ON Semi reported a beat in Q3 and provided an in-line guide for Q4, signaling stabilization in auto and industrial markets. Management emphasized strong growth in AI data center power, driven by full power-train solutions and progress in silicon carbide and vertical GaN. The company remains focused on financial discipline and shareholder returns. Q3 revenue came in above guidance, with auto and industrial showing stabilization and sequential growth.
ON Semi reported a beat in Q3 and provided an in-line guide for Q4, signaling stabilization in auto and industrial markets. Management emphasized strong growth in AI data center power, driven by full power-train solutions and progress in silicon carbide and vertical GaN. The company remains focused on financial discipline and shareholder returns. Q3 revenue came in above guidance, with auto and industrial showing stabilization and sequential growth.
Management highlighted AI data center as a key growth driver, with AI revenue expected to reach about $250 million in 2025, growing through share gains in power delivery from wall to core, including JFET silicon carbide and Trejo products. They are investing in AI-related power…
Management expressed cautious optimism about market stabilization and AI growth, but remained disciplined and avoided overpromising, emphasizing consistent execution and no restocking cycle yet.
Guidance · revenue to $1.53B
AI data center business is on track for ~$250M in 2025, with management claiming a unique position as one of only two suppliers able to support the full power tree from grid to core.
Management highlighted AI data center as a key growth driver, with AI revenue expected to reach about $250 million in 2025, growing through share gains in power delivery from wall to core, including JFET silicon carbide and Trejo products. They are investing in AI-related power solutions and see continued growth ahead.
No restocking cycle observed yet. Management expressed cautious optimism about market stabilization and AI growth, but remained disciplined and avoided overpromising, emphasizing consistent execution and no restocking cycle yet.
Capital expenditures are expected to be in the range of $20 to $40 million for Q4, reflecting ongoing investment in innovation and differentiation. Management is focused on capital efficiency and returning over 100% of free cash flow to shareholders while investing in high-voltage, high-efficiency technologies like vertical GAN and silicon carbide.
Management expressed cautious optimism about market stabilization and AI growth, but remained disciplined and avoided overpromising, emphasizing consistent execution and no restocking cycle yet.
“we've been building die bank inventory for the mass market. This is a market that we've talked about for probably well over a year about we need to seed that market. We've been doing it through the distribution channel.”
“if you take that quote-unquote crowded space of 13 or however many companies and you look at who can go from wall to core, there's only two. And we are the share gainer. We're one of the two.”
“But one thing I would highlight is we haven't seen a restocking cycle yet. So that's still out there.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Capex | FY2025 Q4 | 20–40 | 30 | GUIDED |
| EPS | FY2025 Q4 | $0.57–$0.67 | $0.62 | GUIDED |
| Gross margin | FY2025 Q4 | 37%–39% | 38% | GUIDED |
| Revenue | FY2025 Q4 | $1.48B–$1.58B | $1.53B | GUIDED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2026 Q1 | EPS | FY2026 Q2 | $0.65–$0.77 | $0.74 | Met / beat |
| FY2026 Q1 | Gross margin | FY2026 Q2 | 38%–40% | 38.43% | Met / beat |
| FY2026 Q1 | Revenue | FY2026 Q2 | $1.535B–$1.635B | $1.6035B | Met / beat |
| FY2025 Q4 | EPS | FY2026 Q1 | $0.56–$0.66 | $0.64 | Met / beat |
| FY2025 Q4 | Gross margin | FY2026 Q1 | 37.5%–39.5% | 38.53% | Met / beat |
| FY2025 Q4 | Revenue | FY2026 Q1 | $1.44B–$1.54B | $1.5133B | Met / beat |
The 'mass market' strategy likely includes Chinese hyperscalers like ByteDance, and the inventory build is to support their growing data center demands.
“we've been building die bank inventory for the mass market. This is a market that we've talked about for probably well over a year about we need to seed that market. We've been doing it through the distribution channel. Now we've got a”
For my follow-up, maybe on utilization and gross margins, Pat, I think you said something about utilization, perhaps flat to slightly down, anything more to read into it. And if you could just remind us, what is your seasonal pattern in Q1? And if there is some utilization headwind from Q4, how does that kind of reflect in gross margins in Q1, just based on historical seasonal trends? Thank you.
Yeah. Yeah. So our... Our utilization increased to 74% in Q3. As I said in the prepared remarks, we've been building die bank inventory for the mass market. This is a market that we've talked about for probably well over a year about we need to seed that market. We've been doing it through the distribution channel. Now we've got a whole inventory in die bank for a kind of quick turn on that mass market that we need to invest in. I expect it to be down, the utilization to be down in Q4 because we expect those builds to be completed. So going back to kind of a normalized utilization rate from that point forward. You can think about utilization, the impact on utilization as having a couple quarter impact on the P&L. There's always a delay on that rate. So if you think about going into next year, and obviously we're not providing any guidance at this point, But we think between Q4 and kind of the next couple quarters, we're looking at seasonal patterns. If you take the midpoint of our guidance for Q4, it's directly in line with normal seasonality, which is typically flat to down 2%. I think the midpoint of our guidance is down about 1.3%. And to answer your question about kind of what's the normal seasonality in Q1, it's typically down 2% to 3%.
ON is designed into NIO's new brand with silicon carbide, indicating a design win and volume growth potential in China's EV market.
“One is the NEO launching a new brand where we were designed into that new brand with silicon carbide.”
Yeah, thanks for taking the questions. I was wondering with, you know, a quarter to go, any sort of color you could provide on, you know, your expectations for silver and carbon revenue growth this year?
We didn't provide any guidance on silicon carbide, but I'll tell you, silicon carbide is coming in exactly where we expected. We continue to gain share in our end customers, and our position in China remains unchanged as new products are ramping. You know, I mentioned a couple of examples here. One is the NEO launching a new brand where we were designed into that new brand with silicon carbide. and a broader deployment now in China EVs through a leading tier one in China that gives us really exposure to beyond just the top 10 OEMs that we've been engaged to. So that gives you a little bit of an outlook or a feel into our penetration of silicon carbide will continue to increase and we will continue to gain share.
ON sees itself as one of only two companies able to support the full power delivery tree from high voltage to the core, positioning it uniquely against competitors. — This suggests ON is gaining significant share in AI data center power, a high-growth market unlike its traditional automotive and industrial focus.
“You mentioned the collaboration list on the 800-volt with NVIDIA, and that's great to be on that list, but there's 13 other folks on the list as well.”
Thanks for that color. I guess this is my second question, perhaps a little bit of a longer term one. You, for the first time, I believe, sized the AI business at about $250 million, I think, for this year as a whole, so roughly 4% of sales. Can you just talk about how ON differentiates in that? You mentioned the collaboration list on the 800-volt with NVIDIA, and that's great to be on that list, but there's 13 other folks on the list as well. So as you look at that market today, How do you believe that $250 million will grow, and what's the differentiation on delivers to drive that growth?