Is ON Semiconductor Stock a Hidden Value Opportunity Amid Chip Industry Challenges?

Tuesday, 14 May 2024, 13:45
ON Semiconductor, a major player in silicon carbide power chips, is currently facing revenue challenges due to slowdown in electric vehicle sales. Despite the short-term setbacks, the company's strategic shift towards higher-end and more profitable chips has boosted profit margins. The outlook for long-term growth in power chips and sensors remains positive, making ON Semiconductor stock a potential value investment.
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Is ON Semiconductor Stock a Hidden Value Opportunity Amid Chip Industry Challenges?

Overview

ON Semiconductor, known for silicon carbide power chips, is tackling revenue downturns with a focus on high-profit chips. The company anticipates challenges due to EV sales slowdown but is strategically positioning for long-term growth.

Strategic Shift

CEO Hassane El-Khoury is leading a shift towards advanced chips like SiC chips and image sensors, enhancing profitability despite slower revenue growth.

Industry Challenges

  • The chip industry is facing a cyclical downturn, impacting revenue and EPS for ON Semiconductor.
  • Market conditions, including a slowdown in EV sales, are affecting chip suppliers like ON Semiconductor.

Future Outlook

ON Semiconductor projects steady revenue growth and higher free cash flow margins, underlining long-term potential.

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