ON Semiconductor (ON) Deutsche Bank 2026 Technology Conference summary

Market outlook and demand trends

• Demand has stabilized at natural levels across end markets, with improved visibility extending into 2027 and 2028 for some products.

• Book-to-bill remains above parity, and lead times are extending in certain constrained technologies, especially those supporting AI data centers.

• Utilization rates have risen from 68% to 83% in six months, reflecting stronger order patterns and business health.

• Automotive demand is stable, with electrification and China EVs outpacing the broader market; industrial secular markets like energy infrastructure are growing rapidly.

• Inventory levels are healthy across channels, with lean balance sheets and the ability to ramp manufacturing in line with demand recovery.

Pricing, capacity, and supply chain

• Two rounds of price increases have been implemented to offset rising input costs, with further pricing impact expected in coming quarters.

• Capacity investments are complete, with no major CapEx cycles planned; current footprint supports growth and allows for brownfield expansion.

• Some technologies face supply constraints, leading to targeted price increases and allocation trade-offs between auto and AI data center.

• CapEx will remain at maintenance levels, with flexibility to expand internally or externally as needed.

Data center and technology innovation

• AI data center revenue is set to more than double in 2026, with broad customer and regional diversification.

• The transition to 800V in data centers is a major opportunity, leveraging expertise from automotive and unique vertical GaN technology.

• Vertical GaN is being sampled with customers, with manufacturing in Syracuse, NY, and no current competitors delivering similar devices.

• Lateral GaN is pursued through partnerships, while vertical GaN development is primarily organic with a strong IP moat.