ON Semiconductor Corporation

11/03/2025 | Press release | Distributed by Public on 11/03/2025 10:14

Quarterly Report for Quarter Ending October 3, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included in the 2024 Form 10-K, and our unaudited consolidated financial statements for the fiscal quarter ended October 3, 2025, which are included elsewhere in this Form 10-Q. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on expectations and assumptions as of the date of this Form 10-Q and are subject to risks, uncertainties and other factors. Actual results could differ materially because of the factors discussed below or elsewhere in this Form 10-Q. See Part II, Item 1A. "Risk Factors" of this Form 10-Q and Part I, Item 1A. "Risk Factors" of the 2024 Form 10-K.
Executive Overview
onsemi Overview
We offer intelligent power and intelligent sensing solutions that drive the transformation of automotive and industrial markets, while also meeting the increasing needs of AI and data centers. Our intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers efficient fast-charging systems and propels sustainable energy for the highest efficiency solar strings and industrial power. Our intelligent power solutions for the automotive industry allow our customers to exceed range targets with lower weight and reduce system cost through efficiency. Our intelligent sensing technologies support the next generation industry, allowing for smarter factories and buildings while also enhancing the automotive mobility experience with imaging and depth sensing that make advanced vehicle safety and automated driving systems possible.
We believe the evolution of the automotive industry, with advancements in autonomous driving, ADAS, vehicle electrification, and the increase in electronics content for vehicle platforms, is reshaping the boundaries of transportation. Through sensing integration, we believe our intelligent power solutions achieve superior efficiencies compared to our peers. This integration allows lower temperature operation and reduced cooling requirements while saving costs and minimizing weight. In addition, our power solutions deliver power with less die per module, achieving higher range for a given battery capacity.
Business Strategy Developments
We are focused on generating operating cash and returning capital to our shareholders through our Share Repurchase Program. Our goal is to achieve revenue growth with stable gross margins by capitalizing on high-growth megatrends in our primary end-markets of automotive and industrial infrastructure. Despite the current challenges posed by geopolitical and macroeconomic factors, we continue to optimize and right-size our manufacturing footprint to align our capacity with anticipated long-term growth, while focused on generating efficiencies to manage these headwinds. We design products for differentiated markets, focusing on addressing customer needs. We aim to achieve efficiencies in our operating and capital expenditures and invest in research and development initiatives to accelerate growth in high-margin products.
2025 Manufacturing Realignment Program
During the first quarter of 2025, we announced restructuring and cost reduction initiatives based on an evaluation of our operating structure, business strategy, manufacturing technologies and internal capabilities to realign our internal manufacturing capacity and capabilities with anticipated long-term needs.
We expect to incur total severance costs and related benefit expenses of $67 million related to the termination of approximately 2,400 employees. Of this, approximately $2.8 million and $65.9 million was recognized during the quarter and nine months ended October 3, 2025, respectively. Additionally, we recorded non-cash impairment charges of $15.8 million and $487.9 million during the quarter and nine months ended October 3, 2025, respectively, related to previous investments in manufacturing equipment at certain manufacturing facilities pursuant to held-for-sale accounting guidance. Other charges of $1.0 million and $51.5 million for the quarter and nine months ended October 3, 2025, respectively, comprised of estimated costs associated with selling the equipment and contract termination costs, were incurred as a result of the above initiatives. The total of the aforementioned costs was included within Restructuring, Asset Impairments and Other, Net in the Consolidated Statement of Operations.
Additionally, during the nine months ended October 3, 2025, we recorded $235.8 million relating to excess and obsolete inventory charges, of which $230.3 million related to inventory primarily considered work in progress within the ISG reportable segment, as well as $45.7 million related to write-off of consumables, manufacturing supplies and obligations for certain unfulfilled purchase commitments due to the manufacturing capacity reduction actions associated with the 2025
Manufacturing Realignment Program. These charges were recorded within Cost of revenue in the Consolidated Statement of Operations.
For additional information, see Note 5: ''Restructuring, Asset Impairments and Other, Net'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q.
Share Repurchases
During the quarter ended October 3, 2025, we repurchased approximately 6.1 million shares of common stock for an aggregate purchase price of $328.2 million. During the nine months ended October 3, 2025, we repurchased approximately 19.1 million shares of common stock for an aggregate purchase price of $933.8 million. For additional information, see Note 8: ''Earnings Per Share and Equity'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q.
Results of Operations
Quarter Ended October 3, 2025 compared to the Quarter Ended September 27, 2024
The following table summarizes certain information relating to our operating results that has been derived from our unaudited consolidated financial statements (in millions):
Quarters Ended
October 3, 2025 September 27, 2024 Dollar Change
Revenue $ 1,550.9 $ 1,761.9 $ (211.0)
Cost of revenue 963.7 962.5 1.2
Gross profit 587.2 799.4 (212.2)
Operating expenses:
Research and development 141.9 151.0 (9.1)
Selling and marketing 62.8 65.4 (2.6)
General and administrative 87.3 95.5 (8.2)
Amortization of intangible assets 11.2 13.0 (1.8)
Restructuring, asset impairments and other, net 19.6 29.1 (9.5)
Total operating expenses 322.8 354.0 (31.2)
Operating income 264.4 445.4 (181.0)
Other income (expense), net:
Interest expense (17.7) (15.7) (2.0)
Interest income 22.7 28.6 (5.9)
Other income (expense) 3.6 (3.7) 7.3
Other income (expense), net 8.6 9.2 (0.6)
Income before income taxes 273.0 454.6 (181.6)
Income tax provision (17.7) (51.9) 34.2
Net income 255.3 402.7 (147.4)
Less: Net income attributable to non-controlling interest (0.3) (1.0) 0.7
Net income attributable to ON Semiconductor Corporation $ 255.0 $ 401.7 $ (146.7)
The following table summarizes certain information relating to our segment results (in millions):
Quarter Ended October 3, 2025 As a % of Total Quarter Ended September 27, 2024 As a % of Total Dollar Change
Revenue:
PSG $ 737.6 47.6 % $ 829.4 47.1 % $ (91.8)
AMG 583.3 37.6 % 653.7 37.1 % (70.4)
ISG 230.0 14.8 % 278.8 15.8 % (48.8)
Total $ 1,550.9 100.0 % $ 1,761.9 100.0 % $ (211.0)
Cost of revenue:
PSG $ 527.4 54.7 % $ 484.5 50.4 % $ 42.9
AMG 287.2 29.8 % 328.4 34.1 % (41.2)
ISG 149.1 15.5 % 149.6 15.5 % (0.5)
Total $ 963.7 100.0 % $ 962.5 100.0 % $ 1.2
Gross profit: (1)
PSG $ 210.2 28.5 % $ 344.9 41.6 % $ (134.7)
AMG 296.1 50.8 % 325.3 49.8 % (29.2)
ISG 80.9 35.2 % 129.2 46.3 % (48.3)
Total $ 587.2 37.9 % $ 799.4 45.4 % $ (212.2)
(1)Gross profit margin as a percentage of respective segment revenue balances.
Revenue
Revenue was $1,550.9 million and $1,761.9 million for the quarters ended October 3, 2025 and September 27, 2024, respectively, representing a decrease of $211.0 million, or approximately 12%, year over year. We had one customer, a distributor, whose revenue accounted for approximately 12% of our total revenue for the quarters ended October 3, 2025 and September 27, 2024 across all reportable segments.
Revenue from PSG
Revenue from PSG decreased by $91.8 million, or approximately 11%, for the quarter ended October 3, 2025 compared to the quarter ended September 27, 2024. Revenue from our Automotive Power Division, Multi-Market Power Division and Industrial Power Division decreased by $69.6 million, $19.6 million and $2.6 million, respectively, primarily due to the continued decrease in demand in the automotive and industrial end-markets.
Revenue from AMG
Revenue from AMG decreased by $70.4 million, or approximately 11%, for the quarter ended October 3, 2025 compared to the quarter ended September 27, 2024. Revenue from our Sensor Interface Division increased by $25.3 million primarily due to an increase in industrial demand offset by decreases within our Power Management Division and Integrated Circuit Division of $71.2 million and $24.5 million, respectively, primarily due to the continued decrease in demand in the automotive and other end-markets.
Revenue from ISG
Revenue from ISG decreased by $48.8 million, or approximately 18%, for the quarter ended October 3, 2025 compared to the quarter ended September 27, 2024. Revenue from our Industrial and Consumer Solutions Division and Automotive Sensing Division decreased by $0.7 million and $48.1 million, respectively, primarily due to the continued decrease in demand in the automotive and industrial end-markets.
Revenue by Geographic Location
Revenue by geographic location, based on sales billed from the respective country or region, was as follows (dollars in millions):
Quarter Ended October 3, 2025
As a % of
Total Revenue (1)
Quarter Ended September 27, 2024
As a % of
Total Revenue (1)
Hong Kong $ 424.9 27.4 % $ 466.9 26.5 %
Singapore 320.1 20.6 % 449.5 25.5 %
United Kingdom 315.0 20.3 % 395.8 22.5 %
United States 340.5 22.0 % 281.9 16.0 %
Other 150.4 9.7 % 167.8 9.5 %
Total revenue $ 1,550.9 $ 1,761.9
(1)Certain amounts may not total due to rounding of individual amounts.
Gross Profit and Gross Margin
Gross profit decreased by $212.2 million, or approximately 27%, to $587.2 million for the quarter ended October 3, 2025 compared to $799.4 million for the quarter ended September 27, 2024 primarily attributable to a continued decrease in sales volume from existing products and new products that negatively impacted gross profit by approximately $188.2 million and $24.0 million, respectively.
PSG gross profit decreased by $134.7 million, primarily driven by the decline in sales volume from existing products and new products, which negatively impacted gross profit by approximately $110.7 million and $24.0 million, respectively. PSG gross margin decreased by 13.1 percentage points to 28.5% from 41.6% as a result of significant underutilization, decline in sales volume, impact of unfavorable product mix and market pressures.
AMG gross profit decreased by $29.2 million, primarily driven by the decline in sales volume from existing products. AMG gross margin increased by 1.0 percentage point to 50.8% from 49.8%, primarily due to the reduction in lower-margin manufacturing services revenue at our EFK location.
ISG gross profit decreased by $48.3 million, primarily driven by the decline in sales volume from existing products. ISG gross margin decreased to 35.2% from 46.3%, primarily due to unfavorable product mix and market pressures as well as the result of certain strategy changes in connection with the 2025 Manufacturing Realignment Program.
Operating Expenses
Research and development expenses were $141.9 million for the quarter ended October 3, 2025, as compared to $151.0 million for the quarter ended September 27, 2024, representing a decrease of $9.1 million, or approximately 6%. The decrease wasprimarily attributable to a decrease in production supplies and outside services.
Selling and marketing expenses were $62.8 million for the quarter ended October 3, 2025, as compared to $65.4 million for the quarter ended September 27, 2024, representing a decrease of $2.6 million, or approximately 4%.The decrease was primarily attributable to a decrease in payroll-related expenses.
General and administrative expenses were $87.3 million for the quarter ended October 3, 2025, as compared to $95.5 million for the quarter ended September 27, 2024, representing a decrease of $8.2 million, or approximately 9%. The decrease wasprimarily attributable to an increase in payroll-related expenses offset by lower third-party acquisition-related costs.
Other Operating Expenses
Amortization of Intangible Assets
Amortization of intangible assets was $11.2 million for the quarter ended October 3, 2025, as compared to $13.0 million for the quarter ended September 27, 2024, representing a decrease of $1.8 million, or approximately 14%.
Restructuring, Asset Impairments and Other, Net
Restructuring, asset impairments and other, net was $19.6 million for the quarter ended October 3, 2025, as compared to $29.1 million for the quarter ended September 27, 2024. Charges incurred for the quarter ended October 3, 2025 primarily relate to restructuring actions during the period. See Note 5: ''Restructuring, Asset Impairments and Other, Net'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for additional information.
Interest Expense
Interest expense increased by $2.0 million to $17.7 million during the quarter ended October 3, 2025, as compared to $15.7 million during the quarter ended September 27, 2024. Our average gross long-term debt for the quarter ended October 3, 2025 was $3,379.9 million at a weighted-average interest rate of 2.1%, as compared to $3,379.9 million at a weighted-average interest rate of 1.9% for the quarter ended September 27, 2024.
Interest Income
Interest income decreased by $5.9 million, or approximately 21%, to $22.7 million during the quarter ended October 3, 2025 compared to $28.6 million during the quarter ended September 27, 2024 primarily related to lower interest rates on short-term investments.
Other Income (Expense)
During the quarter ended October 3, 2025, other income was $3.6 million compared to other expense of $3.7 million during the quarter ended September 27, 2024, primarily driven by higher dividend income.
Income Tax Provision
We recorded an income tax provision of $17.7 million and $51.9 million for the quarters ended October 3, 2025 and September 27, 2024, respectively, representing effective tax rates of 6.5% and 11.4%, respectively. The change in the effective tax rate for the quarter was primarily driven by a return-to-provision adjustment recorded upon finalizing the U.S. federal income tax return, which resulted in a discrete tax benefit.
For additional information, see Note 13: ''Income Taxes'' in the notes to the unaudited consolidated financial statements included elsewhere in this Form 10-Q.
Results of Operations
Nine Months Ended October 3, 2025 compared to the Nine Months Ended September 27, 2024
The following table summarizes certain information relating to our operating results that has been derived from our unaudited consolidated financial statements (in millions):
Nine Months Ended
October 3, 2025 September 27, 2024 Dollar Change
Revenue $ 4,465.3 $ 5,359.8 $ (894.5)
Cost of revenue 3,032.4 2,922.8 109.6
Gross profit 1,432.9 2,437.0 (1,004.1)
Operating expenses:
Research and development 449.8 457.5 (7.7)
Selling and marketing 194.4 203.1 (8.7)
General and administrative 262.9 275.8 (12.9)
Amortization of intangible assets 33.6 38.5 (4.9)
Restructuring, asset impairments and other, net 608.1 103.0 505.1
Total operating expenses 1,548.8 1,077.9 470.9
Operating income (loss) (115.9) 1,359.1 (1,475.0)
Other income (expense), net:
Interest expense (53.6) (47.0) (6.6)
Interest income 74.5 83.6 (9.1)
Other income (expense) 9.2 (0.8) 10.0
Other income (expense), net 30.1 35.8 (5.7)
Income (loss) before income taxes (85.8) 1,394.9 (1,480.7)
Income tax (provision) benefit 27.6 (200.1) 227.7
Net income (loss) (58.2) 1,194.8 (1,253.0)
Less: Net income attributable to non-controlling interest (2.6) (1.9) (0.7)
Net income (loss) attributable to ON Semiconductor Corporation $ (60.8) $ 1,192.9 $ (1,253.7)
The following table summarizes certain information relating to our segment results (in millions):
Nine Months Ended October 3, 2025 As a % of Total Nine Months Ended September 27, 2024
As a % of
Total
Dollar Change
Revenue:
PSG $ 2,080.9 46.6 % $ 2,538.8 47.4 % $ (457.9)
AMG 1,705.6 38.2 % 1,998.5 37.3 % (292.9)
ISG 678.8 15.2 % 822.5 15.3 % (143.7)
Total revenue $ 4,465.3 100.0 % $ 5,359.8 100.0 % $ (894.5)
Cost of revenue:
PSG $ 1,566.7 51.7 % $ 1,479.7 50.7 % $ 87.0
AMG 826.8 27.3 % 1,012.5 34.6 % (185.7)
ISG 638.9 21.0 % 430.6 14.7 % 208.3
Total $ 3,032.4 100.0 % $ 2,922.8 100.0 % $ 109.6
Gross profit: (1)
PSG $ 514.2 24.7 % $ 1,059.1 41.7 % $ (544.9)
AMG 878.8 51.5 % 986.0 49.3 % (107.2)
ISG 39.9 5.9 % 391.9 47.6 % (352.0)
Total $ 1,432.9 32.1 % $ 2,437.0 45.5 % $ (1,004.1)
(1)Gross profit margin as a percentage of respective segment revenue balances.
Revenue
Revenue was $4,465.3 million and $5,359.8 million for the nine months ended October 3, 2025 and September 27, 2024, respectively, representing a decrease of $894.5 million, or approximately 17%, year over year. We had one customer, a distributor, whose revenue accounted for approximately 13% and 11% of our total revenue for the nine months ended October 3, 2025 and September 27, 2024, respectively.
Revenue from PSG
Revenue from PSG decreased by $457.9 million, or approximately 18%, for the nine months ended October 3, 2025 compared to the nine months ended September 27, 2024. Revenue from our Automotive Power Division, Multi-Market Power Division and Industrial Power Division decreased by $328.8 million, $114.4 million and $14.7 million, respectively, primarily due to the continued decrease in demand in the automotive and industrial end-markets.
Revenue from AMG
Revenue from AMG decreased by $292.9 million, or approximately 15%, for the nine months ended October 3, 2025 compared to the nine months ended September 27, 2024. Revenue from our Sensor Interface Division, Power Management Division and Integrated Circuit Division decreased by $63.6 million, $201.3 million and $28.0 million, respectively, primarily due to the continued decrease in demand in the automotive and industrial end-markets.
Revenue from ISG
Revenue from ISG decreased by $143.7 million, or approximately 17%, for the nine months ended October 3, 2025 compared to the nine months ended September 27, 2024, largely driven by a decrease in revenue from our Industrial and Consumer Solutions Division and Automotive Sensing Division of $23.8 million and $119.9 million, respectively, primarily due to the continued decrease in demand in the automotive and industrial end-markets as well as the result of certain strategy changes in connection with the 2025 Manufacturing Realignment Program.
Revenue by Geographic Location
Revenue by geographic location, based on sales billed from the respective country or region, was as follows (dollars in millions):
Nine Months Ended October 3, 2025
As a % of
Total Revenue (1)
Nine Months Ended September 27, 2024
As a % of
Total Revenue (1)
Hong Kong $ 1,208.3 27.1 % $ 1,325.8 24.7 %
Singapore 920.8 20.6 % 1,273.0 23.8 %
United Kingdom 1,009.9 22.6 % 1,253.6 23.4 %
United States 911.0 20.4 % 1,025.7 19.1 %
Other 415.3 9.3 % 481.7 9.0 %
Total revenue $ 4,465.3 $ 5,359.8
(1)Certain amounts may not total due to rounding of individual amounts.
Gross Profit and Gross Margin
Gross profit decreased by $1,004.1 million, or approximately 41%, to $1,432.9 million for the nine months ended October 3, 2025 compared to $2,437.0 million for the nine months ended September 27, 2024. We recorded excess and obsolete inventory charges of $235.8 million, of which $230.3 million related to inventory primarily considered work in progress within the ISG reportable segment, as a result of changes in business strategy due to the 2025 Manufacturing Realignment Program. See Note 5: ''Restructuring, Asset Impairments and Other, Net'' for additional information. We also continued to experience a significant decrease in sales volume from existing products and new products that negatively impacted gross profit by approximately $635.5 million and $132.8 million, respectively.
PSG gross profit decreased by $544.9 million, primarily driven by the decline in sales volume from existing products and new products, which negatively impacted gross profit by approximately $412.1 million and $132.8 million, respectively. Also included in the gross profit decrease was the $43.9 million write-off of consumables and manufacturing supplies associated with the manufacturing capacity reduction actions taken under the 2025 Manufacturing Realignment Program. PSG gross margin decreased by 17.0 percentage points to 24.7% from 41.7% as a result of the decline in sales volume, significant underutilization, the related impact of unfavorable product mix and the impact of the consumables and manufacturing supplies write-off discussed above.
AMG gross profit decreased by $107.2 million, primarily driven by the decline in sales volume from existing products. AMG gross margin increased by 2.2% percentage points to 51.5% from 49.3%, primarily due to the reduction in lower-margin manufacturing services revenue at our EFK location.
ISG gross profit decreased by $352.0 million, primarily driven by the excess and obsolete inventory charges discussed above. Additionally, the decline in sales volume from existing products added to the decrease. ISG gross margin decreased to 5.9% from 47.6%, primarily due to the excess and obsolete inventory charges as a result of certain strategy changes in connection with the 2025 Manufacturing Realignment Program.
Operating Expenses
Research and development expenses were $449.8 millionfor the nine months ended October 3, 2025, as compared to $457.5 millionfor the nine months ended September 27, 2024, representinga decrease of $7.7 million, or approximately 1.7%. The decrease was primarily attributable to a decrease in production supplies, outside services and payroll-related expenses.
Selling and marketing expenses were $194.4 millionfor the nine months ended October 3, 2025, as compared to $203.1 millionfor the nine months ended September 27, 2024, representing a decrease of $8.7 million, or approximately 4%.The decrease was primarily attributable to a decrease in payroll-related expenses.
General and administrative expenses were $262.9 million for the nine months ended October 3, 2025, as compared to $275.8 million for the nine months ended September 27, 2024, representing a decrease of $12.9 million, or approximately 5%. The decrease was primarily attributable to decreased third-party acquisition-related costs.
Other Operating Expenses
Amortization of Intangible Assets
Amortization of intangible assets was $33.6 millionand $38.5 millionfor the nine months ended October 3, 2025 and September 27, 2024, respectively, representing a decrease of $4.9 million, or approximately 13%.
Restructuring, Asset Impairments and Other, Net
Restructuring, asset impairments and other, net was $608.1 millionfor the nine months ended October 3, 2025, as compared to $103.0 millionfor the nine months ended September 27, 2024, representing an increase of $505.1 million. Charges incurred for the nine months ended October 3, 2025 primarily relate to restructuring actions during the period. See Note 5: ''Restructuring, Asset Impairments and Other, Net'' in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for additional information.
Interest Expense
Interest expense increased by $6.6 million to $53.6 millionduring the nine months ended October 3, 2025, as compared to $47.0 millionduring the nine months ended September 27, 2024. Our average gross long-term debt balance for the nine months ended October 3, 2025 was $3,379.9 million at a weighted-average interest rate of 2.1%, as compared to $3,379.9 million at a weighted-average interest rate of 1.9% for the nine months ended September 27, 2024.
Interest Income
Interest income decreased by $9.1 million, or approximately 11%, to $74.5 millionduring the nine months ended October 3, 2025 compared to $83.6 millionduring the nine months ended September 27, 2024 primarily attributable to lower interest rates on short-term investments.
Other Income (Expense)
Other income was $9.2 millionfor the nine months ended October 3, 2025 as compared to other expense of $0.8 millionfor the nine months ended September 27, 2024, primarily driven by higher dividend income.
Income Tax Provision
We recorded an income tax benefit of $27.6 millionand income tax provision of $200.1 millionduring the nine months ended October 3, 2025 and September 27, 2024, respectively, representing effective tax rates of 32.2% and 14.3%, respectively. The change in the effective tax rate for the quarter was primarily driven by a return-to-provision adjustment recorded upon finalizing the U.S. federal income tax return, which resulted in a discrete tax benefit.
For additional information, see Note 13: ''Income Taxes'' in the notes to the unaudited consolidated financial statements included elsewhere in this Form 10-Q.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity are cash on hand, short-term investments, cash generated from operations, available borrowings under our Revolving Credit Facility as well as new debt and/or equity issuances. In the near term, we expect to fund our cash requirements by utilizing any or a combination of these principal sources. Our cash and cash equivalents and short-term investments were approximately $2.9 billion as of October 3, 2025, and the Revolving Credit Facility has approximately $1.1 billion available for future borrowings.
We require cash to: (i) fund our operating expenses, working capital requirements, outlays for strategic acquisitions and investments; (ii) service our debt, including principal and interest; (iii) incur capital expenditures; and (iv) repurchase our common stock. During the ordinary course of business, we evaluate our cash requirements and, if necessary, adjust our expenditures to reflect the current market conditions and our projected sales and demand. Our capital expenditures are primarily directed towards manufacturing equipment. Future capital expenditures may be impacted by events and transactions that are not currently forecasted.
We believe that our cash on hand, cash generated from our operations and the amounts available under the Revolving Credit Facility are adequate to meet our working capital requirements and other business needs for at least the next 12 months and thereafter for the foreseeable future.
Operating Activities
Our cash flows from operating activities were $1,205.3 million and $1,326.7 million for the nine months ended October 3, 2025 and September 27, 2024, respectively. The decrease in net income was driven by lower end-market demand for our products and by the non-cash asset impairment and other restructuring-related charges incurred during the nine months ended October 3, 2025. The decrease in cash flows from operating activities of $121.4 million was driven by the timing of cash receipts and payments related to working capital balances.
Our ability to maintain positive operating cash flows is dependent on, among other factors, our success in achieving our revenue goals and manufacturing and operating cost targets. Management of our assets and liabilities, including both working capital and long-term assets and liabilities, also influences our operating cash flows.
Investing Activities
Our cash flows used in investing activities were $487.8 million and $858.1 million for the nine months ended October 3, 2025 and September 27, 2024, respectively. The decrease of $370.3 million was primarily attributable to a decrease in capital expenditures partially offset by the payments for acquisition of a business during the nine months ended October 3, 2025. Our capital expenditures as a percentage of revenue through Q3 were approximately 6%, and we expect capital expenditures in the range of 5 - 6% of revenue for 2025.
Financing Activities
Our cash flows used in financing activities were $939.9 million and $480.5 million for the nine months ended October 3, 2025 and September 27, 2024, respectively. The increase of $459.4 million was primarily attributable to increased share repurchases during the nine months ended October 3, 2025.
We do not have any meaningful debt maturing during the next 12 months. We expect to continue our Share Repurchase Program subject to market conditions, the price of our shares and other factors (including liquidity needs). However, the Share Repurchase Program may be modified, suspended or terminated by the Board of Directors at any time without prior notice.
Key Factors Potentially Affecting Liquidity
We believe that the key factors that could adversely affect our internal and external sources of cash include, among other considerations:
•changes in demand for our products, competitive pricing pressures, supply chain constraints, effective management of our manufacturing capacity, our ability to achieve further reductions in operating expenses, our ability to make progress on the achievement of our business strategy and sustainability goals, the impact of our restructuring programs on our production and cost efficiency, and our ability to make the research and development expenditures required to remain competitive in our business; and
•the debt and equity capital markets could impact our ability to obtain needed financing on acceptable terms or to respond to business opportunities and developments as they arise, including interest rate fluctuations, macroeconomic conditions, sudden reductions in the general availability of lending from banks or the related increase in cost to obtain bank financing and our ability to maintain compliance with covenants under our debt agreements in effect from time to time.
Debt Guarantees and Related Covenants
As of October 3, 2025, we were in compliance with the indentures relating to our 0% Notes, 0.50% Notes and 3.875% Notes and with covenants included in the Credit Agreement. The 0% Notes, 0.50% Notes and 3.875% Notes are senior to the existing and future subordinated indebtedness of onsemi and its guarantor subsidiaries, rank equally in right of payment to all of our existing and future senior debt and, as unsecured obligations, are subordinated to all of our existing and future secured debt to the extent of the assets securing such debt.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 3: ''Recent Accounting Pronouncements and Other Developments'' in the notes to the unaudited consolidated financial statements included elsewhere in this Form 10-Q and our 2024 Form 10-K.
ON Semiconductor Corporation published this content on November 03, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 03, 2025 at 16:14 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]