On Semiconductor to record $200–$300 million in asset impairment charges

ON Semiconductor Corporation (NASDAQ:ON) announced Monday that it will recognize additional pre-tax non-cash impairment and accelerated depreciation charges totaling between $200 million and $300 million. The charges relate to long-lived assets at certain company manufacturing facilities and were approved by management on November 13. With a current market capitalization of $18.48 billion and trading at a P/E ratio of 60.3, the chipmaker appears overvalued according to InvestingPro analysis, which may explain management’s focus on cost-cutting measures.

According to a statement in the SEC filing, these charges stem from ongoing evaluations of the company’s manufacturing operations as part of restructuring and cost reduction initiatives. ON Semiconductor said the actions are intended to realign its internal manufacturing capacity and capabilities with anticipated long-term needs.

The company expects that the impairment and accelerated depreciation charges will reduce recurring depreciation expense by an estimated $10 million to $15 million in 2026. Most of the charges are expected to be incurred between now and the first two quarters of 2026. The company does not anticipate that the charges will result in material future cash expenditures. ON currently operates with a moderate level of debt and maintains strong liquidity with a current ratio of 5.23, indicating its liquid assets significantly exceed short-term obligations.

The non-cash charges were determined as the difference between the carrying values of the affected assets and their estimated fair values, less anticipated costs to sell such assets. ON Semiconductor noted that actual timing, fair values, disposal costs, related impairment charges, and impact on depreciation expense may differ from current estimates.

This information is based on a press release statement included in the company’s recent SEC filing.

In other recent news, Ascendis Pharma A/S has issued 41,220 warrants to certain employees, allowing them to subscribe for ordinary shares at an exercise price of $201.16 per share. These warrants are set to vest over a four-year period, with specific conditions laid out in the company’s Articles of Association. Meanwhile, ON Semiconductor has been the focus of several analyst updates following its latest quarterly earnings report, which modestly exceeded expectations. Truist Securities raised its price target for ON Semiconductor to $51, maintaining a Hold rating, while TD Cowen increased its target to $60, citing stabilizing demand and maintaining a Buy rating. In contrast, Piper Sandler lowered its price target to $55, attributing the adjustment to lower multiples across the semiconductor sector. Additionally, ON Semiconductor announced that Alan Campbell, the chair of its board, plans to retire after the 2026 annual meeting, with no disagreements reported regarding the company’s operations or policies. These developments reflect ongoing strategic and operational activities within both Ascendis Pharma and ON Semiconductor.

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