ON Semiconductor Corporation Q3 FY2025 earnings call

• Third quarter results exceeded guidance with revenue of $1.55 billion, non-GAAP gross margin of 38%, and earnings per share at the high-end of the range. - Positioning the company for market recovery with stabilization in Automotive and Industrial and growth in AI. - Treo platform scaling across core markets, with new products sampling and a design funnel exceeding $1 billion. - Key milestones: Treo platform scaling, vertical GaN platform launch, SiC JFET proliferation, and Vcore acquisition. - Stabilization in Automotive and Industrial, growth in AI, with traction in areas like infrared imaging systems, solar and energy storage platforms, and AI data center power delivery.

For the third quarter, the Power Solutions Group (PSG) had revenue of $738 million, a 6% quarter-over-quarter increase and an 11% year-over-year decrease. The Analog and Mixed-Signal Group (AMG) reported revenue of $583 million, a 5% quarter-over-quarter increase and an 11% year-over-year decrease. The Intelligent Sensing Group (ISG) had revenue of $230 million, a 7% quarter-over-quarter increase and an 18% year-over-year decrease.

• Q4 revenue expected to be in the range of $1.48 billion to $1.58 billion. - Non-GAAP gross margin expected to be between 37% and 39%. - Non-GAAP operating expenses expected to be between $282 million and $297 million. - Non-GAAP earnings per share in the range of $0.57 to $0.67. - Capital expenditures expected in the range of $20 million to $40 million.

• Supply chain disruptions and geopolitical factors that could impact business operations. - Macroeconomic softness affecting certain regions like Europe and China. - Uncertainties in market recovery and demand normalization.

Q: Ross Seymore asked about the automotive side's upside and the sustainability of growth, as well as how ON differentiates in the AI business.

A: Hassane El-Khoury responded that automotive growth was due to stabilization, no restocking cycle yet, and ON differentiates by being one of the few companies able to support power delivery from high voltage to core.

Q: Vivek Arya inquired about seasonality in Q1 and utilization's impact on gross margins.

A: Thad Trent said utilization was expected to be flat to slightly down in Q4, normal seasonal patterns for Q4 are flat to down 2%, and midpoint of guidance is down about 1.3%, with seasonal patterns for Q1 typically down 2% to 3%.

Q: Blayne Curtis asked about normal seasonal for December and how the guide relates to it.

A: Thad Trent stated normal seasonal pattern for Q4 is flat to down 2%, and the guide is in line with that.

Q: Joseph Quatrochi asked about silicon carbide revenue growth and short lead time orders.

A: Hassane El-Khoury said silicon carbide revenue was on track, and Thad Trent mentioned lead times pushed out slightly, with order patterns improving.