🐺The Bull Case for ON Semiconductor

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ON Semiconductor has transformed itself into a focused power and sensing company centered on silicon carbide, high-voltage power devices, and industrial-grade reliability. Its portfolio is tightly aligned with EV powertrains, industrial automation, energy infrastructure, and datacenter power, areas where efficiency and durability matter far more than commoditized scale.

Compared to peers, ON sits in a differentiated middle ground between global giants like STMicroelectronics and Infineon and more fragile pure-plays like Wolfspeed. It combines U.S.-based manufacturing, vertical integration in SiC, and long automotive qualification cycles, giving it durability that few competitors can replicate.

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ON’s U.S.-based manufacturing footprint is a strategic advantage as governments and OEMs prioritize supply chain security. Domestic SiC production aligns directly with EV policy, grid modernization, defense procurement, and CHIPS Act incentives.

For customers, onshoring reduces geopolitical risk and improves long-term supply assurance. For ON, it strengthens pricing power, deepens OEM relationships, and positions the company as a preferred supplier as electrification and AI infrastructure continue to scale.

At a roughly $22.5B market cap, ON is guiding toward $6.3B in revenue in 2026 and $7B in 2027, with $2.9B in cash against just $800M in debt. With $6B authorized for buybacks, the company’s effective enterprise value trends toward roughly $13B by the end of 2027.

That implies ON is trading near 2x 2027 price-to-sales after buybacks, a valuation typically reserved for low-growth cyclicals, not strategic power leaders. Forward P/E sits around 20x, dropping to roughly 13x by 2027, creating a setup where execution alone can drive meaningful multiple expansion.

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