ON Semiconductor Corporation

Q2 revenue was $1.6 billion, up 6% sequentially and 9% year-over-year. Non-GAAP gross margin was 39.3%, up 80 basis points sequentially, and non-GAAP diluted EPS was $0.74, about 4x revenue growth and 16% above the prior quarter. GAAP gross margin was 38.4%, GAAP EPS was $0.56, and free cash flow was $425 million. For Q3, onsemi guided revenue to $1.65 billion to $1.75 billion, non-GAAP gross margin to 40% to 42%, and non-GAAP EPS to $0.81 to $0.93. Capital expenditures are expected to be $40 million to $50 million, and full-year capex is expected to be below 5% of revenue.

Hassane El-Khoury said the quarter showed progress from the company’s multiyear portfolio reshaping and improving demand, especially in AI data center, China EVs, and industrial energy infrastructure. He emphasized that supply is tightening, lead times are extending, and customers are placing orders within lead times, which he framed as signs of a healthy recovery. His tone was confident and strategic, focusing on onsemi’s full AI power-tree opportunity, content gains in EVs, and the longer-term benefits of the Synaptics acquisition.

Thad Trent highlighted operating leverage, saying revenue rose 9% year-over-year while non-GAAP EPS grew about 4x faster than revenue. He cited $425 million of free cash flow, $460 million of cash from operations, $3.9 billion of cash and short-term investments, and $5.4 billion of total liquidity including $1.5 billion undrawn on the revolver. He said gross margin expanded to 39.3% on improved manufacturing performance and favorable mix, utilization rose to 83%, and the company returned $332 million to shareholders; he also noted approximately $35 million of annualized savings from the Mountain Top and Philippines divestitures, with benefits starting in 2027 and full savings in 2028.

Analysts focused on automotive seasonality, pricing, gross margin mechanics, AI data center sizing, and supply constraints. Management said auto was stable overall, with Q2 seasonality mainly from Europe and growth supported by China and content gains; pricing actions apply across markets, including automotive, because input cost inflation is broad-based. On margins, Thad said the benefit from higher utilization typically flows through with a two-quarter lag and estimated about 25 to 30 basis points of gross margin improvement per utilization point, while Hassane said the company is prioritizing AI data center shipments and expects to catch up in the second half.