onsemi Q2 2025: Navigating a Downturn with a Major Manufacturing Pivot

ON Semiconductor (onsemi), a key supplier of intelligent power and sensing technologies for the automotive and industrial sectors, is navigating a challenging market. To understand how the company is performing, we're diving into its latest quarterly report, filed with the SEC on August 4, 2025. The numbers reveal a period of significant transition, marked by declining sales and a major strategic overhaul of its manufacturing operations.

You can view the complete document on the SEC's website here.

A Look at the Top Line

For the second quarter ending July 4, 2025, onsemi reported revenue of $1.47 billion, a noticeable 15% decrease from the $1.74 billion generated in the same quarter last year. This downturn was felt across all of the company's business units.

• Power Solutions Group (PSG): Revenue fell to $698 million from $835 million year-over-year.
• Advanced Solutions Group (AMG): Revenue declined to $556 million from $648 million.
• Intelligent Sensing Group (ISG): Revenue dropped to $215 million from $252 million.

The automotive market, which is onsemi's largest end-market, saw revenue fall to $733 million from $907 million a year ago, signaling broader softness in demand.

Profitability and a Major Strategic Pivot

The revenue decline, coupled with strategic shifts, had a significant impact on profitability. Gross profit for the quarter was $552 million, down from $784 million in the prior year, with the company's overall gross margin shrinking from 45.2% to 37.6%.

The path from revenue to net income, which landed at $170.3 million, is illustrated in the flow diagram below.

A key story in this filing is the "2025 Manufacturing Realignment Program." This strategic initiative involves streamlining the company's production facilities. While aimed at long-term efficiency, it has resulted in substantial short-term costs.

For the first six months of 2025, onsemi recorded a staggering $588.5 million in charges for "Restructuring, asset impairments and other, net." This figure is massively up from just $73.9 million in the first half of 2024 and includes a $472.1 million non-cash asset impairment charge. In simple terms, the company is writing down the value of certain manufacturing assets as it reconfigures its operations. These charges were the primary reason the company reported a six-month operating loss of $380 million, a dramatic reversal from the $914 million in operating income it earned in the same period last year.

Capital Management and Financial Health

Despite the operational headwinds, onsemi is actively managing its capital. The company demonstrated confidence in its long-term value by repurchasing 6.9 million shares of its common stock for $300 million during the quarter. This is part of a larger $3.0 billion share repurchase program authorized through the end of 2025.

The company's balance sheet remains solid. As of July 4, 2025, onsemi held $2.5 billion in cash and cash equivalents and maintained a healthy balance between its assets ($13.1 billion) and liabilities ($5.2 billion).

Looking Ahead

Onsemi's latest quarter reflects a company in the midst of a significant strategic pivot during a market downturn. The sharp decline in revenue and the large impairment charges paint a challenging short-term picture. However, these moves are part of a deliberate strategy to optimize its manufacturing footprint, likely to better focus on high-growth areas like silicon carbide (SiC) technology for electric vehicles and renewable energy. Investors will be watching to see if this painful but necessary realignment will position onsemi for stronger, more profitable growth when market conditions improve.