ON Semiconductor (ON) KeyBanc Technology Leadership Forum summary

Market cycle and recovery outlook

• Demand is stabilizing with some recovery in industrial segments, but a sustainable upturn is needed before shifting from a cautious approach.

• Recovery is expected to be L-shaped, with inventory digestion tied closely to demand trends rather than specific markets or technologies.

• Inventory management is handled on a customer-by-customer basis, with some customers already lean and others holding more for competitive reasons.

• Channel inventory is being increased strategically in mass markets, but overall approach remains cautious and surgical.

• Channel inventory levels are currently at 8.9 weeks, with plans to remain in this range for the rest of the year and possibly increase to 10 weeks over time.

Inventory and supply chain strategy

• Inventory norms vary by customer, with two weeks seen as too lean for automotive; focus is on managed business continuity planning (BCP) across the supply chain.

• Strategic customers engage in BCP, coordinating inventory levels across OEMs, tier ones, and distribution to support demand surges.

• The company maintains flexibility by holding internal substrate capacity and qualifying external sources, including from China, while managing geopolitical risks.

• European operations are being expanded to enhance supply resilience and customer assurance.

Electric vehicle (EV) market and China exposure

• China remains the largest EV opportunity, with significant market share in silicon carbide traction inverters for new EVs.

• Local Chinese suppliers are not yet competitive in efficiency, giving an edge in global OEM competitions.

• The company leverages both internal and external substrate sources, balancing innovation and supply assurance.