to remain competitive in our business.*

*industries, and a downturn or lower sales to customers in one or more of these industries could occur.*

- *We may be unable to maintain manufacturing efficiency.*

- *We may be unable to successfully implement cost reduction initiatives, including through restructuring activities.*

- *Uncertainties regarding the timing and amount of customer orders could lead to excess inventory and write-downs of inventory.*

- *We are dependent on the services of third-party suppliers and contract manufacturers, and we may experience a disruption in or deterioration of the quality of the services or goods delivered by such third parties.*

- *We may be subject to warranty claims, product liability claims and product recalls.*

- *Currency fluctuations, changes in foreign exchange regulations and repatriation delays and costs could have a material adverse effect on our results of operations and financial condition.*

Trends, Risks and Uncertainties Related to Intellectual Property

- *Our technologies could be subject to claims of infringement on the IP rights of others.*

- *We may be unable to protect the IP we use.*

Trends, Risks and Uncertainties Related to Technology and Data Privacy

- *We may be subject to disruptions or breaches of our secured network.*

- *We are subject to governmental laws, regulations and other legal obligations related to privacy and data protection.*

Trends, Risks and Uncertainties Related to Regulation

- *We may be subject to environmental and health and safety liabilities and expenditures.*

- *Compliance with regulations regarding the use of "conflict minerals" could limit the supply and increase the cost of certain raw materials used in manufacturing our products.*

- *If we are unable to comply with anti-corruption laws in the jurisdictions we operate, including the FCPA, it could result in penalties that could harm our reputation.*

- *The agreements relating to our indebtedness, including the Amended Credit Agreement and the 3.875% Notes, may restrict our ability to operate our business.*

- *We may not be able to generate sufficient cash flow to meet our debt service obligations.*

- *An event of default under any agreement relating to our outstanding indebtedness could cross default other indebtedness.*

- *Our operating subsidiaries have no independent obligation to repay our debt, and may not able to make cash available to us for such repayment.*

- *If interest rates increase, our debt service obligations under our variable rate indebtedness could increase significantly.*

- *Note hedge and warrant transactions we have entered into may materially adversely affect the value of our common stock.*

- *Counterparty risk with respect to the note hedge transactions, if realized, could have a material adverse impact on our*

*results of operations.*

- *The stockholders’ rights plan adopted by our Board of Directors may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.*

- *Provisions in our charter documents may delay or prevent the acquisition of our Company.*

General Risk Factors

- *Downturns or volatility in general economic conditions could have a material adverse effect on our business and results of operations.*

- *We may be unable to successfully integrate new strategic acquisitions.*

- *Natural disasters, health and safety epidemics 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.*

Among these factors are our revenue and operating performance; economic conditions and markets (including current financial conditions); risk related to changes in tariffs or other government trade policies, including between the U.S. and China; risks related to our ability to meet our assumptions regarding outlook for revenue and gross margin as a percentage of revenue; effects of exchange rate fluctuations; the cyclical nature of the semiconductor industry; changes in demand for our products; changes in inventories at our customers and distributors; risks associated with restructuring actions and workforce reductions; technological and product development risks; risks that our products may be accused of infringing the IP rights of others; enforcement and protection of our IP rights and related risks; risks related to the security of our information systems and secured network; availability of raw materials, electricity, gas, water and other supply chain uncertainties; our ability to effectively shift production to other facilities when required in order to maintain supply continuity for our customers; variable demand and the aggressive pricing environment for semiconductor products; our ability to successfully manufacture in increasing volumes on a cost-effective basis and with acceptable quality for our current products; risks associated with our acquisitions and dispositions generally, including our ability to realize the anticipated benefits of our acquisitions and dispositions, including our acquisition of Quantenna; risks that acquisitions or dispositions may disrupt our current plans and operations, the risk of unexpected costs, charges or expenses resulting from acquisitions or dispositions and difficulties arising from integrating and consolidating acquired businesses, our timely filing of financial information with the SEC for acquired businesses and our ability to accurately predict the future financial performance

of acquired businesses; competitor actions, including the adverse impact of competitor product announcements; pricing and gross profit pressures; risks associated with the addition of Huawei Technologies Co., Ltd. and its non-U.S. affiliates and subsidiaries, and other customers, to the U.S. Departments of Commerce, Bureau of Industry Security Entity List; loss of key customers; order cancellations or reduced bookings; changes in manufacturing yields; control of costs and expenses and realization of cost savings and synergies from restructurings; the costs to defend against or pursue litigation and the potential significant costs associated with adverse litigation outcomes; 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 needs; risks associated with our substantial leverage and restrictive covenants in our debt agreements that may be in place from time to time; risks associated with our worldwide operations, including changes in trade policies, foreign employment and labor matters associated with unions and collective bargaining arrangements, continuing political unrest in markets in which we do significant business, including Hong Kong, as well as man-made and/or natural disasters affecting our operations or financial results; the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally; risks of changes in U.S. or international tax rates or legislation; risks and costs associated with increased and new regulation of corporate governance and disclosure standards; risks related to new legal requirements; risks related to the potential impact of climate change and regulations related thereto on our operations; and risks and expenses involving environmental or other governmental regulation.

Although the United States and China announced an initial “phase one” trade agreement in December 2019, the result of which may roll back or delay the imposition of additional tariffs, details have not yet been released, and there can be no assurance that a broader trade agreement will be successfully negotiated between the United States and China to reduce or eliminate these tariffs.

For example, certain of our foreign customers may respond to the imposition of tariffs or threat of tariffs on products we produce by delaying purchase orders, purchasing products from our competitors or developing their own products.

Changes in government trade policies could limit our ability to sell our products to certain customers, which may materially adversely affect our sales and results of operations.

To the extent we incorrectly plan for favorable economic conditions that do not materialize or take longer to materialize than expected, we may face oversupply of our products relative to customer demand.

In the past, reduced customer spending has driven us, and may in the future drive us and our competitors, to reduce product pricing, which results in a negative effect on gross profit.

Moreover, volatility in revenue as a result of unpredictable economic conditions may alter our anticipated working capital needs and interfere with our short-term and long-term strategies.

To the extent that our sales, profitability and strategies are negatively affected by downturns or volatility in general economic conditions, our business and results of operations may be materially adversely affected.

Product sales to our ten largest end-customers, which excludes distributors, have historically accounted for a significant amount of our business.

For instance, for the year ended December 31, 2019, revenue from our 10 largest end-customers collectively represented approximately 27% of our total revenue.

Many of our customers operate in cyclical industries, and, in the past, we have experienced significant fluctuations from period to period in the volume of our products ordered.

Generally, our agreements with our customers impose no minimum or continuing obligations to purchase our products.

We cannot assure you that our largest customers will not cease purchasing products from us in favor of products produced by other suppliers, significantly reduce orders or seek price reductions in the future, and any such event could have a material adverse effect on our revenue, profitability, and results of operations.

For example, our facility in Rožnov pod Radhoštěm, Czech Republic, manufactures silicon wafers used by a number of our facilities, and ISG relies predominantly on one third-party for manufacturing at the front-end of its manufacturing process, and any operational disruption, natural or man-made disaster or other extraordinary event that impacted either of those facilities would have a material adverse effect on our ability to produce a number of our products worldwide.

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

Our manufacturing efficiency is

We may be unable to develop new products to satisfy changing customer demands or regulatory requirements, which may materially adversely affect our business and results of operations.

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 areas or develop products that meet industry standards or certification requirements in a timely manner.

This difficulty may be compounded when we sell to OEMs indirectly through distributors or contract manufacturers, or both, as our forecasts for demand are then based on estimates provided by multiple parties, which may vary significantly.

As

If we do not have access to capital on favorable terms, on the timeline we anticipate, or at all, our financial condition and results of operations could be materially adversely affected.

We require a substantial amount of capital to meet our operating requirements and remain competitive.

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 capacity, and there can be no assurance that we will realize a return on the capital expended.

We have incurred and may continue to incur material amounts of debt to fund these requirements.

Significant volatility or disruption in the global financial markets may result in us not being able to obtain additional financing on favorable terms, on the timeline we anticipate, or at all, and we may not be able to refinance, if necessary, any outstanding debt when due, all of which could have a material adverse effect on our financial condition.

Any inability to obtain additional funding on favorable terms, on the timeline we anticipate, or at all, may cause us to curtail our operations significantly, reduce planned capital expenditures and research and development, or obtain funds through arrangements that management does not currently anticipate, including disposing of our assets and relinquishing rights to certain technologies, the occurrence of any of which may significantly impair our ability to remain competitive.

If our operating results falter, our cash flow or capital resources prove inadequate, or if interest rates increase significantly, we could face liquidity problems that could materially and adversely affect our results of operations and financial condition.

The semiconductor industry is characterized by the high costs associated with developing marketable products and manufacturing technologies as well as high levels of investment in production capabilities.

our capacity to compete and require us to restructure our operations, any of which would have a material adverse effect on our business.

For example, as a result of the outbreak of the Coronavirus in the first quarter of 2020, we and/or certain of our third party vendors may experience decreased production in our facilities in China and elsewhere, which may lead to interruptions in our supply chain, delays in delivery of or inability to deliver products on expected timeframes or at all, and/or loss of customers.

We exercise significant judgment in determining our worldwide provision for income taxes and, in the ordinary course of our business, there may be transactions and calculations where the ultimate tax determination is uncertain.

Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting (“BEPS”) project that was undertaken by the Organization for Economic Co-operation and Development (“OECD”).

The OECD, which represents a coalition of member countries, recommended changes to numerous long-standing tax principles.

The changes arising from the BEPS project, if adopted by countries in which we do business, could increase tax uncertainty and may

adversely affect our provision for income taxes, which could, ultimately, materially adversely affect our financial condition, results of operations and cash flows.

The impact of 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 made broad and complex changes to the U.S. tax code.

Some of the changes still require additional guidance, including through the issuance of final Treasury Regulations, which could lessen or increase certain adverse impacts of the Tax Act.

This executive overview presents summarized information regarding our [removed: industry, markets, business,] [added: business] and operating trends only.

Our [removed: total] revenue for the year ended December 31, [removed: 2019] [added: 2020] was [removed: $5,517.9] [added: $5,255.0] million, a decrease of [removed: 6.1%] [added: 4.8%] from [removed: $5,878.3] [added: $5,517.9] million [removed: from] [added: for] the year ended December 31, [removed: 2018.][added: 2019.]

The decrease was [removed: primarily] attributable to reduced demand for our products across PSG, ASG and [removed: ISG.][added: ISG primarily due to the negative impact from the COVID-19 pandemic.]

During [removed: 2019,] [added: 2020, while] we reported net income attributable to ON Semiconductor of [removed: $211.7] [added: $234.2] million compared to [removed: $627.4] [added: $211.7] million in [removed: 2018.][added: 2019, our operating income during 2020 was $348.7 million compared to $432.7 million during 2019.]

Our gross margin decreased by approximately [removed: 230] [added: 310] basis points to [removed: 35.8%] [added: 32.7%] in [removed: 2019] [added: 2020] from [removed: 38.1%] [added: 35.8%] in [removed: 2018.][added: 2019.]

*Business and Macroeconomic [removed: Environment Influence on Cost Savings and Restructuring Activities*][added: Environment*]

We [removed: also believe, however,] [added: believe] that secular [removed: megatrends] [added: trends] in the automotive, industrial, and cloud-power [removed: end-markets] [added: end-markets, which are our primary areas of focus,] will continue to drive long-term growth in the semiconductor industry.

[removed: In an effort to mitigate adverse demand trends in the semiconductor industry, we have] [added: We] historically [added: have] pursued, and expect to continue to pursue, cost-saving initiatives to align our overall cost structure, capital investments and other expenditures with our expected revenue, spending and capacity levels based on our current sales and manufacturing projections.

[removed: However, there] [added: There] can be no assurances that we will adequately forecast [added: the impact of adverse] economic conditions [added: on our business] or that we will effectively align our cost structure, capital investments and other expenditures with our revenue, spending and capacity levels in the future.

Our results of operations for the year ended December 31, [removed: 2019] [added: 2020] includes the [added: full year results, and our results of operations for the year ended December 31, 2019 includes] partial year results [removed: from] [added: of] Quantenna, which we acquired on June 19, 2019.

For a discussion and comparison of the results of our operations for the year ended December 31, [removed: 2018] [added: 2019] with the year ended December 31, [removed: 2017,] [added: 2018,] refer to "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in our Form 10-K for the year ended December 31, [removed: 2018] [added: 2019] filed with the SEC on February [removed: 20, 2019.][added: 19, 2020.]

| | | | Year ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: Dollar Change] | | | | | | | | | | | | | | | | | |

| Cost of revenue (exclusive of amortization shown below) | | | [removed: 3,544.3] [added: 3,539.2] | | | | | | [removed: 3,639.6] [added: 3,544.3] | | | | | | | | | | | | [removed: (95.3)] | | | | | | [added: (5.1)] | | | | | | | | | | | | | | | | | | | | |

| Gross profit | | | [removed: 1,973.6] [added: 1,715.8] | | | | | | [removed: 2,238.7] [added: 1,973.6] | | | | | | | | | | | | [removed: (265.1)] | | | | | | [added: (257.8)] | | | | | | | | | | | | | | | | | | | | |

| Research and development | | | [removed: 640.9] [added: 642.9] | | | | | | [removed: 650.7] [added: 640.9] | | | | | | | | | | | | [removed: (9.8)] | | | | | | [added: 2.0] | | | | | | | | | | | | | | | | | | | | |

| Selling and marketing | | | [removed: 301.0] [added: 278.7] | | | | | | [removed: 324.7] [added: 301.0] | | | | | | | | | | | | [removed: (23.7)] | | | | | | [added: (22.3)] | | | | | | | | | | | | | | | | | | | | |

| General and administrative | | | [removed: 284.0] [added: 258.7] | | | | | | [removed: 293.3] [added: 284.0] | | | | | | | | | | | | [removed: (9.3)] | | | | | | [added: (25.3)] | | | | | | | | | | | | | | | | | | | | |

| Litigation settlement | | | [removed: 169.5] [added: —] | | | | | | [removed: —] [added: 169.5] | | | | | | | | | | | | [removed: 169.5] | | | | | | [added: (169.5)] | | | | | | | | | | | | | | | | | | | | |

| Amortization of acquisition-related intangible assets | | | [removed: 115.2] [added: 120.3] | | | | | | [removed: 111.7] [added: 115.2] | | | | | | | | | | | | [removed: 3.5] | | | | | | [added: 5.1] | | | | | | | | | | | | | | | | | | | | |

| Restructuring, asset impairments and other charges, net | | | [removed: 28.7] [added: 65.2] | | | | | | [removed: 4.3] [added: 28.7] | | | | | | | | | | | | [removed: 24.4] | | | | | | [added: 36.5] | | | | | | | | | | | | | | | | | | | | |

| [removed: Goodwill and intangible] [added: Intangible] asset impairment | | | [removed: 1.6] [added: 1.3] | | | | | | [removed: 6.8] [added: 1.6] | | | | | | | | | | | | [removed: (5.2)] | | | | | | [added: (0.3)] | | | | | | | | | | | | | | | | | | | | |

| Total operating expenses | | | [removed: 1,540.9] [added: 1,367.1] | | | | | | [removed: 1,391.5] [added: 1,540.9] | | | | | | | | | | | | [removed: 149.4] | | | | | | [added: (173.8)] | | | | | | | | | | | | | | | | | | | | |

| Operating income | | | [removed: 432.7] [added: 348.7] | | | | | | [removed: 847.2] [added: 432.7] | | | | | | | | | | | | [removed: (414.5)] | | | | | | [added: (84.0)] | | | | | | | | | | | | | | | | | | | | |

| Interest expense | | | [removed: (148.3)] [added: (168.4)] | | | | | | [removed: (128.2)] [added: (148.3)] | | | | | | | | | | | | [removed: (20.1)] | | | | | | [added: (20.1)] | | | | | | | | | | | | | | | | | | | | |

| Interest income | | | [removed: 10.2] [added: 4.9] | | | | | | [removed: 6.1] [added: 10.2] | | | | | | | | | | | | [removed: 4.1] | | | | | | [added: (5.3)] | | | | | | | | | | | | | | | | | | | | |

| Loss on debt refinancing and prepayment | | | [removed: (6.2)] [added: —] | | | | | | [removed: (4.6)] [added: (6.2)] | | | | | | | | | | | | [removed: (1.6)] | | | | | | [added: 6.2] | | | | | | | | | | | | | | | | | | | | |

| Other expense | | | [removed: (11.8)] [added: (8.6)] | | | | | | [removed: (7.1)] [added: (11.8)] | | | | | | | | | | | | [removed: (4.7)] | | | | | | [added: 3.2] | | | | | | | | | | | | | | | | | | | | |

| Other income (expense), net | | | [removed: (156.1)] [added: (172.1)] | | | | | | [removed: (92.2)] [added: (156.1)] | | | | | | | | | | | | [removed: (63.9)] | | | | | | [added: (16.0)] | | | | | | | | | | | | | | | | | | | | |

| Income before income taxes | | | [removed: 276.6] [added: 176.6] | | | | | | [removed: 755.0] [added: 276.6] | | | | | | | | | | | | [removed: (478.4)] | | | | | | [added: (100.0)] | | | | | | | | | | | | | | | | | | | | |

| Income tax [removed: provision] [added: (provision) benefit] | | | [removed: (62.7)] [added: 59.8] | | | | | | [removed: (125.1)] [added: (62.7)] | | | | | | | | | | | | [removed: 62.4] | | | | | | [added: 122.5] | | | | | | | | | | | | | | | | | | | | |

| Net income | | | [removed: 213.9] [added: 236.4] | | | | | | [removed: 629.9] [added: 213.9] | | | | | | | | | | | | [removed: (416.0)] | | | | | | [added: 22.5] | | | | | | | | | | | | | | | | | | | | |

| Less: Net income attributable to non-controlling interest | | | (2.2) | | | | | | [removed: (2.5)] [added: (2.2)] | | | | | | | | | | | | [removed: 0.3] | | | | | | [added: —] | | | | | | | | | | | | | | | | | | | | |

| Net income attributable to ON Semiconductor Corporation | | | $ | [removed: 211.7] [added: 234.2] | | | | | $ | [removed: 627.4] [added: 211.7] | | | | | | | | | | | [removed: $] | [removed: (415.7)] | | | | | [added: $] | [added: 22.5] | | | | | | | | | | | | | | | | | | | |

Revenue was [removed: $5,517.9] [added: $5,255.0] million and [removed: $5,878.3] [added: $5,517.9] million for [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively.

The decrease [added: from 2019 to 2020] of [removed: $360.4] [added: $262.9] million, or [removed: 6.1%] [added: 4.8%,] was primarily attributable to [removed: an 8.2%, 4.8%] [added: a 6.5%, 3.1%] and [removed: 1.5%] [added: 2.5%] decrease in revenue in PSG, ASG and ISG, respectively, which is further explained below.

| | | | [removed: 2019] [added: 2020] | | | | | | As a % of Revenue (1) | | | | | | [removed: 2018 | | | | | |] [added: 2019] | | | | | | As a % of Revenue (1) | | | | | | | | | | | | [removed: | | |]

| PSG | | | $ | [removed: 2,788.3] [added: 2,606.1] | | | | | [removed: 50.5] [added: 49.6] | | % | | | | $ | [removed: 3,038.2 | | | | | |] [added: 2,788.3] | | | | | [removed: 51.7] [added: 50.5] | | % | | | | | | | | | | [removed: | | |]

| ASG | | | [removed: 1,972.3] [added: 1,910.4] | | | | | | [removed: 35.7] [added: 36.4] | | % | | | | [removed: 2,071.2 | | | | | |] [added: 1,972.3] | | | | | | [removed: 35.2] [added: 35.7] | | % | | | | | | | | | | [removed: | | |]

| ISG | | | [removed: 757.3] [added: 738.5] | | | | | | [removed: 13.7] [added: 14.1] | | % | | | | [removed: 768.9 | | | | | |] [added: 757.3] | | | | | | [removed: 13.1] [added: 13.7] | | % | | | | | | | | | | [removed: | | |]

| Total revenue | | | $ | [removed: 5,517.9] [added: 5,255.0] | | | | | | | | | | | $ | [removed: 5,878.3 | | | | | | | | |] [added: 5,517.9] | | | | | | | | | | | | | | | | |

While the decrease in operating income was primarily due to the pervasive macroeconomic impacts of the COVID-19 pandemic, the increase in net income attributable to ON Semiconductor was due to the income tax benefit recorded during the year.

See discussion under "Results of Operations" for further discussion on the reasons for the fluctuations year over year.

The COVID-19 pandemic has had, and is expected to continue to have, a significant adverse impact on global economic activity, including creating supply chain and market disruption.

While certain measures enacted in 2020 to contain the spread of the COVID-19 pandemic have since been relaxed in many jurisdictions, the extent to which the pandemic will impact demand for our products depends on future developments, which are highly uncertain and difficult to predict, including new information that may emerge concerning the severity and longevity of the pandemic, and actions to contain and treat its impact.

We have taken, and continue to take, significant cost containment efforts, including, but not limited to, workforce reductions, reducing discretionary spending, furloughs, and mandatory vacations.

While all our global

manufacturing sites are currently operational, our facilities could be required to temporarily curtail production levels or temporarily cease operations based on government mandates.

*The Impact of the COVID-19 Pandemic on our Business*

In an effort to protect the health and safety of our employees, we have taken proactive, aggressive actions to adopt social distancing policies at our locations around the world, including reducing the number of people in our sites at any one time, encouraging our employees to work from home where possible, limiting the number of employees attending meetings and significantly reducing employee travel.

In our role as responsible corporate citizens, we have taken actions to support our global communities by providing personal protective equipment to hospitals and health workers.

We will continue to actively monitor implications of the COVID-19 pandemic on our business and may take further actions to adjust our business operations if deemed necessary, or as required by federal, state, or local law.

During the majority of 2020, our results of operations were adversely impacted due to the reduced demand from our customers, government-mandated temporary shutdowns of certain of our facilities, supply shortages and other logistical constraints arising from the COVID-19 pandemic.

However, towards the end of 2020, we experienced a meaningful improvement in the demand for most of our products, specifically products in the automotive sector that had been significantly impacted by the pandemic.

However, current demand levels have yet to reach levels achieved before the pandemic.

While we believe that our business has stabilized from the impact of the pandemic, a possible resurgence or another wave of the pandemic could alter the business and economic landscape again.

We expect volatility in demand to continue in varying duration and severity until such time as the COVID-19 pandemic is effectively contained globally.

Our long-term fundamentals remain strong as we believe that we are well-positioned for growth as business conditions continue to improve.

| | | | 2020 | | | | | | 2019 | | | | | | | | | | | | | | | | | | Change | | | | | | | | | | | | | | | | | | | | |

| Revenue | | | $ | 5,255.0 | | | | | $ | 5,517.9 | | | | | | | | | | | | | | | | | $ | (262.9) | | | | | | | | | | | | | | | | | | | |

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

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

We had one customer, a distributor, whose revenue accounted for approximately 11% of the total revenue for the year ended December 31, 2020.

Revenue by operating and reportable segments was as follows (dollars in millions):

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

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

Revenue from PSG decreased by $182.2 million, or approximately 7%, during 2020 compared to 2019.

The decreases were due to a combination of a general decline in demand for these products due to economic conditions caused by the COVID-19 pandemic, and was exacerbated by internal delays in fulfilling certain customer orders due to our factories in China, the Philippines and Malaysia, which operated at significantly reduced capacity levels during portions of the first half of 2020 as a result of the COVID-19 pandemic.

Revenue from ASG decreased by $61.9 million, or approximately 3%, during 2020 compared to 2019.

The revenue from our Automotive Division and Mobile, Computing and Cloud Division decreased by $47.4 million and $39.6 million, respectively, and was partially offset by an increase in revenue of $34.1 million in our Wireless Connectivity Solutions Division, which included the acquired Quantenna business.

The decreases in demand for the products in these divisions was primarily due to the economic conditions as a result of the COVID-19 pandemic, and specifically the automotive industry during the first half of the year, which has started to experience a meaningful recovery during the fourth quarter.

Similar to PSG, this decrease was exacerbated by delays in fulfilling certain customer orders due to our factories in China, the Philippines and Malaysia, which operated at a significantly reduced capacity levels during portions of the first half of 2020 as a result of the COVID-19 pandemic.

Revenue from ISG decreased by $18.8 million, or 2.5%, during 2020 compared 2019, which was primarily due to the decrease in revenue from our Automotive Sensing Division of $20.0 million, which was due to decreased demand and delays in fulfilling certain customer orders due to supply chain constraints during the first half of 2020 as a result of the COVID-19 pandemic.

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

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

___________________

Our gross profit was $1,715.8 million during 2020 compared to $1,973.6 million during 2019 representing a decrease of $257.8 million, or approximately 13%.

The decrease in gross profit and gross margin were attributable to a significant decline in sales volume due to the COVID-19 pandemic and a decline in average selling prices.

While the improving business conditions during the second half of 2020 positively impacted our gross margins, we incurred additional expenses for freight, transportation and cleaning costs to operate our facilities in compliance with local government regulations that had an adverse impact on our gross margin.

While there was a decrease in the cost of external consultants and travel-related expenses due to the cost-saving measures and travel restrictions implemented in response to the COVID-19 pandemic, these decreases were offset due to the payroll expenses for Quantenna employees for the entire year in 2020.

The decrease was primarily related to a significant decrease in travel-related expenses due to the cost-saving measures and travel restrictions implemented in response to the COVID-19 pandemic and nominal decreases in payroll expenses as a result of furloughs and the VSP and Involuntary Separation Program ("ISP") offered during 2020.

*Industry Overview*

According to WSTS (an industry research firm), worldwide semiconductor industry sales were $412.1 billion in 2019, a decrease of approximately 12.1% from $468.8 billion in 2018.

We participate in unit and revenue surveys and use data summarized by WSTS to evaluate overall semiconductor market trends and to track our progress against the market in the areas we provide semiconductor components.

The following table sets forth total worldwide semiconductor industry revenue since 2015:

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

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

| Year Ended December 31, | | | | | | Worldwide Semiconductor Industry Sales (1) | | | | | | Percentage Change | | | | | | | | | | | | | | |

| | | | | | | (in billions) | | | | | | | | | | | | | | | | | | | | |

| 2019 | | | | | | $412.1 | | | | | | (12.1)% | | | | | | | | | | | | | | |

| 2018 | | | | | | $468.8 | | | | | | 13.7% | | | | | | | | | | | | | | |

| 2017 | | | | | | $412.2 | | | | | | 21.6% | | | | | | | | | | | | | | |

| 2016 | | | | | | $338.9 | | | | | | 1.1% | | | | | | | | | | | | | | |

| 2015 | | | | | | $335.2 | | | | | | (0.2)% | | | | | | | | | | | | | | |

_______________________

(1)Based on shipment information published by WSTS.

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.

As indicated above, worldwide semiconductor sales increased from $335.2 billion in 2015 to $412.1 billion in 2019.

The decrease of 12.1% from 2018 to 2019 was the result of decreased demand for semiconductor products.

Our revenue decreased by $360.4 million, or 6.1%, from 2018 to 2019.

ON Semiconductor Overview

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 high-growth applications.

We collaborate with our customers to identify desired innovations in electronic systems in each end-market that we serve.

This enables us to participate in the fastest growing sectors of the market.

We also innovate in advanced packaging technologies to support ongoing size reduction in electronic systems and in advanced thermal packaging to support high performance power conversion 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 high-growth technologies.

We deploy people and capital with the goal of maximizing our investment in research and development in order to facilitate continued growth by targeting innovative products and solutions for high growth applications that position us to outperform the industry.

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, value-added solutions to our global customers for their electronics systems.

We believe that some of the key factors and trends affecting our current and future results of operations include, but not limited to:

- Macroeconomic conditions affecting the semiconductor industry;

- The cyclicality and seasonality of the semiconductor industry;

- The global economic climate;

- Our significant indebtedness, including the indebtedness incurred for the acquisition of Fairchild and Quantenna;

- The impact of U.S. corporate tax reform and an uncertain corporate tax environment abroad;

- An uncertain political climate and related impacts on global trade, such as tariffs on imports into the U.S. from China;

- The effects of trends in the automotive and industrial end-markets on our revenue;

- Competitive conditions, and in particular, consolidation, within our industry; and

- Underutilization of installed capacity and competitive pricing environment.

*Acquisition of Quantenna*

We do not use derivative financial instruments for speculative or trading [removed: purposes.]

As of December 31, [removed: 2019,] [added: 2020,] our [added: gross] long-term debt (including current maturities) totaled [removed: $3,749.2] [added: $3,589.5] million.

We have no interest rate exposure to rate changes on our fixed rate debt, which totaled [removed: $2,265.1] [added: $2,775.0] million.

We do have interest rate exposure with respect to the [removed: $1,484.1] [added: $814.5] million balance of our variable interest rate debt outstanding as of December 31, [removed: 2019.][added: 2020.]

A 50 basis point increase in interest rates would impact our expected annual interest expense for the next 12 months by approximately [removed: $7.4] [added: $4.1] million.

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

[removed: We entered into] [added: Our] interest rate swaps [removed: to] hedge [removed: some] [added: the majority] of the risk of variability in cash flows resulting from future interest payments on our variable interest rate debt.

The notional amount of foreign exchange contracts at December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] was [removed: $183.3] [added: $263.4] million and [removed: $157.3] [added: $183.3] million, respectively.

However, a significant amount of our operating expenditures and capital purchases are transacted in local currencies, including [added: Chinese Renminbi, Czech Koruna, Euros,] Japanese Yen, [removed: Euros,] Korean Won, Malaysian Ringgit, Philippine [removed: Peso, Singapore Dollars, Swiss Francs, Chinese Renminbi,] [added: Peso] and [removed: Czech Koruna.][added: Vietnamese Dong.]

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: $105.7] [added: $129.7] million for the year ended December 31, [removed: 2019,] [added: 2020,] assuming no offsetting hedge position or correlated activities.

purposes.

While we have recently begun to observe stabilization in the capital markets impacted by the COVID-19 pandemic, there can be no assurance that equity or borrowings will be available when we access the capital markets again or, if available, will be at rates or prices acceptable to us.

deposits and investments also increase.

ON Semiconductor Corporation, together with its wholly and majority-owned subsidiaries ("ON [removed: Semiconductor,] [added: Semiconductor,"] "we," "us," "our," or the "Company"), was incorporated under the laws of the state of Delaware in 1992 under the name Motorola Energy Systems, Inc. Immediately prior to our August 4, 1999 recapitalization, we were a wholly-owned subsidiary of Motorola.

[removed: Our] [added: We believe that our] extensive portfolio of sensors, power management, connectivity, custom and SoC, analog, logic, timing and discrete devices helps customers efficiently solve their design challenges in advanced electronic systems and products.

Our [removed: growing] portfolio of sensors, including image sensors, radar and LiDAR, provide advanced solutions for automotive, industrial and IoT applications.

Our high performance Wi-Fi solution creates a strong platform for addressing connectivity solutions for industrial [removed: IoT.][added: IoT applications.]

We serve a broad base of end-user markets, including automotive, [removed: communications, computing, consumer, medical,] industrial, [added: medical, aerospace/defense, communications,] networking, [removed: telecom] [added: wireless, consumer] and [removed: aerospace/defense.][added: computing.]

We shipped approximately [removed: 66.2] [added: 64.3] billion units in [removed: 2019,] [added: 2020] and approximately [removed: 75.7] [added: 66.2] billion units in [removed: 2018.][added: 2019, resulting in a period-over-period decrease of approximately 3%.]

As of December 31, [removed: 2019,] [added: 2020,] we were organized into the following three operating and reportable segments: the Power Solutions Group ("PSG"), the Advanced Solutions Group ("ASG") and the Intelligent Sensing Group ("ISG").

| [removed: HD products] [added: MOSFET Products] | | | | | | Connectivity products | | | | | | | | | | | |

| [removed: IPM] [added: Power Module] products | | | | | | ECL products | | | | | | | | | | | |

| [removed: MOSFET] [added: Memory] products | | | | | | Gate Driver products | | | | | | | | | | | |

| [removed: Memory] [added: Gate Driver] products | | | | | | LSI products | | | | | | | | | | | |

| [removed: PIM] [added: Standard Logic] products | | | | | | Standard [removed: logic] [added: Logic] products | | | | | | | | | | | |

| [added: | | |] Sensors | | | [added: AR/VR] | | | | | | [added: Robotics] | | | | | | | | | [added: | | |]

We currently have domestic design operations in Arizona, California, Idaho, New York, Oregon, Pennsylvania, Rhode Island, [removed: Texas] [added: Texas, Utah] and [removed: Utah.][added: Virginia.]

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

[removed: Completed Acquisitions][added: Pending and completed acquisitions]

Following the acquisition, Quantenna changed its name to ON Semiconductor Connectivity Solutions, Inc. The purchase price totaled $1,039.3 million, [removed: of which $1,026.6 million] [added: and] was [removed: paid in cash during the year ended December 31, 2019,] [added: funded] with the proceeds from a $900.0 million draw against our Revolving Credit Facility and cash on hand.

See Note 5: ''Acquisitions, [removed: Divestitures] [added: Divestiture] and Licensing Transactions'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information.

See [removed: "Business Overview" above and] Note 3: ''Revenue and Segment Information'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for other information regarding our [removed: segments and] [added: segments,] their revenue and property, plant and equipment and the income derived from each segment.

[removed: PSG][added: *PSG*]

New semiconductor products based upon WBG technologies, including SiC, are rapidly being adopted for EV/HEV traction and charging applications due to the higher [removed: efficiencies,] [added: efficiencies] they provide.

SiC and GaN technology enables drastic reduction in power [removed: adaptor] [added: adapter] size.

[removed: ASG][added: *ASG*]

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

Our product solutions enable industry leading active mode and standby mode efficiency now [removed: being] demanded by regulatory agencies around the world.

[removed: Additionally, ASG offers trusted foundry and design] services for our government customers as well as manufacturing services, which leverage the Company’s broad range of manufacturing, IC design, packaging, and silicon technology offerings to provide turn-key solutions for our customers.

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

[removed: ISG][added: *ISG*]

ISG designs and develops CMOS [removed: and CCD] image sensors, proximity sensors, image signal processors, single photon detectors, including SiPM and SPAD arrays, radar, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in the [removed: automotive, industrial, consumer, wireless, medical and aerospace/defense markets.][added: different end-markets.]

A broad portfolio of automotive sensing technologies spanning ultrasonic, imaging, radar and [removed: LiDAR] [added: LiDAR,] paving the way [removed: to] [added: for] high levels of [removed: driver assistance (ADAS)] [added: ADAS] and automated driving with built in functional safety and cybersecurity processing.

A broad range of [removed: CMOS, CCD] [added: CMOS] and SiPM sensors with an emphasis on machine vision for factory automation, robotics and logistics, intelligent transportation systems, agriculture, medical, cinematography, scientific and aerospace/defense applications.

[removed: Most] [added: Our distributors generally negotiate pricing terms on a quarterly basis, most] of our OEM customers negotiate pricing terms [removed: with us] on an annual basis near the end of the calendar [removed: year, our distributors generally negotiate pricing terms on a quarterly basis,] [added: year] and electronic manufacturing service providers negotiate prices periodically during the year.

With respect to [added: customers in] public [removed: sector clients,] [added: sector,] the government’s remedies may include suspension or debarment from future government business.

[removed: 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.

For the year ended December 31, [removed: 2019,] [added: 2020,] aggregate revenue from our five largest customers for PSG, ASG and ISG, comprised approximately [removed: 41%, 35%] [added: 46%, 36%] and [removed: 48%,] [added: 43%,] respectively, of the respective segment revenue.

For additional information regarding agreements with our customers, see [removed: "End-Markets for Our Products," "Manufacturing and Operations," and "Backlog] [added: "Markets," "Resources"] and [removed: Inventory," below, “Risk] [added: "Risk] Factors - Trends, Risks and Uncertainties Related to Our [removed: Business”] [added: Business"] included elsewhere in this Form 10-K and Note 2: [removed: “Significant] [added: "Significant] Accounting Policies - Revenue [removed: Recognition”] [added: Recognition"] in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K.

[removed: End-Markets for Our Products][added: End-Markets]

The following table sets forth our principal end-markets, the estimated percentage (based in part on information provided by our distributors and electronic manufacturing service providers) of our revenue generated from each end-market during [removed: 2019,] [added: 2020,] and sample applications for our products.

| [removed: *Sample applications*] | | | [removed: EV/HEV] [added: In-Vehicle Networking] | | | [removed: Hearing Health] [added: Smart Cities & Buildings] | | | [removed: Tablets] [added: Switches] | | | Gaming, Home Entertainment Systems, & Set Top Boxes | | | Notebooks, Ultrabooks, & 2-in-1s | | | | | | | | |

| | | | [removed: Automated Driving] [added: Lighting] | | | Power Solutions | | | Power Supplies | | | Wearable Devices | | | | | | | | | | | |

Recent Business Strategy Developments

Our primary focus is on gross margin expansion, while at the same time, achieving significant revenue growth in our focused end-markets of automotive, industrial and communication infrastructure as well as being opportunistic in other end-markets.

In light of these objectives, we have begun the process of evaluating our current product portfolio.

We intend to allocate capital and research and development investments and resources to accelerate growth in high-margin products and end-markets by moving away from non-differentiated products, which have had historically lower gross margins, and in that process, reduce complexity, streamline the organization, and improve operating efficiencies.

Additionally, we believe these actions will allow us to transition to a lighter internal fabrication model where our gross margins will be less volatile and not as heavily influenced by our internal manufacturing volumes.

As further discussed below, we are also rationalizing our manufacturing footprint to align with our investment priorities and corporate strategy.

Our goal is to reduce volatility in our gross margins and maximize return on our manufacturing investments with the intent to have our product strategy drive our manufacturing footprint and capital investments.

Novel coronavirus disease 2019 ("COVID-19")

In March 2020, the World Health Organization declared COVID-19 to be a pandemic, which continues to spread throughout the U.S. and the world.

Our results of operations were adversely impacted during the majority of 2020 due to the reduced demand from our customers, government-mandated temporary shutdowns of certain of our facilities, supply shortages and other logistical constraints arising from the COVID-19 pandemic.

We are unable to accurately predict the full impact that the COVID-19 pandemic will have on us due to a number of uncertainties, including the duration and severity of the outbreak, globally and, in particular, in the markets in which we do business, the impact of the pandemic on our customers' businesses, the imposition of any future government restrictions on staffing and facility operations, supply chain shortages, and other disruptions.

Without global containment, it is likely that the pandemic will continue to have a negative impact on our business, results of operations and financial condition for the foreseeable future.

On April 22, 2019, we entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with GLOBALFOUNDRIES U.S. Inc. ("GFUS") and GLOBALFOUNDRIES Inc. pursuant to which we will acquire GFUS’s East

Fishkill, New York site and fabrication facilities and certain other assets and liabilities on or around December 31, 2022 (the "Closing Date"), subject to certain conditions, for an aggregate purchase price of $400.0 million in cash, subject to adjustment as described in the Asset Purchase Agreement (the "Total Consideration").

On April 22, 2019, we paid GFUS $70.0 million of the Total Consideration in cash as a non-refundable deposit, which will be applied toward and reduce the Total Consideration.

On October 1, 2020, we entered into an amendment to the Asset Purchase Agreement (the "APA Amendment") pursuant to which we paid GFUS a non-refundable deposit in the amount of $100.0 million in cash on October 5, 2020 (the "Additional Deposit").

The Additional Deposit will be applied toward and reduce the Total Consideration as a non-refundable deposit, and the remaining $230.0 million of the Total Consideration will be paid on or around the Closing Date.

Other terms and conditions of the Asset Purchase Agreement remain unchanged.

With the expected completion of the acquisition in East Fishkill, New York on or around December 31, 2022, we initiated structural changes to our manufacturing footprint.

During February and August 2020, we announced that we were exploring the sales of our six-inch fabrication facilities in Oudenaarde, Belgium and Niigata, Japan, respectively.

We could incur accounting charges in the future in connection with the active marketing and sale of these fabrication facilities and for costs to transition the manufacturing activity to other sites in our manufacturing network.

On June 19, 2019, we completed our acquisition of Quantenna Communications, Inc. ("Quantenna").

Revenue-Generating Activities

ON Semiconductor generates revenue from the sale of our semiconductor products to distributors, OEMs and electronic manufacturing service providers.

We also generate revenue, to a much lesser extent, from product development agreements and manufacturing services provided to customers.

Our devices are found in a wide variety of end products as noted within the sample applications in the end-markets section below.

As many of our products are sold into different end-markets, the total revenue reported under PSG, ASG and ISG is not indicative of actual sales in the end-market associated with that segment, but rather is the sum of the revenue from the product lines assigned to that segment.

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

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

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

Additionally, ASG offers trusted foundry and design

We sell our products to distributors, OEMs and electronic manufacturing service providers for ultimate use in a variety of end-products in different end-markets.

In addition, almost

*Distributors*

We had one distributor whose revenue accounted for approximately 11% of the total revenue for the year ended December 31, 2020.

*OEMs*

*Electronic Manufacturing Service Providers*

Markets

Product development

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

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

Our devices are found in a wide variety of end products, including automobiles, smartphones, data center and enterprise servers, wearable medical devices, PCs, industrial building and home automation systems, factory automation, consumer white goods, security and surveillance systems, machine vision and robotics, LED lighting, power supplies, networking and telecom equipment, medical diagnostics, imaging, wireless routers and hearing health.

We changed the name of our Analog Solutions Group to the Advanced Solutions Group and the name of our Image Sensor Group to the Intelligent Sensing Group in December 2019 and December 2018, respectively.

| Standard logic products | | | | | | | | | | | | | | | | | |

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

Company Highlights for the year ended December 31, 2019

- Total revenue of $5,517.9 million

- Gross margin of 35.8%

- Acquired Quantenna Communications, Inc. ("Quantenna") for $1,039.3 million

- Settled litigation with Power Integrations, Inc. ("PI")

- Net income of $0.51 per diluted share

- Cash and cash equivalents of $894.2 million

On June 19, 2019, we completed our acquisition of Quantenna pursuant to the definitive Agreement and Plan of Merger with each of Quantenna and Raptor Operations Sub, Inc., our wholly-owned subsidiary (“Raptor”), which provided for the merger of Quantenna with Raptor, whereby Quantenna continued as the surviving corporation and our wholly-owned subsidiary.

On May 8, 2018, we acquired 100% of the outstanding shares of SensL, a company specializing in SiPM, SPAD and LiDAR sensing products for the automotive, medical, industrial and consumer markets, for $71.6 million, funded with cash on hand.

This acquisition positions us to extend our products in automotive sensing applications for ADAS and autonomous driving by adding LiDAR capabilities to our existing capabilities in imaging and radar.

maximize the performance of their products while preserving critical battery life.

Although payment terms may vary, most distributor agreements require payment within 30 days.

Our products are ultimately purchased for use in a variety of end-markets, including computing, automotive, consumer, industrial, communications, networking, aerospace/defense and medical.

| Approximate percentage of 2019 Revenue | | | 33% | | | 26% | | | 19% | | | 11% | | | 11% | | | | | | | | |

| | | | 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 | | | Cloud Computing | | | | | | | | |

| | | | Sensors | | | Industrial Automation | | | AP/Gateway | | | Robotics | | | | | | | | | | | |

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

| Rochester, New York (2) (4) | | | | | | ISG | | | | | | 275,642 | | |

(4)One building owned and a portion of another leased.

We intend to close this facility in 2020 and eventually market it for sale.

(5)In February 2020, we announced that we are exploring the sale of this facility and are looking for partners for an orderly transition.

Each request represents a purchase commitment by the requesting shareholder, provided that the shareholder may

Our joint venture partner in OSA is Fujitsu Semiconductor Limited (“FSL”), a Japanese corporation.

Pursuant to a foundry agreement, on a quarterly basis, ON and FSL are required to allocate the capacity of OSA and provide a rolling twenty-four month forecast consistent with the capacity allocated to each joint venture partner.

We have committed to purchase 60% of OSA’s production capacity, and our committed capacity is scheduled to increase gradually through April 1, 2020, when, subject to the fulfillment of certain conditions, we are required to increase our ownership in OSA to 100%.

The decrease in contract manufacturing costs in 2019 is due to the consolidation of the financial results of OSA after acquiring the majority of the outstanding equity interests during the fourth quarter of 2018.

Backlog and Inventory

PSG is a leading provider of power semiconductors to the automotive, industrial, wireless and mass markets.

Employees

As of December 31, 2019, we had approximately 34,800 employees worldwide, of which approximately 4,600 employees were in the United States.

None of our employees in the United States are covered by collective bargaining agreements, except for approximately 117 of our employees (or approximately 2.6% of our U.S.-based employees) at the Mountain Top, Pennsylvania manufacturing facility.

For the fiscal year ended December 31, [removed: 2019][added: 2020]

(Commission File Number) [removed: 000-30419][added: 001-39317]

| Securities Registered Pursuant to Section 12(b) of the Act: | | | | | | | | | [removed: | | | | | |]

| Title of each class | | | Trading Symbol(s) | | | Name of each exchange on which registered | | | [removed: | | | | | |]

| Common Stock, par value $0.01 per share | | | ON | | | The Nasdaq Stock Market LLC | | | [removed: | | | | | |]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of [removed: “large] [added: "large] accelerated [removed: filer,” “accelerated filer” and “smaller] [added: filer," "accelerated filer," "smaller] reporting [removed: company”] [added: company," and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

[added: | | | | | | |] Emerging growth company [added: | | |] ☐ [added: | | |]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was [removed: $8,172,927,739] [added: $7,783,044,394] as of [removed: June 28, 2019,] [added: July 3, 2020,] 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: 13, 2020] [added: 10, 2021] was [removed: 411,065,636.][added: 411,881,071.]

Portions of the registrant's Definitive Proxy Statement relating to its [removed: 2020] [added: 2021] 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: 2019,] [added: 2020,] are incorporated by reference into Part III of this Form 10-K.

| | | | Part I | | | | | | [removed: | | |]

| *Item 1.* | | | Business | | | [removed: [5](#i_0_16) | | |] [added: [5](#i8afb058a51bd4e449582d76e6d89e83d_16)] | | |

| | | | Business Overview | | | [removed: [5](#i_0_19) | | |] [added: [5](#i8afb058a51bd4e449582d76e6d89e83d_19)] | | |

| | | | Seasonality | | | [removed: [11](#i_0_43) | | |] [added: [14](#i8afb058a51bd4e449582d76e6d89e83d_43)] | | |

| | | | Government Regulation | | | [removed: [13](#i_0_55) | | |] [added: [14](#i8afb058a51bd4e449582d76e6d89e83d_52)] | | |

| | | | Executive Officers of the Registrant | | | [removed: [14](#i_0_61) | | |] [added: [16](#i8afb058a51bd4e449582d76e6d89e83d_58)] | | |

| | | | Available Information | | | [removed: [16](#i_0_67) | | |] [added: [18](#i8afb058a51bd4e449582d76e6d89e83d_64)] | | |

| *Item 1A.* | | | Risk Factors | | | [removed: [16](#i_0_70) | | |] [added: [18](#i8afb058a51bd4e449582d76e6d89e83d_67)] | | |

| *Item 1B.* | | | Unresolved Staff Comments | | | [removed: [35](#i_0_73) | | |] [added: [36](#i8afb058a51bd4e449582d76e6d89e83d_70)] | | |

| *Item 2.* | | | Properties | | | [removed: [35](#i_0_76) | | |] [added: [37](#i8afb058a51bd4e449582d76e6d89e83d_73)] | | |

| *Item 3.* | | | Legal Proceedings | | | [removed: [36](#i_0_79) | | |] [added: [37](#i8afb058a51bd4e449582d76e6d89e83d_76)] | | |

| *Item 4.* | | | Mine Safety [removed: Disclosures | | | [36](#i_0_82)] [added: Disclosure] | | | [added: [37](#i8afb058a51bd4e449582d76e6d89e83d_79)] | | |

| | | | Part II | | | | | | [removed: | | |]

| *Item 5.* | | | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | | [removed: [36](#i_0_88) | | |] [added: [37](#i8afb058a51bd4e449582d76e6d89e83d_85)] | | |

| *Item 6.* | | | Selected Financial Data | | | [removed: [37](#i_0_91) | | |] [added: [38](#i8afb058a51bd4e449582d76e6d89e83d_88)] | | |

| *Item 7.* | | | Management's Discussion and Analysis of Financial Condition and Results of Operations | | | [removed: [38](#i_0_94) | | |] [added: [39](#i8afb058a51bd4e449582d76e6d89e83d_91)] | | |

| *Item 7A.* | | | Quantitative and Qualitative Disclosures about Market Risk | | | [removed: [56](#i_0_118) | | |] [added: [54](#i8afb058a51bd4e449582d76e6d89e83d_115)] | | |

| *Item 8.* | | | Financial Statements and Supplementary Data | | | [removed: [57](#i_0_121) | | |] [added: [55](#i8afb058a51bd4e449582d76e6d89e83d_118)] | | |

| *Item 9.* | | | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | | [removed: [57](#i_0_124) | | |] [added: [55](#i8afb058a51bd4e449582d76e6d89e83d_121)] | | |

| *Item 9A.* | | | Controls and Procedures | | | [removed: [58](#i_0_127) | | |] [added: [55](#i8afb058a51bd4e449582d76e6d89e83d_124)] | | |

| *Item 9B.* | | | Other Information | | | [removed: [58](#i_0_130) | | |] [added: [56](#i8afb058a51bd4e449582d76e6d89e83d_127)] | | |

| | | | Part III | | | | | | [removed: | | |]

| *Item 10.* | | | Directors, Executive Officers and Corporate Governance | | | [removed: [58](#i_0_136) | | |] [added: [56](#i8afb058a51bd4e449582d76e6d89e83d_133)] | | |

| *Item 11.* | | | Executive Compensation | | | [removed: [59](#i_0_139) | | |] [added: [56](#i8afb058a51bd4e449582d76e6d89e83d_136)] | | |

| *Item 12.* | | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | | [removed: [59](#i_0_142) | | |] [added: [57](#i8afb058a51bd4e449582d76e6d89e83d_139)] | | |

| *Item 13.* | | | Certain Relationships and Related Transactions, and Director Independence | | | [removed: [59](#i_0_145) | | |] [added: [57](#i8afb058a51bd4e449582d76e6d89e83d_142)] | | |

| *Item 14.* | | | Principal Accountant Fees and Services | | | [removed: [59](#i_0_148) | | |] [added: [57](#i8afb058a51bd4e449582d76e6d89e83d_145)] | | |

| | | | Part IV | | | | | | [removed: | | |]

| *Item 15.* | | | Exhibits and Financial Statement Schedules | | | [removed: [59](#i_0_154) | | |] [added: [57](#i8afb058a51bd4e449582d76e6d89e83d_151)] | | |

| Preferred Stock, Series B Junior Participating, Purchase Rights | | | N/A | | | The Nasdaq Stock Market LLC | | |

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Yes ☒ No ☐

| | | | Revenue Generating Activities | | | [6](#i8afb058a51bd4e449582d76e6d89e83d_22) | | |

| | | | Markets | | | [9](#i8afb058a51bd4e449582d76e6d89e83d_28) | | |

| | | | Resources | | | [12](#i8afb058a51bd4e449582d76e6d89e83d_31) | | |

| | | | Human Capital Resources | | | [15](#i8afb058a51bd4e449582d76e6d89e83d_55) | | |

| Signatures | | | | | | [66](#i8afb058a51bd4e449582d76e6d89e83d_160) | | |

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

| 3.875% Notes | | | | | | 3.875% Senior Notes due 2028 | | |

| AC | | | | | | Alternating current | | |

| AFCI | | | | | | Arc fault circuit interrupter | | |

| AI | | | | | | Artificial intelligence | | |

| Amended Credit Agreement | | | | | | Credit Agreement, dated as of April 15, 2016, as subsequently amended, 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, providing for the Revolving Credit Facility and the Term Loan "B" Facility | | |

| BCD | | | | | | Bipolar-CMOS-DMOS | | |

| DC | | | | | | Direct current | | |

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

| HV | | | | | | High voltage | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| Revolving Credit Facility | | | | | | A $1.97 billion revolving credit facility created pursuant to the Amended Credit Agreement | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| Term Loan "B" Facility | | | | | | A $2.4 billion term loan "B" facility created pursuant to the Amended Credit Agreement | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

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

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

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

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

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).

| | | | Products and Technology | | | [6](#i_0_22) | | | | | |

| | | | Customers | | | [8](#i_0_25) | | | | | |

| | | | End-Markets for Our Products | | | [9](#i_0_28) | | | | | |

| | | | Manufacturing Operations | | | [9](#i_0_31) | | | | | |

| | | | Raw Materials | | | [11](#i_0_34) | | | | | |

| | | | Sales, Marketing and Distribution | | | [11](#i_0_37) | | | | | |

| | | | Patents, Trademarks, Copyrights and Other Intellectual Property Rights | | | [11](#i_0_40) | | | | | |

| | | | Backlog and Inventory | | | [12](#i_0_46) | | | | | |

| | | | Competition | | | [12](#i_0_49) | | | | | |

| | | | Employees | | | [13](#i_0_58) | | | | | |

| | | | Geographical Information | | | [16](#i_0_64) | | | | | |

| Signatures | | | | | | | | | [68](#i_0_163) | | |

| 2.625% Notes, Series B | | | | | | 2.625% Convertible Senior Subordinated Notes due 2026, Series B | | |

| AXSEM | | | | | | AXSEM A.G. | | |

| CCD | | | | | | Charge-coupled device | | |

| HD | | | | | | Hyper Device | | |

| IPD | | | | | | Integrated passive devices | | |

| IPM | | | | | | Intelligent power module | | |

| PIM | | | | | | Power integrated module | | |

| SMBC | | | | | | Sumitomo Mitsui Banking Corporation | | |

| WSTS | | | | | | World Semiconductor Trade Statistics | | |

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

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

Additionally, we own and lease research and development facilities located in Australia, Belgium, Canada, China, the Czech Republic, France, Germany, [removed: Hong Kong,] India, [added: Ireland, Israel, Italy,] Japan, [added: the Philippines,] Singapore, South Korea, Romania, Russia, the Slovak Republic, [added: Slovenia,] Switzerland, Taiwan, the United Kingdom and the United States.

Our joint [removed: ventures] [added: venture] in Leshan, China [removed: and in Aizuwakamatsu, Japan] also [removed: own] [added: owns] manufacturing, warehouse, laboratory, office and other unused space.

[added: See "Business—Resources" included elsewhere in this Form 10-K for] further details on our properties and "Business-Governmental Regulation" for further details on environmental regulation of our properties.

See “Business—Manufacturing Operations" and "Sales, Marketing and Distribution” included elsewhere in this Form 10-K for

As of February [removed: 13, 2020,] [added: 10, 2021,] there were approximately [removed: 222] [added: 209] holders of record of our common stock and [removed: 411,065,636] [added: 411,881,071] shares of common stock outstanding.

The following table provides information regarding repurchases of our common stock during the quarter ended December 31, [removed: 2019:][added: 2020:]

[removed: (1) These time] [added: (1)The] periods represent our fiscal month start and end dates for the fourth quarter of [removed: 2019.][added: 2020.]

[removed: (2) The] [added: (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 [removed: RSUs.][added: RSUs and shares purchased under the previously disclosed share repurchase program pursuant to the Capital Allocation Policy (the "2018 Share Repurchase Program").]

[removed: (3) The] [added: (3)The] price per share is based on the fair market value at the time of tender or repurchase, [removed: respectively.][added: as applicable.]

[removed: (4) On] [added: (4)On] November 15, 2018, we announced [removed: a new share repurchase program pursuant to] the [removed: Capital Allocation Policy (the “2018] [added: 2018] Share Repurchase [removed: Program”] [added: Program] for up to $1.5 billion of our common stock, [removed: effective from December 1, 2018,] exclusive of any fees, commissions or other [removed: expenses.][added: expenses, subject to certain contingencies, that became effective on December 1, 2018 and expires on December 31, 2022.]

We repurchased approximately [removed: 7.8] [added: 3.6] million shares of common stock for [removed: $138.9] [added: $65.3] million under the 2018 Share Repurchase Program during the year ended December 31, [removed: 2019.][added: 2020.]

[removed: We] [added: Under the 2018 Share Repurchase Program, 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, [added: and] other market and economic conditions.

| October 3, 2020 - October 30, 2020 | | | | | | 1,919 | | | | | | $ | 23.35 | | | | | — | | | | | | $ | 1,295.8 | |

| October 31, 2020 - November 27, 2020 | | | | | | 5,808 | | | | | | 26.57 | | | | | | — | | | | | | 1,295.8 | | |

| November 28, 2020 - December 31, 2020 | | | | | | 11,913,263 | | | | | | 27.17 | | | | | | — | | | | | | 1,295.8 | | |

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

| Total | | | | | | 11,920,990 | | | | | | 27.17 | | | | | | — | | | | | | | | |

Also included in the November 28, 2020 – December 30, 2020 period is an aggregate of 11,823,348 shares that were repurchased on December 1, 2020 pursuant to bond hedges for which no cash was exchanged.

See Note 9: ''Long-Term Debt'' in the notes to the audited consolidated financial statements included elsewhere in this Form 10-K for additional information on this transaction.

As of December 31, 2020, the authorized amount remaining under the 2018 Share Repurchase Program was $1,295.8 million.

| September 28, 2019 - October 25, 2019 | | | | | | 44,381 | | | | | | $ | 18.29 | | | | | — | | | | | | $ | 1,361.1 | |

| October 26, 2019 - November 22, 2019 | | | | | | 12,285 | | | | | | 21.66 | | | | | | — | | | | | | 1,361.1 | | |

| November 23, 2019 - December 31, 2019 | | | | | | 41,358 | | | | | | 21.11 | | | | | | — | | | | | | 1,361.1 | | |

| Total | | | | | | 98,024 | | | | | | 19.90 | | | | | | — | | | | | | | | |

The 2018 Share Repurchase Program expires on December 31, 2022.

Of the total amount authorized, $1,361.1 million remained unutilized as of December 31, 2019.

Under the 2018 Share Repurchase Program, we may repurchase up to $1.5 billion (exclusive of fees, commissions and other expenses) of our common stock from December 1, 2018 through December 31, 2022, subject to certain contingencies.

The [removed: statement] [added: consolidated statements] of operations and balance sheet data set forth below are derived from our audited consolidated financial statements.

| | | | Year ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | | | | | | | | | | | | | |]

| | | | [removed: 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | 2015] [added: 2020] | | | | | | [added: 2019] | | | | | | [added: 2018] | | | | | | [added: 2017] | | | | | | [added: 2016] | | |

| | | | (in millions, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | | | | | | | | | | | | | |]

| Consolidated Statements of Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | | | | | | | | | | | | | |]

| Revenue | | | $ | [removed: 5,517.9] [added: 5,255.0] | | | | | $ | [removed: 5,878.3] [added: 5,517.9] | | | | | $ | [removed: 5,543.1] [added: 5,878.3] | | | | | $ | [removed: 3,906.9] [added: 5,543.1] | | | | | $ | [removed: 3,495.8 | | | | | | | | | | | | | | | | | | | | | | | |] [added: 3,906.9] | |

| Income tax (provision) benefit | | | [removed: (62.7) | | | | | | (125.1) | | | | | | 265.5 | | | | | | 3.9 | | | | | | (10.8)] [added: 59.8] | | | | | | [added: (62.7)] | | | | | | [added: (125.1)] | | | | | | [added: 265.5] | | | | | | [added: 3.9] | | |

| Net income | | | [removed: 213.9 | | | | | | 629.9 | | | | | | 813.0 | | | | | | 184.5 | | | | | | 209.0] [added: 236.4] | | | | | | [added: 213.9] | | | | | | [added: 629.9] | | | | | | [added: 813.0] | | | | | | [added: 184.5] | | |

| Diluted net income per common share attributable to ON Semiconductor Corporation | | | [removed: 0.51 | | | | | | 1.44 | | | | | | 1.89 | | | | | | 0.43 | | | | | | 0.48] [added: 0.56] | | | | | | [added: 0.51] | | | | | | [added: 1.44] | | | | | | [added: 1.89] | | | | | | [added: 0.43] | | |

| | | | (in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | | | | | | | | | | | | | |]

| Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | | | | | | | | | | | | | |]

| Total assets [removed: (1)] | | | $ | [removed: 8,425.5] [added: 8,668.0] | | | | | $ | [removed: 7,587.6] [added: 8,425.5] | | | | | $ | [removed: 7,195.1] [added: 7,587.6] | | | | | $ | [removed: 6,924.4] [added: 7,195.1] | | | | | $ | [removed: 3,869.6 | | | | | | | | | | | | | | | | | | | | | | | |] [added: 6,924.4] | |

| Net long-term debt, including current maturities [removed: (1)] | | | [removed: 3,612.5 | | | | | | 2,766.1 | | | | | | 2,951.8 | | | | | | 3,622.3 | | | | | | 1,393.9] [added: 3,491.3] | | | | | | [added: 3,612.5] | | | | | | [added: 2,766.1] | | | | | | [added: 2,951.8] | | | | | | [added: 3,622.3] | | |

| Total stockholders' equity | | | [removed: 3,324.1 | | | | | | 3,194.1 | | | | | | 2,801.0 | | | | | | 1,845.0 | | | | | | 1,631.9] [added: 3,558.1] | | | | | | [added: 3,324.1] | | | | | | [added: 3,194.1] | | | | | | [added: 2,801.0] | | | | | | [added: 1,845.0] | | |

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

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

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

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

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

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

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

| | | | As of December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

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

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

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

| | | | As of | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

_______________________

(1)Increased in 2016 primarily due to the acquisition of Fairchild.

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 [removed: Rules 13a-15(e) and 15d-15(e) of the Exchange Act).]

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, [removed: 2019.][added: 2020.]

There have been no 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 fiscal quarter ended December 31, [removed: 2019] [added: 2020] 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: 2019.][added: 2020.]

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, [removed: 2019.][added: 2020.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2019] [added: 2020] 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.

Rules 13a-15(e) and 15d-15(e) of the Exchange Act).

Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2019 excluded Quantenna, which was acquired by the Company on June 19, 2019.

Quantenna is a wholly-owned subsidiary of the Company that is excluded from management’s assessment of internal control over financial reporting and represented approximately 1% and 2% of total assets and total revenue, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2019.

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 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 fiscal year [added: ended December 31, 2020 in connection with our 2021 Annual Meeting of Stockholders ("Proxy Statement").]

ended December 31, 2019 in connection with our 2020 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 [removed: Governance—2019] [added: Governance—2020] Compensation of Directors," "Compensation of Executive Officers," "Compensation Committee Report," "Compensation Discussion and Analysis," "ON Semiconductor [removed: 2019] [added: 2020] Pay Ratio [removed: Disclosure" and "Compensation Committee Interlocks and Insider Participation" in our Proxy Statement.]

Disclosure" and "Compensation Committee Interlocks and Insider Participation" in our Proxy Statement.

| Report of Independent Registered Public Accounting Firm | | | [removed: [69](#i_0_166)] [added: [68](#i8afb058a51bd4e449582d76e6d89e83d_163)] | | |

| Consolidated Balance Sheets as of December 31, [removed: 2019] [added: 2020] and December 31, [removed: 2018] [added: 2019] | | | [removed: [71](#i_0_172)] [added: [70](#i8afb058a51bd4e449582d76e6d89e83d_169)] | | |

| Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | | | [removed: [73](#i_0_178)] [added: [72](#i8afb058a51bd4e449582d76e6d89e83d_172)] | | |

| Consolidated Statements of Stockholders' Equity for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | | | [removed: [74](#i_0_181)] [added: [73](#i8afb058a51bd4e449582d76e6d89e83d_175)] | | |

| Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | | | [removed: [75](#i_0_187)] [added: [74](#i8afb058a51bd4e449582d76e6d89e83d_178)] | | |

| Notes to Consolidated Financial Statements | | | [removed: [76](#i_0_190)] [added: [75](#i8afb058a51bd4e449582d76e6d89e83d_181)] | | |

| Schedule II - Valuation and Qualifying Accounts for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | | | [removed: [125](#i_0_268)] [added: [117](#i8afb058a51bd4e449582d76e6d89e83d_247)] | | |

| 4.2(a) | | | | | | [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)](http://www.sec.gov/Archives/edgar/data/1097864/000119312515216536/d939149dex41.htm)] [added: April 3, 2017)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm)] | | | | | |

| 4.2(b) | | | | | | [Form of Global [removed: 1.00%] [added: 1.625%] Convertible Senior Note due [removed: 2020] [added: 2023] (included in Exhibit [removed: 4.2(a))](http://www.sec.gov/Archives/edgar/data/1097864/000119312515216536/d939149dex41.htm)] [added: 4.](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm)[2](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm)[(a))](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm)] | | | | | |

| [removed: 4.2(c)] [added: 4.3(a)] | | | | | | [removed: [Supplemental Indenture to the Indenture regarding the 1.00% Convertible Senior Notes due 2020,] [added: [Indenture,] dated [removed: March 11, 2016,] [added: as of August 21, 2020,] among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National [removed: Association, as trustee] [added: Association] (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on [removed: March 17, 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516508595/d149160dex41.htm)] [added: August 21, 2020)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520227087/d26820dex41.htm) [Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 21, 2020)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520227087/d26820dex41.htm)] | | | | | |

| [removed: 4.2(d)] [added: 4.2(c)] | | | | | | [removed: [Second] [added: [First] Supplemental Indenture to the Indenture regarding the [removed: 1.00%] [added: 1.625%] Convertible Senior Notes [removed: 2020,] [added: due 2023,] dated [removed: April 14, 2016,] [added: as of January 7, 2020] among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as [removed: 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)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex41.htm)] [added: trustee](http://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex43c.htm)] | | | | | |

| [removed: 4.2(e)] [added: 10.5(e)] | | | | | | [removed: [Third Supplemental Indenture] [added: [Joinder] to [removed: the Indenture regarding the 1.00% Convertible Senior Notes due 2020,] [added: Amended and Restated Guaranty,] dated [removed: November 21,] [added: April 14,] 2016, among [removed: ON Semiconductor Corporation,] the guarantors party thereto [removed: and Wells Fargo Bank, National Association, as trustee] (incorporated by reference to Exhibit [removed: 4.1] [added: 10.4] to the Company’s Current Report on Form 8-K filed with the Commission on [removed: November 21, 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516773790/d293684dex41.htm)] [added: April 15, 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex104.htm)] | | | | | |

| 4.3(b) | | | | | | [Form of Global [removed: 1.625% Convertible] [added: 3.875%] Senior Note due [removed: 2023] [added: 2028] (included in Exhibit [removed: 4.3(a))](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm)] [added: 4.3(a))](http://www.sec.gov/Archives/edgar/data/1097864/000119312520227087/d26820dex41.htm)] | | | | | |

| 4.4 | | | | | | [Description of the Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934, as [removed: amended(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex44.htm)] [added: amended(1)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit44descriptionofsecu.htm)] | | | | | |

| [removed: 10.5(e)] [added: 10.18] | | | | | | [removed: [Joinder to Amended] [added: [Form of Indemnification Agreement with Directors] and [removed: Restated Guaranty, dated April 14, 2016, among the guarantors party thereto] [added: Officers] (incorporated by reference to Exhibit [removed: 10.4] [added: 10.1] to the Company’s Current Report on Form [removed: 8](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex104.htm)[\-](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex104.htm)[K] [added: 8-K] filed with the Commission on [removed: April 15, 2016)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516543360/d175901dex104.htm)] [added: February 25, 2016)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516478268/d77585dex101.htm)] | | | | | |

| 10.7(h) | | | | | | [Non-qualified Stock Option Agreement [removed: for](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex103.htm) [Senior] [added: for Senior] Vice Presidents [removed: an Above](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex103.htm) [for] [added: and Above for] the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (form of standard agreement) (incorporated by reference to Exhibit [removed: 10.](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex103.htm)[3](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex103.htm) [to] [added: 10.3 to] the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 5, 2010)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex103.htm) | | | | | |

| 10.7(i) | | | | | | [removed: [Restricted](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex104.htm) [Stock](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex104.htm) [Units Award](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex104.htm) [Agreement] [added: [Restricted Stock Units Award Agreement] for Senior Vice Presidents and Above for the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (form of standard agreement) (incorporated by reference to Exhibit [removed: 10.](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex104.htm)[4](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex104.htm) [to] [added: 10.4 to] the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 5, 2010)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312510179445/dex104.htm) | | | | | |

| 10.7(k) | | | | | | [Performance-Based Restricted Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan [removed: (2016] [added: (2017] form of Performance-Based Award for Senior Vice Presidents and Above) (incorporated by reference to Exhibit [removed: 10.1] [added: 10.3] to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August [removed: 8, 2016)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516674368/d398426dex101.htm)] [added: 7, 2017)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517249592/d428805dex103.htm)] | | | | | |

| 10.7(l) | | | | | | [Performance-Based Restricted Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan [removed: (2017] [added: (2018] form of Performance-Based Award for Senior Vice Presidents and Above) (incorporated by reference to Exhibit [removed: 10.3] [added: 10.1] to the Company’s Quarterly Report on Form 10-Q filed with the Commission on [removed: August 7, 2017)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517249592/d428805dex103.htm)] [added: April 30, 2018)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312518141784/d570004dex101.htm)] | | | | | |

| 10.7(m) | | | | | | [removed: [Performance-Based Restricted] [added: [Restricted] Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2018 form [removed: of Performance-Based Award] [added: agreement] for Senior Vice Presidents and Above) (incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the Company’s Quarterly Report on Form 10-Q filed with the Commission on April 30, [removed: 2018)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312518141784/d570004dex101.htm)] [added: 2018)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312518141784/d570004dex102.htm)] | | | | | |

| [removed: 10.7(n)] [added: 10.7(o)] | | | | | | [removed: [Restricted] [added: [Performance-Based Restricted] Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan [removed: (2018] [added: (2019] form agreement for Senior Vice Presidents and Above) (incorporated by reference to Exhibit 10.2 to the Company’s [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q] [added: 8-K] filed with the Commission on [removed: April 30, 2018)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312518141784/d570004dex102.htm)] [added: February 19, 2019)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519044289/d708156dex102.htm)] | | | | | |

| [removed: 10.7(o)] [added: 10.7(n)] | | | | | | [Restricted Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2019 form agreement for Section 16 Officers) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 19, 2019)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519044289/d708156dex101.htm) | | | | | |

| 10.7(p) | | | | | | [Performance-Based Restricted Stock Units [added: Upside] Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2019 form agreement for Senior Vice Presidents and Above) (incorporated by reference to Exhibit [removed: 10.2] [added: 10.3] to the Company’s Current Report on Form 8-K filed with the Commission on February 19, [removed: 2019)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519044289/d708156dex102.htm)] [added: 2019)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519044289/d708156dex103.htm)] | | | | | |

| 10.7(q) | | | | | | [removed: [Performance-Based] [added: [2020 Form of Performance-Based] Restricted Stock Units [removed: Upside] Award [removed: Agreement] [added: for Senior Vice Presidents and Above (Upside)] under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan [removed: (2019 form agreement for Senior Vice Presidents and Above)] (incorporated by reference to Exhibit [removed: 10.3] [added: 10.1] to the Company’s Current Report on Form [removed: 8-K] [added: 8-K/A] filed with the Commission on [removed: February 19, 2019)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519044289/d708156dex103.htm)] [added: March 5, 2020)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520062011/d833568dex101.htm)] | | | | | |

| 10.14 | | | | | | [removed: [Key Officer Severance and Change of Control] [added: [Employment] Agreement by and between Semiconductor Components Industries, LLC and [removed: Taner Ozcelik,] [added: Vincent C. Hopkin,] dated as of [removed: June 1, 2017] [added: May 11, 2018] (incorporated by reference to Exhibit [removed: 10.22] [added: 10.2] to the Company’s [removed: Annual] [added: Quarterly] Report on Form [removed: 10-K] [added: 10-Q] filed with the Commission on [removed: February 21, 2018)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312518051397/d508456dex1022.htm)] [added: July 30, 2018)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312518230892/d550734dex102.htm)] | | | | | |

| 10.15 | | | | | | [Employment Agreement by and between Semiconductor Components Industries, LLC and [removed: Vince Hopkin,] [added: Simon Keeton,] dated [removed: as of May 11, 2018] [added: January 1, 2019] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.20] to the [removed: Company’s Quarterly] [added: Company's Annual] Report on Form [removed: 10-Q] [added: 10-K] filed with the Commission on [removed: July 30, 2018)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312518230892/d550734dex102.htm)] [added: February 20, 2019)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519045025/d664850dex1020.htm)] | | | | | |

| [removed: 10.16] [added: 10.20(a)] | | | | | | [removed: [Employment Agreement by and] [added: [Asset Purchase Agreement, dated as of April 22, 2019,] between [added: GLOBALFOUNDRIES U.S. Inc. and] Semiconductor Components Industries, LLC [removed: and Simon Keeton, dated January 1, 2019](http://www.sec.gov/Archives/edgar/data/1097864/000119312519045025/d664850dex1020.htm) [(incorporated] [added: (incorporated] by reference to Exhibit [removed: 10.20] [added: 10.1] to the [removed: Company's Annual] [added: Company’s Quarterly] Report on Form [removed: 10-K] [added: 10-Q] filed with the Commission on [removed: February 20, 2019)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519045025/d664850dex1020.htm)[(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312519045025/d664850dex1020.htm)] [added: August 5, 2019)†](http://www.sec.gov/Archives/edgar/data/1097864/000119312519212847/d781739dex101.htm)] | | | | | |

| [removed: 10.17] [added: 4.5] | | | | | | [removed: [Form] [added: [Rights Agreement, dated as] of [removed: Indemnification Agreement with Directors] [added: June 8, 2020, between ON Semiconductor Corporation] and [removed: Officers] [added: Computershare Trust Company, N.A., as Rights Agent] (incorporated by reference to Exhibit [removed: 10.1] [added: 4.1] to the Company’s Current Report on Form 8-K filed with the Commission on [removed: February 25, 2016)(2)](http://www.sec.gov/Archives/edgar/data/1097864/000119312516478268/d77585dex101.htm)] [added: June 8, 2020)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520162912/d938291dex41.htm)] | | | | | |

| [removed: 10.18(a)] [added: 10.19(a)] | | | | | | [Environmental Side Letter, dated March 11, 1997, between National Semiconductor Corporation and Fairchild Semiconductor Corporation (incorporated by reference to Exhibit 10.19 to Fairchild Semiconductor Corporation’s Registration Statement filed with the Commission on May 12, 1997 (File No. 333-26897))](http://www.sec.gov/Archives/edgar/data/1036960/0000912057-97-016828.txt) | | | | | |

| [removed: 10.18(b)] [added: 10.19(b)] | | | | | | [Intellectual Property License Agreement, dated April 13, 1999, between Samsung Electronics Co., Ltd. and Fairchild Korea Semiconductor, Ltd. (incorporated by reference to Exhibit 10.41 to Fairchild Semiconductor International, Inc.’s Registration Statement filed with the Commission on June 30, 1999 (File No. 333-78557))](http://www.sec.gov/Archives/edgar/data/1036960/000095012399006087/0000950123-99-006087.txt) | | | | | |

| [removed: 10.18(c)] [added: 10.19(c)] | | | | | | [Fairchild Benefit Restoration Plan (incorporated by reference to Exhibit 10.23 to Fairchild Semiconductor Corporation’s Registration Statement filed with the Commission on May 12, 1997 (File No. 333-26897))(2)](http://www.sec.gov/Archives/edgar/data/1036960/0000912057-97-016828.txt) | | | | | |

| [removed: 10.18(d)] [added: 10.19(d)] | | | | | | [Technology Licensing and Transfer Agreement, dated March 11, 1997, between National Semiconductor Corporation and Fairchild Semiconductor Corporation (incorporated by reference to Amendment No. 3 to Fairchild Semiconductor Corporation’s Registration Statement on Form S-4, [removed: filed July] [added: filed](http://www.sec.gov/Archives/edgar/data/1036960/0000912057-97-016828.txt) [with the Commiss](http://www.sec.gov/Archives/edgar/data/1036960/0000912057-97-016828.txt)[ion on](http://www.sec.gov/Archives/edgar/data/1036960/0000912057-97-016828.txt) [July] 9, 1997 (File No. 333-28697))](http://www.sec.gov/Archives/edgar/data/1036960/0000912057-97-016828.txt) | | | | | |

| [removed: 10.18(e)] [added: 10.19(e)] | | | | | | [Intellectual Property Assignment and License Agreement, dated December 29, 1997, between Raytheon Semiconductor, Inc. and Raytheon Company (incorporated by reference to Fairchild Semiconductor International, Inc.’s Current Report on Form 8-K, dated December 31, 1997, [removed: filed January] [added: filed](http://www.sec.gov/Archives/edgar/data/1038272/0001047469-98-000847.txt) [with the Commission on](http://www.sec.gov/Archives/edgar/data/1038272/0001047469-98-000847.txt) [January] 13, 1998. (File No. 333-26897))](http://www.sec.gov/Archives/edgar/data/1038272/0001047469-98-000847.txt) | | | | | |

| [removed: 10.19] [added: 10.20(b)] | | | | | | [removed: [Asset] [added: [Amendment No. 1 to Asset] Purchase Agreement, dated [removed: as of April 22, 2019, between GLOBALFOUNDRIES U.S. Inc.] [added: October 1, 2020, by] and [added: among] Semiconductor Components Industries, [removed: LLC] [added: LLC, GLOBALFOUNDRIES U.S. Inc., and GLOBALFOUNDRIES Inc.] (incorporated by reference to Exhibit 10.1 to the Company’s [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q] [added: 8-K] filed with the Commission on [removed: August 5, 2019)†](http://www.sec.gov/Archives/edgar/data/1097864/000119312519212847/d781739dex101.htm)] [added: October 7, 2020)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520265627/d12798dex101.htm)] | | | | | |

| [removed: 10.20] [added: 10.21] | | | | | | [Settlement Agreement, dated October 19, 2019, by and between ON Semiconductor Corporation and [added: Settlement Agreement, dated October 19, 2019, by and between ON Semiconductor Corporation and] Power Integrations, [removed: Inc.(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex1020.htm)] [added: Inc. (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K filed with the Commission on February 19, 2020)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex1020.htm)] | | | | | |

| 21.1 | | | | | | [List of Significant [removed: Subsidiaries(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex211.htm)] [added: Subsidiaries(1)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit211subsidiariesfor2.htm)] | | | | | |

| 23.1 | | | | | | [Consent of Independent Registered Public Accounting Firm-PricewaterhouseCoopers [removed: LLP(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex231.htm)] [added: LLP(1)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit231onsemiconductorc.htm)] | | | | | |

| 24.1 | | | | | | [Powers of [removed: Attorney(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex241.htm)] [added: Attorney(1)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit24120ormpowerofatto.htm)] | | | | | |

| 31.1 | | | | | | [Certification by CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex311.htm)] [added: 2002(1)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit3112020form10-k.htm)] | | | | | |

| 31.2 | | | | | | [Certification by CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex312.htm)] [added: 2002(1)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit3122020form10-k.htm)] | | | | | |

| 3.3 | | | | | | [Certificate of Designations of Series B Junior Participating Preferred Stock of ON Semiconductor Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 8, 2020)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520162912/d938291dex31.htm) | | | | | |

| 10.5(q) | | | | | | [Eighth Amendment to Credit Agreement, dated as of June 23, 2020, 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 June 24, 2020)](http://www.sec.gov/Archives/edgar/data/1097864/000119312520177742/d933652dex101.htm) | | | | | |

| 10.7(r) | | | | | | [Restricted Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan for Hassane S. El-Khoury, dated December 7, 2020(1)(2)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit107ronrsuawardagree.htm) | | | | | |

| 10.7(s) | | | | | | [Performance-Based Restricted Stock Units Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan for Hassane S. El-Khoury, dated December 7, 2020(1)(2)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit107sonpbrsuawardagr.htm) | | | | | |

| 10.16 | | | | | | [Employment Agreement by and between Semiconductor Components Industries, LLC and Hassane S. El-Khoury, dated December 7, 2020(1)(2)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit1016el-khouryemploy.htm) | | | | | |

| 10.17 | | | | | | [Key Officer Severance and Change in Control Agreement by and between Semiconductor Components Industries, LLC and Ross F. Jatou, dated as of October 1, 2020 (1)(2)](https://www.sec.gov/Archives/edgar/data/1097864/000162828021002219/exhibit1017-jatouseverance.htm) | | | | | |

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

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

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

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

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

| 4.2(f) | | | | | | [Fourth Supplemental Indenture to the Indenture regarding the 1.00% Convertible Senior Notes due 2020, dated January 7, 2020, among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex42f.htm) | | | | | |

| 4.3(a) | | | | | | [Indenture regarding the 1.625% Convertible Senior Notes due 2023, dated 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 April 3, 2017)](http://www.sec.gov/Archives/edgar/data/1097864/000119312517107567/d343212dex41.htm) | | | | | |

| 4.3(c) | | | | | | [First Supplemental Indenture to the Indenture regarding the 1.625% Convertible Senior Notes due 2023, dated as of January 7, 2020 among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee(1)](https://www.sec.gov/Archives/edgar/data/1097864/000119312520041751/d864442dex43c.htm) | | | | | |

| [added: February 16, 2021] | | | | | | ON Semiconductor Corporation | | |

| /s/ [removed: KEITH D. JACKSON Keith D. Jackson] [added: HASSANE S. EL-KHOURY Hassane S. El-Khoury] | | | President, Chief Executive Officer and Director [removed: (Principal] | | | February [removed: 19, 2020] [added: 16, 2021] | | |

| | | | [added: (Principal] Executive Officer) | | | | | |

| /s/ BERNARD GUTMANN Bernard Gutmann | | | Executive Vice President, Chief Financial Officer and Treasurer | | | February [removed: 19, 2020] [added: 16, 2021] | | |

| | | | (Principal Financial [removed: Officer and Principal Accounting] Officer) | | | | | |

| * | | | Chair of the Board of Directors | | | February [removed: 19, 2020] [added: 16, 2021] | | |

| * | | | Director | | | February [removed: 19, 2020] [added: 16, 2021] | | |

| *By: /s/ BERNARD GUTMANN Bernard Gutmann | | | [removed: Attorney in Fact] [added: Attorney-in-Fact] | | | February [removed: 19, 2020] [added: 16, 2021] | | |

We have audited the accompanying consolidated balance sheets of ON Semiconductor Corporation and its subsidiaries (the [removed: “Company”)] [added: "Company")] as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the related consolidated statements of operations and comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the [removed: “consolidated] [added: "consolidated] financial [removed: statements”).][added: statements").]

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019] [added: 2020] 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: 2019,] [added: 2020,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and [removed: expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.]

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s ship and credit reserves are [removed: $178.7] [added: $180.2] million as of December 31, [removed: 2019.][added: 2020.]

The principal considerations for our determination that performing procedures relating to ship and credit reserves is a critical audit matter are [removed: there was] [added: the] significant judgment by management [removed: to estimate] [added: in estimating] the reserves, which in turn led to significant auditor judgment, subjectivity and effort in performing procedures to evaluate management’s expected future claims assumptions.

These procedures also included, among [removed: others,] [added: others (i)] testing management’s process for determining the estimate, [added: (ii)] evaluating the appropriateness of the approach used by management in developing the [removed: estimate and] [added: estimate, (iii) evaluating] the reasonableness of the expected future claims assumptions, and [added: (iv)] testing the completeness and accuracy of historical claims data.

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s inventory balance of [removed: $1,232.4] [added: $1,251.4] million as of December 31, [removed: 2019,] [added: 2020,] is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value.

The principal considerations for our determination that performing procedures relating to the valuation of inventories is a critical audit matter are [removed: there was] [added: the] significant judgment by management in developing the write down for excess and obsolete inventories.

These procedures also included, among [removed: others,] [added: others (i)] testing management’s process for developing the write down for excess and obsolete inventories, [added: (ii)] evaluating the appropriateness of the [removed: analysis] [added: analysis,] and [added: (iii) evaluating] the reasonableness of the significant assumptions [added: related to projected end-user demand] used by management in developing the write down for excess and obsolete [removed: inventories, including projected end-user demand.][added: inventories.]

Determining the fair value [added: of acquired technology assets] is judgmental in nature and requires the use of significant estimates and assumptions, including the discount rate, revenue growth rates, projected gross margins, and estimated research and development [added: and other operating] expenses.

| | | | December 31, 2019 | | | [removed: | | |] December 31, 2018 | | |

| Cash and cash equivalents | | | [added: | | |] $ | [added: 1,080.7 | | | | | $ |] 894.2 | | | | | $ | 1,069.6 | |

| Receivables, net | | | [removed: 705.0] [added: 676.0] | | | | | | [removed: 686.0] [added: 705.0] | | |

| Inventories | | | [removed: 1,232.4] [added: 1,251.4] | | | | | | [removed: 1,225.2] [added: 1,232.4] | | |

| Other current assets | | | [removed: 188.4] [added: 176.0] | | | | | | [removed: 187.0] [added: 188.4] | | |

| Total current assets | | | [removed: 3,020.0] [added: 3,184.1] | | | | | | [removed: 3,167.8] [added: 3,020.0] | | |

| Property, plant and equipment, net | | | [removed: 2,591.6] [added: 2,512.3] | | | | | | [removed: 2,549.6] [added: 2,591.6] | | |

| Goodwill | | | [removed: 1,659.2] [added: 1,663.4] | | | | | | [removed: 932.5] [added: 1,659.2] | | |

| Intangible assets, net | | | [removed: 590.5] [added: 469.0] | | | | | | [removed: 566.4] [added: 590.5] | | |

| Deferred tax assets | | | [removed: 307.8] [added: 429.0] | | | | | | [removed: 266.2] [added: 307.8] | | |

| Other assets | | | [removed: 256.4] [added: 410.2] | | | | | | [removed: 105.1] [added: 256.4] | | |

| Total assets | | | $ | [removed: 8,425.5] [added: 8,668.0] | | | | | $ | [removed: 7,587.6] [added: 8,425.5] | |

| Accounts payable | | | $ | [removed: 543.6] [added: 572.9] | | | | | $ | [removed: 671.7] [added: 543.6] | |

| Accrued expenses and other current liabilities | | | [removed: 538.8] [added: 570.0] | | | | | | [removed: 659.1] [added: 538.8] | | |

| Current portion of long-term debt | | | [removed: 736.0] [added: 531.6] | | | | | | [removed: 138.5] [added: 736.0] | | |

| Total current liabilities | | | [removed: 1,818.4] [added: 1,674.5] | | | | | | [removed: 1,469.3] [added: 1,818.4] | | |