on semiconductor at bank of america conference: strategic shifts ahead

On Tuesday, 03 June 2025, ON Semiconductor (NASDAQ:ON) presented at the Bank of America Global Technology Conference 2025. The company shared a cautiously optimistic outlook, highlighting strategic repositioning and financial stability efforts. While growth is anticipated in the second half of the year, geopolitical challenges remain a concern.

Key Takeaways

• ON Semiconductor expects automotive sector recovery in the second half of 2025, driven by new product launches in China.
• The company is focusing on silicon carbide technology to enhance efficiency and market penetration.
• A shift from flat pricing to a more strategic approach is underway to capture market share and improve margins.
• Gross margins are linked to utilization rates, with improvements anticipated as utilization increases.
• ON is rationalizing its manufacturing footprint to align with high-value products and ensure geopolitical stability.

Financial Results

• Q2 is expected to mark the lowest point for the automotive sector, with growth predicted later in the year.
• AI revenue doubled year-on-year in Q1.
• The company is walking away from $475 million in volatile business due to pricing pressures, while retaining $300 million with favorable margins.
• Current utilization is approximately 60%, with a slight decline expected in Q2. Each point of utilization improvement contributes 25-30 basis points to gross margins.
• Treo products are projected to generate $1 billion by 2030, with margins between 60% and 70%.

Operational Updates

• ON Semiconductor is optimizing its manufacturing footprint, focusing on areas where high value is added.
• A dual manufacturing strategy is in place to ensure geopolitical stability, with primary and secondary locations in the US and abroad.
• The company is increasing inventory weeks in channels to service the broad market while maintaining steady dollar value.
• A vertically integrated silicon carbide supply chain reduces dependency on third-party substrates.
• Production is ramping up with a major Chinese OEM focused on autonomous technology.

Future Outlook

• ON anticipates growth in the automotive sector in the latter half of the year, driven by new product ramps in China.
• The company aims for a 30-40% market share in silicon carbide.
• Margin expansion is expected to commence in 2026 as utilization rates increase.
• ON continues to focus on silicon carbide JFETs for data center applications and expects growth in the image sensors market, linked to volume and penetration.

Q&A Highlights

• The second half of the year is expected to be more favorable for ON’s target markets.
• New product ramps in China are the main drivers for automotive strength in the second half.
• ON has gained market share outside China and sees continued growth in European EV volumes.
• The company is winning in silicon carbide due to its 10% efficiency advantage, allowing customers to reduce battery costs.

For more details, please refer to the full transcript below.

Full transcript - Bank of America Global Technology Conference 2025:

Hassan El-Khoury, ON: We’ve set out to really reposition the company strategically, but also from a financial posture. Over the last few years, we’ve really focused on what we can control, and that became even more important and relevant in the last couple of years with all the volatility that we’ve had, which is whether it’s demand, whether it’s geopolitical, and to end. So what does that mean? What are the things that we can control? You’ve seen us maintain investments in new products, and I’ll talk a little bit about the penetration of new products that are helping with the growth back, but also growth forward.

We are focused on our manufacturing footprint, rationalizing our manufacturing footprint to match our portfolio of products with high value. We even as soon as last quarter, we talked about taking capacity offline. So not only have we reduced our footprint, physical footprint of a fab part of our fab lighter, but part of our fab right approach is really focusing our manufacturing to the areas where we add value, but also having the right manufacturing capacity to support our growth. All of these have led to a much more predictable, but also a much more certain environment from a gross margin expansion perspective, where coming out of this, you’re going to see a margin expansion that is better than what we would have otherwise gotten had we not done those changes. With the current existing footprint, I talk about it as a strategic realignment, but it’s also a competitive advantage knowing the geopolitical environment we are in.

You know, we have, set out to have, for example, from manufacturing, a primary and a secondary. When you have a primary and a secondary, one in The US, One outside The US, when you have geopolitical uncertainties, that becomes a competitive advantage. And we’ve been utilizing that competitive advantage to maintain stability from our customer and really capture the demand without the volatility. Now we can’t prevent all volatility because customers still have their factories that they have to rationalize. But from our exposure, we give the customer that supply resilience that they have asked for starting in COVID, but now it’s for different reasons.

From a demand environment, you know, we started to see signs of recovery. We talked about signs of recovery in the industrial market, which is our second largest market. And based on the outlook that we see, net of any changes in the environment that we talk about, we do expect Q2 to be the bottom even in automotive. We are expecting growth. We’re expecting growth driven by our penetration and our success that we’ve had in EVs in China, But we’re also going to benefit from a broad based recovery based on the signs that we see even for the second half of this year.

Of course, net of any changes in the geopolitical output outlook, but net of those disruptions that are not, you know, that we don’t know about, we are, you know, we feel good about the the second half. And of course, next year is too soon to talk about next year, but the second half is the first step of did we hit the bottom, and are we gonna see recovery from there?

Unidentified speaker: Got it. I don’t wanna read too much, Hassan, in in the body language, but it’s the first time after a while that I’ve heard you use the word good and and recovery. Right? Or or am I or am I reading too much? You know, because, you know, with the last number of quarterly calls, you have been more kinda guarded, right, because of what so is it fair to say you’re feeling a little better now?

And and if yes, what what is driving that?

Hassan El-Khoury, ON: I I you you you’ve known me for for a long time. As far as I’m gonna call it for what what I see it. And I’ve always said, I’m going to talk about what I see, not what I hope to see or wish to see. Right. Now that works out for or against you.

When I started talking about the softness in industrial and automotive, I was public enemy number one. But we are seeing sign. We talked about it on the call. We’re seeing signs of recovery in industrial. You know, both Thad and I talked about it.

Industrial is gonna be better in the second half of the year than it’s in the first half of the year. Automotive, bottoming out, like I said, in q two. Second half of the year is gonna be better than the first half of the year, driven by ramps of new products in automotive that we have already seen in the market. You know, I was at the Shanghai Auto Show last month. I saw the models that we are in.

They are released. Those we expect to ramp. Those are facts. They’re not, you know, projections or those are facts. That’s what I’m, referring to.

So, yeah, based on the facts that we see, again, net of any disruption that that Right. I can’t project, the second half is going to be, more favorable in in the markets that we we address. Now, of course, you haven’t heard me talk about, I didn’t call out AI, which I’m sure in this conference, the first word out of everyone’s mouth is AI. AI has doubled year on year for us in the first quarter. It’s smaller revenue than, you know, our primary markets of auto and industrial.

But even there, that’s more of penetration. Not a recovery comment because that market has been good. But from our side, from Odd Semi, we’ve been investing in that. You’ve seen us we’ve acquired the silicon carbide JFET. As the rack power increases in that market, now you’re going to see more of our penetration in that market because now it’s in our sweet spot of high power just like auto and industrial is.

Unidentified speaker: Got it. On the automotive side, the second half strength, is that China? Or are you starting to see some signs of recovery outside of Chinese OEMs also?

Hassan El-Khoury, ON: There signs outside, but the primary driver is really the new product ramps for us, which is driven by China. But we’ve also outside of China, we have had share gains as well. Right. So share gains, you can call it recovery, but that’s specific to on semi. But from a general market recovery, we’re gonna benefit just like everybody else.

But there are a few that are on semi specific. The share gains and the China ramp, those are on semi specific.

Unidentified speaker: Got it. And I remember, Hassan, in the last almost year plus or so, one reason you had been a little more measured and guarded in your outlook was because of channel inventory, right, where you mentioned that it wasn’t just on, it was a number of your competitors. So where do we stand today in automotive specifically? And then we’ll talk about industrial. Do you think most of the excess inventory is kind of done within the automotive side?

Or are there still spots that we have to worry about?

Hassan El-Khoury, ON: Yes. So you mentioned channel inventory. Want to break the inventory question in two different pieces. From a channel inventory, we pride ourselves with with the execution that I’ve talked about. We set the company up very well with really tight control of channel inventory.

Even in a downturn, you’ve seen us some quarters drain channel inventory in dollars, so less and less. So we’ve been very measured and very disciplined as far as what we ship. We have to see the demand and get the certainty of demand before we fulfill it through the channel. Otherwise, it will get stuck. So that we’ve done very well.

That’s been, really always been in our sweet spot. We’ve increased the weeks of inventory a little bit in in the channel for a very specific reason. We have starved the broad market during the shortages. We said we’re gonna increase in order to service the the broad market. Our customer count in the broad market since that decision was made has increased 19% year on year.

So we’re getting more customers in that broad, which for us is a strategic decision why we increase inventory. But from a dollar perspective, that’s been very, very steady. Inventory on the balance sheets, again, right in our sweet spot. You know, our base inventory is a hundred and nineteen days. You can think about it’s we wanna fluctuate between a hundred and a 20, so that’s there.

Back to everything we control in a recovery. Right. We don’t have to wait to burn inventory in the channel and burn inventory on the balance sheet before we take our utilization up. As soon as the recovery, we’re gonna start seeing our utilization go up. Two quarters later, margin expansion will start.

So that’s what we’ve set the company up for success during downturn and back to the things I started with, the things we control. The second part of your question, on automotive, that is not a channel inventory, that’s more on the customers. We believe we’re kind of we’re there. You know, it’s not an industry answer. It’s more customer by customer.

There are some customers that still have inventory and they’re gonna continue. But there are customers that have achieved their inventory burn. And I say customer by customer because the level of inventory, if you ask me, well, where do they wanna be? It depends on the customer and their financial position. Right.

If they can afford to have working capital tied to inventory, they’re gonna have higher weeks than others. But we believe even without a recovery, just to go back to demand from undershipping demand to demand, you’re gonna see that that benefit in the outlook for us.

Unidentified speaker: Got it. Makes sense. Whenever people hear about strength in China, the perception is, well, this is all silicon carbide and just because of the strength of their EV market and silicon carbide sooner or later is going to commoditize and these sockets are not going to be sticky. How do you so maybe just if we take a step back, Hassan, talk to us about the silicon carbide market as it exists today. How strategic is it for you?

And your China exposure, is it just that one aspect? Or is it more broad based? Just how sticky are these sockets in China? MR.

Hassan El-Khoury, ON: Sure. So from a silicon carbide, yes, the silicon carbide technology and the market is still strategic for us, not just in automotive, but renewable energy. You know, when I mean renewable energy, I’m not talking about residential solar inverters. I’m talking about, you know, charging stations, energy storage, you know, container level battery packs. So utility grade and commercial grade.

All of these are areas we win, and we win because of the value. So what does what does that mean, the value? And why do I still consider silicon carbide strategic versus a lot of the, you know, the the news and the headlines you you see out there? I’ve always been very consistent from the beginning is you only win if you provide value. I never talked about, you know, the cost curve.

I never talked about any of that. So what is that value, and why do we win? If I can if we at Onsemi, our products give 10% more efficiency from a silicon carbide and the customer can remove 10% of the battery, that’s way more dollars than a piece of silicon given it for x percent less. So the customer will pay more for a highly efficient silicon carbide if they can get their cost out of the battery. That’s not a problem at all.

Why is that important in China? Because the customer does the bat sources the battery and the silicon carbide. There’s no tier one. So think about it in a traditional model. You have a tier one that does the inverter and a tier one that does the battery.

So if I say, hey. You gotta pay more for silicon carbide on the inverter because I get 10%. You can save the battery. They go, I don’t make the battery. So efficiency doesn’t matter.

So the fact that EVs are decision points at the OEM highlights the value that we provide because the OEM can do the trade off and the optimization at a system level. That’s why we win in in China. That’s why we win in Europe. That’s why we win in, North America. Point number one, that’s silicon carbide EV.

EV penetration, plug in hybrid, last quarter, I talked about how even plug in hybrid, we’ve got a North American plug in hybrid design in or design win, with silicon carbide. So as plug in hybrids start to use that, they wanna extend the range beyond the 50 mile kind of plug in hybrid to 75 and a hundred, now silicon carbide becomes the name of the game. So we are starting to get that penetration in, which will support our growth. So whether it’s China, Europe, and North America, you win with silicon carbide if you provide the customer the value that they can extract out of the system, starting with the efficiency. We do that.

That’s why we win. That’s why I call it the consistency to win. Are there and has there been silicon carbide suppliers in China on the substrates? Yes. On devices, there are a few.

How close they are? Not close. Then the next thing people say, well, they’re gonna catch up. Yeah. Do we think we’re standing still too?

They’re gonna catch up to the prior and prior generation. On the call, I talked about our trench silicon carbide. So we’re also advancing the boundary of what we can offer our customers. That’s how we’re gonna win. So it’s not about China or China EV or against Chinese competitor.

It’s about how do you win with silicon carbide. And that bottom line is efficiency, not just on the device, but also on the packaging.

Thad Trent, ON: Also for the Chinese OEMs that are looking to export outside of China, that efficiency matters. Right? So just good enough is not going to work outside of China. So they’ve got to compete with the other, you know, disruptors and OEMs. So they’ve got to differentiate that in that that export market as Great point.

Unidentified speaker: Got it. Now what about the Western EV? So like the ex China EV market, right? You have a, you know, fairly prominent North American, you know, customer, and we know that outside of China, EV volumes have been in softer, right? So what are you seeing just as a kind of a broader Western market EV adoption?

Has that trend rolled over? Do you think it’s it’s it’s going to pick up at at some point? How how are you modeling that in in your growth? So

Hassan El-Khoury, ON: by the way, it didn’t roll over. Specific OEMs have, you know, challenges and and headwinds. But if you look at an aggregate, somebody else is getting that because the total number, you know, EVs in Europe are starting to increase. They’re they’re not going down. So the slope is not what we thought, you know, from four years ago or three years ago, but EVs are still a growth market from a unit perspective.

And as those EVs get to the 800 volt battery, which is kinda where the market is going, silicon carbide is gonna be more and more. A lot of these EVs have been historically on IGBT because silicon carbide was not that accessible when those cars were designed four years ago or five years ago. We’re starting to see that conversion. Pretty much a % of the RFQs on 800, volt batteries today are silicon carbide. So you gotta see that penetration come in.

So the growth in silicon carbide specifically is not just tied to the EV volume and EV penetration, but you have the silicon carbide penetration into existing EVs as well. So that’s the double growth that you can you can start seeing.

Unidentified speaker: Got it. To put you on the spot, Hassan, if if I could, a few years ago, you had sized that market at, I don’t know, roughly 3 ish billion and you had said, you know, on at that time had mid twenties or or so market share. What is that snapshot of the market today and and what on market share?

Hassan El-Khoury, ON: So I I won’t I won’t give you the the market because, you know, a lot of the quotes for the market is is a lot of the third party reports, which I don’t have to tell you have been wrong so far. I can give you based on our our our view, the 20% sole market share has only increased since then. Our target remains 30 to 40%. That’s been our target in the market has increased. And we’ve talked about share gains in North America.

We’ve talked about share gains in China. So our we’ve talked about share gains in in Europe. So our share has been increasing. So regardless of what the market does, it’s gonna be bumpy. We’ve always said the market is gonna be bumpy, but our share is increasing.

And that will remain. That’s on track. And that’s increased since we talked about it a few years ago.

Unidentified speaker: One last question on silicon carbide. So there is a well known kind of smaller competitor of yours, right, that is going through a lot of financial, right, turbulence right now. Does that impact your share or your customer engagement in any way depending on whatever happens there?

Hassan El-Khoury, ON: So it doesn’t based on, you kind of call it the last six month. Because the last six month has been the financial struggles. Right? That has was, and I’ve talked about it, publicly before. You know, a few years ago when the execution issue started Mhmm.

With that, with that peer, that’s when customers started coming to us and starting to talk about conversion. So a lot of design wins that are forward looking, a lot of them are new designs that a customer just made a new EV and were in were the incumbent. But some, they were using that competitor. And based on the challenge from two years ago, we’ve been we’ve been converting since for two years now.

Unidentified speaker: Right.

Hassan El-Khoury, ON: So the current environment is not what’s causing a shift or a opportunity in the short term. That’s opportunity has been coming along for the past few years.

Unidentified speaker: Got

Hassan El-Khoury, ON: it. And from a supply side, we don’t have from From a supply side, part of our competitive advantage to customers is we don’t have the dependency on third party substrates. Are vertically integrated from that perspective, and that’s proven to be a very, very good point versus some of the peers, the other peers that source from them.

Unidentified speaker: Got it. When we think of ON people and autos, people always bring up silicon carbide. But the one other important thing you guys are very strong at is image sensors, right? And so talk to us about what is the state of that market, especially as it relates to a lot more ADAS, right, adoption in cars? Is that still a growth opportunity for you?

Is it kind of being caught up in all these macro issues? So where are you in image sensors? And then how much of a growth market is that for you?

Hassan El-Khoury, ON: Yes. So for us, image sensors market is not just auto, but we’re also industrial. So as you see a lot of the automation, you’re going to see that robotics and factory automation using a lot of our sensors. But automotive is a very interesting market. We’ve always said we have high share in that market.

We’re about 60% to 80% in ADAS specifically, but 60% in auto. So market share is high, which means that it’s more tied to penetration and volume. So it did get caught up with the inventory burns that we’ve had. Some of the SoCs talked about their inventory that they had to adjust. But it’s a very interesting market.

It’s definitely a focused market, and it’s a growth market. And what I mean by that is even in the first quarter, we talked about a big Chinese OEM that is going down the path of autonomy across a much broader platform. So we started ramping there as well. So we are focusing on that business. We have new products coming out, and we will continue to push that penetration as more and more automotive cars get to that autonomy.

But it is more tied to volume and penetration. Remember, four years ago, we thought we’d be in level four and five today, Right? We’re level two plus. Right. It’s kind of that.

So every car now is getting that content. Now it’s the capability is gonna keep evolving. And the more OEMs that that introduce a higher level of autonomy, the more we’re to see the benefit from that business.

Unidentified speaker: That’s what I wanted to ask. Do you expect ON to participate in some of these new autonomous car, robotaxi type projects?

Hassan El-Khoury, ON: I don’t want robotaxi is a trip of art

Unidentified speaker: car, right.

Hassan El-Khoury, ON: Autonomy, yes. Okay, understood. I’ll keep it at that industry term.

Unidentified speaker: One thing, Hassan, that came up on the earnings call was the concept of pricing that the industry has gone through, not just on, but just broadly, pricing that was supposed to be kind of flattish, but it went up a lot and then it was supposed to kind of stabilize at flattish and low single digit. And I think on the last one or two calls, spoke about price concessions that kind of caught some investors by by surprise. So where are we in in terms of how you think about pricing going in in the next handful of quarters?

Hassan El-Khoury, ON: Yeah. Look. There to me, we talk I talked about price movement, not really concession because think about it this way. Pricing being flat and unmovable is not a business decision you can you can stand behind. Price stability is something we can talk about.

So let me explain what what I mean. We have new products coming out as an example. We take cost out of our products. If I take 10% cost out of a product and I work with a customer and say for more share, I get 3% cost reduction as an example, I’ll take that deal any day. Because I took 10% off the cost, you know, manufacturing cost, and we’ve been working on our manufacturing network and cost and so on, incentivizing to gain share and using that.

That’s why I call this surgical and strategic. It is not like pricing across the board is deteriorating. I very specifically said it was strategic and it was surgical in nature in order to achieve a business outcome. It is one tool like I have in the toolbox with other tools. New products, value, all of these are tools in the toolbox for us to gain share and win designs.

Pricing is a normal thing. So it’s not a change in strategic outlook as my

Unidentified speaker: So it wasn’t something that happened that is happening to cause you further

Hassan El-Khoury, ON: No. I mean, said the the stuff that falls under that is the things that we’ve been very clear about. We’re not gonna chase it down. We’re gonna walk away because there’s no value. It’s purely a pricing discussion.

It’s not a Right. Surgical. That there’s no change in our strategy. But from a day to day yeah. But don’t expect pricing news to keep coming up quarter on quarter.

That’s not that’s not where where we are.

Unidentified speaker: So in aggregate, how would you kinda characterize the pricing environment, for your overall in, let’s say, five? Down low mid single? Is it or is it any different than what

Hassan El-Khoury, ON: It’s no different than what I talked about. Okay. That what I already talked about. No no increase, no no further. It’s stable.

Thad Trent, ON: Okay. Yeah. And then what Hassan referred to is the business that we walked away from. The $475,000,000, which was volatile business, right? We talked about there is pricing pressure on that.

If you remember, we kept about $300,000,000 because the margin was favorable. That we’re seeing some pressure and we always said we weren’t going to chase that. So that 300 could disappear over time. We’ll see how the market plays out. But that’s one where we’re not going to compete on.

Unidentified speaker: Okay. How many more quarters, Pat, do you think that business has to go?

Thad Trent, ON: I think it’s going to depend on demand. Right? If demand comes back, it may not disappear at all. Right? I mean, we’re not all of it will go away.

So I think it’s more dependent. I’m hoping by the time we get to 26, we’re not talking about this. Understood.

Hassan El-Khoury, ON: I remember we thought we’re gonna be done with it two years ago.

Unidentified speaker: Right. Yeah. It’s still lingers on. It’s still here. Yeah.

So it’s market dependent. Understood. Some of your bigger competitors are in Europe. And what I’m leading to is given what we see because of all the geopolitics and trade and tariff issues, do you think that they may have an edge in terms of winning future business because they happen to be not based in The U. S?

Are you seeing customers change behavior because of these factors or or not really?

Hassan El-Khoury, ON: No. Because it goes back to I mean, I’ll give the perfect example of our success in China. Right. You know, if that were the case. Now, I’ll flip it the other way.

Wouldn’t would that same? I don’t by the way, I don’t think that’s true because of the win in China. Right. But let’s say if I take your, scenario, then we have a much better advantage in The US because we also manufacture in The US. You see what I mean?

Unidentified speaker: Right.

Hassan El-Khoury, ON: So the point I’m trying to make is our manufacturing footprint that we have, US, Europe, Japan, Southeast Asia, and some China. Right. We’re a much better position to service customers no matter where they are. Number one. Number two is we do have customers that manufacture Chinese customers that wanna export back to, you know, that was that said, Therefore, okay, what about their manufacturing for the export market that they want out of China?

So flexibility of supply in a manufacturing network like we have is actually a competitive advantage, not a disadvantage. But at the end of the day, you have to have better products. That’s the bottom line. Got it.

Unidentified speaker: One other thing I can’t resist but go back to, you know, your kind of feeling of optimism is, you know, some of your peers, right, as they have started to use words like inflection or, you know, recovery, they have often pointed to above seasonal quarters. Are are we at that point where you think we you know, one one could talk about that?

Hassan El-Khoury, ON: So remember what You opened the door,

Unidentified speaker: so I’m just No.

Hassan El-Khoury, ON: No. That’s fine. But I also I characterized my approach as I’m gonna call it to what I see it. Talking about seasonality at this point means nothing. What is c we’ve been four, five years of no seasonality.

So what is seasonality? I don’t talk about seasonality. It’s either up or not. What it is is is is, will happen over time. Seasonality, you need you need normalcy, whatever the new normal is.

But you need normalcy for at least two years, so you get two data points. That’s when you start hearing me talk about seasonality and and and so on. But for now, I am managing to do we see green shoots? Do we see growth? Can I understand why the growth is?

You know, is it new designs like we talked about? Is it broad based? Is it industrial? Those things I can measure, I can track, and I can hold my team accountable to. That’s what I can, talk about.

Overall, trends is too soon

Unidentified speaker: to talk about trends. Got it. And then, gross margins, do you think gross margins also will bottom at roughly where your sales are bottoming? We should be looking for some recovery. Obviously, they’re not always perfectly aligned because of utilization and such, but

Thad Trent, ON: Yes. You hit on it, right? Gross margins are going to be driven by utilization in the short term, right? Longer term, as the new products come out, Treo, we’re going to have the accretive margin products ramping as well. But in the short term, if I think about this year, it’s all utilization, right?

So every point of utilization is 25 to 30 basis points of gross margin improvement. So if you think about where we are today, roughly 60% utilized going to step down slightly here in Q2. The rest of this year is going to be kind of in this range of where our Q2 guidance is. And by the way, our Q2 guidance, if you take out the under absorption, that’s 900 basis points. You can just add to that, right?

That’s the full impact of getting from, let’s call it, 60% to the kind of low 80% where we maxed out. So there’s this two quarter lag for it to hit the P and L. So for the remainder of this year, we’re going be kind of in this range. But as we take up utilization in the second half, assuming there is a recovery, you’re going to see the margin impact started to hit us early in 2026. So we expect that, and as Hassan was saying, we don’t have to wait for an inventory bleed, right, you know, on our balance sheet or at the distribution the the discies to have that increase in utilization so we can react very quickly, and that marginal hit us a couple quarters later.

Hassan El-Khoury, ON: And one thing, you know, that thought in the short term, it’s all about utilization. But I do wanna make sure we touch on the longer term margin expansion, which is the new products. You know, he mentioned Treo. You know, we’re I talked in the first quarter. We recognized revenue on Treo already.

We expected that, of course, in the second half of twenty twenty five, but we’ve already achieved that. What application did that? So those are specifically on the medical and so on. So it start and by the way, if you know the medical market, you don’t just make a product and get into medical. You have to prove the reliability.

So the fact that that has that we achieved the milestones is, again, proof point that, one, that product and that technology is competitive. The first dollar on a brand new technology is always the hardest. Now we have confidence in the funnel. We have confidence in the ramp. We have confidence in the breadth.

And right now, what we’re focusing on is the breadth of the product. And we’re on track to doubling the number of products on that platform, and that’s going to fuel the growth towards that 1,000,000,000 by the end of the by by 2030 and with a margin of 60% to 70 So as that business becomes a higher percent of revenue, then the margin expansion is going to start coming from mix on top of just the short term utilization impact.

Unidentified speaker: Got it. And then finally, Hassan, in terms of data center, right, you mentioned that that is a growth driver. When do you think you get to a point where you might be able to call it out separately also, so one can track the progress in that? I’ll let you know. Okay, but but you see enough opportunity.

Hassan El-Khoury, ON: I see enough opportunity. You know we talked about we acquired the silicon carbide JFET. That’s a very differentiated technology. So you’re gonna start seeing a lot more kind of announcements and and

Unidentified speaker: It’s a crowded market, though. Right?

Hassan El-Khoury, ON: But that’s why but that’s why you don’t you hear me? You haven’t heard me talk about it because I’m not going to run after a crowded market. That’s why I very clearly talk about silicon carbide JFET. Nobody’s got that. Right.

As the voltage starts coming up and they need that specific technology, that’s where we add value. We’re gonna penetrate that market. Right. We’re not gonna go in and kinda elbowing everybody Because if you don’t provide value, now you’re talking about pricing. That’s not the market we’re in.

We’re going to be very disciplined, but we’re going to be strategic. We have value to offer customers with the technologies we provide. That’s where the progress is going to be, not just general purpose.

Unidentified speaker: On that optimistic note, thank you so much, Hassan. Thank you, Thad. Really appreciate you joining us this morning.

Hassan El-Khoury, ON: Thank you.

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