ON Semiconductor (ON) Bank of America 2026 Global Technology Conference summary

Market inflection and recovery signals

• Q1 marked an inflection point, with improved demand visibility and backlog extending further out, indicating a cyclical bottom but not a full recovery yet.

• Automotive demand is stabilizing, especially in China EV exports, while industrial markets benefit from AI and energy storage trends.

• Second half of the year is expected to outperform the first, driven by ongoing program ramps and tangible design wins in AI data center and renewables.

• Bookings for Q3 and Q4 are stronger than previous years, with customers layering backlog further out, supporting confidence in market recovery.

• Automotive content growth is outpacing SAAR, driven by new products and investments made during the downturn.

Technology and product differentiation

• Silicon carbide differentiation is based on device technology, not substrates, with significant share gains in China and North America.

• ON is two to three generations ahead in silicon carbide devices, maintaining a sustainable competitive advantage.

• AI data center transition to 800V leverages automotive technology, expanding ON's competitive domain and content opportunity.

• Outside silicon carbide, content growth in automotive is driven by zonal architecture, Ethernet communication, and leadership in sensing technologies.

• Data center content per rack could increase from $5,000 to $55,000 with 800V adoption, offering significant forward-looking growth.

Financial outlook and capital allocation

• Gross margin expansion is expected through operating leverage, improved utilization, and positive mix shift from differentiated products.

• Pricing actions taken in April will positively impact the second half, offsetting input cost increases.

• Free cash flow margin remains strong at 24% even in a downturn, reflecting structural changes and a shift from manufacturing to product focus.

• Confident in achieving gross margins in the 50% range as utilization improves and self-help initiatives continue.

• Capital allocation priorities remain investing in the business, maintaining balance sheet flexibility, and returning capital to shareholders via buybacks.