ON Semiconductor 10-Q 2024-06-28

Filed 2024-07-29. 8 sections, 178K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 28, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

(Commission File Number) 001-39317

ON SEMICONDUCTOR CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						36-3840979
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

5701 N. Pima Road

Scottsdale, AZ 85250

(602) 244-6600

(Address, zip code and telephone number, including area code, of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ON	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares outstanding of the issuer's class of common stock as of the close of business on July 24, 2024:


Title of Each Class						Number of Shares
Common Stock, par value $0.01 per share						428,356,117

ON SEMICONDUCTOR CORPORATION FORM 10-Q

TABLE OF CONTENTS

Part I: Financial Information



			Item 1. Financial Statements (unaudited)			4
			Consolidated Balance Sheets			4
			Consolidated Statements of Operations and Comprehensive Income			5
			Consolidated Statements of Stockholders' Equity			6
			Consolidated Statements of Cash Flows			8
			Notes to Consolidated Financial Statements			9
			Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			26
			Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
			Item 4. Controls and Procedures			35

Part II: Other Information




			Item 1. Legal Proceedings			36
			Item 1A. Risk Factors			36
			Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			37
			Item 3. Defaults Upon Senior Securities			37
			Item 4. Mine Safety Disclosures			37
			Item 5. Other Information			37
			Item 6. Exhibits			38
			Signatures			39

(See the glossary of selected terms immediately following this table of contents for definitions of certain abbreviated terms.)

ON SEMICONDUCTOR CORPORATION

FORM 10-Q

GLOSSARY OF SELECTED ABBREVIATED TERMS*


Abbreviated Term						Defined Term
0% Notes						0% Convertible Senior Notes due 2027
0.50% Notes						0.50% Convertible Senior Notes due 2029
1.625% Notes						1.625% Convertible Senior Notes due 2023

3.875% Notes						3.875% Senior Notes due 2028
ADAS						Advanced driver-assistance systems
Amended and Restated SIP						ON Semiconductor Corporation Amended and Restated Stock Incentive Plan, as amended




ASU						Accounting Standards Update









Commission or SEC						Securities and Exchange Commission
New Credit Agreement						Credit agreement, dated as of June 22, 2023, by and among the Company, as borrower, the several lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, and certain other parties, providing for the Revolving Credit Facility
EFK						East Fishkill, New York fabrication facility
ESPP						ON Semiconductor Corporation 2000 Employee Stock Purchase Plan, as amended
Exchange Act						Securities Exchange Act of 1934, as amended





IP						Intellectual property



















IRS						United States Internal Revenue Service
IT						Information Technology


Revolving Credit Facility						A $1.5 billion senior revolving credit facility created pursuant to the New Credit Agreement
ROU						Right-of-use
RSU						Restricted stock unit

SiC						Silicon carbide




Securities Act						Securities Act of 1933, as amended




U.S. or United States						United States of America

Terms used, but not defined, within the body of the Form 10-Q are defined in this Glossary.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ON SEMICONDUCTOR CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

(unaudited)


	June 28, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	2,231.0	$	2,483.0
Short-term investments	450.0		—
Receivables, net	887.2		935.4
Inventories	2,224.6		2,111.8
Other current assets	532.2		382.1

Total current assets	6,325.0		5,912.3

Property, plant and equipment, net	4,372.5		4,401.5
Goodwill	1,577.6		1,577.6
Intangible assets, net	275.0		299.3
Deferred tax assets	679.1		600.8
ROU financing lease assets	41.7		42.4
Other assets	387.9		381.3
Total assets	$	13,658.8	$	13,215.2
Liabilities and Stockholders’ Equity
Accounts payable	$	617.7	$	725.6
Accrued expenses and other current liabilities	684.3		663.2
Current portion of financing lease liabilities	0.4		0.8
Current portion of long-term debt	795.6		794.0
Total current liabilities	2,098.0		2,183.6
Long-term debt	2,545.7		2,542.6
Deferred tax liabilities	39.6		38.7
Long-term financing lease liabilities	21.7		22.4
Other long-term liabilities	595.4		627.3
Total liabilities	5,300.4		5,414.6
Commitments and contingencies (Note 9)
ON Semiconductor Corporation stockholders’ equity:
Common stock ($0.01 par value, 1,250,000,000 shares authorized, 622,068,261 and 616,281,996 issued, 428,217,874 and 426,386,426 outstanding, respectively)	6.2		6.2
Additional paid-in capital	5,283.3		5,210.9
Accumulated other comprehensive loss	(56.8)		(45.2)
Accumulated earnings	7,339.3		6,548.1
Less: Treasury stock, at cost: 193,850,387 and 189,895,570 shares, respectively	(4,232.5)		(3,937.4)
Total ON Semiconductor Corporation stockholders’ equity	8,339.5		7,782.6
Non-controlling interest	18.9		18.0
Total stockholders’ equity	8,358.4		7,800.6
Total liabilities and stockholders’ equity	$	13,658.8	$	13,215.2

See accompanying notes to consolidated financial statements

ON SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in millions, except per share data)

(unaudited)


	Quarters Ended				Six Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Revenue	$	1,735.2	$	2,094.4	$	3,597.9	$	4,054.1
Cost of revenue	951.2		1,101.0		1,960.3		2,143.2
Gross profit	784.0		993.4		1,637.6		1,910.9
Operating expenses:
Research and development	156.5		145.3		306.5		283.7
Selling and marketing	68.6		71.6		137.7		143.4
General and administrative	85.0		87.2		180.3		163.1

Amortization of acquisition-related intangible assets	12.9		12.0		25.5		27.0
Restructuring, asset impairments and other charges, net	72.5		2.6		73.9		54.1

Total operating expenses	395.5		318.7		723.9		671.3
Operating income	388.5		674.7		913.7		1,239.6
Other income (expense), net:
Interest expense	(15.7)		(16.4)		(31.3)		(42.8)
Interest income	27.4		24.0		55.0		41.1
Loss on debt prepayment	—		—		—		(13.3)

Gain (loss) on divestiture of business	—		0.5		—		(0.6)

Other income (expense)	1.9		(1.3)		2.9		3.4
Other income (expense), net	13.6		6.8		26.6		(12.2)
Income before income taxes	402.1		681.5		940.3		1,227.4
Income tax provision	(63.7)		(104.4)		(148.2)		(188.1)
Net income	338.4		577.1		792.1		1,039.3
Less: Net income attributable to non-controlling interest	(0.2)		(0.5)		(0.9)		(1.0)
Net income attributable to ON Semiconductor Corporation	$	338.2	$	576.6	$	791.2	$	1,038.3

Net income for diluted earnings per share of common stock (Note 7)	$	338.2	$	577.0	$	791.2	$	1,039.1
Net income per share of common stock attributable to ON Semiconductor Corporation:
Basic	$	0.79	$	1.34	$	1.85	$	2.40
Diluted	$	0.78	$	1.29	$	1.82	$	2.32
Weighted-average shares of common stock outstanding:
Basic	429.1		431.7		428.6		431.8
Diluted	433.2		448.7		434.9		448.6

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included in the 2023 Form 10-K, and our unaudited consolidated financial statements for the fiscal quarter ended June 28, 2024, which are included elsewhere in this Form 10-Q. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on expectations and assumptions as of the date of this Form 10-Q and are subject to risks, uncertainties and other factors. Actual results could differ materially because of the factors discussed below or elsewhere in this Form 10-Q. See Part II, Item 1A. "Risk Factors" of this Form 10-Q and Part I, Item 1A. "Risk Factors" of the 2023 Form 10-K.

Executive Overview

onsemi Overview

We provide intelligent power and intelligent sensing solutions with a primary focus towards automotive and industrial markets to help our customers solve challenging problems and create cutting-edge products for a better future. Our intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers efficient fast-charging systems and propels sustainable energy for the highest efficiency solar strings, industrial power, data centers and storage systems. Our intelligent power solutions for the automotive industry allow our customers to exceed range targets with lower weight and reduce system cost through efficiency. Our intelligent sensing technologies support the next generation industry, allowing for smarter factories and buildings while also enhancing the automotive mobility experience with imaging and depth sensing that make advanced vehicle safety and automated driving systems possible.

We believe the evolution of the automotive industry, with advancements in autonomous driving, ADAS, vehicle electrification, and the increase in electronics content for vehicle platforms, is reshaping the boundaries of transportation. Through sensing integration, we believe our intelligent power solutions achieve superior efficiencies compared to our peers. This integration allows lower temperature operation and reduced cooling requirements while saving costs and minimizing weight. In addition, our power solutions deliver power with less die per module, achieving higher range for a given battery capacity.

During the first quarter of 2024, we renamed our Advanced Solutions Group ("ASG") reportable segment to Analog and Mixed-Signal Group ("AMG") and reorganized the existing divisions within PSG and AMG. See Note 2: ''Revenue and Segment Information'' in the notes to the unaudited consolidated financial statements included elsewhere in this Form 10-Q for additional information regarding the segment reorganization. As of June 28, 2024, we were organized into the three operating and reportable segments of PSG, AMG and ISG.

Business Strategy Developments

Our primary focus continues to be on profitable revenue with stable gross margin and operating income by capturing high-growth megatrends in our focused end-markets of automotive and industrial infrastructure. We design products in highly-differentiated markets focused on customer needs while optimizing and right-sizing our manufacturing footprint to support growth and maintain gross margins through efficiencies and new product development. We are focused on achieving efficiencies in our operating and capital expenditures, capital allocation on research and development investments and resources to accelerate growth in high-margin products.

2024 Business Realignment

In an effort to streamline resources, drive organizational efficiencies, consolidate our global corporate footprint, and align with our "Fab Right" manufacturing strategy, we initiated the 2024 business realignment efforts during the second quarter of 2024. Under this business realignment, approximately 1,000 employees were notified of their employment termination and around 300 additional employees were reassigned or asked to relocate to another site. We incurred severance and other related charges of approximately $52.5 million and asset impairments and other charges of approximately $18.8 million. For additional information, see Note 4: ''Restructuring, Asset Impairments and Other Charges, Net'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q.

Share Repurchases

During the quarter ended June 28, 2024, we repurchased approximately 2.1 million shares of common stock for an aggregate purchase price of $150.1 million. During the first quarter of 2024, we had repurchased approximately 1.3 million shares of common stock for an aggregate purchase price of $100 million. For additional information, see Note 7: ''Earnings Per Share and Equity'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q.

Results of Operations

Quarter Ended June 28, 2024 compared to the Quarter Ended June 30, 2023

The following table summarizes certain information relating to our operating results that has been derived from our unaudited consolidated financial statements (in millions):


	Quarters Ended
	June 28, 2024		June 30, 2023		Dollar Change
Revenue	$	1,735.2	$	2,094.4	$	(359.2)
Cost of revenue	951.2		1,101.0		(149.8)
Gross profit	784.0		993.4		(209.4)
Operating expenses:
Research and development	156.5		145.3		11.2
Selling and marketing	68.6		71.6		(3.0)
General and administrative	85.0		87.2		(2.2)

Amortization of acquisition-related intangible assets	12.9		12.0		0.9
Restructuring, asset impairments and other charges, net	72.5		2.6		69.9

Total operating expenses	395.5		318.7		76.8
Operating income	388.5		674.7		(286.2)
Other income (expense), net:
Interest expense	(15.7)		(16.4)		0.7
Interest income	27.4		24.0		3.4

Loss on divestiture of business	—		0.5		(0.5)


Other income (expense)	1.9		(1.3)		3.2
Other income (expense), net	13.6		6.8		6.8
Income before income taxes	402.1		681.5		(279.4)
Income tax provision	(63.7)		(104.4)		40.7
Net income	338.4		577.1		(238.7)
Less: Net income attributable to non-controlling interest	(0.2)		(0.5)		0.3
Net income attributable to ON Semiconductor Corporation	$	338.2	$	576.6	$	(238.4)

Revenue

Revenue was $1,735.2 million and $2,094.4 million for the quarters ended June 28, 2024 and June 30, 2023, respectively, representing a decrease of $359.2 million, or approximately 17%, year over year. We had one customer, a distributor, whose revenue accounted for approximately 12% and 11% of our total revenue for the quarters ended June 28, 2024 and June 30, 2023, respectively.

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


	Quarter Ended June 28, 2024		As a % of Total Revenue (1)		Quarter Ended June 30, 2023		As a % of Total Revenue (1)
PSG	$	835.2	48.1	%	$	977.4	46.7	%
AMG	647.8		37.3	%	791.9		37.8	%
ISG	252.2		14.5	%	325.1		15.5	%
Total revenue	$	1,735.2			$	2,094.4

(1) Certain amounts may not total due to rounding of individual amounts.

Revenue from PSG decreased by $142.2 million, or approximately 15%, for the quarter ended June 28, 2024 compared to the quarter ended June 30, 2023. Revenue from our Multi-Market Power Division, Automotive Power Division and Industrial Power Division decreased by $68.8 million, $36.8 million and $36.7 million, respectively, primarily driven by a decrease in demand in the automotive, industrial and communications end-markets.

Revenue from AMG decreased by $144.1 million, or approximately 18%, for the quarter ended June 28, 2024 compared to the quarter ended June 30, 2023. Revenue from our Power Management Division, Sensor Interface Division and Integrated Circuit Division decreased by $80.5 million, $36.5 million and $27.2 million, respectively, primarily due to a decrease in demand in the automotive and industrial end-markets.

Revenue from ISG decreased by $72.9 million, or approximately 22%, for the quarter ended June 28, 2024 compared to the quarter ended June 30, 2023, largely driven by a decrease in revenue from our Automotive Sensing Division and Industrial and Consumer Solutions Division of $38.7 million and $34.2 million, respectively, primarily due to the decrease in demand for these products in the automotive and industrial end-markets.

Revenue by geographic location, based on sales billed from the respective country or region, was as follows (dollars in millions):


	Quarter Ended June 28, 2024		As a % of Total Revenue (1)		Quarter Ended June 30, 2023		As a % of Total Revenue (1)
Hong Kong	$	453.5	26.1	%	$	530.2	25.3	%
Singapore	390.3		22.5	%	519.3		24.8	%
United Kingdom	413.8		23.8	%	449.4		21.5	%
United States	324.9		18.7	%	380.9		18.2	%
Other	152.7		8.8	%	214.6		10.2	%
Total revenue	$	1,735.2			$	2,094.4

(1) Certain amounts may not total due to rounding of individual amounts.

Gross Profit and Gross Margin

Gross profit decreased by $209.4 million to $784.0 million for the quarter ended June 28, 2024 compared to $993.4 million for the quarter ended June 30, 2023. This was primarily due to the decline in volume which negatively impacted gross profit by approximately $183 million and $47 million from existing products and new products, respectively, partially offset by approximately $20 million due to a reduction in the lower-margin foundry business at our EFK location.

Our gross margin decreased by approximately 2.2% to 45.2% for the quarter ended June 28, 2024 from 47.4% for the quarter ended June 30, 2023, primarily due to changes as explained in the segment gross margin sections below.

Our gross profit by operating and reportable segments was as follows (dollars in millions):


	Quarter Ended June 28, 2024		As a % of Revenue		Quarter Ended June 30, 2023		As a % of Revenue
PSG	$	348.8	41.8	%	$	468.0	47.9	%
AMG	321.9		49.7	%	370.2		46.7	%
ISG	113.3		44.9	%	155.2		47.7	%
Total gross profit	$	784.0	45.2	%	$	993.4	47.4	%

Explanation for the fluctuation in gross profit amounts and gross margin percentages for the quarter ended June 28, 2024 compared to the quarter ended June 30, 2023 is provided below:

PSG gross profit decreased by $119.2 million, primarily driven by a decline in volume which negatively impacted gross profit by approximately $72 million and $47 million from existing products and new products, respectively. PSG gross margin decreased by 6.1% to 41.8% from 47.9% primarily as a result of the decline in volume, underutilization and the related impact of unfavorable product mix.

AMG gross profit decreased by $48.3 million, primarily driven by a decline in existing business which negatively impacted gross profit by approximately $69 million partially offset by improved gross profit of approximately $20 million due to the

reduction in the lower-margin foundry business at our EFK location. AMG gross margin increased by 3.0% to 49.7% from 46.7%, primarily due to the reduction in the lower-margin foundry business.

ISG gross profit decreased by $41.9 million, primarily driven by a decline in existing business. ISG gross margin decreased by 2.8% to 44.9% from 47.7%, primarily driven by changes in product mix.

Operating Expenses

Research and development expenses were $156.5 million for the quarter ended June 28, 2024, as compared to $145.3 million for the quarter ended June 30, 2023, representing an increase of $11.2 million, or approximately 8%. The increase was primarily attributable to an increase in payroll-related expenses and materials used in development activities, partially offset by a decrease in variable compensation.

Selling and marketing expenses were $68.6 million for the quarter ended June 28, 2024, as compared to $71.6 million for the quarter ended June 30, 2023, representing a decrease of $3.0 million, or approximately 4%. The decrease was primarily attributable to decreased variable compensation and commissions, partially offset by increased payroll-related costs.

General and administrative expenses were $85.0 million for the quarter ended June 28, 2024, as compared to $87.2 million for the quarter ended June 30, 2023, representing a decrease of $2.2 million, or approximately 3%. The decrease was primarily attributable to decreased variable compensation, partially offset by an increase in expenses associated with information technology initiatives.

Other Operating Expenses

Amortization of Acquisition-Related Intangible Assets

Amortization of acquisition-related intangible assets was $12.9 million for the quarter ended June 28, 2024, as compared to $12.0 million for the quarter ended June 30, 2023, representing an increase of $0.9 million, or approximately 8%.

Restructuring, Asset Impairments and Other, Net

Restructuring, asset impairments and other, net was $72.5 million for the quarter ended June 28, 2024, as compared to $2.6 million for the quarter ended June 30, 2023. Charges incurred for quarter ended June 28, 2024 primarily relate to restructuring actions during the period. See Note 4: ''Restructuring, Asset Impairments and Other Charges, Net'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for additional information.

Interest Expense

Interest expense decreased by $0.7 million to $15.7 million during the quarter ended June 28, 2024, as compared to $16.4 million during the quarter ended June 30, 2023. The decrease was primarily due to the maturity of the 1.625% notes in 2023. Our average gross long-term debt for the quarter ended June 28, 2024 was $3,379.9 million at a weighted-average interest rate of 1.9%, as compared to $3,507.1 million at a weighted-average interest rate of 1.9% for the quarter ended June 30, 2023. The calculation of our weighted-average interest rates includes the effect of our interest rate swap agreements.

Interest income

Interest income increased by $3.4 million, or approximately 14%, to $27.4 million during the quarter ended June 28, 2024 compared to $24.0 million during the quarter ended June 30, 2023, primarily due to an increase in interest rates along with a strategic shift in our investment strategy with higher balances in interest bearing accounts.

Other Income (Expense)

During the quarter ended June 28, 2024, other income was $1.9 million compared to an expense of $1.3 million during the quarter ended June 30, 2023.

Income Tax Provision

We recorded an income tax provision of $63.7 million and $104.4 million for the quarters ended June 28, 2024 and June 30, 2023, respectively, representing effective tax rates of 15.8% and 15.3%, respectively.

For additional information, see Note 12: ''Income Taxes'' in the notes to the unaudited consolidated financial statements included elsewhere in this Form 10-Q.

Results of Operations

Six Months Ended June 28, 2024 compared to the Six Months Ended June 30, 2023

The following table summarizes certain information relating to our operating results that has been derived from our unaudited consolidated financial statements (in millions):


	Six Months Ended
	June 28, 2024		June 30, 2023		Dollar Change
Revenue	$	3,597.9	$	4,054.1	$	(456.2)
Cost of revenue	1,960.3		2,143.2		(182.9)
Gross profit	1,637.6		1,910.9		(273.3)
Operating expenses:
Research and development	306.5		283.7		22.8
Selling and marketing	137.7		143.4		(5.7)
General and administrative	180.3		163.1		17.2

Amortization of acquisition-related intangible assets	25.5		27.0		(1.5)
Restructuring, asset impairments and other charges, net	73.9		54.1		19.8

Total operating expenses	723.9		671.3		52.6
Operating income	913.7		1,239.6		(325.9)
Other income (expense), net:
Interest expense	(31.3)		(42.8)		11.5
Interest income	55.0		41.1		13.9
Loss on debt prepayment	—		(13.3)		13.3

Loss on divestiture of business	—		(0.6)		0.6

Other income	2.9		3.4		(0.5)
Other income (expense), net	26.6		(12.2)		38.8
Income before income taxes	940.3		1,227.4		(287.1)
Income tax provision	(148.2)		(188.1)		39.9
Net income	792.1		1,039.3		(247.2)
Less: Net income attributable to non-controlling interest	(0.9)		(1.0)		0.1
Net income attributable to ON Semiconductor Corporation	$	791.2	$	1,038.3	$	(247.1)

Revenue

Revenue was $3,597.9 million and $4,054.1 million for the six months ended June 28, 2024 and June 30, 2023, respectively, representing a decrease of $456.2 million, or approximately 11%, year over year. We had one customer, a distributor, whose revenue accounted for approximately 11% and 10% of our total revenue for the six months ended June 28, 2024 and June 30, 2023, respectively.

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


	Six Months Ended June 28, 2024		As a % of Total Revenue (1)		Six Months Ended June 30, 2023		As a % of Total Revenue (1)
PSG	$	1,709.5	47.5	%	$	1,838.3	45.3	%
AMG	1,344.8		37.4	%	1,536.6		37.9	%
ISG	543.6		15.1	%	679.2		16.8	%
Total revenue	$	3,597.9			$	4,054.1

(1) Certain amounts may not total due to rounding of individual amounts.

Revenue from PSG decreased by $128.8 million, or approximately 7%, for the six months ended June 28, 2024 compared to the six months ended June 30, 2023. Revenue from our Multi-Market Power Division and Industrial Power Division decreased by $117.4 million and $57.2 million, respectively, primarily driven by a decrease in demand in the industrial and communications end-markets which was partially offset by an increase in revenue from our Automotive Power Division of $45.8 million.

Revenue from AMG decreased by $191.8 million, or approximately 12%, for the six months ended June 28, 2024 compared to the six months ended June 30, 2023. Revenue from our Power Management Division, Integrated Circuit Division and Sensor Interface Division decreased by $110.0 million, $69.4 million and $12.4 million, respectively, primarily due to a decrease in demand in the automotive and industrial end-markets.

Revenue from ISG decreased by $135.6 million, or approximately 20%, for the six months ended June 28, 2024 compared to the six months ended June 30, 2023, largely driven by a decrease in revenue from our Automotive Sensing Division and Industrial and Consumer Solutions Division of $70.4 million and $65.2 million, respectively, primarily due to the decrease in demand for these products in the automotive and industrial end-markets.

Revenue by geographic location, including local sales made by operations within each area, based on sales billed from the respective region, was as follows (dollars in millions):


	Six Months Ended June 28, 2024		As a % of Total Revenue (1)		Six Months Ended June 30, 2023		As a % of Total Revenue (1)
Hong Kong	$	858.9	23.9	%	$	1,020.6	25.2	%
Singapore	823.5		22.9	%	970.0		23.9	%
United Kingdom	857.8		23.8	%	862.7		21.3	%
United States	743.9		20.7	%	770.0		19.0	%
Other	313.8		8.7	%	430.8		10.6	%
Total revenue	$	3,597.9			$	4,054.1

(1) Certain amounts may not total due to rounding of individual amounts.

Gross Profit and Gross Margin

Gross profit was $1,637.6 million for the six months ended June 28, 2024 compared to $1,910.9 million for the six months ended June 30, 2023, representing a decrease of $273.3 million. This was primarily due to the decline in volume which negatively impacted gross profit by approximately $325 million, partially offset by approximately $54 million due to a reduction in the lower-margin foundry business at our EFK location.

Our gross margin decreased by 1.6% to 45.5% for the six months ended June 28, 2024 from 47.1% for the six months ended June 30, 2023, primarily due to changes as explained in the segment gross margin sections below.

Our gross profit by operating and reportable segments was as follows (dollars in millions):


	Six Months Ended June 28, 2024		As a % of Revenue		Six Months Ended June 30, 2023		As a % of Revenue

PSG	$	714.2	41.8	%	$	864.4	47.0	%
AMG	660.7		49.1	%	714.2		46.5	%
ISG	262.7		48.3	%	332.3		48.9	%
Total gross profit	$	1,637.6	45.5	%	$	1,910.9	47.1	%

Explanation for the increase or decrease in gross profit amounts and gross margin percentages for the six months ended June 28, 2024 compared to the six months ended June 30, 2023 is provided below:

PSG gross profit decreased by $150.2 million, primarily driven by a decline in volume which negatively impacted gross profit by approximately $148 million. PSG gross margin decreased by 5.2% to 41.8% from 47.0%, primarily as a result of the decline in volume, underutilization and the related impact of unfavorable product mix.

AMG gross profit decreased by $53.5 million, primarily driven by a decline in existing business which negatively impacted gross profit by approximately $108 million, partially offset by improved gross profit of approximately $54 million from the lower-margin foundry business at our EFK location. AMG gross margin increased by 2.6% to 49.1% from 46.5%, primarily due to the reduction in the lower-margin foundry business.

ISG gross profit decreased by $69.6 million, primarily driven by a decline in existing business. ISG gross margin decreased 0.6% to 48.3% from 48.9%, primarily driven by changes in product mix.

Operating Expenses

Research and development expenses were $306.5 million for the six months ended June 28, 2024, as compared to $283.7 million for the six months ended June 30, 2023, representing an increase of $22.8 million, or approximately 8%. The increase was primarily attributable to increase in payroll-related expenses and materials used in development activities, partially offset by a decrease in variable compensation.

Selling and marketing expenses were $137.7 million for the six months ended June 28, 2024, as compared to $143.4 million for the six months ended June 30, 2023, representing a decrease of $5.7 million, or approximately 4%. The decrease was primarily attributable to decreased variable compensation and commissions, partially offset by increased payroll-related costs.

General and administrative expenses were $180.3 million for the six months ended June 28, 2024, as compared to $163.1 million for the six months ended June 30, 2023, representing an increase of $17.2 million, or approximately 11%. The increase was primarily attributable to expenses associated with information technology initiatives and an adjustment to variable compensation during the quarter ended March 31, 2023.

Other Operating Expenses

Amortization of Acquisition-Related Intangible Assets

Amortization of acquisition-related intangible assets was $25.5 million and $27.0 million for the six months ended June 28, 2024 and June 30, 2023, respectively, representing a decrease of $1.5 million, or approximately 6%. The decrease was due to a reduction in amortization expense as certain intangible assets became fully amortized.

Restructuring, Asset Impairments and Other, Net

Restructuring, asset impairments and other, net was $73.9 million for the six months ended June 28, 2024, as compared to $54.1 million for the six months ended June 30, 2023, representing an increase of $19.8 million. Amounts incurred for the six months ended June 28, 2024 related primarily to the business realignment efforts in the second quarter of 2024. See Note 4: ''Restructuring, Asset Impairments and Other Charges, Net'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for additional information.

Interest Expense

Interest expense decreased by $11.5 million to $31.3 million during the six months ended June 28, 2024, as compared to $42.8 million during the six months ended June 30, 2023. The decrease was primarily due to higher variable-rate debt that was paid down and replaced by the 0.50% Notes in 2023. Our average gross long-term debt balance for the six months ended June 28, 2024 was $3,379.9 million at a weighted-average interest rate of 1.9%, as compared to $3,363.9 million at a weighted-average interest rate of 2.5% for the six months ended June 30, 2023. The calculation of our weighted-average interest rates includes the effect of our interest rate swap agreements.

Loss on Debt Prepayment

There was no loss on debt prepayment recognized for the six months ended June 28, 2024, as compared to $13.3 million for the six months ended June 30, 2023 due to the write-off relating to the partial repayment of the Term Loan "B" Facility in 2023. See Note 6: ''Long-Term Debt'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for additional information.

Other Income (Expense)

Other income (expense) was an income of $2.9 million for the six months ended June 28, 2024 as compared to $3.4 million for the six months ended June 30, 2023.

Income Tax Provision

We recorded an income tax provision of $148.2 million and $188.1 million during the six months ended June 28, 2024 and June 30, 2023, respectively, representing effective tax rates of 15.8% and 15.3%, respectively.

For additional information, see Note 12: ''Income Taxes'' in the notes to the unaudited consolidated financial statements included elsewhere in this Form 10-Q.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash on hand, cash generated from operations, available borrowings under our Revolving Credit Facility as well as new debt and/or equity issuances. In the near term, we expect to fund our cash requirements by utilizing any or a combination of these principal sources, including any amounts required to satisfy our current portion of long-term debt. Our cash and cash equivalents and short-term investments were approximately $2.7 billion as of June 28, 2024, and the Revolving Credit Facility has approximately $1.1 billion available for future borrowings.

We require cash to: (i) fund our operating expenses, working capital requirements, outlays for strategic acquisitions and investments; (ii) service our debt, including principal and interest; (iii) incur capital expenditures; and (iv) repurchase our common stock. During the ordinary course of business, we evaluate our cash requirements and, if necessary, adjust our expenditures to reflect the current market conditions and our projected sales and demand. Our capital expenditures are primarily directed towards manufacturing equipment and can materially influence our available cash for other initiatives. Future capital expenditures may be impacted by events and transactions that are not currently forecasted.

We believe that our cash on hand, cash generated from our operations and the amounts available under the Revolving Credit Facility are adequate to meet our working capital requirements and other business needs for at least the next 12 months.

Operating Activities

Our cash flows from operating activities were $860.9 million and $799.7 million for the six months ended June 28, 2024 and June 30, 2023, respectively. The increase of $61.2 million was primarily due to improved working capital management.

Our ability to maintain positive operating cash flows is dependent on, among other factors, our success in achieving our revenue goals and manufacturing and operating cost targets. Management of our assets and liabilities, including both working capital and long-term assets and liabilities, also influences our operating cash flows.

Investing Activities

Our cash flows used in investing activities were $826.2 million and $945.5 million for the six months ended June 28, 2024 and June 30, 2023, respectively. The decrease of $119.3 million was primarily attributable to a decrease in capital expenditures and payments for the acquisition of our EFK location during the six months ended June 30, 2023 partially offset by the purchase of short-term investments. Our capital expenditures as a percent of revenue were approximately 10%, and we expect capital expenditures to be in the range of 9% - 11% of revenue for the remainder of 2024.

Financing Activities

Our cash flows used in financing activities were $283.5 million and $153.0 million for the six months ended June 28, 2024 and June 30, 2023, respectively. The increase of $130.5 million was primarily attributable to increased share repurchases during the six months ended June 28, 2024 compared to the same period in 2023. Additionally, during the quarter ended June 30, 2023, we had net cash outflows related to the establishment of our New Credit Agreement.

We do not have any meaningful debt maturing during the next 12 months. Our 0% Notes are also classified as a current liability based on share price trigger provisions. We expect to continue our Share Repurchase Program subject to market conditions, the price of our shares and other factors (including liquidity needs). However, the Share Repurchase Program may be modified, suspended or terminated by the Board of Directors at any time without prior notice.

Key Factors Potentially Affecting Liquidity

We believe that the key factors that could adversely affect our internal and external sources of cash include, among other considerations:

changes in demand for our products, competitive pricing pressures, supply chain constraints, effective management of our manufacturing capacity, our ability to achieve further reductions in operating expenses, our ability to make progress on the achievement of our business strategy and sustainability goals, the impact of our restructuring programs on our production and cost efficiency, and our ability to make the research and development expenditures required to remain competitive in our business; and
the debt and equity capital markets could impact our ability to obtain needed financing on acceptable terms or to respond to business opportunities and developments as they arise, including interest rate fluctuations, macroeconomic conditions, sudden reductions in the general availability of lending from banks or the related increase in cost to obtain bank financing and our ability to maintain compliance with covenants under our debt agreements in effect from time to time.

Debt Guarantees and Related Covenants

As of June 28, 2024, we were in compliance with the indentures relating to our 0% Notes, 0.50% Notes and 3.875% Notes and with covenants included in the New Credit Agreement. The 0% Notes, 0.50% Notes and 3.875% Notes are senior to the existing and future subordinated indebtedness of onsemi and its guarantor subsidiaries, rank equally in right of payment to all of our existing and future senior debt and, as unsecured obligations, are subordinated to all of our existing and future secured debt to the extent of the assets securing such debt.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 3: ''Recent Accounting Pronouncements and Other Developments'' in the notes to the unaudited consolidated financial statements included elsewhere in this Form 10-Q and our 2023 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information presented in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk," in the 2023 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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 June 28, 2024.

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 June 28, 2024 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

See Note 9: ''Commitments and Contingencies'' under the heading "Legal Matters" in the notes to the consolidated unaudited financial statements included elsewhere in this Form 10-Q for additional information on our legal proceedings and related matters. See also Part I, Item 1 "Business - Government Regulation" of the 2023 Form 10-K for information on certain environmental matters.

Item 1A. Risk Factors

Our business, financial condition and results of operations are subject to a number of trends, risks and uncertainties. We review and, where applicable, update our risk factors each quarter. There have been no material changes from the risk factors disclosed in Part I, Item 1A of the 2023 Form 10-K.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking statements," as that term is defined in Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included or incorporated in this Form 10-Q could be deemed forward-looking statements, particularly statements about our plans, strategies and prospects under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements are often characterized by the use of words such as "believes," "estimates," "expects," "projects," "may," "will," "intends," "plans," "anticipates," "should" or similar expressions, or by discussions of strategy, plans or intentions. All forward-looking statements in this Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements.

Important factors that could cause our actual results to differ materially from those anticipated in the forward-looking statements are described under Part I, Item 1A "Risk Factors" in the 2023 Form 10-K, in this Form 10-Q and from time to time in our other SEC reports. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information, which speaks only as of the date made, except as may be required by law. Investing in our securities involves a high degree of risk and uncertainty, and you should carefully consider the trends, risks and uncertainties described in the aforementioned reports and subsequent reports filed with or furnished to the SEC before making any investment decision with respect to our securities. The risk factors described herein and in our 2023 Form 10-K are not all of the risks we may face. Other risks not presently known to us or that we currently believe are immaterial may materially affect our business. If any of the trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding repurchases of our common stock during the quarter ended June 28, 2024:


Period (1)	Total Number of Shares Purchased	Average Price Paid per Share ($)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar value of Shares that May Yet be Purchased Under the Plans or Programs (in millions) ($)
March 30, 2024 - April 26, 2024	—	—	—	2,336.0
April 27, 2024 - May 24, 2024	2,086,879	71.89	2,086,874	2,186.0
May 25, 2024 - June 28, 2024	—	—	—	2,186.0
Total	2,086,879	71.89	2,086,874

(1) These time periods represent our fiscal month start and end dates for the second quarter of 2024.

Shares withheld to satisfy statutory tax withholding requirements related to the vesting of share-based awards are not issued or considered repurchases of our common stock under our Share Repurchase Program and, therefore, are excluded from the table above.

Share Repurchase Program

In February 2023, the Board of Directors approved a share repurchase program (the "Share Repurchase Program"), which allows for the repurchase of 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 Share Repurchase Program, which does not require us to purchase any minimum amount of our common stock, has an aggregate limit of $3.0 billion from February 8, 2023 through December 31, 2025 (exclusive of fees, commissions and other expenses). Any repurchases will be at the Company’s discretion and will be subject to market conditions, the price of our shares and other factors (including liquidity needs). The Share Repurchase Program may be modified, suspended or terminated by the Board of Directors at any time without prior notice.

There were 2.1 million shares of the Company's common stock repurchased under the Share Repurchase Program during the quarter ended June 28, 2024. As of June 28, 2024, the authorized amount remaining under the Share Repurchase Program was approximately $2.2 billion.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Insider Trading Arrangements

During the quarter ended June 28, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as those terms are defined in Item 408 of Regulation S-K), except as follows:

Hassane El-Khoury, our President and CEO, and a director, adopted a Rule 10b5-1 trading arrangement on June 7, 2024. Under this arrangement, a total of 10,500 shares of our common stock may be sold, subject to certain conditions, before the plan expires on March 31, 2025.

The above arrangement is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act

Item 6. Exhibits

EXHIBIT INDEX



Exhibit No.		Exhibit Description*****




	31.1	Certification by CEO pursuant to Rule 13(a)-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (1).

	31.2	Certification by CFO pursuant to Rule 13(a)-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (1).

	32	Certification by CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2).

	10.1	onsemi Nonqualified Deferred Compensation Plan for senior officers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 22, 2024) (3).

	10.2	Non-emp loyee Director Stock Election and Deferr al Plan (1)(3).

	101.INS	XBRL Instance Document (1)

	101.SCH	XBRL Taxonomy Extension Schema Document (1)

	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (1)

	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (1)

	101.LAB	XBRL Taxonomy Extension Label Linkbase Document (1)

	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (1)

	104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.


*			Reports filed under the Exchange Act (Form 10-K, Form 10-Q and Form 8-K) are filed under File No. 000-30419 and File No. 001-39317.
†			The Company has omitted certain schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K and, upon request by the Commission, agrees to furnish supplementally to the Commission a copy of any omitted schedule or exhibit.


(1)			Filed herewith.
(2)			Furnished herewith.
(3)			Management contract or compensatory plan, contract or arrangement.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




		ON SEMICONDUCTOR CORPORATION (Registrant)

Date:	July 29, 2024	By:	/s/ THAD TRENT
			Thad Trent
			Executive Vice President, Chief Financial Officer and Treasurer
			(Principal Financial and Accounting Officer and officer duly authorized to sign this report)