ON Semiconductor Corporation

Q1 revenue was $1.51 billion, down 1% sequentially and up 5% year over year. Non-GAAP diluted EPS was $0.64; GAAP diluted loss per share was $0.08. Non-GAAP gross margin was 38.5%, up sequentially, and non-GAAP operating margin was 19.1%. Automotive revenue was $797 million, up nearly 5% year over year; industrial revenue was $417 million; Power Solutions Group revenue was $737 million, Analog and Mixed-Signal Group revenue was $540 million, and Intelligent Sensing Group revenue was $256 million. Cash and short-term investments were about $2.44 billion, total liquidity was $3.9 billion, cash from operations was $239 million, free cash flow was $217 million, and CapEx was $22 million. For Q2, management guided revenue to $1.535 billion to $1.635 billion, non-GAAP gross margin to 38% to 40%, non-GAAP operating expenses to $287 million to $302 million, and non-GAAP EPS to $0.65 to $0.77. They also said they expect to exit another $30 million to $40 million of non-core revenue in Q2 and that 2026 AI data center revenue should double versus 2025.

Hassane El-Khoury framed the quarter as a clear inflection point, saying improving demand signals and accelerating AI data center growth show the structural changes of the last several years are starting to translate into financial results. He emphasized Treo, AI data center, EV power, and sensing as the company’s key secular growth engines, and said these are already showing up in the business, not just in the roadmap. His tone was notably more confident than cautious, repeatedly saying the cycle has found a low point and that the company is on a path to recovery.

Thad Trent focused on operating leverage and margin mechanics. He pointed to 38.5% gross margin, 77% utilization, $346 million returned to shareholders in Q1, and mid-single-digit CapEx as signs that the model is working, while noting Q1 operating expenses included $329 million of restructuring charges. He said every point of utilization adds 25 to 30 basis points of gross margin, FabRight should add more than 200 basis points longer term, mix should contribute over 200 basis points, and pricing should begin to show through in the second half.

Analysts pressed management on whether secular growth themes would become externally visible, and Hassane said AI data center is already contributing in 2026 while Treo/zonal content should build through 2026-2028. On gross margin, Thad said the company should see larger step-ups later this year as utilization, FabRight, mix, and pricing all work together. Several questions focused on AI data center content and whether the company needs M&A to scale; management said it already has the needed technology breadth and highlighted recent acquisitions, including Aurasemi and JFET silicon carbide, as complements rather than necessities. Analysts also asked about inventory and channel builds; management said lead times have stretched slightly, some customers are calling about allocations, and distribution inventory should stay around 10 to 11 weeks.