Shares in analog chips maker ON Semiconductor (ON) dropped today after it missed fourth quarter revenue forecasts and said 2025 remained “uncertain”.
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The group, whose chips are most often used in cars, industry and cloud data centers, reported a 14.6% year-over-year drop in revenue to $1.72 billion, compared with analyst estimates of $1.76 billion. Its adjusted earnings per share came in at $0.95, again down on analyst expectations of $0.97. ON’s revenue guidance for the first quarter of 2025 of $1.4 billion also missed expectations of $1.6 billion. ON’s shares fell nearly 6% in early trading.
Weaker Auto and Industry Demand
Revenue in its automotive segment came to $951 million, representing an 18% year-over-year decline. Industrial revenue was $440 million, down 29% year-over-year. However, there were positives with silicon carbide revenue rising driven by growing demand for more solar renewable energy and Chinese electric vehicles. ON also recorded growth in its Intelligent Sensing business with strength in demand for industrial imaging across several applications such as machine vision, robotics and scanning.
Semiconductor Sector Faces Challenges
“As we continue to navigate this market downturn, our actions over the last four years have proven we are a structurally different company that is well-equipped to navigate prolonged volatility,” said Hassane El-Khoury, president and CEO of ON Semiconductor. “While 2025 remains uncertain, we remain committed to our long-term strategy.” ON is not alone. Other semiconductor firms are facing a number of headwinds from customers with excess inventories following pandemic stockpiling, the threat of tariff trade wars and geopolitical fears over supply. However, expected growing demand for data centers as well as the use of AI in the car and other industries should be a tailwind in the years ahead.
Is ON a Good Stock to Buy?
On TipRanks, ON has a Moderate Buy consensus based on 11 Buy, 5 Hold and 1 Sell rating. Its highest price target is $107. ON stock’s consensus price target is $75.44 implying an 56.22% upside but this is liable to change in the wake of its earnings update.
