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ON Semiconductor Looks To Earmark $2B On EV Chip Production

  • ON Semiconductor Corp (NASDAQ: ON) looks to invest $2 billion in boosting the production of silicon carbide chips catering to electric vehicles.

  • ON is weighing the expansion in the U.S., the Czech Republic, or Korea, where it already has factories, Reuters cites company executives during an analyst presentation.

  • ON Semiconductor is a veteran supplier to the automotive industry, supplying chips that go into drive trains of electric cars and other chips like cameras and sensors that help with driver-assistance systems.

  • ON produces over 50% of its chips internally and has invested in a complete supply chain for energy-efficient silicon carbide chips.

  • In an interview, ON CEO Hassane El-Khoury said the firm's silicon carbide chip production centers on one of its Bucheon, South Korea factories.

  • ON plans to find "end-to-end" production as a geographically distributed supply chain has become an important selling point to automakers wary of the semiconductor chip crisis.

  • On Thursday's financial analyst day, ON shared plans to capture 40% of the silicon carbide automotive chip market by 2027.

  • ON forecasts that growth in that area and others will help it grow revenue at a 10% - 12% compound annual rate, expanding sales from $8.3 billion in 2022 to an estimate with a midpoint of $13.9 billion by 2027. Over the same period, ON expects to grow free cash flows from $1.6 billion in 2022 to $3.5 billion - $4 billion by 2027.

  • In May, ON reported first-quarter FY23 revenue growth of 1% year-on-year to $1.96 billion, beating the consensus of $1.92 billion.

  • Revenue from Power Solutions Group (PSG) grew 3% Y/Y to $1.01 billion, Advanced Solutions Group (ASG) decreased 14% Y/Y to $592.8 million, and Intelligent Sensing Group (ISG) rose 32% Y/Y to $354.1 million.

  • ON Price Action: ON Semiconductor shares are trading higher by 1.28% at $84.10 premarket on the last check Wednesday.

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This article ON Semiconductor Looks To Earmark $2B On EV Chip Production originally appeared on Benzinga.com

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