Overview

• ON Semiconductor's shares fell almost 22% as projections for the fourth quarter significantly underperformed analysts' expectations. The chipmaker predicted its fourth quarter revenue to be between $1.9 billion and $2 billion, compared to analysts' predictions of $2.18 billion.
• The company's CEO, Hassane El-Khoury, denied direct impact from the United Auto Workers strike on the projection, although he warned of possible future repercussions. Instead, El-Khoury hinted at the influence of a 'single outlier customer' in affecting the quarterly earnings.
• Deutsche Bank analysts believe ON Semiconductor has 'succumbed to macro pressures', referencing the softening demand for cars, particularly electric vehicles. Despite this, they maintain a buy rating on the stock, citing the company's structural improvements.
• Craig-Hallum analysts also warned of near-term automotive uncertainties affecting ON Semiconductor, including the recent UAW strike, high interest rates, and a drop in demand for electric vehicles. This is predicted to negatively impact the company's performance in upcoming quarters or potentially much of 2024.
• Despite the gloomy forecast, ON Semiconductor's third-quarter FY23 revenue reported a decrease of only 0.5% year-on-year to $2.18 billion, beating the consensus of $2.15 billion. The adjusted earnings per share of $1.39 also topped the consensus of $1.34.