Introduction
In its Q1 2026 earnings call on May 5, 2026, onsemi (ON) reported financial results reflecting improving conditions following a prolonged semiconductor downturn. The company posted revenue of $1.51 billion, compared with $1.86 billion in Q1 2024. Non-GAAP EPS was $0.64.
onsemi operates three business segments:
- Power Solutions Group (PSG)
- Advanced Solutions Group (ASG)
- Intelligent Sensing Group (ISG)
For Q2 2026, onsemi provided revenue guidance between $1.40 billion and $1.50 billion. The company expects gross margins to range from approximately 36% to 38% on a non-GAAP basis.
Power Solutions Group (PSG)
For the Power Solutions Group (PSG), onsemi CEO Hassane El-Khoury stated during the company’s recent earnings call that the company continues to focus on silicon carbide and intelligent power solutions tied to automotive electrification and AI infrastructure opportunities.
I first alerted readers and investors about a downturn in the silicon carbide (SiC) business in my January 10, 2024 Seeking Alpha article entitled “Tracking A 2024 Slowdown In Silicon Carbide For EVs With Eyes On ON Semiconductor And Wolfspeed.”
The EV Slowdown Is Changing The SiC Market
In the U.S., EV sales fluctuated significantly in 2025 driven by a rush to purchase EV in January before a 25% tariff increase on imported cars and auto parts imposed by president Trump in April, the and the termination of the $7,500 federal tax credit on September 30th, which was followed by a rise in the price of EVs. Battery electric vehicle (BEV) sales reached 1.3 million units, a cumulative year-on-year increase of just 1.1%. For 1926, sales growth of BEVs should exhibit comparable growth, although high prices of gasoline could become a catalyst for increased BEV (and hybrids) adoption in 2H 2026.
This continued slowdown in the EV market in the U.S. has changed the dynamics of the SiC wafer and power device market because suppliers continued to expand production facilities while simultaneously transitioning to larger 8-inch wafers. I detailed this analysis in my July 22, 2024 Seeking Alpha article entitled “STMicroelectronics: A Q2 Preview, It Benefits From A 10% SiC Wafer Shortage In 2024.”
I noted for STMicroelectronics (STM), the subject of that article, but which is also applicable to applicable to onsemi:
“The anticipated undersupply of SiC wafers in 2024 that I uncovered in my analysis, presents a unique opportunity for STM to capitalize on higher prices and secure long-term contracts, thereby boosting revenue and market share.”
According to Chart 1, onsemi held a leading position in the non-Chinese SiC power chip market in 2025, although STMicroelectronics remained the market leader, according to my report entitled “Power Semiconductors: Markets, Materials and Technologies,” which can be previewed on my website at The Information Network.
Chart 1. Non-Chinese SiC Power Device Market Share In 2025
Chart 2 shows SiC power chip growth by company between Q1 2018 and Q1 2026. Here we see the strong growth of the sector followed by a slowdown beginning in Q4 2023. The chart also shows the large market shares held by STMicroelectronics, Infineon, and onsemi.
Chart 2. Quarterly SiC Power Device Revenue By Company: Q1 2018 – Q1 2026
Unfortunately, investors had anticipated SiC as an important long-term automotive semiconductor growth drivers. While this thesis remains intact structurally, the near-term market environment in the U.S. has become considerably weaker and should remain so as the current government administration remain intent on not penalizing consumers by forcing them to purchase BEVs, which was the case under Biden.
Intelligent Sensing Group (“ISG”)
As noted above, ISG remains an important business segment for onsemi, particularly in automotive and industrial sensing applications.
A CMOS image sensor (CIS) converts light from semiconductor devices into electrical signals, like a camera film in a digital camera or smartphone. In recent years, demand has increased in line with the trend of smartphones equipped with multiple camera lenses, and demand is expected to surge further as autonomous vehicles gain popularity. This is because the CIS functions as an autonomous vehicle’s optic nerve that recognizes real-time changes in the roads and surrounding environments.
CMOS image sensors are typically less expensive to produce and consume significantly less power than CCDs. When originally introduced, the quality of CMOS image sensors lagged behind that of CCDs, but in recent years, advances in semiconductor manufacturing processes and design techniques have led to significant improvements in CMOS image sensor performance and image quality. Smaller circuits and better current control made it possible to design CMOS image sensors that provide image quality comparable to that of CCDs of comparable resolution.
As a result, CMOS image sensors are now widely used in camera-equipped mobile phones, entertainment applications such as tablets, notebooks and webcams, DSCs, security and surveillance systems, and increasingly in automotive and medical applications, all areas where high image quality, low-power consumption, small size and low cost are important considerations.
The Automotive CIS Market Is Becoming More Competitive
According to Table 1, Sony remains the dominant supplier in the global CMOS image sensor market, with an estimated 43.4% market share, more than double Samsung’s approximate 19% share. However, the competitive structure of the market is changing. Historically, smartphone image sensors drove the majority of industry growth, favoring companies with leadership in pixel miniaturization and consumer imaging performance. Increasingly, growth is shifting toward automotive ADAS, robotics, industrial automation, and physical AI systems requiring higher dynamic range, lower latency, wider temperature tolerance, and advanced heterogeneous integration.
This shift is important because it changes the competitive requirements of the CIS industry. Smartphone leadership alone may no longer be sufficient to maintain long-term dominance as image sensors evolve into AI sensing platforms integrated with advanced semiconductor packaging and edge processing technologies.
According to my analysis, the consumer electronics sector is the largest market for CMOS image sensors, primarily due to their use in smartphones, tablets, and digital cameras. The automotive sector is rapidly growing in the CMOS image sensor market, driven by the adoption of ADAS and autonomous driving technologies. The industrial segment, including applications in machine vision, robotics, and surveillance, is another significant market for CMOS image sensors.
To make matters worse for onsemi, its main competitor in CIS, Sony Semiconductor Solutions announced plans for a proposed joint venture with foundry Taiwan Semiconductor Manufacturing Company (TSMC) (TSM) to focus on next-generation image sensor development and manufacturing in Japan.
According to Sony’s press release, “Sony has been our long-time partner in the CMOS image sensor business. We are excited to elevate our collaboration to the next level, which represents a key step forward in driving future sensing technology in the AI era,” said TSMC Senior Vice President and Deputy Co-COO, Dr. Kevin Zhang. “This partnership underscores our shared commitment and mutual vision of leveraging cutting-edge technologies and innovative solutions to deliver leading sensing technology and products. We look forward to working closely together to achieve impactful results and create lasting value for all stakeholders.”
Investor Takeaway
Onsemi’s Power Solutions Group (PSG) remains one of the company’s most important business segments, driven largely by SiC power semiconductors tied to EVs, industrial systems, and AI infrastructure opportunities.
Indeed, the BEV market continues to slow on a YoY basis, although growth in hybrid vehicles has partially offset weaker battery electric vehicle demand.
onsemi’s two most important automotive growth pillars are facing more headwinds simultaneously. SiC chips are no longer benefiting from a shortage conditions that supported pricing and margins earlier in the EV cycle, which were initially catalyzed by Covid-related shortages and the EV policies by the Biden administration to hamstring ICE (internal combustion engine) purchases. At the same time, automotive image sensing is facing increasing competitive pressure as a result of the JV between TSMC and Sony. which is expected to expand more aggressively into automotive and AI sensing applications.
Valuation Has Expanded Despite Greater Competitive Risks
According to Chart 3, ON’s share price increased 159.2% over the past year based on the anticipation that the company stood to benefit from a recovery in automotive, industrial, and AI-related semiconductor demand. The recent strong rally also reflected optimism that the slowdown in SiC power semiconductors would prove temporary and that automotive image sensing would remain a long-term growth driver for the company.
With my deep-dive into the company’s competitive posturing and near- and mid-term growth potential, share price needs to be re-evaluated by investors and analysts.
Chart 3
Chart 4 shows that ON’s forward PE ratio increased to 34.41x. This is a substantially different valuation environment from early 2024, when its forward PE was just 14. This suggests investors are currently assigning a premium valuation to the company despite its increasing competitive pressure in both SiC semiconductors and automotive image sensing.”
Chart 4
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