ON Semiconductor Reports 15.3% Revenue Decline and Significant Net Income Drop for Fiscal Year 2025

ON Semiconductor Corporation reported a significant decline in its financial performance for the fiscal year ending December 31, 2025, with total revenue of $5.995 billion, a decrease of 15.3% from $7.082 billion in 2024. The company also experienced a substantial drop in net income, which fell to $121 million from $1.573 billion in the previous year. This decline was attributed to lower sales volumes across all reportable segments, particularly in the automotive and industrial markets, as well as restructuring and asset impairment charges totaling $666.9 million related to the 2025 Manufacturing Realignment Program.

The company's gross margin decreased sharply to 33.1% from 45.4% in 2024, reflecting the impact of reduced demand and underutilization of manufacturing facilities. The restructuring program, which involved the termination of approximately 2,400 employees, incurred severance costs of $67.1 million and non-cash impairment charges of $496 million. Additionally, ON Semiconductor recorded $268.2 million in excess and obsolete inventory charges, primarily due to changes in business strategy.

Strategically, ON Semiconductor made two significant acquisitions in 2025. The company acquired the Silicon Carbide Junction Field-Effect Transistor technology business from Qorvo for $118.8 million, enhancing its power management portfolio. Additionally, it acquired rights to Vcore power technologies from Aura Semiconductor for up to $144 million, contingent on achieving specific revenue milestones. These acquisitions are expected to bolster the company's capabilities in high-energy efficiency and power density solutions, particularly for AI data centers.

Operationally, ON Semiconductor's workforce was approximately 22,600 employees as of December 31, 2025, with a significant portion of its operations concentrated in Asia Pacific and Japan. The company reported that sales to distributors accounted for about 54% of its revenue, while direct customer sales made up 46%. The geographic distribution of revenue showed that Hong Kong, the United Kingdom, and Singapore were key markets, contributing significantly to total sales.

Looking ahead, ON Semiconductor aims to align its manufacturing capacity with anticipated demand and continue implementing cost-saving initiatives to improve its financial performance. The company plans to focus on operational excellence and cash flow generation while navigating the challenges posed by the current macroeconomic environment. The management expressed optimism about future growth opportunities, particularly in the automotive and AI data center markets, as it seeks to recover from the downturn experienced in 2025.