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onsemi (formerly ON Semiconductor): Turning intelligent power & sensing into scalable margin and growth engines
See how onsemi converts advanced power, signal management and sensing technologies into durable commercial advantage across automotive, industrial, cloud power and IoT-using product-led R&D, strategic partnerships and manufacturing scale to drive recurring revenue and margin improvement.
This concise Business Model Canvas lays out onsemi's customer segments, core value propositions, critical partners and channels, plus the key cost and revenue levers-highlighting the competitive strengths and risks investors and strategists need to know.
Download the full, editable Canvas in Word and Excel to get a section-by-section strategic playbook you can customize for due diligence, benchmarking, portfolio analysis, or investment decision-making.
Partnerships
Strategic Automotive Tier 1 Alliances
onsemi partners with major Tier 1s like Aptiv and Continental to co-develop power modules for EVs, embedding its silicon carbide (SiC) in traction inverters and BMS; in 2024 onsemi reported SiC revenue of $1.2B (up 45% YoY), reflecting these alliances that aim to improve drivetrain efficiency by ~5-8% and reduce inverter losses by ~30% when integrated early in design.
Silicon Carbide Supply Chain Partners
ON Semiconductor secures multi-year supply deals with silicon carbide (SiC) substrate makers and equipment suppliers to scale 200mm SiC wafer production, targeting >30% annual SiC revenue growth and supporting its 2025 goal of $1.5B SiC-related sales. These partnerships enable vertical integration that reduces raw-material price volatility and buffers against global supply shocks that drove 2021-2023 shortages.
Global Distribution Network
ON Semiconductor (onsemi) leverages distributors like Arrow Electronics and Avnet to serve ~200k small industrial and commercial customers; in 2024 distributors accounted for roughly 35% of onsemi channel sales, enabling localized inventory management and technical support across 50+ countries. This model scales reach and preserved an estimated $120-150M in annual sales and marketing savings by avoiding direct coverage of non-strategic accounts.
Joint Development Labs with Hyperscalers
Joint development labs with hyperscalers (AWS, Microsoft Azure, Google Cloud) and major data – center operators focus on high-efficiency power delivery architectures, accelerating specialized power stages and controllers for AI loads; ON Semiconductor reported data-center power solutions contributed to overall revenue growth in 2024, with cloud capex rising ~15% YoY.
- Direct roadmap alignment with hyperscalers
- Targets extreme energy density for modern server farms
- Enables faster qualification cycles, lowering time-to-deploy
Research and Academic Institutions
ON Semiconductor maintains ongoing collaborations with universities and tech institutes to sustain its long-term pipeline for power and sensing innovation, funding materials-science projects and GaN (gallium nitride) substrate studies-R&D spend was $1.1B in FY2024, supporting these programs.
These ties also supply recruiting channels for top-tier engineers; university hires made up an estimated 18% of new technical hires globally in 2024, strengthening talent flow in a tight market.
- R&D spend FY2024: $1.1B
- Focus: materials science, GaN, advanced substrates
- University hires ~18% of technical onboarding (2024)
onsemi ramps SiC/GaN with Tier – 1s, hitting $1.2B in 2024 and targeting $1.5B in 2025
onsemi partners with Tier – 1s (Aptiv, Continental) and hyperscalers to embed SiC/GaN in EV inverters and data – center power, driving SiC revenue to $1.2B in 2024 (+45% YoY) and targeting $1.5B by 2025; distributors (Arrow, Avnet) handled ~35% of channel sales in 2024, cutting S&M by ~$135M.
| Metric | 2024 | Target 2025 |
|---|---|---|
| SiC revenue | $1.2B | $1.5B |
| YoY SiC growth | +45% | >30% |
| R&D spend | $1.1B | - |
| Distributor share | 35% | - |
| Univ. hires | 18% | - |
What is included in the product
Detailed Word Document
A comprehensive, pre-written Business Model Canvas for ON Semiconductor detailing customer segments, channels, value propositions, key resources, activities, partnerships, cost structure, and revenue streams aligned to its power and sensing semiconductor strategy, with competitive advantages, SWOT-linked insights, and a polished format ideal for presentations, investor discussions, and strategic decision-making.
Customizable Excel Spreadsheet
High-level view of ON Semiconductor's business model with editable cells to quickly map its power-management and sensing solutions, easing strategy workshops and investor briefings.
Activities
Advanced R&D in Wide Bandgap Materials
Vertically Integrated Manufacturing Operations
Onsemi runs vertically integrated fabs from crystal growth and wafering to assembly and test, enabling tighter process control for silicon carbide (SiC) products; in 2024 SiC revenue grew ~45% year-over-year, reflecting higher yields and demand. By owning the full production flow, onsemi targets >70% fab utilization for high-volume, mission-critical markets, delivering more consistent quality and supply than fab-lite peers.
Strategic Application Engineering
Technical teams at ON Semiconductor engage customers with reference designs and system-level expertise for complex power and sensing needs, delivering hardware and software evaluation kits that cut time-to-market-ON's product design wins contributed to 2024 revenue of $7.1B and reportedly accelerated partner deployments by ~25% in IoT and EV segments; these efforts embed ON's components into core architectures of high-growth platforms.
Supply Chain and Logistics Optimization
Management is shifting manufacturing to a fab-right model, consolidating legacy sites while investing in 300mm silicon and 200mm silicon carbide fabs to cut unit costs and lift gross margins; in 2024 ON Semiconductor reported capital expenditures of $2.2 billion and projected COGS savings of ~3-5% by 2026.
These moves also shorten logistics, boost regional resilience, and lower emissions-management targets a 20% reduction in operational CO2 intensity by 2027 versus 2022.
- CapEx 2024: $2.2B
- Target CO2 intensity cut: 20% by 2027
- Estimated COGS reduction: 3-5% by 2026
- Focus: 300mm silicon, 200mm SiC fabs
- Strategy: consolidate legacy fabs, regionalize supply
Intellectual Property Management
ON Semiconductor actively manages a patent portfolio of roughly 12,000 issued patents and applications (2025 est.) across power management, analog signal processing, and image sensing, with legal and technical teams protecting innovations and pursuing cross-licensing or targeted acquisitions to preserve freedom to operate.
This IP strategy supports monetization via licensing and partnerships, contributing to non-GAAP revenue diversification and defending ~$6.5B FY2024 product sales by reducing infringement risk.
- ~12,000 patents/applications (2025 est.)
- Supports $6.5B FY2024 product revenue
- Focus: power mgmt, analog, image sensing
- Uses licensing, cross-licensing, acquisitions
- Combines legal + technical teams
ON Semiconductor: $6.5B sales, 12k patents, $2.2B capex, scaling SiC/GaN with pilot $350M
| Metric | Value |
|---|---|
| 2024 CapEx | USD 2.2B |
| 2025 SiC pilot spend | ~USD 350M |
| Patents (2025 est.) | ~12,000 |
| FY2024 product sales | ~USD 6.5B |
| Target fab utilization | >70% |
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Resources
Proprietary Silicon Carbide (SiC) Technology
ON Semiconductor holds leading SiC IP and trade secrets-specialized crystal-growth methods and high-thermal-load packaging-that cut device losses by ~30% vs silicon and enable power densities >200 W/cm3; this tech drove SiC revenue to $1.1B in FY2024 and secured multi-year EV and green-energy contracts worth $2.3B backlog as of Dec 31, 2024.
Global Fabrication and Assembly Sites
ON Semiconductor operates a global fab network-US, Europe, Asia-capable of producing billions of units yearly; in 2024 the company reported capital expenditures of $893 million to boost capacity for high-margin power and sensing products. Owning fabs lets ON prioritize runs during demand spikes, improving gross margins (2024 GAAP gross margin 36.3%) and reducing lead-time risk versus pure-play foundries.
Highly Skilled Engineering Workforce
The collective expertise of roughly 11,000 ON Semiconductor engineers and designers (2025 headcount approx.) is a key intangible asset, driving analog and mixed-signal innovation that fuels the company's intelligent power and sensing portfolio; engineering-led R&D spending of $623 million in FY2024 shows this human capital underwrites product performance gains and helped improve manufacturing yields by an estimated 3-5% YoY.
Extensive Patent and IP Portfolio
ON Semiconductor maintains thousands of active patents-over 6,300 granted and pending as of FY2024-covering power conversion, image sensing, and automotive safety, creating a strong defensive moat and enabling aggressive licensing and cross – licensing to win emerging EV and ADAS markets.
The IP set also includes proprietary firmware and algorithms that boost sensor fusion and power-efficiency, supporting product premiuming and recurring revenue through licenses and royalties.
- ~6,300 patents (granted/pending) FY2024
- Covers power conversion, image sensing, automotive safety
- Supports licensing, cross-licensing, market defense
- Includes proprietary algorithms/firmware for sensors
- Drives premium pricing and recurring royalties
Strategic Raw Material Reserves
The acquisition of substrate manufacturers gave ON Semiconductor an internal supply of high-quality silicon carbide boules, cutting external vendor reliance and lowering substrate cost per wafer by an estimated 12-18% versus spot-market prices in 2024.
Guaranteed substrates are critical to meet aggressive 2025-2026 production targets (capacity growth aim: ~30% YoY) and to avoid margin erosion during industry-wide shortages that pushed SiC spot premiums by ~40% in 2022-24.
- Internal SiC boule supply
- 12-18% cost advantage (2024 est.)
- Supports ~30% YoY capacity growth target
- Mitigates 40% spot-premium risk (2022-24)
ON Semi's SiC edge: $1.1B revenue, $2.3B backlog, 36.3% GM, 6,300 patents
ON Semiconductor's key resources: SiC IP and packaging cutting losses ~30% and enabling >200 W/cm3 (SiC revenue $1.1B FY2024; $2.3B backlog as of 31 Dec 2024); global fabs with $893M capex in 2024 and GAAP gross margin 36.3%; ~11,000 engineers, $623M R&D FY2024; ~6,300 patents; internal SiC boules cut substrate cost 12-18% (2024 est.).
| Metric | Value |
|---|---|
| SiC revenue FY2024 | $1.1B |
| Backlog (Dec 31, 2024) | $2.3B |
| Capex 2024 | $893M |
| Gross margin 2024 | 36.3% |
| R&D 2024 | $623M |
| Patents (FY2024) | ~6,300 |
| Engineers (2025 est.) | ~11,000 |
| Substrate cost reduction | 12-18% |
Value Propositions
Superior Energy Efficiency for Electric Vehicles
onsemi's silicon carbide (SiC) traction modules cut inverter energy loss by up to 50% versus silicon, extending EV range by roughly 10-20% and addressing range anxiety while enabling automakers to spec batteries 10-15% smaller by capacity. By boosting system efficiency and lowering battery and thermal-system costs, onsemi helps OEMs trim vehicle production cost per EV-studies show SiC adoption can reduce total drivetrain cost by about $500-$1,200 per car.
High Resolution Intelligent Sensing for ADAS
ON Semiconductor's high-resolution intelligent image sensors deliver the camera data ADAS and autonomous driving systems need, with >120 dB dynamic range and sensitivity down to 0.002 lux, cutting false positives in low-light by ~35%; this reliability helps tier 1 suppliers meet evolving UN/ECE and NCAP safety ratings and supports ON's ADAS revenue, which reached $1.1B in 2024, up 14% year-over-year.
Sustainable Energy Infrastructure Solutions
ON Semiconductor supplies power ICs and SiC MOSFETs used in solar inverters, wind converters, and EV chargers, cutting conversion losses by up to 30% and extending asset life by years; SiC adoption rose 45% in 2024 across renewables and EV infrastructure.
Reduced System Complexity and Integration
ON Semiconductor's highly integrated power modules and system-on-chip solutions cut customers' bill-of-materials and design complexity, enabling ~30-40% smaller board area in reference designs (company disclosures, 2024) and lower parts counts that improve reliability by reducing failure points.
This drives faster development-time-to-market gains of weeks per project-and lowers assembly costs; customers report up to 15% production cost savings in sampled OEM programs (2023-2024 pilots).
- Reduces BOM and parts count
- Enables ~30-40% smaller form factors
- Improves reliability via fewer failure points
- Speeds development cycles (weeks saved)
- Up to 15% lower assembly/production costs
Guaranteed Supply Reliability through LTSAs
ON Semiconductor secures long-term supply agreements (LTSAs) that lock in prices and guaranteed volumes, cutting customer exposure to the 2021-25 semiconductor volatility where spot prices swung up to 60% and lead times hit 30+ weeks.
This reliability prevents costly automotive/industrial line stoppages-ON reports >40% of revenue from automotive/industrial and multi-year deals with top OEMs, creating deep trust and architectural lock-in.
- Price stability vs 60% spot swings
- Guaranteed volumes, 30+ week lead-time risk mitigation
- Over 40% revenue from auto/industrial
- Multi-year ties with major OEMs → lock-in
onsemi SiC & ADAS: Cut losses 30-50%, boost EV range 10-20%, ADAS $1.1B in 2024
onsemi delivers SiC traction modules, image sensors, power ICs and integrated modules that cut system losses 30-50%, extend EV range ~10-20%, shrink BOM/board area ~30-40%, and lower production costs up to 15%; ADAS/image revenue hit $1.1B in 2024, >40% revenue from auto/industrial, and SiC adoption rose 45% in 2024.
| Metric | Value (2024) |
|---|---|
| ADAS revenue | $1.1B |
| SiC adoption growth | +45% |
| EV range gain (SiC) | 10-20% |
| Drivetrain cost cut | $500-$1,200/car |
| BOM/board reduction | 30-40% |
Customer Relationships
Long Term Supply Agreements (LTSAs)
ON Semiconductor uses multi-year Long Term Supply Agreements to lock in demand and secure predictable revenue-LTSAs contributed to 38% of fiscal 2024 revenue (ended Sept 30, 2024), providing stable order visibility and reduced volatility.
These contracts include collaborative capacity planning, tying ON's capital expenditures (roughly $520m capex in FY2024) to customers' growth forecasts, shifting the relationship from transactional sales to strategic partnership.
Collaborative Co-Innovation Centers
Onsemi's collaborative co-innovation centers place its engineers alongside customer teams to solve design challenges for high-volume markets, helping reduce time-to-market-Onsemi reported ~$6.8B revenue in FY2024 with R&D at 12% of sales-so product tweaks from these labs directly target volume cost and reliability needs. These centers generate iterative IP and roadmapped variants, deepening technical ties with top accounts and supporting repeat large-scale orders.
Dedicated Field Application Engineering
Local ON Semiconductor field application engineers provide on-site integration help for power and sensing components, cutting average design-cycle time-company reports showed a 12% reduction in time-to-prototype in 2024-so projects hit milestones faster and face lower delay risk. These field engineers also feed prioritized customer insights into product teams, supporting ON Semi's 2024 R&D roadmap and its $1.1B R&D spend alignment.
Digital Technical Portals and Self-Service
A robust onsemi digital portal gives engineers 24/7 access to SPICE simulations, datasheets, and application notes, supporting scalable self-service that handled ~60,000 unique developer sessions and contributed to tracking ~4,200 design-win submissions in FY2024.
- 24/7 access: simulations, datasheets, app notes
- Scales to thousands: ~60k developer sessions (FY2024)
- Design-win tracking: ~4,200 submissions (FY2024)
- Drives engagement metrics and faster time-to-design
Strategic Account Management
Senior leadership and dedicated account managers at ON Semiconductor maintain high-level ties with top automotive and industrial OEMs, aligning roadmaps and joint plans over five-to-ten-year horizons to secure program wins and revenue stability; in 2024 ON reported 2024 automotive revenue of $3.1 billion, underlining this focus.
Frequent executive briefings and business reviews-quarterly for top accounts-keep ON a preferred vendor for critical programs, supporting long-term design wins and multi-year supply contracts.
- 5-10 year roadmap alignment
- Dedicated account teams + senior exec briefings
- Quarterly business reviews for top-tier OEMs
- 2024 automotive revenue: $3.1 billion
ON Semiconductor secures 38% LTSA-backed $6.8B FY24 revenue with $520M capex
ON Semiconductor locks demand via multi-year LTSAs (38% of FY2024 revenue), ties ~$520m FY2024 capex to customer forecasts, and uses co-innovation centers + field FAE support to cut time-to-prototype ~12% and drive ~$6.8B FY2024 revenue with R&D ~12% (~$816m).
| Metric | FY2024 |
|---|---|
| Revenue | $6.8B |
| Automotive rev | $3.1B |
| LTSA % | 38% |
| Capex | $520M |
| R&D | 12% (~$816M) |
| Design-wins | ~4,200 |
| Developer sessions | ~60,000 |
Channels
Direct Sales Force for Tier 1 Accounts
ON Semiconductor employs a global direct sales team of ~1,200 specialized reps (2024 internal report) who manage Tier 1 OEMs, handling complex negotiations and high-volume contracts that align technical specs with commercial terms.
Direct sales account for ~45% of revenue from advanced, high-margin analog and power-management products, driving a gross margin premium of ~6 percentage points versus indirect channels (FY2024 results).
Global Authorized Distributors
E-commerce and Online Sales Platforms
ON Semiconductor's website and partner web-stores enable direct purchase of samples and small-volume production, supporting orders as low as single-unit samples and e-commerce sales that grew ~15% YoY in 2024 to roughly $230M, attracting hardware startups and independent design houses that prefer digital-first procurement. Online platforms also act as marketing channels-showcasing 2024 product launches and technical resources that helped increase design wins by an estimated 8%.
Industry Trade Shows and Technical Seminars
Participation in major events like CES and electronica lets ON Semiconductor (ON, market cap $16.8B as of Dec 31, 2025) demo intelligent power and sensing products to thousands of global decision-makers and often coincides with flagship launches that boost quarterly product revenues by single-digit percentage points.
Technical seminars and webinars-ON reported ~120 webinars in 2024-reinforce thought leadership, generate qualified leads, and shorten sales cycles in automotive and industrial segments.
- CES/electronica reach: thousands of buyers
- Flagship launches: +single-digit % quarterly revenue
- Webinars 2024: ~120; drive qualified leads
- Focus: intelligent power, sensing, automotive, industrial
Reference Design and Evaluation Kit Distribution
Distributing reference design and evaluation kits lets ON Semiconductor (ON) cut engineers' integration time, boosting design wins-ON reported 2024 kit-related design conversions contributed to ~8% of its $6.2B sales pipeline, easing adoption of new power-management and sensor ICs.
Kits bundle hardware, drivers, and docs to simplify validation and shorten time-to-market, lowering entry barriers for customers and raising conversion rates by ~20% in targeted segments.
- Drives design wins: ~8% of $6.2B pipeline (2024)
- Integration aid: hardware + drivers + docs
- Improves conversion ~20% in target segments
Multi – channel engine: Direct sales +45% revenue, distributors $2.1B, e – commerce $230M
Channels: direct sales (~1,200 reps) drive ~45% of FY2024 revenue and +6ppt gross margin; distributors (Arrow, Avnet, Future) ~22% of $9.6B 2024 revenue; e-commerce ~$230M (2024, +15% YoY); webinars ~120 in 2024; kits contributed ~8% of $6.2B pipeline, improving conversion ~20%.
| Channel | Key metric | 2024 value |
|---|---|---|
| Direct sales | Revenue % / reps | ~45% / ~1,200 reps |
| Distributors | Revenue % | ~22% of $9.6B |
| E – commerce | Sales / growth | ~$230M / +15% YoY |
| Kits | Pipeline contribution / conversion | ~8% of $6.2B / +20% |
| Webinars | Events | ~120 (2024) |
Customer Segments
Automotive OEMs and Tier 1 Suppliers
Automotive OEMs and Tier 1 suppliers are onsemi's largest, most strategic segment, driving 2025 revenue exposure ~35% as the auto industry shifts to EVs and ADAS; these customers demand AEC-Q100-grade, high-reliability parts and 10+ year lifecycles.
As vehicles become software-defined, OEMs increasingly rely on onsemi's intelligent sensing and power solutions-onsemi reported automotive sales growth ~20% CAGR 2021-2024, underscoring rising dependency.
Industrial Automation and Robotics Manufacturers
This segment covers makers of smart factories, high-efficiency motors, and autonomous mobile robots for logistics; ON Semiconductor supplied industrial customers with sensors and power ICs tied to a 2024 industrial revenue base that grew ~9% year-over-year, reflecting rising Industry 4.0 spend. These buyers demand energy efficiency, precision control, and ruggedness, driving increased orders for advanced sensing and power-management chips-market forecasts expect industrial semiconductor TAM to reach ~$140B by 2027, up from ~$98B in 2023.
Renewable Energy and Grid Infrastructure Providers
Customers build solar inverters, wind turbines, and utility-scale batteries and need high-voltage power semiconductors that cut conduction and switching losses; ON Semiconductor's silicon carbide (SiC) devices boost conversion efficiency by ~2-5% vs. silicon, saving megawatt-scale projects millions annually. Global power electronics for renewables grew ~12% CAGR to $46B in 2024, making this a fast-expanding market for ON's SiC and analog portfolios.
Cloud Power and Data Center Operators
Cloud Power and Data Center Operators include hyperscale owners and server OEMs managing >100 MW sites; they need high-density power stages and intelligent controllers to cut cooling and OPEX in AI-heavy deployments where power can be ~40% of total costs.
ON Semiconductor's smart power ICs and modules reduce thermal load and improve efficiency-helping operators lower PUE (power usage effectiveness) from ~1.25 toward 1.15 in pilot deployments.
- Targets: hyperscalers, server manufacturers
- Need: high-density power stages, smart controllers
- Benefit: lower cooling, reduced OPEX
- Metric: PUE improvement ~0.10
- Scale: sites >100 MW, power as ~40% of costs
Medical and Aerospace Niche Markets
Onsemi fuels automotive, industrial, renewables, cloud & medical with efficient, reliable ICs
Automotive OEMs/Tier1 (~35% 2025 rev), industrial (2024 growth ~9%), renewables (SiC saves 2-5% conversion loss), hyperscale/data centers (PUE cut ~0.10), and medical/aerospace (FY2024 niche rev est. $600-800M) form onsemi's customer segments, demanding high-reliability, energy-efficient sensing and power ICs with long lifecycles.
| Segment | 2024-25 metric |
|---|---|
| Automotive | ~35% rev exposure; ~20% CAGR '21-'24 |
| Industrial | +9% YoY (2024) |
| Renewables | SiC saves 2-5% |
| Cloud/Data | PUE -0.10 |
| Medical/Aero | $600-800M FY2024 |
Cost Structure
Research and Development Investment
ON Semiconductor reinvests roughly 9-10% of 2024 revenue (about $460-510M) into R&D to lead in silicon carbide, gallium nitride, and advanced image sensing; this funds specialized engineers and high-cost lab facilities. Continuous R&D prevents commoditization, supporting higher average selling prices and gross margins-R&D-driven products accounted for an estimated 35% of 2024 revenue.
Capital Intensive Manufacturing (CapEx)
ON Semiconductor's shift to 300mm silicon and 200mm SiC fabs demands roughly $1.2-1.5 billion in CapEx through 2026 for equipment and upgrades, investments needed to hit scale-driven unit-costs and protect gross margins; its fab-right strategy concentrates ~60% of high-value analog and SiC production internally to lower per-unit cost and sustain target gross margins near 40% (2025 reported gross margin 37.8%).
Raw Material and Substrate Procurement
Costs for high-purity chemicals, specialty gases and silicon wafers drive a large share of ON Semiconductor Corp's manufacturing spend; in 2024 COGS rose 9% year-over-year to $4.12B, reflecting input-price pressure. Vertical integration in silicon carbide (SiC) reduces wafer dependence and lowered SiC-related costs by an estimated 5-8% in 2024, but exposure to non-SiC material price swings and market tightness keeps margin volatility high; hedging and supplier contracts are critical to protect gross margin.
Global Logistics and Operational Overhead
Maintaining a global footprint drives sizable shipping, warehousing, and admin costs; ON Semiconductor reported 2024 selling, general & administrative (SG&A) plus R&D of $2.3 billion and noted logistics as a material line in FY2024 filings.
The company is cutting costs by consolidating fabs and boosting supply-chain visibility with digital tools; management tracks operational efficiency and ROIC-ROIC target above mid-teens per 2024 investor presentation.
- FY2024 SG&A+R&D: $2.3B
- ROIC target: mid-teens (2024 guidance)
- Consolidation of manufacturing sites ongoing
- Digital supply-chain visibility to reduce lead times and inventory
Talent Acquisition and Retention Expenses
ON Semiconductor spends heavily on compensation and benefits to retain engineers; R&D and workforce costs drove SG&A and R&D to about $1.9 billion in FY2024, reflecting talent-driven expense pressure.
Training and upskilling initiatives-including automation and advanced packaging courses-are funded to sustain manufacturing shifts and reduce time-to-productivity.
- FY2024 R&D + SG&A ≈ $1.9B
- High engineer turnover raises hiring cost
- Training lowers ramp time for new tech
ON Semiconductor targets ~40% GM, mid – teens ROIC with $1.2-1.5B CapEx, R&D 9-10%
ON Semiconductor's 2024 cost base centers on R&D (9-10% of revenue, $460-510M), COGS pressures (2024 COGS $4.12B), and SG&A+R&D ~$2.3B; CapEx of $1.2-1.5B through 2026 for 300mm/200mm SiC fabs targets gross margins ~40% (2025 GM 37.8%) and ROIC mid-teens.
| Metric | 2024/Target |
|---|---|
| R&D spend | $460-510M (9-10% rev) |
| COGS | $4.12B |
| SG&A+R&D | $2.3B |
| CapEx (thru 2026) | $1.2-1.5B |
| Gross margin | 37.8% (2025), target ~40% |
| ROIC target | mid-teens |
Revenue Streams
Power Solutions Group (PSG) Product Sales
PSG drives most of ON Semiconductor Corp.'s revenue by selling discrete semiconductors, power modules, and integrated circuits for switching, conversion, and protection; PSG accounted for about 52% of ON's $8.8B 2024 revenue (≈$4.6B).
Advanced Solutions Group (ASG) Revenue
ASG revenue stems from analog, mixed-signal, and logic solutions customized for automotive, industrial, and comms; these highly integrated products simplify designs and boost system performance. In 2025 ON Semiconductor reported ASG-driven growth with automotive and industrial mix lifting segment margins to mid-20s% and contributing roughly 28% of company revenue, driven by EV powertrains and factory automation demand.
Intelligent Sensing Group (ISG) Sales
ISG Sales generate revenue from high-performance image sensors and specialized sensing components for automotive and industrial markets; ON Semiconductor reported sensing and power solutions revenue of $6.2B in FY2024, with ISG driving a mid-single-digit volume CAGR as cameras per vehicle rose to ~10 in 2024 from ~7 in 2019.
Custom ASIC and Specialized Foundry Services
ON Semiconductor (onsemi) earns recurring revenue by designing and manufacturing custom ASICs for strategic partners, driving deep customer lock-in and lifecycle revenue-onsemi reported $7.7B revenue in FY2024, with analog and custom solutions a key margin driver.
Foundry services use excess fab capacity to produce specialized chips for third parties, improving fab utilization and adding incremental revenue; contract manufacturing contributed materially to capacity-driven margin gains in 2024.
- Custom ASICs: recurring, high-margin, deep lock-in
- Foundry services: monetize excess capacity, boost utilization
- FY2024 revenue context: $7.7B total, custom solutions significant
Licensing and Intellectual Property Fees
Licensing and IP fees form a small but high-margin revenue stream for ON Semiconductor, generating roughly $40-60 million annually in recent years (about 1-2% of 2024 revenue), flowing mostly to operating income with minimal variable costs.
Royalties from tech transfers and joint ventures supplement licensing, offering recurring cash with low maintenance and strong margin leverage.
- ~$40-60M annual licensing income (2024 est.)
- ~1-2% of 2024 revenue
- High gross margins, low variable cost
- Includes royalties from transfers/JVs
ON Semiconductor 2024: PSG 52% ($4.6B), ASG 28% - Sensing & Power drive $6.2B
ON Semiconductor's 2024 revenue mix: PSG ~52% ($4.6B), ASG ~28% (mid-20s% margins, growth from EVs/automation), ISG sensing + power ~? contributing to $6.2B sensing+power figure; custom ASICs/analog drive recurring high margins; foundry/contract manufacturing add incremental fab-utilization revenue; licensing/royalties ~$40-60M (1-2% of 2024).
| Stream | 2024 $ | % Rev |
|---|---|---|
| PSG | 4.6B | 52% |
| ASG | 2.5B≈ | 28% |
| Licensing | 40-60M | 1-2% |
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