onsemi (Nasdaq: ON) recently released its third-quarter 2024 financial results, showcasing resilience in a challenging semiconductor market. The Phoenix-based semiconductor manufacturer, known for its intelligent sensing and power solutions, reported results that exceeded expectations despite ongoing market headwinds.
onsemi generated revenue of $1.76 billion in Q3 2024, marking a 2% sequential increase from Q2 but a 19% decrease year-over-year. The company maintained a strong gross margin of 45.4%, slightly improving from 45.2% in the previous quarter. GAAP earnings per share reached $0.93, up from $0.78 in Q2 2024.
- Free cash flow increased 41% sequentially to $293.6 million
- The company returned 75% of free cash flow to shareholders through stock repurchases
- Silicon carbide revenue showed sequential growth, driven by utility-scale solar and China BEV market gains
- Intelligent Sensing Group (ISG) demonstrated strong performance with 11% quarter-over-quarter growth
- Operating margin improved to 25.3% from 22.4% in Q2 2024
Power Solutions Group (PSG)
PSG revenue reached $829.4 million, showing a slight sequential decrease of 1%. The segment faces temporary headwinds from reduced demand in key markets.
Advanced Solutions Group (AMG)
AMG generated revenue of $653.7 million, achieving a 1% sequential increase despite automotive sector challenges.
Intelligent Sensing Group (ISG)
ISG posted revenue of $278.8 million, marking an impressive 11% sequential increase and showing particular strength in ADAS and industrial imaging applications.
For Q4 2024, onsemi projects:
* Revenue between $1,710 million and $1,810 million
* GAAP diluted earnings per share between $0.88 and $1.00
* Gross margin between 43.9% and 45.9%
Positive Factors
- Strong positioning in the growing silicon carbide market
- Significant design wins with major hyperscalers in North America
- Expected 50% market share in China’s silicon carbide segment
- Rising demand in renewable energy sector, particularly solar installations
Market Headwinds
- Soft demand environment across automotive and industrial sectors
- Ongoing inventory digestion affecting revenue growth
- Regional weakness in North America and Europe
- Slowing EV sell-through rates
onsemi maintains its strategic focus on:
1. Expanding market share in automotive and industrial segments
2. Investing in silicon carbide capabilities
3. Strengthening presence in AI data center markets
4. Improving manufacturing efficiency through Fab Right strategy
Several factors warrant investor attention:
* Year-over-year revenue decline of 19%
* Gross margin compression compared to Q3 2023
* Recent reorganization of reporting units
* Ongoing inventory management challenges
While onsemi faces near-term market challenges, the company maintains strong fundamentals and strategic positioning in growth markets. The sequential improvements in key metrics and strategic wins in silicon carbide and AI data center markets suggest resilience in its business model.
To explore the detailed earnings report and AI-powered analysis, visit onsemi’s Q3 2024 Earnings Report Analysis.
