On Semiconductor (Onsemi) experienced a full-year decline in sales while seeing a rise in profit in 2023, with the automotive business driving sales growth. The company expects soft demands in 2024 and warns of slower growth in EVs.
According to Onsemi's financial results, the company reported sales of US$2 billion in the fourth quarter of 2023, down 4.06% from a year ago. The fourth-quarter profit dropped 6.88% year-on-year to US$562.7 million. For full-year results, Onsemi's revenue fell from US$8.33 billion in 2022 to US$8.25 billion in 2023, while its profit rose from US$1.90 billion to US$2.18 billion during the same period.
Hassane El-Khoury, president and CEO of Onsemi, said in a press release that the company's momentum continued in 2023, achieving record automotive revenue and four times year-on-year growth in silicon carbide (SiC) revenue, adding that it's driving innovation beyond silicon and SiC with an upcoming analog and mixed-signal platform to further the leadership in intelligent power and sensing solutions.
El-Khoury elaborated at the earnings call that Onsemi's automotive revenue increased 29% over 2022, driven by intelligent power and sensing businesses. The company achieved the first US$1 billion year for automotive image sensors, with design wins increasing more than 50% year-on-year. Onsemi shipped over SiC worth US$800 million in 2023, for times 2022 revenue, and achieved the highest SiC revenue growth in the industry, both in terms of dollar terms and percentage, delivering an estimated 25% market share.
Regarding guidance, Onsemi anticipated revenue of US$1.8-1.9 billion and expected an adjusted gross margin of 44.5-46.5% for the first quarter of 2024. Although Onsemi expects continued softness across all end markets through a period of inventory digestion and slowing end demand, El-Khoury said the company is expected to grow at two times the market growth in 2024.
El-Khoury said at the earnings call that Onsemi continues to make progress on its transition to 200mm. He warned that despite a projected 30-40% growth for SiC in 2024, the actual growth is expected to be 20-30% based on OEMs' latest EV plan.
Regarding the investment in production, Onsemi said the capital expenditure (Capex) for the fourth quarter was US$391 million, equivalent to a capital intensity of 19%. Driven by improved SiC manufacturing output on 150mm wafers, the company revised its Capex plan for 2024 upward, expecting a capital intensify to be in the low teens, better than its previous estimation.
Onsemi financial summary (US$m) | ||||||
Financial | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | YoY for 4Q23 (%) |
Revenue | 2103.6 | 1959.7 | 2094.4 | 2180.8 | 2018.1 | -4.06 |
Gross profit | 1020.5 | 917.5 | 993.4 | 1030.7 | 941.9 | -7.7 |
Operating income | 704.3 | 564.9 | 674.7 | 687 | 612.1 | -13.09 |
Net income | 604.3 | 461.7 | 576.6 | 582.7 | 562.7 | -6.88 |
Source: Onsemi, February 2024
Onsemi sales by business group (US$m) | ||||||
Business Group | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | YoY for 4Q23 (%) |
PSG | 1048.4 | 1012.8 | 1119.8 | 1230.6 | 1085.8 | 3.57 |
ASG | 701 | 592.8 | 649.5 | 621.6 | 624.6 | -10.9 |
ISG | 354.2 | 354.1 | 325.1 | 328.6 | 307.7 | -13.13 |
Source: Onsemi, February 2024
