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SCOTTSDALE, AZ – ON Semiconductor Corp (NASDAQ:ON), a prominent semiconductor manufacturer with an $18.28 billion market capitalization, announced today that it will recognize pre-tax non-cash impairment charges estimated between $600 million and $700 million. This decision, approved by management on Monday, is part of a restructuring plan and cost reduction initiatives that were previously disclosed on February 24, 2025. According to InvestingPro analysis, the company appears undervalued at current levels, despite its stock declining 37.64% over the past six months.
The impairment charges relate to long-lived assets, specifically investments in manufacturing equipment at certain facilities, and are in line with held-for-sale accounting guidance. The company is realigning its manufacturing capacity and capabilities to better match its anticipated long-term needs, following a review of its current manufacturing technologies.
These charges are expected to reduce the company’s depreciation expense by approximately $30 million to $35 million for the year 2025. ON Semiconductor anticipates that most of these charges will be recorded in the first half of the year and does not foresee them leading to significant future cash expenditures.
The determination of the impairment charges was based on the difference between the carrying values of the assets and their estimated fair values, minus expected costs to sell. However, the actual timing of disposition, fair values, disposal costs, and related impairment charges may vary from current expectations, and such differences could be material.
ON Semiconductor’s statement included forward-looking remarks regarding the impairment charges and related estimates. The company cautioned that these statements are based on current expectations and involve risks and uncertainties that could cause actual results to differ materially.
The information in this article is based on a press release statement and reflects the company’s position as of March 18, 2025. Investors are advised to consider the risks and uncertainties described in the company’s filings with the SEC, including its 2024 Annual Report on Form 10-K, before making any investment decisions. For a deeper understanding of ON Semiconductor’s financial position and future outlook, access the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, Allegro (WA:ALEP) MicroSystems received an unsolicited acquisition proposal from Onsemi, offering $35.10 per share in cash. Allegro’s Board, advised by PJT Partners (NYSE:PJT), deemed the offer inadequate, reflecting ongoing consolidation trends in the semiconductor industry. Meanwhile, Onsemi announced a restructuring plan to cut approximately 2,400 jobs globally, aiming to save between $105 million and $115 million annually, though they expect to incur charges of $50 million to $60 million. Analyst firms Baird and Stifel have both revised their price targets for Onsemi, with Baird lowering it from $75 to $48 and Stifel adjusting from $60 to $52, citing current market challenges and economic conditions. Baird maintains a Neutral rating, noting a historically low utilization rate, while Stifel holds a Hold rating, acknowledging long-term potential but near-term macroeconomic pressures. These developments come amid speculation of a potential Onsemi takeover of Allegro, spurred by a Bloomberg report and resulting in increased investor interest. Allegro’s strong position in the automotive industry and its ownership structure, with Sanken Electric holding a significant stake, add complexity to any potential acquisition. Investors are closely watching how these dynamics will unfold in the evolving semiconductor landscape.
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