ON Semiconductor: A Stock for the Visionary Investor

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In the world of semiconductors, few names possess the promise of ON Semiconductor (ON). A company that, with a deft flourish, peddles the essential circuits that power our modern existence-everything from our beloved automobiles to the soaring ambitions of AI. For those willing to entertain the notion of short-term risk for a more substantial, long-term gain, ON presents itself as an investment of considerable merit. But, as ever, we must be wary of the intoxicating allure of immediate reward, for the true riches lie further ahead.

What Does ON Semiconductor Do? A Glimpse into Its World

ON Semiconductor, with its elegant grasp on power and sensing solutions, caters predominantly to the automotive industry, claiming 55% of its 2024 revenue from this sector. It is here, amid the whirring of electric motors and the hum of autonomous vehicles, that ON has made its mark. Its portfolio, an intricate tapestry of power semiconductors, intelligent sensors, and integrated circuits, paints a vivid picture of tomorrow’s technology. The company’s influence extends beyond mere automotive applications, finding its way into industrial automation, machine vision, and even the smart infrastructure that promises to grace our cities.

Within the automotive sector, ON’s burgeoning role in the electric vehicle (EV) industry cannot be overstated. The company is rapidly expanding its exposure to the silicon carbide (SiC) chips that are the lifeblood of the EV revolution-chips essential for the next generation of vehicles. And let us not forget its ventures into the realm of EV charging, where it plays a role in fueling the very industry it seeks to electrify. The industrial sector, accounting for 25% of revenue, is similarly endowed with potential-encompassing everything from factory automation to smart buildings and infrastructure.

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The company’s ventures also span a broader, more eclectic portfolio, including AI and data center solutions, where ON partners with industry titan Nvidia to shape the future of computing. It is in these nascent fields that ON Semiconductor may prove its mettle, offering an entrée to the cutting-edge technologies that will define the next decade.

Long-Term Growth: A Visionary’s Dream, But Beware the Short-Term Pitfalls

The long-term prospects for ON Semiconductor are not only promising but positively exhilarating. The electric vehicle market is not a passing fancy-it is the automotive industry’s beating heart, now and in the years to come. Ford and its contemporaries are investing billions to capture a market whose pace is quickening by the day. Yet, as with all great visions, the road is far from smooth.

The near-term, alas, does not indulge the same optimism. High interest rates, like the ever-present specter of caution, have weighed heavily on automotive sales, slowing the very growth ON seeks to embrace. The company’s sales, too, have languished since the end of 2023, a reminder that even the most promising ventures must endure the trials of the present before reaping the spoils of the future.

But let us not be deceived by the minor setbacks of today. The market is a fickle beast, prone to sudden shifts in sentiment. However, with ON Semiconductor’s stock priced at just over 14 times the Wall Street analyst consensus for free cash flow in 2025, there lies a certain buffer, a margin of safety against the erraticities of the market. It is this very margin that renders the stock highly attractive to the discerning investor-one who knows that fortune favors those who are patient and willing to wait for the harvest.

In the grand theatre of investing, it is clear that ON Semiconductor is playing a long game. For those who can bear the slings and arrows of near-term volatility, the rewards of tomorrow promise to be exquisite indeed. 🍃

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2025-10-01 20:03