ON Semiconductor Looks To Earmark $2B On EV Chip Production - ON Semiconductor (NASDAQ:ON)

ON Semiconductor Corp 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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