FULLTEXT DEL 2 AV 3
10-K – 2026-02-09 – on-20251231.htm
We have been and may be subject to or involved in litigation or threatened litigation, the outcome of which may be difficult to predict, and which may be costly to defend, divert management attention, require us to pay damages, or restrict the operation of our business.
From time to time, we have been and may be subject to disputes, litigation or regulatory investigations, with and without merit, that may be costly and which may divert the attention of our management and our resources in general. The results of complex legal proceedings are difficult to predict. Moreover, complaints filed against us may not specify the amount of damages that plaintiffs seek, and we therefore may be unable to estimate the possible range of damages that might be incurred should these lawsuits be resolved unfavorably. Even if we are able to estimate losses related to these actions, the ultimate amount of loss may be materially higher than our estimates. Any resolution of litigation, or threatened litigation, could involve the payment of damages or expenses by us, which may be significant or involve an agreement with terms that restrict the operation of our business. Even if any future lawsuits are not resolved against us, the costs of defending such lawsuits may be significant. There can be no assurance that we are adequately insured to protect against all claims and potential liabilities. Allegations made in the course of legal proceedings may also harm our reputation, regardless of whether there is merit to such claims. We can provide no assurance that additional litigation will not be filed against us in the future. See Note 13: “Commitments and Contingencies – Legal Matters” in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for more information on our legal proceedings.
Regulatory and legislative developments related to climate change may materially adversely affect our business and financial condition.
Various jurisdictions have developed or are developing climate change-based laws or regulations that could cause us to incur additional direct costs for compliance, as well as indirect costs resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us. These legal and regulatory requirements, as well as some investors' heightened expectations, on corporate environmental and social responsibility practices and disclosure are subject to change, can be unpredictable and may be difficult and expensive for us to comply with, given the complexity of our supply chain and our significant outsourced manufacturing. If we are unable to comply, or are unable to cause our suppliers to comply, with such policies or provisions or meet the requirements or expectations of our customers and investors, including any customers and investors that are critical of or oppose such initiatives, a customer may stop purchasing products from us or an investor may sell their shares, or parties may take legal action against us, which could harm our reputation, revenue and results of operations. Any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impact of climate change, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or others in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business and financial condition.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
The secure processing, maintenance and transmission of sensitive data, including confidential and other proprietary information about our business and our employees, customers, suppliers and business partners, is important to our operations and business strategy. As a result, cybersecurity and data protection are key components of our long-term strategy.
We use various processes to inform our assessment, identification and management of risk from cybersecurity threats. Key areas of our cybersecurity risk management processes and strategy currently include:
• Cross-Functional Collaboration and Coordination . Our Enterprise Cybersecurity Services (“ECS”) team, led by our Chief Information Security Officer (“CISO”) , has first line responsibility for our cybersecurity risk management processes. The ECS team works in partnership with other internal teams to coordinate efforts, priorities and oversight. These include:
◦ our Cybersecurity Executive Council (the “Council”), which is composed of key leaders from stakeholder groups throughout the Company, including the CISO and certain members of senior management;
◦ our Enterprise Risk Management (“ERM”) team, which is responsible for evaluating and assessing overall
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enterprise risk, including cybersecurity risk, and advising senior management and the Board regarding our overall risk profile and priorities as they evolve;
◦ our Internal Audit Department (“IAD”), which monitors certain IT systems controls that are integrated into our larger Sarbanes-Oxley control environment ; and
◦ our Cyber Incident Response Team (“CIRT”), a cross-functional team of subject matter experts from across the Company and certain third-party support providers that we have on retainer.
• Ongoing Evaluation and Assessment of Systems and Processes . We update our information security management system from time to time as appropriate and we employ standards and frameworks as we deem necessary to assist us in monitoring compliance with regulatory, industry and evolving data privacy requirements. In addition to periodic in-depth evaluations of our systems and processes, we monitor our IT systems and processes on an ongoing basis with the goal of identifying and remediating real and potential threats as they arise. We adjust our systems, procedures and policies regularly as we deem necessary in response to identified threats and risks.
• Security Awareness Program to Train and Test Personnel . We sponsor a multi-faceted security awareness program that includes mandatory trainings for our personnel on data protection and malware detection, policy and process awareness, periodic phishing simulations and other kinds of preparedness testing.
• Cyber Incident Response Plan . We maintain a cross-functional cyber incident response plan with defined roles, responsibilities and reporting protocols. This plan, which we evaluate and test on a regular basis, focuses on responding to and recovering from any significant breach as well as mitigating any impact to our business. Generally, when a breach or suspected breach is identified, the ECS team would escalate the issue to the Council for initial analysis and guidance. In the event of a significant breach, the CIRT, overseen by the Council, would typically be tasked with preparing an initial response. The Council (in consultation with, among others, the CIRT) would be responsible for determining whether a particular incident (alone or in combination with other factors) triggers any reporting or notification responsibilities.
• Regular Evaluation of Initiatives, Results and Priorities . The ECS team, in consultation with the Council and other members of senior management, updates its strategy at least annually to account for changes in our business strategy, legal and regulatory developments across our geographic footprint, the results of our recent ECS initiatives, and further developments in the cybersecurity threat landscape. In addition, we periodically engage a third-party provider to conduct an external assessment of our security program. The results of this assessment, which are reported to the Audit Committee (and the Board, as appropriate), assist us in determining whether any further changes to our existing policies and practices are warranted.
We expect that our cybersecurity risk management processes and strategy will continue to evolve as the cybersecurity threat landscape evolves.
As indicated above, we engage third-party providers to assist us with our cybersecurity risk management and strategy. Some of these providers provide us with ongoing assistance (such as threat monitoring, mitigation strategies, updates on emerging trends and developments and policy guidance) while we engage others to provide targeted assistance (such as security and forensic expertise) as needed. Prior to exchanging any sensitive data or integrating with any key third-party provider, we assess their security fitness against our risk posture and request changes as we deem necessary.
As of December 31, 2025, we have not identified any risks from cybersecurity threats (including any previous cybersecurity incidents) that have materially affected the Company, our business strategy, our results of operations or our financial condition. For a discussion of risks from cybersecurity threats that could be reasonably likely to materially affect us, please see our Risk Factors discussion under the heading, “Trends, Risks and Uncertainties Related to Technology and Data Privacy” included elsewhere in this Form 10-K.
Governance
Consistent with our overall risk management governance structure, management is responsible for the day-to-day management of cybersecurity risk while our Board and its Audit Committee play an active, ongoing oversight role.
Board Oversight . Our Board has delegated to its Audit Committee specific, first-line responsibility for overseeing major cybersecurity risk exposures in addition to our broader ERM program. Specifically, under its charter, the Audit Committee is responsible for overseeing our cybersecurity posture, risk assessment, strategy and mitigation and for making recommendations
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to address and resolve any breaches or issues related to the protection or privacy of our data. Management (including our Chief Information Officer (“CIO”) and our CISO) reports at least quarterly to the Audit Committee on information security and data privacy and protection. These presentations address a wide range of topics, including trends in cyber threats and the status of initiatives intended to bolster our security systems and the cyber readiness of our personnel. The Audit Committee chair reports to the full Board on these risk discussions as appropriate. At least annually, the Board meets with members of our ERM team to review and discuss our ERM program, including areas of material risk and how these risks, which may include cybersecurity risk, are being managed and reported to the Board and its committees.
Management’s Role . Our ECS team is composed of several support teams that address and respond to cyber risk, including cyber risks related to security architecture and engineering, identity and access management and security operations. The ECS team oversees compliance with our cybersecurity framework within the organization and facilitates cybersecurity risk management activities throughout the organization. The ECS team also assists with the review and approval of policies, completes benchmarking against applicable standards, maintains a cyber risk register and oversees the security awareness program.
The onsemi cyber security program is based on the internationally recognized standard of ISO/IEC 27001:2022. The cyber program is formally certified by respective outside auditors on an annual basis and maintains certification globally.
Our ECS team is led by our CISO. Our CISO reports to our CIO who, in turn, reports to our Executive Vice President and Chief Financial Officer. Our CISO has over 20 years of experience in leading global security functions and strategies. Collectively, the other members of our ECS team have decades of relevant education and experience and maintain a wide range of industry certifications. We invest in regular, ongoing cybersecurity training for our ECS team.
As noted previously, our CISO is a member of the Council, which meets at least quarterly to provide operational direction to the ECS team considering the evolving risk landscape. The ECS team and the Council, through ongoing communication, monitor the prevention, detection, mitigation and remediation of cybersecurity threats and incidents. The CISO, in consultation with the Council and other members of senior management, reports such threats and incidents to the Audit Committee, as appropriate. These reports may be included in, or in addition to, his regular quarterly reports to the Audit Committee.
Item 2. Properties
Our corporate headquarters, as well as certain design center and research and development operations, are located in approximately 200,000 square feet of building space on property that we lease in Scottsdale, Arizona. We also own and lease properties around the world for use as sales offices, design centers, research and development labs, warehouses, logistic centers, trading offices and manufacturing support. The size and location of these properties, which are used by all of our reportable segments, change from time to time based on business requirements. We operate distribution centers, which are leased or contracted through a third-party, in locations throughout Asia, Europe and the Americas. See "Business — Resources" included elsewhere in this Form 10-K for information on properties used in our manufacturing operations. While these facilities are primarily used in manufacturing operations, they also include office, utility, laboratory, warehouse and unused space. Additionally, we own and lease research and development facilities located in Belgium, Canada, China, the Czech Republic, Germany, India, Ireland, Israel, Italy, Japan, the Philippines, Singapore, South Korea, Romania, the Slovak Republic, Slovenia, Switzerland, Taiwan, the United Kingdom and the United States. Our joint venture in Leshan, China also owns manufacturing, warehouse, laboratory, office and other unused space.
Certain of our properties are subject to encumbrances such as mortgages and liens. See Note 9: ''Long-Term Debt'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for further information. In addition, due to local law restrictions, the land upon which our facilities are located in certain foreign locations is subject to varying long-term leases. See "Business — Resources" and "Business — Government Regulation" included elsewhere in this Form 10-K for further details on our properties and environmental regulation.
Item 3. Legal Proceedings
The Company has elected to use a $1 million threshold for disclosing certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party. The Company believes proceedings under this threshold are not material to its business and financial condition. See "Legal Matters" under Note 13: ''Commitments and Contingencies'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for a description of legal proceedings and related matters.
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Item 4 . Mine Safety Disclosure
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded under the symbol "ON" on the Nasdaq Global Select Market. The stock price details can be obtained from the Nasdaq website at www.nasdaq.com. As of February 4, 2026, there were approximately 151 holders of record of our common stock and 394,020,530 shares of common stock outstanding. Holders of record are defined as those stockholders whose shares are registered in their names in our stock records and do not include beneficial owners of common stock whose shares are held in the names of brokers, dealers or clearing agencies.
Company Stock Performance
The following graph shows a comparison of the five-year cumulative total stockholder return for onsemi, the PHLX Semiconductor Sector Index ("SOX"), and the Standard and Poor's 500 ("S&P 500"). The comparison assumes $100 was invested on December 31, 2020 in shares of our common stock and in both of the indices shown and assumes that all of the dividends were reinvested. Note that past stock price performance is not necessarily indicative of future stock price performance. The performance graph in this Form 10-K shall be deemed furnished, and not filed, and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act as a result of this furnishing, except to the extent that we specifically incorporate it by reference.
We have neither declared nor paid any cash dividends on our common stock since our initial public offering. Our future dividend policy with respect to our common stock will depend upon our earnings, capital requirements, financial condition, debt restrictions and other factors deemed relevant by our Board of Directors in its sole discretion.
Our outstanding debt facilities may limit the amount of dividends we are permitted to pay and share repurchases under the Share Repurchase Program and the New Share Repurchase Program (each as defined below). We may pay dividends and buy back shares under the New Share Repurchase Program in an unlimited amount so long as, after giving effect thereto, the consolidated total net leverage ratio (calculated in accordance with our Credit Agreement) does not exceed 2.75 to 1.00. Additionally, under a different provision, so long as no default has occurred and is continuing or results therefrom, our Credit Agreement permits us to pay cash dividends to our common stockholders, buy back shares under the New Share Repurchase Program, or a combination thereof, in an amount up to $350.0 million per year. See Note 9: ''Long-Term Debt'' in the notes to the audited consolidated financial statements included elsewhere in this Form 10-K for further discussion of our Credit Agreement.
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Issuer Purchases of Equity Securities
The following table provides information regarding repurchases of our common stock during the quarter ended December 31, 2025:
Period (1)
Total Number of Shares Purchased Average Price Paid per Share ($) (2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs ($ in millions) ($) (3)
October 4, 2025 - October 31, 2025 2,956,354 $ 50.75 2,956,354 $ 711.0
November 1, 2025 - November 28, 2025 2,644,513 47.90 2,644,513 592.5
November 29, 2025 - December 31, 2025 3,178,828 54.55 3,178,828 411.0
Total 8,779,695 51.27 8,779,695
(1) The periods represent our fiscal month start and end dates for the fourth quarter of 2025.
(2) The price per share is based on the fair market value at the time of tender, repurchase or exercise of outstanding put options, respectively.
(3) Represents the authorized amount remaining under the Share Repurchase Program (as defined below) announced on February 6, 2023 to repurchase up to $3.0 billion of shares of our common stock through December 31, 2025 (exclusive of fees, commissions and other expenses).
Share Repurchase Program
In February 2023, the Board of Directors approved a share repurchase program (the “Share Repurchase Program”), which allowed for the repurchase of our common stock from time to time through a variety of methods, including in privately negotiated transactions or open market transactions, such as pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act or a combination of methods. The Share Repurchase Program, which did not require us to purchase any minimum amount of our common stock, allowed for repurchases up to $3.0 billion from February 8, 2023 through December 31, 2025 (exclusive of fees, commissions and other expenses). Any repurchases were at the Company’s discretion and subject to market conditions, the price of our shares and other factors.
The repurchases under the Share Repurchase Program amounted to an aggregate purchase price of approximately $1,375 million during the year ended December 31, 2025 (excluding fees, commissions and other expenses). There were approximately $650 million in repurchases of common stock for the year ended December 31, 2024 and approximately $564 million in repurchases of common stock under the previous share repurchase program during the year ended December 31, 2023 (in each case excluding fees, commissions and other expenses).
New Share Repurchase Program
In November 2025, the Board of Directors approved a new Share Repurchase Program (the "New Share Repurchase Program") under which the Company may repurchase up to an aggregate of $6.0 billion of the Company's common stock (exclusive of fees, commissions and other expenses). Under the New Share Repurchase Program, which does not require the Company to purchase any minimum amount of common stock or at all, the Company may repurchase shares from January 1, 2026 through December 31, 2028. The New Share Repurchase Program may be modified, suspended or terminated by the Board of Directors at any time without prior notice.
Through February 4, 2026, the Company acquired 2.9 million shares for $175.6 million under the New Share Repurchase Program pursuant to a 10b5-1 trading arrangement.
See Note 10: ''Earnings Per Share and Equity'' of the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for further information on the Share Repurchase Program and the New Share Repurchase Program.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in conjunction with our audited consolidated financial statements, including the notes thereto, which are included elsewhere in this Form 10-K. Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties, and other factors and speak only as of the filing date. Actual results could differ materially because of the factors discussed in "Risk Factors" and elsewhere in this Form 10-K.
Executive Overview
This executive overview presents summarized information regarding our business and operating trends only. For further details, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations" in its entirety.
onsemi Results
Our revenue for the year ended December 31, 2025 was $5,995.4 million, representing a decrease of 15.3% from $7,082.3 million for the year ended December 31, 2024. During 2025, we reported net income attributable to onsemi of $121.0 million compared to $1,572.8 million in 2024. Our operating income totaled $84.2 million during 2025 compared to $1,767.7 million during 2024. Our gross margin decreased by approximately 1,230 basis points to 33.1% in 2025 from 45.4% in 2024. Our operating results were significantly impacted by restructuring, asset impairment and other charges resulting from our 2025 Manufacturing Realignment Program. See Note 7: ''Restructuring, Asset Impairments and Other, net'' for additional information. We also continued to experience decreased demand in our automotive and industrial end-markets resulting in lower sales volumes and the corresponding underutilization of our manufacturing facilities. See discussion under "Results of Operations" for the reasons for the fluctuations year-over-year.
Business and Macroeconomic Environment
The semiconductor industry has traditionally been highly cyclical, and has often experienced significant downturns in connection with, or in anticipation of, declines in general economic conditions. During 2025, the semiconductor industry continued to experience a softening demand and uncertainty due to macroeconomic factors and the geopolitical environment. In this environment, we have focused on operational excellence and cash flow generation. Given the conditions, we are actively managing and have taken corrective actions in our manufacturing capacity and spending to align with the forecasted demand. We intend to continue these actions during 2026.
We continue to implement cost-saving initiatives to be able to align our overall cost structure, capital investments and other expenditures with our expected revenue, spending and capacity levels to help offset softening demand and increased manufacturing and operating costs. We have taken, and continue to take actions, including but not limited to, exiting product lines that do not enhance gross margin or satisfy strategic objectives. We made meaningful progress in aligning internal manufacturing capacity and resources to external demand.
See Note 7: ''Restructuring, Asset Impairments and Other, net'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for information relating to our most recent cost-saving initiatives.
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Results of Operations
Comparison of the years ended December 31, 2025 and 2024
A discussion of our results of operations for the year ended December 31, 2025 compared to December 31, 2024 is included below.
Operating Results
The following table summarizes certain information relating to our operating results that has been derived from our audited consolidated financial statements (in millions):
Year ended December 31,
2025 2024 Change
Revenue $ 5,995.4 $ 7,082.3 $ (1,086.9)
Cost of revenue 4,011.5 3,866.2 145.3
Gross profit 1,983.9 3,216.1 (1,232.2)
Operating expenses:
Research and development 583.6 612.7 (29.1)
Selling and marketing 255.9 273.5 (17.6)
General and administrative 348.9 376.3 (27.4)
Amortization of intangible assets 44.4 52.0 (7.6)
Restructuring, asset impairments and other, net 666.9 133.9 533.0
Total operating expenses 1,899.7 1,448.4 451.3
Operating income 84.2 1,767.7 (1,683.5)
Other income (expense), net:
Interest expense (70.9) (62.3) (8.6)
Interest income 95.1 111.4 (16.3)
Other income, net 22.9 20.6 2.3
Other income (expense), net 47.1 69.7 (22.6)
Income before income taxes 131.3 1,837.4 (1,706.1)
Income tax provision (7.7) (262.8) 255.1
Net income 123.6 1,574.6 (1,451.0)
Less: Net income attributable to non-controlling interest (2.6) (1.8) (0.8)
Net income attributable to ON Semiconductor Corporation $ 121.0 $ 1,572.8 $ (1,451.8)
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The following table summarizes certain information relating to our segment results (in millions):
2025 As a % of Total 2024 As a % of Total Dollar Change
Revenue:
PSG $ 2,805.1 46.8 % $ 3,348.2 47.3 % $ (543.1)
AMG 2,261.9 37.7 % 2,609.1 36.8 % (347.2)
ISG 928.4 15.5 % 1,125.0 15.9 % (196.6)
Total $ 5,995.4 100.0 % $ 7,082.3 100.0 % $ (1,086.9)
Cost of revenue:
PSG $ 2,117.6 52.8 % $ 1,963.8 50.8 % $ 153.8
AMG 1,105.4 27.6 % 1,302.8 33.7 % (197.4)
ISG 788.5 19.6 % 599.6 15.5 % 188.9
Total $ 4,011.5 100.0 % $ 3,866.2 100.0 % $ 145.3
Gross profit: (1)
PSG $ 687.5 24.5 % $ 1,384.4 41.3 % $ (696.9)
AMG 1,156.5 51.1 % 1,306.3 50.1 % (149.8)
ISG 139.9 15.1 % 525.4 46.7 % (385.5)
Total $ 1,983.9 33.1 % $ 3,216.1 45.4 % $ (1,232.2)
(1) Gross profit margin as a percent of respective segment revenue balances
Revenue
Revenue was $5,995.4 million and $7,082.3 million for 2025 and 2024, respectively. The decrease from 2024 to 2025 of $1,086.9 million, or 15.3%, w as attributable primarily to lower sales volumes across all reportable segments, which are further explained below. We had one customer, a distributor, whose revenue accounted for approximately 11% and 10% of the total revenue for the years ended December 31, 2025 and 2024, respectively, with sales across all reportable segments.
Revenue from PSG
Revenue from PSG decreased by $543.1 million, or approximately 16.2%, during 2025 compared to 2024. This was driven by a decrease in revenue of $438.0 million and $120.2 million in the automotive and industrial end-markets, respectively, which was partially offset by increased revenue of $15.1 million in other end-markets which include AI data centers.
Revenue from AMG
Revenue from AMG decreased by $347.2 million, or approximately 13.3%, during 2025 compared to 2024. This was driven by decreases in revenue of $204.1 million and $161.5 million in the automotive and other end-markets, respectively, which was partially offset by an increase of $18.4 million within the industrial end-market. The decrease in the other end-market primarily related to the reduction of manufacturing services revenue at our EFK location.
Revenue from ISG
Revenue from ISG decreased by $196.6 million, or approximately 17.5%, during 2025 compared to 2024. This was driven by decreases in revenue of $177.9 million and $24.2 million in the automotive and industrial end-markets respectively, which was partially offset by increased revenue of $5.5 million in other end-markets.
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Revenue by Geographic Location
Revenue by geographic location, based on sales billed from the respective country or region, was as follows (dollars in millions):
2025 As a % of
Revenue (1)
2024 As a % of
Revenue (1)
Hong Kong $ 1,634.8 27.3 % $ 1,779.3 25.1 %
United Kingdom 1,347.0 22.5 % 1,637.8 23.1 %
Singapore 1,252.4 20.9 % 1,733.2 24.5 %
United States 1,230.6 20.5 % 1,307.5 18.5 %
Other 530.6 8.8 % 624.5 8.8 %
Total Revenue $ 5,995.4 $ 7,082.3
(1) Certain of the amounts may not total due to rounding of individual amounts.
Gross Profit and Gross Margin
Gross profit was $1,983.9 million and $3,216.1 million for 2025 and 2024, respectively, representing a decrease of $1,232.2 million or approximately 38.3%. We recorded excess and obsolete inventory charges of $268.2 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 7: ''Restructuring, Asset Impairments and Other, net'' for additional information. We also continued to experience a decline in sales volume across end-markets.
Our gross margin decreased by 12.3 percentage points from 45.4% for the year ended December 31, 2024 to 33.1% for the year ended December 31, 2025, primarily due to the impact of the factors explained in the segment gross margin sections below.
PSG gross profit decreased by $696.9 million, primarily driven by the decline in sales volume in the automotive and industrial end-markets. Also contributing to the decrease in gross profit 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 16.8 percentage points to 24.5% from 41.3%, primarily as a result of the decline in sales volume, underutilization of our manufacturing facilities, 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 $149.8 million, primarily driven by the decline in sales volume in the automotive and industrial end-markets. AMG gross margin increased by 1.0 percentage point to 51.1% from 50.1%, primarily due to the reduction in the lower-margin manufacturing services revenue at our EFK location.
ISG gross profit decreased by $385.5 million, primarily driven by the $230.3 million excess and obsolete inventory charges discussed above. The decline in sales volume in the automotive and industrial end-markets also added to the decrease. ISG gross margin decreased 31.6 percentage points to 15.1% from 46.7%, primarily due to the excess and obsolete inventory charges resulting from certain strategy changes in connection with the 2025 Manufacturing Realignment Program.
Operating Expenses
Research and Development
Research and development expenses were $583.6 million and $612.7 million, or approximately 10% and 9% of revenue for 2025 and 2024, respectively, representing a decrease of $29.1 million, or approximately 5% year-over-year. The decrease was primarily due to a decrease in production supplies, outside services and payroll-related expenses as a result of the restructuring program.
Selling and Marketing
Selling and marketing expenses were $255.9 million and $273.5 million, or approximately 4% of revenue for both 2025 and 2024, representing a decrease of $17.6 million, or approximately 6% year-over-year. The decrease was primarily related to a decrease in payroll-related expenses as a result of the restructuring program.
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General and Administrative
General and administrative expenses were $348.9 million and $376.3 million, or approximately 6% and 5% of revenue for 2025 and 2024, respectively, representing a decrease of $27.4 million, or approximately 7% year-over-year. The decrease was primarily due to a decrease in consulting fees and payroll-related expenses as a result of the restructuring program.
Other Operating Expenses
Amortization of Intangible Assets
Amortization of intangible assets was $44.4 million and $52.0 million for 2025 and 2024, respectively, representing a decrease of $7.6 million, or approximately 15%, year-over-year due to previously acquired assets becoming fully amortized during 2025.
Restructuring, Asset Impairments and Other Charges, net
Restructuring, asset impairments and other charges, net was $666.9 million and $133.9 million for 2025 and 2024, respectively, representing an increase of $533.0 million. Amounts incurred during 2025 primarily represent severance and asset impairment charges associated with the 2025 Manufacturing Realignment Program. Charges in 2024 related primarily to the 2024 business realignment efforts. For additional information, see Note 7: ''Restructuring, Asset Impairments and Other, net'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K.
Other Income and Expenses
Interest Expense
Interest expense increased by $8.6 million, or approximately 14%, to $70.9 million during 2025 compared to $62.3 million in 2024. Our average gross amount of long-term debt balance during 2025 and 2024 was $3,379.9 million and $3,379.9 million, respectively. Interest expense increased due to an increase in our average interest rate on our long-term debt. Our weighted average interest rate was 2.1% and 1.8% per annum in 2025 and 2024, respectively.
Interest income
Interest income decreased by $16.3 million, or approximately 15%, to $95.1 million during 2025 compared to $111.4 million in 2024, primarily attributable to lower interest rates on cash and cash equivalents and short-term investments.
Other income, net
Other income, net was $22.9 million and $20.6 million in 2025 and 2024, respectively . The increase was primarily driven by slightly higher dividend income in 2025.
Income Tax Provision
We recorded an income tax provision of $7.7 million and $262.8 million in 2025 and 2024, respectively, representing effective tax rates of 5.9% and 14.3%. The change in the effective tax rate was primarily driven by lower income before income taxes, which increased the rate impact of discrete items.
For additional information, see Note 16: ''Income Taxes'' in the notes to the audited consolidated financial statements included elsewhere in this Form 10-K.
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Comparison of the years ended December 31, 2024 and 2023
A discussion of our results of operations for the year ended December 31, 2024 compared to December 31, 2023 is included below.
Operating Results
The following table summarizes certain information relating to our operating results that has been derived from our audited consolidated financial statements (in millions):
Year ended December 31,
2024 2023 Change
Revenue $ 7,082.3 $ 8,253.0 $ (1,170.7)
Cost of revenue 3,866.2 4,369.5 (503.3)
Gross profit 3,216.1 3,883.5 (667.4)
Operating expenses:
Research and development 612.7 577.3 35.4
Selling and marketing 273.5 279.1 (5.6)
General and administrative 376.3 362.4 13.9
Amortization of intangible assets 52.0 51.1 0.9
Restructuring, asset impairments and other, net 133.9 74.9 59.0
Total operating expenses 1,448.4 1,344.8 103.6
Operating income 1,767.7 2,538.7 (771.0)
Other income (expense), net:
Interest expense (62.3) (74.8) 12.5
Interest income 111.4 93.1 18.3
Loss on debt refinancing and prepayment — (13.3) 13.3
Loss on divestiture of businesses — (0.7) 0.7
Other income (expense), net 20.6 (7.2) 27.8
Other income (expense), net 69.7 (2.9) 72.6
Income before income taxes 1,837.4 2,535.8 (698.4)
Income tax provision (262.8) (350.2) 87.4
Net income 1,574.6 2,185.6 (611.0)
Less: Net income attributable to non-controlling interest (1.8) (1.9) 0.1
Net income attributable to ON Semiconductor Corporation $ 1,572.8 $ 2,183.7 $ (610.9)
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The following table summarizes certain information relating to our segment results (in millions):
2024 As a % of Total 2023 As a % of Total Dollar Change
Revenue:
PSG $ 3,348.2 47.3 % $ 3,880.4 47.0 % $ (532.2)
AMG 2,609.1 36.8 % 3,057.1 37.0 % (448.0)
ISG 1,125.0 15.9 % 1,315.5 16.0 % (190.5)
Total $ 7,082.3 100.0 % $ 8,253.0 100.0 % $ (1,170.7)
Cost of revenue:
PSG $ 1,963.8 50.8 % $ 2,058.5 47.1 % $ (94.7)
AMG 1,302.8 33.7 % 1,635.8 37.4 % (333.0)
ISG 599.6 15.5 % 675.2 15.5 % (75.6)
Total $ 3,866.2 100.0 % $ 4,369.5 100.0 % $ (503.3)
Gross profit: (1)
PSG $ 1,384.4 41.3 % $ 1,821.9 47.0 % $ (437.5)
AMG 1,306.3 50.1 % 1,421.3 46.5 % (115.0)
ISG 525.4 46.7 % 640.3 48.7 % (114.9)
Total $ 3,216.1 45.4 % $ 3,883.5 47.1 % $ (667.4)
(1) Gross profit margin as a percent of respective segment revenue balances.
Revenue
Revenue was $7,082.3 million and $8,253.0 million for 2024 and 2023, respectively. The decrease from 2023 to 2024 of $1,170.7 million, or 14.2%, w as attributable primarily to lower sales volumes across all segments, which are further explained below. We had one customer, a distributor, whose revenue accounted for approximately 10% of our total revenue for the year ended December 31, 2024, with sales across all reportable segments. There was no customer whose revenue exceeded 10% of total revenue for the year ended December 31, 2023.
Revenue from PSG
Revenue from PSG decreased by $532.2 million, or approximately 13.7%, during 2024 compared to 2023. This was driven by a decrease in revenue of $168.3 million, $267.7 million and $96.2 million in the automotive, industrial and other end-markets, respectively.
Revenue from AMG
Revenue from AMG decreased by $448.0 million, or approximately 14.7%, during 2024 compared to 2023. This was driven by a decrease in revenue of $182.3 million, $119.7 million and $146.0 million in the automotive, industrial and other end-markets, respectively. The decrease in the other end-market primarily relates to the reduction of manufacturing services revenue at our EFK location.
Revenue from ISG
Revenue from ISG decreased by $190.5 million, or approximately 14.5%, during 2024 compared to 2023. This was driven by a decrease in revenue of $68.5 million, $90.2 million and $31.8 million in the automotive, industrial and other end-markets, respectively.
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Revenue by Geographic Location
Revenue by geographic location, based on sales billed from the respective country or region, was as follows (dollars in millions):
2024 As a % of
Revenue (1)
2023 As a % of
Revenue (1)
Hong Kong $ 1,779.3 25.1 % $ 2,168.6 26.3 %
Singapore 1,733.2 24.5 % 1,938.8 23.5 %
United Kingdom 1,637.8 23.1 % 1,753.4 21.2 %
United States 1,307.5 18.5 % 1,573.7 19.1 %
Other 624.5 8.8 % 818.5 9.9 %
Total Revenue $ 7,082.3 $ 8,253.0
(1) Certain of the amounts may not total due to rounding of individual amounts.
Gross Profit and Gross Margin
Gross profit was $3,216.1 million and $3,883.5 million for 2024 and 2023, respectively, representing a decrease of $667.4 million or approximately 17.2%.
Our gross margin decreased by 1.7 percentage points from 47.1% for the year ended December 31, 2023 to 45.4% for the year ended December 31, 2024, primarily due to the impact of the factors explained in the segment gross margin sections below.
PSG gross profit decreased by $437.5 million, primarily driven by the decline in sales volume in the automotive and industrial end-markets. PSG gross margin decreased by 5.7 percentage points to 41.3% from 47.0%, primarily as a result of the decline in volume, underutilization of our manufacturing facilities, and the related impact of unfavorable product mix.
AMG gross profit decreased by $115.0 million, primarily driven by the decline in sales volume in the automotive, industrial, and other end-markets. AMG gross margin increased by 3.6 percentage points to 50.1% from 46.5%, primarily due to the reduction in the lower-margin manufacturing services revenue at our EFK location.
ISG gross profit decreased by $114.9 million, primarily driven by the decline in sales volume in the automotive and industrial end-markets. ISG gross margin decreased 2.0 percentage points to 46.7% from 48.7%, primarily driven by lower sales volumes and the related impact of unfavorable product mix.
Operating Expenses
Research and Development
Research and development expenses were $612.7 million and $577.3 million, or approximately 9% and 7% of revenue for 2024 and 2023, respectively, representing an increase of $35.4 million, or approximately 6% year-over-year. The increase was primarily due to an increase in payroll-related expenses and production supplies, partially offset by a decrease in variable compensation.
Selling and Marketing
Selling and marketing expenses were $273.5 million and $279.1 million, or approximately 4% and 3% of revenue for 2024 and 2023, respectively, representing a decrease of $5.6 million, or approximately 2% year-over-year. The decrease was primarily related to a decrease in sales commissions and variable compensation.
General and Administrative
General and administrative expenses were $376.3 million and $362.4 million, or approximately 5% and 4% of revenue for 2024 and 2023, respectively, representing an increase of $13.9 million, or approximately 4% year-over-year. The increase was primarily due to increased consulting fees associated with information technology initiatives partially offset by a decrease in the bad debt provision with a strategic business partner which was recorded in the prior year.
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Other Operating Expenses
Amortization of Intangible Assets
Amortization of acquisition-related intangible assets was $52.0 million and $51.1 million for 2024 and 2023, respectively, representing an increase of $0.9 million, or approximately 2%, year-over-year. Expenses were consistent between periods as there were no significant acquisitions or divestitures.
Restructuring, Asset Impairments and Other Charges, net
Restructuring, asset impairments and other charges, net was $133.9 million and $74.9 million for 2024 and 2023, respectively, representing an increase of $59.0 million. Amounts incurred during 2024 primarily represent severance and asset impairment charges associated with the 2024 business realignment efforts. Charges in 2023 related primarily to the business realignment efforts during 2023. For additional information, see Note 7: ''Restructuring, Asset Impairments and Other Charges, net'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K.
Other Income and Expenses
Interest Expense
Interest expense decreased by $12.5 million, or approximately 17%, to $62.3 million during 2024 compared to $74.8 million in 2023. The decrease was primarily due to the pay down of higher variable-rate debt and replacement by the 0.50% Notes in 2023. Our average gross amount of long-term debt balance (including current maturities) during 2024 and 2023 was $3,379.9 million and $3,304.1 million, respectively. Our weighted average interest rate on our gross amount of long-term debt (including current maturities) was 1.8% and 2.3% per annum in 2024 and 2023, respectively.
Interest income
Interest income increased by $18.3 million, or approximately 20%, to $111.4 million during 2024 compared to $93.1 million in 2023, primarily due to higher interest rates and increased balances in interest-bearing accounts.
See "Key Financing and Capital Events" below and Note 9: ''Long-Term Debt'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for a description of our indebtedness and our refinancing activities.
Loss on Debt Refinancing and Prepayment
There were no debt refinancing or prepayment transactions during 2024. We recorded a loss on debt refinancing and prepayment of $13.3 million during 2023 due to the write-off relating to the repayment of the Term Loan "B" Facility. See "Key Financing and Capital Events" below and Note 9: ''Long-Term Debt'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for a description of our indebtedness and our refinancing activities.
Other income (expense), net
Other income (expense), net was income of $20.6 million in 2024, compared to expense of $7.2 million in 2023 . We received $9.5 million of dividend income in 2024 with no corresponding amounts in 2023. Actuarial gains on pension plans were $12.2 million in 2024 compared to losses of $4.0 million during 2023 and fluctuations in foreign currencies resulting in increased transaction gains.
Income Tax Provision
We recorded an income tax provision of $262.8 million and $350.2 million in 2024 and 2023, respectively, representing effective tax rates of 14.3% and 13.8%.
For additional information, see Note 16: ''Income Taxes'' in the notes to the audited consolidated financial statements included elsewhere in this Form 10-K.
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Liquidity and Capital Resources
Overview
Our principal sources of liquidity are cash on hand, 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 $2,147.6 million and $400.0 million, respectively, as of December 31, 2025 and our Revolving Credit Facility had approximately $1.5 billion available for future borrowings as of December 31, 2025.
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. Future capital expenditures may be impacted by events and transactions that are not currently forecasted.
We believe that the key factors that could adversely affect our internal and external sources of cash include:
• 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.
Sources and Uses of Cash
The following are the significant sources and uses of cash during 2025:
• Cash flows from operating activities of $1,759.8 million .
• Payments for property, plant & equipment of $341.2 million.
• Repurchases of approximately 27.9 million shares of common stock for an aggregate purchase price of approximately $1,375 million under the Share Repurchase Program.
• Repayment of $375.0 million of borrowings on the Revolving Credit Facility.
Operating Activities
Our long-term cash generation is dependent on our ability to generate cash from our operations. Our cash flows from operating activities were $1,759.8 million, $1,906.4 million and $1,977.5 million for the years ended December 31, 2025, 2024 and 2023 , respectively. Our operating cash flows for the year ended December 31, 2025 decreased by $146.6 million, or 7.7%, compared to the year ended December 31, 2024 and was primarily attributable to a reduction in net income driven by lower end-market demand for our products partially offset 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 meeting 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.
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Investing Activities
Our cash flows used in investing activities were $538.5 million, $1,009.8 million and $1,737.9 million for the years ended December 31, 2025, 2024, and 2023 , respectively. The decrease of $471.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily attributable to a significant decrease in capital expenditures, the net impact of purchases and maturities of short-term investments. During the years ended December 31, 2025, 2024, and 2023, we paid $341.2 million, $694.0 million and $1,539.1 million, respectively, for capital expenditures. Cash paid towards capital expenditures as a percent of revenue for the years ended December 31, 2025, 2024, and 2023 was approximately 6%, 10%, and 19%, respectively. In 2026, based on current plans, we expect capital expenditures to be approximately 5% of revenue.
Financing Activities
Our cash flows used in financing activities were $1,763.8 million, $683.8 million and $686.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. We used cash to repay $375.0 million of borrowings on the Revolving Credit Facility and for share repurchases of $1,377.6 million for the year ended December 31, 2025 compared to $654.1 million in 2024.
In November 2025, the Board of Directors approved a New Share Repurchase Program under which the Company may repurchase up to an aggregate of $6.0 billion of the Company's common stock (exclusive of fees, commissions and other expenses). Under the New Share Repurchase Program, which does not require the Company to purchase any minimum amount of common stock or at all, the Company may repurchase shares from January 1, 2026 through December 31, 2028.
Through February 4, 2026, we acquired 2.9 million shares for $175.6 million under the New Share Repurchase Program, subject to a 10b5-1 trading arrangement. We expect to continue to opportunistically repurchase our shares of common stock under our New Share Repurchase Program subject to market conditions, the price of our shares and other factors (including liquidity needs). The New Share Repurchase Program may be modified, suspended or terminated by the Board of Directors at any time without prior notice.
See Part I, Item 1A "Risk Factors" included elsewhere in this Form 10-K for additional information related to liquidity matters.
Debt
As of December 31, 2025 , we were in compliance with the indentures relating to our 0% Notes, 0.50% Notes and 3.875% Notes and with the financial 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. Failure to comply with any of our covenants or any other terms of our Credit Agreement could result in higher interest rates in our borrowings or the acceleration of the maturities of our outstanding debt. In order to remain in compliance with the various financial covenants contained in our debt agreements and to fund working capital, our capital expenditures and business development efforts will depend on our ability to generate cash from operating activities, which is subject to, among other things, our future operating performance, as well as financial, competitive, legislative, regulatory and other conditions, some of which may be beyond our control.
As of December 31, 2025, there was outstanding $804.9 million aggregate principal amount of the 0% Notes, $1,500.0 million aggregate principal amount of the 0.50% Notes and $700.0 million aggregate principal amount of 3.875% Notes. As noted above, we repaid $375.0 million for borrowings on the Revolving Credit Facility during 2025 and had approximately $1.5 billion available for future borrowings as of December 31, 2025. The associated interest expense related to our indebtedness will continue to have a significant impact on our results of operations.
See Note 9: ''Long-Term Debt'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information.
Key Financing and Capital Events
Overview
We continually evaluate our debt and capital structure and, when appropriate, we have completed various measures to secure liquidity, repurchase shares of our common stock, reduce interest costs, amend or replace existing key financing arrangements and, in some cases, extend a portion of our debt maturities to continue to provide us additional operating flexibility.
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2025 Financing Events
• Repayment of $375.0 million of borrowings on the Revolving Credit Facility.
• Repurchases of approximately 27.9 million shares of common stock for an aggregate purchase price of approximately $1,375 million, excluding fees, commissions, and excise tax, under the Share Repurchase Program.
2024 Financing Events
• Repurchases of approximately 9.1 million shares of common stock for an aggregate purchase price of approximately $650 million under the Share Repurchase Program.
2023 Financing Events
• Issuance of $1.5 billion of 0.50% Notes on February 28, 2023, the net proceeds of which were used to repay $1,086.0 million of the existing indebtedness under the Term Loan "B" Facility, the related transaction fees and expenses and to pay approximately $171.5 million net cost of the related convertible note hedges.
• Entering into a new Credit Agreement consisting of a $1.5 billion Revolving Credit Facility and draw-down of $375.0 million to repay the entire outstanding balance under the Revolver due 2024 in the second quarter of 2023.
• Repurchases of approximately 7.6 million shares of common stock for an aggregate purchase price of approximately $564 million under the Share Repurchase Program.
• Repayment of the 1.625% Notes amounting to $119.6 million in cash upon maturity and issuance of approximately 4.5 million shares of common stock to settle the excess over the principal.
See Note 9: ''Long-Term Debt'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information.
Critical Accounting Policies and Estimates
The accompanying discussion and analysis of our financial condition and results of operations is based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. We believe certain of our accounting policies are critical to understanding our financial position and results of operations. We utilize the following critical accounting policies in the preparation of our financial statements. In addition to our critical accounting policies below, see Note 2: ''Significant Accounting Policies'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K.
Use of Estimates. The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. We evaluate these estimates and judgments on an ongoing basis and base our estimates on experience, current and expected future conditions, third-party evaluations and various other assumptions that we believe are reasonable under the circumstances. Significant estimates have been used by management in conjunction with the following: (i) calculation of future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) measurement of valuation allowances against deferred tax assets, and evaluations of uncertain tax positions; (iv) assumptions used in business combinations and the valuation of assets held-for-sale; and (v) testing for impairment of long-lived assets and goodwill. Actual results may differ from the estimates and assumptions used in the consolidated financial statements.
Revenue Recognition . We generate revenue from sales of our semiconductor products to direct customers and distributors. We also generate revenue, to a much lesser extent, from product development agreements and manufacturing services provided to customers. We apply a five-step approach in determining the amount and timing of revenue to be recognized: (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract; and (v) recognizing revenue when the performance obligation is satisfied. We allocate the transaction price to each distinct product based on its relative stand-alone selling price. In determining the transaction price, we evaluate whether the price is subject to refund or adjustment to determine the net consideration to which we expect to be entitled.
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We recognize revenue when we satisfy a performance obligation in an amount reflecting the consideration to which we expect to be entitled. Substantially all of our revenue is recognized at the time control of the products transfers to the customer. For sales agreements, we have identified the promise to transfer products, each of which is distinct, to be the performance obligation. For product development agreements, we have identified the completion of a service defined in the agreement to be the performance obligation. We recognize revenue from manufacturing services when we satisfy the performance obligation by transferring the promised goods or services to the customer. Depending on the terms of the applicable contractual agreement with the customer, revenue is recognized at the point in time when the customer obtains control of the promised goods or service, or over time when the created asset has no alternate use to us and there is an enforceable right to payment for the performance to date.
Sales to certain distributors, primarily those with ship and credit rights, can be subject to price adjustment on certain products. We develop an estimate of their expected claims under the ship and credit program based on the historical claims data submitted by product and customer and expected future claims, which requires the use of estimates and assumptions related to the amount of each claim as well as the historical period used to develop the estimate. Although payment terms vary, most distributor agreements require payment within 30 days.
Our direct customers do not have the right to return products other than pursuant to the provisions of our standard warranty. Sales to distributors, however, are typically made pursuant to agreements that provide return rights and stock rotation provisions permitting limited levels of product returns. Provisions for discounts and rebates to customers, estimated returns and allowances, ship and credit claims and other adjustments are provided for in the same period the related revenue is recognized, and are netted against revenue. For non-quality related returns, we recognize a related asset for the right to recover returned products with a corresponding reduction to cost of goods sold. Payment terms for direct customers generally require payment within 30 days but can extend up to 90 days. We record a reserve for cash discounts as a reduction to accounts receivable and a reduction to revenue, based on the experience with each customer.
Inventories . We carry our inventories at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value and record provisions for potential excess and obsolete inventories based upon a regular analysis of inventory on hand compared to historical and projected end-user demand. The determination of projected end‑user demand requires updated assumptions regarding customer requirements, market conditions, product transition plans, projected unit sales, and impacts from restructuring‑related strategic changes. These provisions can influence our results from operations. For example, when demand falls for a given part, all or a portion of the related inventory that is considered to be in excess of anticipated demand is reserved, impacting our cost of revenue and gross profit. The majority of product inventory that has been previously reserved is ultimately discarded. Although we do sell some products that have previously been written down, such sales have historically been consistently insignificant and the related impact on our margins has also been insignificant.
Income Taxes. Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which we cannot conclude that it is more likely than not that such deferred tax assets will be realized.
In determining the amount of the valuation allowance, estimated future taxable income, feasible tax planning strategies, future reversals of existing temporary differences and taxable income in prior carryback years, if a carryback is permitted, are considered. If we determine it is more likely than not that all or a portion of the remaining deferred tax assets will not be realized, the valuation allowance will be increased with a charge to income tax expense. Conversely, if we determine it is more likely than not to be able to utilize all or a portion of the deferred tax assets for which a valuation allowance has been provided, the related portion of the valuation allowance will be recorded as a reduction to income tax expense.
We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax positions will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions that are more likely than not to be sustained upon audit, the second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. No tax benefit is recognized for tax positions that are not more likely than not to be sustained. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Significant judgment is required to evaluate uncertain tax positions. Evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of tax audits and effective settlement of audit issues. Changes in the recognition or measurement
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of uncertain tax positions could result in material increases or decreases in income tax expense in the period in which the change is made, which could have a material impact on our effective tax rate.
Business Combinations. We use estimates and assumptions in allocating the purchase price of acquired businesses by utilizing established valuation techniques appropriate for the technology industry to record the acquired assets and liabilities at fair value. We utilize the income approach, cost approach or market approach, depending upon which approach is the most appropriate based on the nature and reliability of available data. If the income approach is used, the fair value determination is predicated upon the value of the future cash flows that an asset is expected to generate over its economic life and involves significant assumptions as to cash flows, associated expenses, long-term growth rates and discount rates. The cost approach takes into account the cost to replace (or reproduce) the asset and involves assumptions relating to the asset's value of physical, functional and/or economic obsolescence that has occurred with respect to the asset. The market approach is used to estimate value from an analysis of actual transactions or offerings for economically comparable assets available as of the valuation date. Determining the fair value of acquired technology assets is judgmental in nature and requires the use of significant estimates and assumptions, including the discount rate, revenue growth rates, projected gross margins, and estimated research and development expenses.
Impairment of Goodwill and Long-Lived Assets:
Goodwill
We evaluate our goodwill for potential impairment annually during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Our impairment evaluation consists of a qualitative assessment, and if deemed necessary, a quantitative test is performed which compares the fair value of a reporting unit with its carrying amount, including goodwill.
Determining the fair value of our reporting units is subjective in nature and involves the use of significant estimates and assumptions, including projected net cash flows, discount and long-term growth rates. We determine the fair value of our reporting units based on an income approach, whereby the fair value of the reporting unit is derived from the present value of estimated future cash flows. The assumptions about estimated cash flows include factors such as future revenue, gross profit, operating expenses, and industry trends. We consider historical rates and current market conditions when determining the discount and long-term growth rates to use in our analysis. We consider other valuation methods, such as the cost approach or market approach, if it is determined that these methods provide a more representative approximation of fair value.
Long-Lived Assets Held and Used
We evaluate the recoverability of the carrying amount of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset group may not be fully recoverable. For assets to be held and used, we group a long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Estimates of future cash flows used to test the recoverability of a long-lived asset group include only the future cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group. A potential impairment charge is evaluated when the undiscounted expected cash flows derived from an asset group are less than its carrying amount. Impairment losses, if applicable, are measured as the amount by which the carrying value of an asset group exceeds its fair value. Judgment is used when applying these impairment rules to determine the timing of the impairment test, the undiscounted cash flows used to assess impairments and the fair value of the asset group.
Assets Held-for-Sale
We classify assets as held-for-sale in the period when all of the following conditions are met: (i) management, having the authority to approve the action, commits to a plan to sell the assets; (ii) the assets are available for immediate sale in their present condition subject only to terms that are usual and customary for sales of such assets; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (iv) the sale of the assets is probable, and transfer of the assets is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the assets beyond one year; (v) the assets are being actively marketed for sale at a price that is reasonable in relation to their current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company evaluates the probability of sale within one year, considering current market conditions for semiconductor equipment and the status of active marketing efforts. If disposal does not occur within 12 months, the Company reassesses whether delays are caused by factors outside its control.
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The assets that are classified as held-for-sale are initially measured at the lower of their carrying value or fair value less any costs to sell. The determination of the fair value less costs to sell may require management to make judgments on significant estimates and assumptions including, but not limited to, indicative sales values, current market conditions and available data for transactions for similar assets. We may use third-party valuation specialists to assist in the determination of such estimates. Any impairment loss resulting from this measurement is recorded in Restructuring, asset impairments and other, net on the Consolidated Statements of Operations and the assets held-for-sale are recorded as a separate line within the Consolidated Balance Sheets. Gains or losses are not recognized on assets held-for-sale until the sale date, when control transfers to the counterparty.
Contingencies . We are involved in a variety of legal matters that arise in the normal course of business. Based on the available information, we evaluate the relevant range and likelihood of potential outcomes and we record the appropriate liability when the amount is deemed probable and reasonably estimable.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 4: ''Recent Accounting Pronouncements and Other Developments'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to financial market risks, including changes in interest rates and foreign currency exchange rates. To mitigate these risks, we utilize derivative financial instruments. We do not use derivative financial instruments for speculative or trading purposes.
As of December 31, 2025, our gross long-term debt totaled $3,004.9 million. We have no interest rate exposure to rate changes on our fixed rate debt, which totaled $3,004.9 million. We would have interest rate exposure with respect to our Revolving Credit Facility, however, there were no borrowings outstanding on the Revolving Credit Facility as of December 31, 2025. If we had not repaid the outstanding balance on the Revolving Credit Facility on December 31, 2025, we estimate a 50-basis point increase in interest rates would have impacted our expected annual interest expense for the next 12 months by approximately $1.9 million.
To ensure the adequacy and effectiveness of our foreign exchange hedge positions, we continually monitor our foreign exchange forward positions. However, given the inherent limitations of forecasting and the anticipatory nature of exposures intended to be hedged, we cannot provide any assurances that such programs will offset more than a portion of the adverse financial impact resulting from unfavorable movements in foreign exchange rates.
We are subject to risks associated with transactions that are denominated in currencies other than our functional currencies, as well as the effects of translating amounts denominated in a foreign currency to the U.S. dollar as a normal part of the reporting process. Some of our Japanese operations utilize Japanese yen as the functional currency, which results in a translation adjustment that is included as a component of accumulated other comprehensive income.
We enter into forward foreign currency contracts that economically hedge the gains and losses generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency. Changes in the fair value of these undesignated hedges are recognized in other income and expense immediately as an offset to the changes in the fair value of the assets or liabilities being hedged. The notional amount of foreign exchange contracts at December 31, 2025 and 2024 was $190.5 million and $256.8 million, respectively.
Substantially all of our revenue is transacted in U.S. dollars. However, a significant amount of our operating expenditures and capital purchases are transacted in local currencies, including Chinese renminbi, Czech koruna, euro, Japanese yen, Korean won, Malaysian ringgit, Philippine peso and Vietnamese dong. Due to the materiality of our transactions in these local currencies, our results are impacted by changes in currency exchange rates measured against the U.S. dollar. For example, we determined that based on a hypothetical weighted-average change of 10% in currency exchange rates, our operating income would have impacted our income before taxes by approximately $102.3 million for the year ended December 31, 2025, assuming no offsetting hedge position or correlated activities.
See Note 15: ''Financial Instruments'' in the notes to the audited consolidated financial statements included elsewhere in this Form 10-K for further information with respect to our hedging activity.
50
Item 8. Financial Statements and Supplementary Data
Our consolidated Financial Statements listed in the index appearing under Part IV, Item 15(a)(1) of this Form 10-K and the Financial Statement Schedule listed in the index appearing under Part IV, Item 15(a)(2) of this Form 10-K are filed as part of this Form 10-K and are incorporated herein by reference in this Item 8.
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
58
Financial Statements:
Consolidated Balance Sheets
60
Consolidated Statements of Operations and Comprehensive Income
61
Consolidated Statements of Stockholders' Equity
62
Consolidated Statements of Cash Flows
64
Notes to Consolidated Financial Statements
65
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures .
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered in this Form 10-K, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer, to allow timely decisions regarding disclosure.
Changes in Internal Control Over Financial Reporting.
We also carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended December 31, 2025.
There have been no changes to our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management's Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework 2013 . Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2025.
The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in "Exhibits and Financial Statement Schedules" of this Form 10-K.
51
Item 9B . Other Information
Insider Trading Arrangements
During the quarter ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as those terms are defined in Item 408 of Regulation S-K), except as follows:
• Thad Trent , our Executive Vice President and Chief Financial Officer , adopted a Rule 10b5-1 trading arrangement on November 7, 2025 . Under this arrangement, a total of 150,000 shares of our common stock may be sold, subject to certain conditions, before the plan expires on December 31, 2026 .
The above arrangements are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information under the heading "Information about Our Executive Officers" in this Form 10-K is incorporated by reference into this section. Information concerning directors and persons nominated to become directors and executive officers is incorporated by reference from the text under the captions "The Board of Directors and Corporate Governance" and "Miscellaneous Information" in our Proxy Statement to be filed pursuant to Regulation 14A within 120 days after our fiscal year ended December 31, 2025 in connection with our 2026 Annual Meeting of Stockholders ("Proxy Statement").
Insider Trading Policy
Information regarding our insider trading policy is incorporated by reference from the text under the caption "Insider Trading Policy" in our Proxy Statement.
Code of Business Conduct
Information concerning our Code of Business Conduct is incorporated by reference from the text under the caption "The Board of Directors and Corporate Governance" in our Proxy Statement.
Item 11. Executive Compensation
Information concerning executive compensation is incorporated by reference from the text under the captions "The Board of Directors and Corporate Governance — 2025 Compensation of Directors" and "Compensation of Executive Officers" (excluding the information under the subheading “2025 Pay versus Performance”) in our Proxy Statement.
The information incorporated by reference under the caption "Compensation of Executive Officers — Compensation Committee Report" in our Proxy Statement shall be deemed furnished, and not filed, in this Form 10-K and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act as a result of this furnishing, except to the extent that we specifically incorporate it by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information concerning security ownership of certain beneficial owners and management is incorporated by reference from the text under the captions "Stock Ownership — Principal Stockholders," "Stock Ownership — Share Ownership of Directors and Executive Officers" and "Stock Ownership — Equity Compensation Plan Information" in our Proxy Statement.
52
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information concerning certain relationships and related transactions involving us and certain others is incorporated by reference from the text under the caption "The Board of Directors and Corporate Governance" in our Proxy Statement.
Item 14. Principal Accountant Fees and Services
Information concerning principal accounting fees and services is incorporated by reference from the text under the caption "Audit Committee Matters" in our Proxy Statement.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Consolidated Financial Statements:
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )
58
Financial Statements:
Consolidated Balance Sheets
60
Consolidated Statements of Operations and Comprehensive Income
61
Consolidated Statements of Stockholders' Equity
62
Consolidated Statements of Cash Flows
64
Notes to Consolidated Financial Statements
65
(2) Consolidated Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2025, 2024 and 2023
108
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or related notes.
(3) Exhibits:
53
EXHIBIT INDEX*
Exhibit No. Exhibit Description
2.1 Stock Purchase Agreement, dated as of December 9, 2024, by and between United Silicon Carbide, Inc., Qorvo US, Inc., Semiconductor Components Industries, LLC and solely for the purposes of Article V and Section 6.15 thereto, ON Semiconductor Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 10, 2024)
3.1(a) Certificate of Incorporation of ON Semiconductor Corporation, as further amended through March 26, 2008 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 7, 2008)
3.1(b) Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated May 28, 2014 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 3, 2014)
3.1(c) Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated May 17, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 7, 2017)
3.2 By-Laws of ON Semiconductor Corporation as Amended and Restated on August 19, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 25, 2022)
4.1 Specimen of share certificate of Common Stock, par value $0.01, ON Semiconductor Corporation (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed with the Commission on March 10, 2004)
4.2(a) Indenture, dated as of August 21, 2020, among ON Semiconductor Corporation, the guarantors party thereto and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 21, 2020)
4.2(b) Form of Global 3.875% Senior Note due 2028 (included in Exhibit 4.2(a))
4.3(a) Indenture, dated as of May 14, 2021, among the Company, the guarantors party thereto and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 19, 2021)
4.3(b) Form of Global 0% Convertible Senior Note due 2027 (included in Exhibit 4.3(a))
4.4(a) Indenture, dated as of February 28, 2023, among the Company, the guarantors party thereto and Computershare Trust Company, National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on March 1, 2023)
4.4(b) Form of Global 0.50% Convertible Senior Note due 2029 (included in Exhibit 4.4(a))
4.5 Description of the Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K filed with the Commission on February 6, 2023)
10.1(a) Joint Venture Contract for Leshan-Phoenix Semiconductor Company Limited, amended and restated on April 20, 2006 between SCG (China) Holding Corporation (a subsidiary of ON Semiconductor Corporation) and Leshan Radio Company Ltd. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on July 28, 2006)
10.1(b) Amendment Agreement, dated September 29, 2014, to Joint Venture Contract for Leshan-Phoenix Semiconductor Company Limited between ON Semiconductor (China) Holding, LLC (a subsidiary of ON Semiconductor Corporation) and Leshan Radio Company Ltd. (incorporated by reference to Exhibit 10.5(b) to the Company’s Annual Report on Form 10-K filed with the Commission on February 27, 2015)
10.2(a) ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (as amended and restated February 11, 2022) (incorporated by reference to Exhibit 10.7(a) to the Company’s Annual Report on Form 10-K filed with the Commission on February 14, 2022)(2)
10.2(b) Form of Annual Restricted Stock Unit Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2022 , 2023 , 2024 and 2025 ) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 2, 2022)(2)
10.2(c) Form of Annual Performance-Based Restricted Stock Unit Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2022 form agreement) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 2, 2022)(2)
54
10.2(d) Form of Annual Performance-Based Restricted Stock Unit Award Agreement under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2023 , 2024 a nd 2025 ) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 1, 2023)(2)
10.2(e) Form of Restricted Stock Award Agreement for Directors under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2022, 2023 , 2024 and 2025 ) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 1, 2022)(2)
10.2(f) Form of Restricted Stock Units Agreement for Directors under the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (2024 and 2025 form) (incorporated by reference to Exhibit 10.3(j) to the Company's Annual Report on Form 10-K filed with the Commission on February 10, 2025) (2)
10.3 ON Semiconductor Corporation 2000 Employee Stock Purchase Plan (as amended and restated effective August 16, 2024) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on October 28, 2024)(2)
10.4 Employment Agreement by and between Semiconductor Components Industries, LLC and Hassane S. El-Khoury, dated December 7, 2020 (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K filed with the Commission on February 16, 2021)(2)
10.5 Employment Agreement by and between Semiconductor Components Industries, LLC and Thad Trent, dated February 16, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 3, 2021)(2)
10.6 Form of Employment Agreement for Executive Vice Presidents/Group Presidents (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on March 4, 2024)(2)
10.7 Form of Employment Agreement for Senior Vice Presidents (Direct Reports to Chief Executive Officer) (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K filed with the Commission on February 5, 2024 (2)
10.8 Form of Indemnification Agreement with Directors and Officers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 25, 2016)(2)
10.9 onsemi Nonqualified Deferred Compensation Plan for senior officers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 22, 2024)(2)
10.10 Non-employee Director Stock Election and Deferral Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on July 29, 2024)(2)
10.11(a) Form of Confirmation for Convertible Notes Hedges related to the Company’s 0% Convertible Senior Note due 2027 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 19, 2021)
10.11(b) Form of Confirmation for Warrants related to the Company’s 0% Convertible Senior Note due 2027 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on May 19, 2021)
10.12(a) Form of Confirmation for Convertible Note Hedges related to the Company’s 0.50% Convertible Senior Notes due 2029 (incorporated by reference to Exhibit 10.1 to the Company’s Amendment No. 1 to Current Report on Form 8-K/A filed with the Commission on March 2, 2023)
10.12(b) Form of Confirmation for Warrants related to the Company’s 0.50% Convertible Senior Notes due 2029 (incorporated by reference to Exhibit 10.2 to the Company’s Amendment No. 1 to Current Report on Form 8-K/A filed with the Commission on March 2, 2023)
10.13(a) Credit Agreement, dated as of June 22, 2023, by and among ON Semiconductor Corporation, as borrower, the several lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, JPMorgan Chase Bank, N.A., Bank of America, N.A., Barclays Bank PLC, BMO Capital Markets, Corp., BNP Paribas Securities Corp., Citibank, N.A., Credit Agricole Corporate and Investment Bank, Deutsche Bank Securities, Inc., Goldman Sachs Bank USA, HSBC Securities (USA) N.A., Morgan Stanley Senior Funding, Inc., MUFG Bank, LTD, PNC Bank, National Association and Sumitomo Mitsui Banking Corporation, as joint lead arrangers and joint bookrunners and BMO Capital Markets, as sustainability structuring agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 26, 2023)
10.13(b) Guarantee Agreement, dated as of June 22, 2023, among the signatories thereto, as grantors, in favor of JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 26, 2023)
10.13(c) Security Agreement, dated as of June 22, 2023, among ON Semiconductor Corporation and the other signatories thereto in favor of JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated June 26, 2023)
55
10.14(a) Master Framework Agreement, dated as of September 23, 2025, by and between Semiconductor Components Industries, LLC, and Ningbo Aura Semiconductor Co., Ltd., Aura Semiconductor Pvt. Ltd., Shaoxing Yuanfang Semiconductor Co. Ltd., Aura Semiconductor Limited and Aim Core Holdings Limited (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on September 23, 2025)†
10.14(b) Form of Support Services Agreement, by and between Semiconductor Components Industries, LLC and Ningbo Aura Semiconductor Co., Ltd., Aura Semiconductor Pvt. Ltd., Shaoxing Yuanfang Semiconductor Co. Ltd. and Aura Semiconductor Limited (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on September 23, 2025)†
19.1 onsemi Insider Trading Policy, as amended and restated as of November 16, 2023 (incorporated by reference to Exhibit 19.1 to the Company's Annual Report on Form 10-K filed with the C ommission on February 10, 2025)†
21.1 List of Significant Subsidiaries(1)
23.1 Consent of Independent Registered Public Accounting Firm-PricewaterhouseCoopers LLP(1)
24.1 Powers of Attorney(1)
31.1 Certification by CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1)
31.2 Certification by CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1)
32 Certification by CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(3)
97 onsemi Dodd-Frank Compensation Recovery Policy (incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K filed with the Commission on February 5, 2024)
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document and contained in Exhibit 101.
* Reports filed under the Securities Exchange Act (Form 10-K, Form 10-Q and Form 8-K) are filed under File No. 000-30419 and File No. 001-39317.
† Schedules or portions of this exhibit have been redacted pursuant to Item 601 of Regulation S-K and, upon request by the SEC, onsemi agrees to furnish supplementally to the SEC a copy of any omitted schedule or exhibit.
(1) Filed herewith.
(2) Management contract or compensatory plan, contract or arrangement.
(3) Furnished herewith.
Item 16 . Form 10-K Summary
None.
56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 9, 2026 ON Semiconductor Corporation
By: /s/ HASSANE EL-KHOURY
Name: Hassane El-Khoury
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Titles Date
/s/ HASSANE EL-KHOURY President, Chief Executive Officer
and Director February 9, 2026
Hassane El-Khoury (Principal Executive Officer)
/s/ THAD TRENT Executive Vice President and Chief Financial Officer February 9, 2026
Thad Trent (Principal Financial and Accounting Officer)
* Chair of the Board of Directors February 9, 2026
Alan Campbell
* Director February 9, 2026
Susan K. Carter
* Director February 9, 2026
Thomas L. Deitrich
* Director February 9, 2026
Bruce E. Kiddoo
* Director February 9, 2026
Paul A. Mascarenas
* Director February 9, 2026
Gregory L. Waters
* Director February 9, 2026
Christine Y. Yan
*By: /s/ THAD TRENT Attorney-in-Fact February 9, 2026
Thad Trent
57
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of ON Semiconductor Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of ON Semiconductor Corporation and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
58
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Inventories
As described in Notes 2 and 8 to the consolidated financial statements, the Company’s inventory balance of $1,989.6 million as of December 31, 2025, is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value. Management writes down excess and obsolete inventories based upon a regular analysis of inventory on hand compared to historical and projected end-user demand.
The principal considerations for our determination that performing procedures relating to the valuation of inventories is a critical audit matter are the significant judgment by management in developing the write down for excess and obsolete inventories. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate the reasonableness of management’s analysis, including the inputs utilized and the significant assumptions related to projected end-user demand employed within the analysis.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of inventories. These procedures also included, among others (i) testing management’s process for developing the write down for excess and obsolete inventories, (ii) evaluating the appropriateness of the analysis, and (iii) evaluating the reasonableness of the significant assumptions related to projected end-user demand used by management in developing the write down for excess and obsolete inventories. Evaluating the reasonableness of the assumptions related to projected end user demand involved considering the performance of product sales and whether they were consistent with evidence obtained in other areas of the audit.
/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
February 9, 2026
We have served as the Company’s auditor since 1999.
59
Table of Contents
ON SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
December 31,
2025 December 31,
2024
Assets
Cash and cash equivalents $ 2,147.6 $ 2,691.3
Short-term investments 400.0 300.0
Receivables, net 908.0 1,160.1
Inventories 1,989.6 2,242.0
Assets held-for-sale 25.0 5.3
Other current assets 352.9 353.3
Total current assets 5,823.1 6,752.0
Property, plant and equipment, net 3,369.0 4,361.4
Goodwill 1,679.9 1,587.9
Intangible assets, net 343.9 257.9
Deferred tax assets 929.1 729.9
ROU financing lease assets 23.1 40.5
Other assets 356.0 360.2
Total assets $ 12,524.1 $ 14,089.8
Liabilities and Stockholders’ Equity
Accounts payable $ 572.3 $ 574.5
Accrued expenses and other current liabilities 714.9 760.0
Current portion of financing lease liabilities 0.5 0.3
Total current liabilities 1,287.7 1,334.8
Long-term debt 2,980.5 3,345.9
Deferred tax liabilities 41.7 37.6
Long-term financing lease liabilities 23.8 20.7
Other long-term liabilities 498.5 536.3
Total liabilities 4,832.2 5,275.3
Commitments and contingencies (Note 13)
ON Semiconductor Corporation stockholders’ equity:
Common stock ($ 0.01 par value, 1,250,000,000 shares authorized, 624,962,201 and 622,655,553 shares issued, 396,740,551 and 422,955,173 shares outstanding, respectively)
6.2 6.2
Additional paid-in capital 5,538.6 5,372.2
Accumulated other comprehensive loss ( 55.5 ) ( 62.4 )
Accumulated earnings 8,241.9 8,120.9
Less: Treasury stock, at cost; 228,221,650 and 199,700,380 shares, respectively
( 6,057.9 ) ( 4,640.5 )
Total ON Semiconductor Corporation stockholders’ equity 7,673.3 8,796.4
Non-controlling interest 18.6 18.1
Total stockholders' equity 7,691.9 8,814.5
Total liabilities and stockholders' equity $ 12,524.1 $ 14,089.8
See accompanying notes to consolidated financial statements
60
Table of Contents
ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions, except per share data)
Year ended December 31,
2025 2024 2023
Revenue $ 5,995.4 $ 7,082.3 $ 8,253.0
Cost of revenue 4,011.5 3,866.2 4,369.5
Gross profit 1,983.9 3,216.1 3,883.5
Operating expenses:
Research and development 583.6 612.7 577.3
Selling and marketing 255.9 273.5 279.1
General and administrative 348.9 376.3 362.4
Amortization of intangible assets 44.4 52.0 51.1
Restructuring, asset impairments and other, net 666.9 133.9 74.9
Total operating expenses 1,899.7 1,448.4 1,344.8
Operating income 84.2 1,767.7 2,538.7
Other income (expense), net:
Interest expense ( 70.9 ) ( 62.3 ) ( 74.8 )
Interest income 95.1 111.4 93.1
Loss on debt refinancing and prepayment — — ( 13.3 )
Loss on divestiture of businesses — — ( 0.7 )
Other income (expense), net 22.9 20.6 ( 7.2 )
Other income (expense), net 47.1 69.7 ( 2.9 )
Income before income taxes 131.3 1,837.4 2,535.8
Income tax provision ( 7.7 ) ( 262.8 ) ( 350.2 )
Net income 123.6 1,574.6 2,185.6
Less: Net income attributable to non-controlling interest ( 2.6 ) ( 1.8 ) ( 1.9 )
Net income attributable to ON Semiconductor Corporation $ 121.0 $ 1,572.8 $ 2,183.7
Net income for diluted earnings per share of common stock (Note 10) $ 121.0 $ 1,572.8 $ 2,185.0
Net income per share of common stock attributable to ON Semiconductor Corporation:
Basic $ 0.29 $ 3.68 $ 5.07
Diluted $ 0.29 $ 3.63 $ 4.89
Weighted-average shares of common stock outstanding:
Basic 411.0 427.4 430.7
Diluted 411.8 432.7 446.8
Comprehensive income, net of tax:
Net income $ 123.6 $ 1,574.6 $ 2,185.6
Foreign currency translation adjustments 0.4 ( 3.4 ) ( 2.1 )
Effects of cash flow hedges 6.5 ( 13.8 ) ( 19.9 )
Other comprehensive income (loss), net of tax 6.9 ( 17.2 ) ( 22.0 )
Comprehensive income 130.5 1,557.4 2,163.6
Comprehensive income attributable to non-controlling interest ( 2.6 ) ( 1.8 ) ( 1.9 )
Comprehensive income attributable to ON Semiconductor Corporation $ 127.9 $ 1,555.6 $ 2,161.7
See accompanying notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions, except share data)
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Treasury Stock Non-Controlling Interest
Number of shares At Par Value Accumulated Earnings Number of shares At Cost Total Equity
Balance at December 31, 2022 608,367,713 $ 6.1 $ 4,670.9 $ ( 23.2 ) $ 4,364.4 ( 176,431,298 ) $ ( 2,829.7 ) $ 18.5 $ 6,207.0
Shares issued pursuant to the ESPP 387,770 — 25.7 — — — — — 25.7
RSUs released and stock grant awards issued 2,433,671 — — — — — — — —
Warrants and bond hedges, net - 0 % Notes
— — ( 171.5 ) — — — — — ( 171.5 )
Tax impact of convertible notes, warrants and bond hedges, net — — 92.3 — — — — — 92.3
Partial settlement - 0 % Notes
794 — — — — — — — —
Partial settlement of bond hedges - 0 % Notes
— — 0.1 — — ( 785 ) ( 0.1 ) — —
Partial settlement of warrants - 0 % Notes
179 — — — — — — — —
Partial settlement - 1.625 % Notes
5,091,710 0.1 ( 0.1 ) — — — — — —
Partial settlement of bond hedges - 1.625 % Notes
— — 472.4 — — ( 5,091,752 ) ( 472.4 ) — —
Partial settlement of warrants - 1.625 % Notes
159 — — — — — — — —
Payment of tax withholding for RSUs — — — — — ( 805,107 ) ( 67.1 ) — ( 67.1 )
Share-based compensation — — 121.1 — — — — — 121.1
Repurchase of common stock — — — — — ( 7,566,628 ) ( 568.1 ) — ( 568.1 )
Dividend to non-controlling shareholder — — — — — — — ( 2.4 ) ( 2.4 )
Comprehensive income (loss) — — — ( 22.0 ) 2,183.7 — — 1.9 2,163.6
Balance at December 31, 2023 616,281,996 6.2 5,210.9 ( 45.2 ) 6,548.1 ( 189,895,570 ) ( 3,937.4 ) 18.0 7,800.6
Shares issued pursuant to the ESPP 435,407 — 25.2 — — — — — 25.2
RSUs released and stock grant awards issued 1,909,867 — — — — — — — —
Partial settlement - 0 % Notes
53 — — — — — — — —
Settlement of warrants - 0 % Notes
14 — — — — — — — —
Settlement of warrants - 1.625 % Notes
4,028,216 — — — — — — — —
Payment of tax withholding for RSUs — — — — — ( 676,539 ) ( 50.8 ) — ( 50.8 )
Share-based compensation — — 136.1 — — — — — 136.1
Repurchase of common stock — — — — — ( 9,128,271 ) ( 652.3 ) — ( 652.3 )
Dividend to non-controlling shareholder — — — — — — — ( 1.7 ) ( 1.7 )
Comprehensive income (loss) — — — ( 17.2 ) 1,572.8 — — 1.8 1,557.4
Balance at December 31, 2024 622,655,553 6.2 5,372.2 ( 62.4 ) 8,120.9 ( 199,700,380 ) ( 4,640.5 ) 18.1 8,814.5
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Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Treasury Stock Non-Controlling Interest
Number of shares At Par Value Accumulated Earnings Number of shares At Cost Total Equity
Shares issued pursuant to the ESPP 584,257 — 22.1 — — — — — 22.1
RSUs released and stock grant awards issued 1,722,388 — — — — — — — —
Partial settlement - 0 % Notes
2 — — — — — — — —
Settlement of warrants - 0 % Notes
1 — — — — — — — —
Payment of tax withholding for RSUs — — — — — ( 595,259 ) ( 29.1 ) — ( 29.1 )
Share-based compensation — — 144.3 — — — — — 144.3
Repurchase of common stock — — — — — ( 27,926,011 ) ( 1,388.3 ) — ( 1,388.3 )
Dividend to non-controlling shareholder — — — — — — — ( 2.1 ) ( 2.1 )
Comprehensive income — — — 6.9 121.0 — — 2.6 130.5
Balance at December 31, 2025 624,962,201 $ 6.2 $ 5,538.6 $ ( 55.5 ) $ 8,241.9 ( 228,221,650 ) $ ( 6,057.9 ) $ 18.6 $ 7,691.9
See accompanying notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year ended December 31,
2025 2024 2023
Cash flows from operating activities:
Net income $ 123.6 $ 1,574.6 $ 2,185.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 686.0 642.9 609.5
Loss on sale or disposal of property, plant and equipment 0.8 5.5 11.6
Loss on divestiture of businesses — — 0.7
Loss on debt refinancing and prepayment — — 13.3
Amortization of debt discount and issuance costs 11.4 11.1 11.3
Share-based compensation 144.3 136.1 121.1
Non-cash asset impairment charges 496.0 37.8 19.5
Change in deferred tax balances ( 193.7 ) ( 129.6 ) ( 127.7 )
Other ( 1.6 ) 10.0 ( 4.7 )
Changes in assets and liabilities (exclusive of acquisitions):
Receivables 163.5 ( 244.3 ) ( 112.8 )
Inventories 273.4 ( 129.6 ) ( 495.2 )
Other assets 89.6 107.0 0.7
Accounts payable 136.9 ( 62.5 ) ( 91.7 )
Accrued expenses and other current liabilities ( 102.7 ) 62.2 ( 178.6 )
Other long-term liabilities ( 67.7 ) ( 114.8 ) 14.9
Net cash provided by operating activities 1,759.8 1,906.4 1,977.5
Cash flows from investing activities:
Payments for acquisition of property, plant and equipment ( 341.2 ) ( 694.0 ) ( 1,539.1 )
Proceeds from sale of property, plant and equipment and assets held-for-sale 32.2 6.2 4.0
Payments related to acquisition of business, net of cash acquired ( 124.5 ) ( 20.5 ) ( 236.3 )
Purchase of short-term investments and available-for-sale securities ( 1,050.0 ) ( 1,050.0 ) —
Proceeds from maturity of short-term investments and available-for-sale securities 950.0 750.0 33.5
Other ( 5.0 ) ( 1.5 ) —
Net cash used in investing activities ( 538.5 ) ( 1,009.8 ) ( 1,737.9 )
Cash flows from financing activities:
Proceeds for the issuance of common stock under the ESPP 22.1 25.2 25.8
Payment of tax withholding for RSUs ( 29.1 ) ( 51.0 ) ( 66.8 )
Repurchase of common stock ( 1,377.6 ) ( 654.1 ) ( 564.2 )
Issuance and borrowings under debt agreements — — 1,845.0
Repayment of borrowings under debt agreements ( 375.0 ) — ( 1,723.4 )
Payment on principal portion of finance lease obligations ( 1.7 ) ( 2.2 ) ( 15.3 )
Payment for purchase of bond hedges — — ( 414.0 )
Proceeds from issuance of warrants — — 242.5
Other ( 2.5 ) ( 1.7 ) ( 16.1 )
Net cash used in financing activities ( 1,763.8 ) ( 683.8 ) ( 686.5 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1.9 ) ( 4.4 ) ( 1.1 )
Net increase (decrease) in cash, cash equivalents and restricted cash ( 544.4 ) 208.4 ( 448.0 )
Cash, cash equivalents and restricted cash, beginning of period (Note 18) 2,693.4 2,485.0 2,933.0
Cash, cash equivalents and restricted cash, end of period (Note 18) $ 2,149.0 $ 2,693.4 $ 2,485.0
See accompanying notes to consolidated financial statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Background and Basis of Presentation
ON Semiconductor Corporation, with its wholly and majority-owned subsidiaries ("onsemi" or the "Company"), operates under the onsemi TM brand, and prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company is organized into three operating and reportable segments: the Power Solutions Group ("PSG"), the Analog and Mixed-Signal Group ("AMG") and the Intelligent Sensing Group ("ISG").
Note 2: Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the assets, liabilities, revenue and expenses of all wholly-owned and majority-owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest or is the primary beneficiary. Investments in affiliates where the Company does not exert a controlling financial interest are not consolidated. All intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. Significant estimates have been used by management in conjunction with the following: (i) calculation of future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) measurement of valuation allowances against deferred tax assets, and evaluations of uncertain tax positions; (iv) assumptions used in business combinations and the valuation of assets held-for-sale; and (v) testing for impairment of long-lived assets and goodwill. Actual results may differ from the estimates and assumptions used in the consolidated financial statements.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and highly liquid investments with original maturities at the time of purchase of three months or less. The Company maintains amounts on deposit at various financial institutions, which may at times exceed federally insured limits. However, management periodically evaluates the credit-worthiness of those institutions and has not experienced any losses on such deposits.
Short-Term Investments
Short-term investments are comprised of time deposits with original maturities of greater than three months at the time of purchase. Interest on these investments are included within Interest income.
Inventories
Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value. General market conditions, as well as the Company's design activities, can cause certain of its products to become obsolete. The Company writes down excess and obsolete inventories based upon a regular analysis of inventory on hand compared to historical and projected end-user demand. The determination of projected end‑user demand requires updated assumptions regarding customer requirements, market conditions, product transition plans, projected unit sales, and impacts from restructuring‑related strategic changes. These write downs can influence results from operations. For example, when demand for a given part falls, all or a portion of the related inventory that is considered to be in excess of anticipated demand is written down, impacting cost of revenue and gross profit. The majority of product inventory that has been previously written down is ultimately discarded. Although the Company does sell some products that have previously been written down, such sales have historically been consistently insignificant and the related impact on the Company's gross profit has also been insignificant. During 2025, the Company revised certain demand forecasts in connection with restructuring initiatives and changes in product roadmaps, which contributed to elevated inventory charges (see Note 7: ''Restructuring, Asset Impairments and Other, net'').
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Property, Plant and Equipment
Property, plant and equipment are recorded at cost and are depreciated over estimated useful lives of 30 years for buildings and 3 - 20 years for computers, machinery and equipment using straight-line methods. Expenditures for maintenance and repairs are charged to operations in the period in which the expenses are incurred. When assets are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized.
Long-Lived Assets Held and Used
The Company evaluates the recoverability of the carrying amount of its long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset group may not be fully recoverable. For assets to be held and used, the Company groups a long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Estimates of future cash flows used to test the recoverability of a long-lived asset group include only the future cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group. A potential impairment charge is evaluated when the undiscounted expected cash flows derived from an asset group are less than its carrying amount. Impairment losses, if applicable, are measured as the amount by which the carrying value of an asset group exceeds its fair value. Judgment is used when applying these impairment rules to determine the timing of the impairment test, the undiscounted cash flows used to assess impairments and the fair value of the asset group.
Assets Held-for-Sale
The Company classifies assets as held-for-sale in the period when all of the following conditions are met: (i) management, having the authority to approve the action, commits to a plan to sell the assets; (ii) the assets are available for immediate sale in their present condition subject only to terms that are usual and customary for sales of such assets; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (iv) the sale of the assets is probable, and transfer of the assets is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company's control extend the period of time required to sell the assets beyond one year; (v) the assets are being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company evaluates the probability of sale within one year, considering current market conditions for semiconductor equipment and the status of active marketing efforts. If disposal does not occur within 12 months, the Company reassesses whether delays are caused by factors outside its control.
The assets that are classified as held-for-sale are initially measured at the lower of their carrying value or fair value less any costs to sell. The determination of the fair value less costs to sell may require management to make judgments on significant estimates and assumptions including, but not limited to, indicative sales values, current market conditions and available data for transactions for similar assets. The Company may use third-party valuation specialists to assist in the determination of such estimates. Any impairment loss resulting from this measurement is recorded in Restructuring, asset impairments and other, net on the Consolidated Statements of Operations and the assets held-for-sale are recorded as a separate line within the Consolidated Balance Sheets. Gains or losses are not recognized on assets held-for-sale until the sale date, when control transfers to the counterparty.
The fair values of assets less any costs to sell are assessed each reporting period for which they remain classified as held-for-sale, and any subsequent change is reported as an adjustment to the carrying value of the assets, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held-for-sale.
Business Combination Purchase Price Allocation
The allocation of the purchase price of business combinations is based on management estimates and assumptions, which utilize established valuation techniques appropriate for the technology industry. These techniques include the income approach, cost approach or market approach, depending upon which approach is the most appropriate based on the nature and reliability of available data. Management records the acquired assets and liabilities at fair value. If the income approach is used, the fair value determination is predicated upon the value of the future cash flows that an asset is expected to generate over its economic life. The cost approach takes into account the cost to replace (or reproduce) the asset and the effects on the asset's value of
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physical, functional and/or economic obsolescence that has occurred with respect to the asset. The market approach is used to estimate value from an analysis of actual market transactions or offerings for economically comparable assets available as of the valuation date. Determining the fair value of acquired technology assets is judgmental in nature and requires the use of significant estimates and assumptions, including the discount rate, revenue growth rates, projected gross margins, and estimated research and development and other operating expenses.
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination. The Company evaluates its goodwill for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of a reporting unit may not be recoverable. The Company’s divisions are one level below the operating segments, constituting individual businesses, at which level the Company’s segment management conducts regular reviews of the operating results. The Company's divisions, either individually or in a combination, constitute reporting units for purposes of allocating and testing goodwill.
The Company's impairment evaluation consists of a qualitative assessment. If this assessment indicates that it is more likely than not the estimated fair value of a reporting unit exceeds its carrying value, goodwill is not considered impaired. Otherwise, a quantitative impairment test is performed by comparing the fair value of a reporting unit to its carrying value, including goodwill. The Company can bypass the qualitative assessment for any period and proceed directly to the quantitative impairment test. If the carrying value of the net assets associated with the reporting unit exceeds the fair value of the reporting unit, goodwill is considered impaired and will be determined as the amount by which the reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
Determining the fair value of the Company's reporting units is subjective in nature and involves the use of significant estimates and assumptions, including projected net cash flows, discount rates and long-term growth rates. The Company determines the fair value of its reporting units based on an income approach derived from the present value of estimated future cash flows. The assumptions about estimated cash flows include factors such as future revenue, gross profit, operating expenses and industry trends. The Company considers historical rates and current market conditions when determining the discount and long-term growth rates to use in its analysis. The Company considers other valuation methods, such as the cost approach or market approach, if it is determined that these methods provide a more representative approximation of fair value.
Intangible Assets
The Company's acquisitions have resulted in intangible assets consisting of values assigned to customer relationships, patents, developed technology, licenses, and trademarks, which are considered long-lived assets and are stated at cost less accumulated amortization. These intangible assets are amortized over their estimated useful lives and are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset group containing these assets may not be recoverable.
Leases
The Company determines if an arrangement is a lease at its inception. Operating and financing lease arrangements are comprised primarily of real estate and equipment agreements. ROU assets are included in other assets and the corresponding lease liabilities, depending on their maturity, are included in accrued expenses and other current liabilities or other long-term liabilities.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The lease term includes options to extend the lease when it is reasonably certain that the option will be exercised. Leases with a term of 12 months or less are not recorded on the Consolidated Balance Sheet.
The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date, giving consideration to publicly available data for instruments with similar characteristics. The Company accounts for the lease and non-lease components as a single lease component.
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Debt Issuance Costs
Debt issuance costs for the Company's revolving credit facilities are capitalized and amortized over the term of the facility on a straight-line basis. Amortization is included in interest expense while the unamortized balance is included in other assets.
Debt issuance costs for the Company's convertible notes, senior notes and term debt are recorded as a direct deduction from the carrying amounts of such debt, consistent with debt discounts, and are amortized over their term using the effective interest method. Amortization is included in interest expense.
Government Incentives
The Company receives government incentives for various reasons including capital expenditures, operating expenses, or to develop specific technologies, which may require the Company to meet or maintain certain metrics, and may be subject to reduction, termination, or recapture if such conditions are not met or maintained. Incentives related to the acquisition or construction of property, plant and equipment are recognized as a reduction in the cost-basis of the underlying assets with a reduction to depreciation expense based on the useful lives of the related assets. Incentives related to specific operating activities are offset against the related expense in the period the expense is incurred. Government incentives received prior to being earned are recognized in current or non-current liabilities or restricted cash, whereas incentives earned prior to being received are recognized in current or non-current receivables. Cash incentives related to operating expenses along with incentives that can offset taxes payable are included in operating activities, while cash received related to the acquisition of property, plant, and equipment are included in investing activities in the Consolidated Statements of Cash Flows.
When indicators of impairment are identified for assets associated with government incentives, the Company evaluates whether the impairment, expected change in use, or revised cash‑flow projections result in a probable and estimable repayment obligation under the relevant incentive agreements. Any expected repayment obligation is recognized as a liability and recorded as an adjustment to the impairment charge in the period in which the obligation becomes probable and reasonably estimable.
Contingencies
The Company is involved in a variety of legal and IP matters and environmental, financing and indemnification contingencies that arise in the ordinary course of business. Based on the information available, management evaluates the relevant range and likelihood of potential outcomes and records the appropriate liability when the amount is deemed probable and reasonably estimable.
Treasury Stock
Treasury stock is recorded at cost, inclusive of fees, commissions and other expenses, when outstanding common shares are repurchased, when bond hedges issued in connection with the convertible notes are settled and when outstanding shares are withheld to satisfy tax withholding obligations in connection with certain shares pursuant to RSUs under the Company's share-based compensation plans. Re-issuance of shares held in treasury stock is accounted for on a first-in, first-out basis.
Revenue Recognition
The Company generates revenue from sales of its semiconductor products to direct customers and distributors. The Company also generates revenue, to a much lesser extent, from product development agreements and manufacturing services provided to customers. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract; and (v) recognizing revenue when the performance obligation is satisfied. The Company allocates the transaction price to each distinct product based on its relative stand-alone selling price. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled.
Revenue is recognized when the Company satisfies a performance obligation in an amount reflecting the consideration to which it expects to be entitled. For sales agreements, the Company has identified the promise to transfer products, each of which is distinct, as the performance obligation. The Company recognizes revenue from sales agreements upon transferring control of a product to the customer, which typically occurs when products are shipped or delivered, depending on the delivery terms, or when products that are consigned at customer locations are consumed. Revenue is also recognized over time for products with
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
no alternative use and an enforceable right to payment as they are manufactured, which represents a contract asset. The Company can receive cash payments from customers in advance of the performance obligation being satisfied, which represents a contract liability. Contract liabilities are recognized as revenue when the performance obligations are satisfied.
Frequently, the Company receives orders with multiple delivery dates that may extend across reporting periods. Each delivery constitutes an individual performance obligation, which consists of transferring control of the products to the customers based on their stand-alone selling price. The Company invoices the customer for each delivery upon shipment and recognizes revenue in accordance with delivery terms. As scheduled delivery dates are within one year , revenue allocated to future shipments of partially completed contracts is not disclosed.
For product development agreements, the Company has identified the completion of a service defined in the agreement as the performance obligation. The Company recognizes revenue from product development agreements over time based on the cost-to-cost method. The Company recognizes revenue from manufacturing services when it satisfies the performance obligation by transferring the promised goods or services to the customer. Depending on the terms of the applicable contractual agreement with the customer, revenue is recognized at the point in time when the customer obtains control of the promised goods or service, or over time when the created asset has no alternate use to the Company and there is an enforceable right to payment for the performance to date.
Sales agreements with customers are renewable periodically and contain terms and conditions with respect to payment, delivery, warranty and supply. In the absence of a sales agreement, the Company’s standard terms and conditions apply. Payment terms for direct customers generally require payment within 30 days but can extend up to 90 days. The Company considers the customer purchase orders, governed by sales agreements or the Company’s standard terms and conditions, to be the contract with the customer. The Company evaluates certain factors including the customer’s ability to pay (or credit risk). The Company’s direct customers do not have the right to return products, other than pursuant to the provisions of the Company’s standard warranty. Sales to distributors, however, are typically made pursuant to agreements that provide return rights and stock rotation provisions permitting limited levels of product returns. Sales to certain distributors, primarily those with ship and credit rights, can also be subject to price adjustment on certain products. Although payment terms vary, most distributor agreements require payment within 30 days. In addition, the Company offers cash discounts to certain customers for payments received within an agreed upon time, generally ten days after shipment, which is recorded as a reduction to revenue.
Sales returns and allowances, which include ship and credit reserves for distributors, are estimated based on historical claims data and expected future claims. Provisions for discounts and rebates to customers, estimated returns and allowances, ship and credit claims and other adjustments are provided for in the same period the related revenue is recognized, and are netted against revenue. The Company records freight and handling costs associated with outbound freight after control over a product has transferred to a customer as a fulfillment cost and includes it in cost of revenue. Taxes assessed by government authorities on revenue-producing transactions, including value-added and excise taxes, are presented on a net basis (excluded from revenue). The Company generally warrants that products sold to its customers will, at the time of shipment, be free from defects in workmanship and materials and conform to specifications. The Company’s standard warranty extends for a period of two years from the date of delivery, except in the case of image sensor products, which are warrantied for one year from the date of delivery. At the time revenue is recognized, the Company establishes an accrual for estimated warranty expenses associated with its sales and records them as a component of the cost of revenue.
Research and Development Costs
Research and development costs are expensed as incurred.
Income Taxes
Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which management cannot conclude that it is more likely than not that such deferred tax assets will be realized.
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In determining the amount of the valuation allowance, estimated future taxable income, feasible tax planning strategies, future reversals of existing temporary differences and taxable income in prior carryback years, if a carryback is permitted, are considered. If the Company determines it is more likely than not that all or a portion of the remaining deferred tax assets will not be realized, the valuation allowance will be increased with a charge to income tax expense. Conversely, if the Company determines it is more likely than not to be able to utilize all or a portion of the deferred tax assets for which a valuation allowance has been provided, the related portion of the valuation allowance will be recorded as a reduction to income tax expense.
The Company recognizes and measures benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that is it more likely than not that the tax positions will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions that are more likely than not to be sustained upon audit, the second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. No tax benefit is recognized for tax positions that are not more likely than not to be sustained. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Significant judgment is required to evaluate uncertain tax positions. Evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of tax audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in significant increases or decreases in income tax expense in the period in which the change is made, which could have a significant impact on the Company's effective tax rate.
Foreign Currencies
Most of the Company's foreign subsidiaries conduct business primarily in U.S. dollars and, as a result, utilize the U.S. dollar as their functional currency. For the remeasurement of financial statements of these subsidiaries, assets and liabilities in foreign currencies that are receivable or payable in cash are remeasured at current exchange rates, while inventories and other non-monetary assets in foreign currencies are remeasured at historical rates. Gains and losses resulting from the remeasurement of such financial statements are included in the operating results, as are gains and losses incurred on foreign currency transactions.
Some of the Company's Japanese subsidiaries utilize Japanese yen as their functional currency. The assets and liabilities of these subsidiaries are translated at current exchange rates, while revenue and expenses are translated at the average rates in effect for the period. The related translation gains and losses are included in other comprehensive income or loss within the Consolidated Statements of Operations and Comprehensive Income.
Defined Benefit Pension Plans
The Company maintains defined benefit pension plans covering certain of its foreign employees. Net periodic pension costs and pension obligations are determined based on actuarial assumptions, including discount rates for plan obligations, assumed rates of return on pension plan assets and assumed rates of compensation increases for employees participating in plans. These assumptions are based upon management's judgment and consultation with actuaries, considering all known trends and uncertainties. The service cost component of the net periodic pension cost is allocated between the cost of revenue, research and development, selling and marketing and general and administrative line items, while the other components are included in other expense in the Consolidated Statements of Operations and Comprehensive Income.
Fair Value Measurement
The Company measures certain of its financial and non-financial assets at fair value by using the fair value hierarchy that prioritizes certain inputs into individual fair value measurement approaches. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the third, unobservable. The Company has elected not to carry any of its debt instruments at fair value.
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Note 3: Segments and Revenue
Segments
As of December 31, 2025, the Company was organized into three operating and reportable segments consisting of PSG, AMG and ISG. These segments represent management's view of the business for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker ("CODM"), which is the Company’s Chief Executive Officer. The CODM uses segment gross profit for evaluating product pricing, factory utilization, allocation of capital and the assessment of segment profitability. The operating costs of manufacturing facilities which service all business units are reflected in each segment's cost of revenue on the basis of product costs. Because operating segments are generally defined by the products they design and sell, they do not sell to each other. The Company does not allocate income taxes or interest expense to its operating segments as the operating segments are principally evaluated on gross profit. Additionally, restructuring, asset impairments and other charges and certain other operating expenses, which include corporate research and development costs and miscellaneous nonrecurring expenses, are not allocated to segments.
Revenue and gross profit for the Company’s operating and reportable segments were as follows (in millions):
PSG AMG ISG Total
Year ended December 31, 2025:
Revenue from external customers $ 2,805.1 $ 2,261.9 $ 928.4 $ 5,995.4
Cost of revenue 2,117.6 1,105.4 788.5 4,011.5
Segment gross profit $ 687.5 $ 1,156.5 $ 139.9 $ 1,983.9
Year ended December 31, 2024:
Revenue from external customers $ 3,348.2 $ 2,609.1 $ 1,125.0 $ 7,082.3
Cost of revenue 1,963.8 1,302.8 599.6 3,866.2
Segment gross profit $ 1,384.4 $ 1,306.3 $ 525.4 $ 3,216.1
Year ended December 31, 2023:
Revenue from external customers $ 3,880.4 $ 3,057.1 $ 1,315.5 $ 8,253.0
Cost of revenue 2,058.5 1,635.8 675.2 4,369.5
Segment gross profit $ 1,821.9 $ 1,421.3 $ 640.3 $ 3,883.5
The Company had one customer, a distributor, whose revenue accounted for approximately 11 % and 10 % of total revenue for the years ended December 31, 2025 and 2024, respectively, with sales across all reportable segments. No customer exceeded 10% of the total revenue for the year ended December 31, 2023. One customer, a distributor, accounted for approximately 10 % and 13 % of the Company's accounts receivable balance as of December 31, 2025 and 2024, respectively.
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Revenue for the Company's operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channels was as follows (in millions):
Year ended December 31, 2025
PSG AMG ISG Total
Geographic Location:
Hong Kong $ 796.5 $ 622.0 $ 216.3 $ 1,634.8
United Kingdom 596.5 438.2 312.3 1,347.0
Singapore 689.4 476.9 86.1 1,252.4
United States 507.5 576.4 146.7 1,230.6
Other 215.2 148.4 167.0 530.6
Total $ 2,805.1 $ 2,261.9 $ 928.4 $ 5,995.4
Sales Channel:
Distributors $ 1,650.7 $ 1,191.2 $ 425.5 $ 3,267.4
Direct Customers 1,154.4 1,070.7 502.9 2,728.0
Total $ 2,805.1 $ 2,261.9 $ 928.4 $ 5,995.4
Year ended December 31, 2024
PSG AMG ISG Total
Geographic Location:
Hong Kong $ 876.1 $ 661.6 $ 241.6 $ 1,779.3
Singapore 991.0 617.1 125.1 1,733.2
United Kingdom 712.8 502.5 422.5 1,637.8
United States 525.4 596.7 185.4 1,307.5
Other 242.9 231.2 150.4 624.5
Total $ 3,348.2 $ 2,609.1 $ 1,125.0 $ 7,082.3
Sales Channel:
Distributors $ 2,051.5 $ 1,338.7 $ 369.4 $ 3,759.6
Direct Customers 1,296.7 1,270.4 755.6 3,322.7
Total $ 3,348.2 $ 2,609.1 $ 1,125.0 $ 7,082.3
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Year ended December 31, 2023
PSG AMG ISG Total
Geographic Location:
Hong Kong 1,151.7 764.2 252.7 2,168.6
Singapore 1,095.1 640.4 203.3 1,938.8
United Kingdom 769.9 647.6 335.9 1,753.4
United States 604.3 642.1 327.3 1,573.7
Other 259.4 362.8 196.3 818.5
Total $ 3,880.4 $ 3,057.1 $ 1,315.5 $ 8,253.0
Sales Channel:
Distributors $ 2,238.6 $ 1,494.2 $ 576.3 $ 4,309.1
Direct Customers 1,641.8 1,562.9 739.2 3,943.9
Total $ 3,880.4 $ 3,057.1 $ 1,315.5 $ 8,253.0
The Company operates in various geographic locations. Sales to external customers have little correlation to where products are manufactured or the location of the end-customer. The Company believes it is, therefore, not meaningful to present operating profit by geographical location.
The following table illustrates the product technologies under each of the Company's reportable segments based on the Company's operating strategy. Because many products are sold into different end-markets, the total revenue reported for a segment is not indicative of actual sales in the end-market associated with that segment, but rather is the sum of the revenue from the product lines assigned to that segment. These segments represent the Company's view of the business and, as such, are used to evaluate progress of major initiatives and allocation of resources.
PSG AMG ISG
SiC products Analog products Actuator Drivers
SiC JFET products ASIC products CMOS image sensors
Discrete products Logic and Isolation products Image Signal Processors
MOSFET products Non-Volatile Memory products Single Photon Detectors
Power Module products Ultrasonic Short-Wavelength Infrared
Vertical GaN Inductive sensing Indirect Time of Flight sensors
Gate Driver products
The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information. The Company’s consolidated assets used in manufacturing are generally shared across and are not specifically ascribed to operating and reportable segments.
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Property, plant and equipment, net by geographic location, is summarized below (in millions):
As of December 31,
2025 2024
South Korea $ 1,175.3 $ 1,423.8
United States 1,046.8 1,410.8
Czech Republic 398.0 612.3
China 186.0 228.8
Philippines 169.8 208.1
Malaysia 147.3 183.1
Vietnam 132.6 155.3
Other 113.2 139.2
Total $ 3,369.0 $ 4,361.4
Revenue
The Company's revenue is derived primarily from product sales, and to a much lesser extent, from product development agreements. Revenue recognized from product sales as a percentage of total revenue was approximately 99 %, 99 % and 97 % for the years ended December 31, 2025, 2024 and 2023, respectively. Revenue recognized from product development agreements as a percentage of total revenue was approximately 1 %, 1 % and 3 % for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company's revenue disaggregated into end-markets and product technologies was as follows (in millions):
Year ended December 31,
2025 2024 2023
End-Markets:
Automotive $ 3,080.8 $ 3,900.8 $ 4,319.9
Industrial 1,674.8 1,800.8 2,278.4
Other* 1,239.8 1,380.7 1,654.7
Total $ 5,995.4 $ 7,082.3 $ 8,253.0
* Other includes the end-markets of computing (including AI data center), consumer, networking, communications, etc.
Product Technologies:
Intelligent Power $ 3,009.4 $ 3,648.6 $ 4,214.8
Intelligent Sensing 1,163.6 1,379.2 1,606.8
Other 1,822.4 2,054.5 2,431.4
Total $ 5,995.4 $ 7,082.3 $ 8,253.0
Remaining Performance Obligations
A portion of the Company’s orders are firm commitments that are non-cancelable, including certain orders or contracts with a duration of less than one year. Certain of the Company's customer contracts are multi-year agreements that include committed amounts ("Long-term Supply Agreements" or "LTSAs") for which the remaining performance obligations as of December 31, 2025 were approximately $ 7.1 billion (excluding the remaining performance obligations for contracts having a duration of one year or less). If products are shipped according to the terms of these contracts, the Company expects to recognize approximately 34 % of this amount as revenue during the next 12 months. Total revenue estimates are based on negotiated contract prices and demand quantities, and could be influenced by risks and uncertainties, including manufacturing or supply chain constraints, modifications to customer agreements, and regulatory changes, among other factors. The timing, pricing or amounts of products delivered under LTSAs may be modified or canceled in certain circumstances, and the actual revenue recognized for the remaining performance obligations in future periods may significantly differ from current estimates. During 2025, certain LTSAs were modified in response to changes in demand. Modifications primarily related to delivery schedules and volume
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commitments. The Company assessed each modification to determine whether it represented a contract modification or a change in estimate.
Certain LTSAs include non-cancelable capacity payments from the customer, which are generally due within 30 days of agreement. These payments reserve production availability or are prepayments for the same purpose and are not recognized as revenue until the performance obligations are satisfied. Payments received in advance of the satisfaction of performance obligations are recorded as contract liabilities. During the years ended December 31, 2025 and 2024, $ 126.1 million and $ 110.9 million, respectively, were recognized as revenue for satisfying the associated performance obligations.
Contract assets and contract liabilities were as follows (in millions):
As of December 31,
2025 2024
Contract assets included in:
Other current assets $ 47.4 $ 39.9
Contract liabilities included in:
Accrued expenses and other current liabilities $ 51.8 $ 98.2
Other long-term liabilities 69.8 120.9
Total $ 121.6 $ 219.1
Note 4: Recent Accounting Pronouncements and Other Developments
Adopted
Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09")
In December 2023, the FASB issued ASU 2023-09 to enhance disclosures about income taxes. The amendments in this ASU require a public entity to disclose in tabular format, using both percentages and reporting currency amounts, specific categories in the rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. The amendments in this ASU also require taxes paid (net of refunds received) to be disaggregated by federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. For public business entities, the provisions of ASU 2023-09, which are required on an annual basis, are effective for fiscal years beginning after December 15, 2024 and can be applied on either a prospective or retrospective basis. The Company adopted this ASU on a prospective basis. See Note 16: ''Income Taxes'' for additional information.
Income Taxes and Legislative Developments
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA includes significant provisions, such as the permanent extension and modification of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions, which become effective on various dates. The provisions impacting the Company have been reflected in the consolidated financial statements for the quarter ended July 4, 2025, and did not have a material impact. The Company will continue to monitor, assess, and update the potential impact on its consolidated financial statements as new information becomes available. Should future results and forecasts differ from management’s estimates, it is possible there could be future adjustments that may result in an increase or decrease in tax expense, deferred taxes, or valuation allowances in the period such changes in estimates are made.
Pending Adoption
Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures ("ASU 2024-03")
In November 2024, the FASB issued ASU 2024-03, which requires public business entities to expand disclosures about specific expense categories. The amendments in this ASU require a public entity to disclose, in tabular format, in the notes to the
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financial statements, specific information about certain costs and expenses. Although the ASU does not change the expense captions an entity presents on the face of the income statement, it requires disaggregation of certain expense captions into specified categories. For public business entities, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. Management is currently evaluating the requirements under this new standard.
Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (ASU "2025-09")
In December 2025, the FASB issued ASU 2025-09 to amend certain aspects of its hedge accounting guidance to better reflect an entity’s risk management activities in the financial statements. The guidance expands the hedged risks permitted to be aggregated in a group of individual forecasted transactions and increases the variable price components eligible to be designated as the hedged risk in the forecasted purchase or sale of nonfinancial assets. For public business entities, the provisions of ASU 2025-09 are effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. Management is currently evaluating the requirements under this new standard.
Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (ASU "2025-10")
In December 2025, the FASB issued ASU 2025-10 to establish the accounting for a government grant received by a business entity including guidance for (1) a grant related to an asset and (2) a grant related to income. For public business entities, the provisions of ASU 2025-10 are effective for fiscal years beginning after December 15, 2028. Early adoption is permitted. Management is currently evaluating the requirements under this new standard and does not expect the adoption to have a material impact on the Company's results of operations or financial condition.
Note 5: Acquisitions
The Company pursues acquisitions and divestitures from time to time to leverage its existing capabilities and further expand its business to achieve certain strategic goals. Acquisition costs are not included as components of consideration transferred and instead are accounted for as expenses in the period in which the costs are incurred. During the years ended December 31, 2025 and 2024, the Company incurred acquisition and divestiture-related costs of approximately $ 3.7 million and $ 13.1 million, respectively, and the Company incurred an immaterial amount during the year ended 2023. Such costs were included in operating expenses in the Consolidated Statements of Operations and Comprehensive Income.
2025 Acquisitions
SiC JFET acquisition
On January 14, 2025, the Company acquired all of the outstanding equity of the SiC JFET technology business from Qorvo US, Inc., and certain of its subsidiaries, for $ 118.8 million in cash, subject to working capital adjustments. The Company believes the acquired SiC JFET technology complements the Company's EliteSiC power portfolio within the PSG reportable segment and enables the Company to help address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers.
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The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their relative fair values, was as follows (in millions):
Purchase Price Allocation
Cash $ 1.3
Inventories 20.8
Property, plant and equipment 4.5
Intangible assets 64.0
Goodwill 53.7
Other assets 3.0
Total assets acquired 147.3
Accounts payable and other accrued liabilities 20.6
Deferred tax liabilities 7.9
Total liabilities assumed 28.5
Net assets acquired/purchase price $ 118.8
Acquired intangible assets consisted of developed technology of $ 56.0 million, customer relationships of $ 7.0 million and a trade name of $ 1.0 million. The acquired intangible assets will be amortized over a weighted average useful life of 8 years. The Company calculated the fair values of the intangible assets using the multi-period excess earnings method for the acquired developed technology, the distributor method for the customer relationships, and the relief-from-royalty method for the trade name. Significant assumptions used in management's estimates included discount rates, revenue growth, projected gross margins, and operating expenses.
The goodwill generated from the acquisition is primarily attributable to synergies that are expected to be achieved from the integration of the business and is not deductible for tax purposes. Consistent with the assignment of goodwill, the consolidated results of the acquired business are included within the Company's PSG operating and reportable segment following the acquisition.
Unaudited pro-forma consolidated results of operations were not included considering the level of significance of the acquisition to the results of the Company.
Vcore acquisition
On October 27, 2025, the Company completed the acquisition of rights to Vcore power technologies, including associated intellectual property licenses, from Aura Semiconductor to further enhance its power management portfolio within the AMG reportable segment. The total purchase consideration is up to $ 144.0 million in cash, subject to customary purchase price adjustments. Of this amount, $ 72.0 million is payable upon the achievement of specified products and the remaining $ 72.0 million is contingent upon the achievement of certain revenue milestones through 2030.
These potential future payments represent contingent consideration and were recorded at their acquisition‑date fair value. At the acquisition date, the Company recognized a contingent consideration liability of $ 108.8 million, measured using probability‑weighted discounted cash flow models. Key unobservable inputs included the probability of completing future product milestones, the probability of achieving revenue targets, the expected timing of payments, volatility and risk‑adjusted discount rates. The contingent liability for revenue milestones was valued using Monte Carlo simulations.
The contingent consideration, which will be settled in cash, has been allocated between accrued expenses and other long-term liabilities based on the expected timing of payments. Accordingly, it will be remeasured at fair value each reporting period, with changes recognized in the Consolidated Statements of Operations.
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The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their relative fair values, was as follows (in millions):
Purchase Price Allocation
Intangible assets - developed technology $ 34.5
IPRD 32.0
Deferred tax assets, net 11.0
Goodwill 38.3
Total assets acquired 115.8
Cash paid at close 7.0
Contingent Consideration 108.8
Purchase price $ 115.8
Acquired intangible developed technology of $ 34.5 million will be amortized over its estimated useful life of 7 years. The value assigned to developed technology was determined using the income approach. The Company calculated the fair value of acquired developed technology using the multi-period excess earnings method. Significant assumptions used in management's estimates included discount rates, revenue growth, projected gross margins, and operating expenses.
IPRD assets are amortized over the estimated useful life of the assets upon successful completion of the related projects. The value assigned to IPRD was determined by estimating the net cash flows from the projects when completed and discounting the net cash flows to their present value using a discount rate of approximately 30 %. IPRD consisted of product development milestones that have not yet reached technological feasibility as of the acquisition date. Accordingly, the Company recorded an indefinite-lived intangible asset of $ 32.0 million for the fair value of these projects, using the multi-period excess earnings method, and such intangible assets will initially not be amortized. Instead, these projects will be tested for impairment annually and whenever events or changes in circumstances indicate that these projects may be impaired. Once the projects reach technological feasibility, the Company will begin to amortize the intangible assets over their estimated useful lives. The cash flows from IPRD’s significant products are expected to commence in 2027.
The acquisition resulted in $ 38.3 million of goodwill, which was assigned to a reporting unit within AMG. Goodwill is attributable to a combination of expectations regarding a more meaningful engagement by the customers due to the scale of the combined company and other product and operating synergies. Goodwill arising from the Vcore acquisition is not deductible for tax purposes.
Unaudited pro-forma consolidated results of operations were not included considering the level of significance of the acquisition to the results of the Company.
2024 Acquisition
In July 2024, the Company completed its acquisition of SWIR Visions Systems ("SWIR") within its ISG segment for cash consideration of approximately $ 20.5 million. SWIR commercialized quantum-dot-based infrared image sensors, making them a strategic addition to the Company's existing technologies.
Note 6: Goodwill and Intangible Assets
Goodwill
Goodwill is tested for impairment annually on the first day of the fourth quarter or more frequently if events or changes in circumstances (each, a "triggering event") would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. For the year ended December 31, 2025, the Company performed a quantitative goodwill assessment as of the first day of its fourth fiscal quarter. The estimated fair values of each of the Company's reporting units were in excess of their carrying values and none of the reporting units were considered at risk for impairment.
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The following table summarizes goodwill by operating and reportable segments (in millions):
As of December 31, 2025 As of December 31, 2024
Operating and Reportable Segments Goodwill Accumulated Impairment Losses Carrying Value Goodwill Accumulated Impairment Losses Carrying Value
AMG $ 1,600.6 $ ( 748.9 ) $ 851.7 $ 1,562.3 $ ( 748.9 ) $ 813.4
PSG 735.8 ( 31.9 ) 703.9 682.1 ( 31.9 ) 650.2
ISG 124.3 — 124.3 124.3 — 124.3
Total $ 2,460.7 $ ( 780.8 ) $ 1,679.9 $ 2,368.7 $ ( 780.8 ) $ 1,587.9
The following table summarizes the change in goodwill (in millions):
Net balance as of December 31, 2024 1,587.9
Addition due to business acquisitions 92.0
Net balance as of December 31, 2025 $ 1,679.9
Intangible Assets
Intangible assets, net, were as follows (in millions):
As of December 31, 2025
Original
Cost Accumulated
Amortization Accumulated Impairment Losses Carrying
Value
Customer relationships $ 582.7 $ ( 488.3 ) $ ( 36.3 ) $ 58.1
Developed technology 1,046.8 ( 771.8 ) ( 40.7 ) 234.3
IPRD 32.0 — — 32.0
Licenses 35.0 ( 15.5 ) — 19.5
Other intangibles 80.1 ( 64.9 ) ( 15.2 ) —
Total $ 1,776.6 $ ( 1,340.5 ) $ ( 92.2 ) $ 343.9
As of December 31, 2024
Original
Cost Accumulated
Amortization Accumulated Impairment Losses Carrying
Value
Customer relationships $ 581.7 $ ( 483.5 ) $ ( 36.3 ) $ 61.9
Developed technology 956.3 ( 739.7 ) ( 40.7 ) 175.9
Licenses 30.0 ( 9.9 ) — 20.1
Other intangibles 79.1 ( 63.9 ) ( 15.2 ) —
Total $ 1,647.1 $ ( 1,297.0 ) $ ( 92.2 ) $ 257.9
Amortization of intangible assets amounted to $ 49.5 million, $ 58.3 million and $ 56.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
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Amortization expense for intangible assets, with the exception of the $ 32.0 million of IPRD assets that will be amortized once the corresponding projects have been completed, is expected to be as follows over the next five years, and thereafter (in millions):
2026 $ 46.2
2027 46.8
2028 54.1
2029 52.2
2030 47.8
Thereafter 64.8
Total estimated amortization expense $ 311.9
Note 7: Restructuring, Asset Impairments and Other, net
Details of restructuring, asset impairments and other charges, net were as follows (in millions):
Restructuring Asset Impairments Other Total
Year ended December 31, 2025:
2025 Manufacturing Realignment $ 67.1 $ 496.0 (1)
$ 103.9 (2)
$ 667.0
2024 Business Realignment 0.9 — 1.0 1.9
Other ( 2.7 ) — 0.7
( 2.0 )
Total $ 65.3 $ 496.0 $ 105.6 $ 666.9
Year ended December 31, 2024:
2024 Business Realignment $ 75.7 $ 37.8 (1)
$ 16.3 (2)
$ 129.8
Other 0.3 — 3.8 4.1
Total $ 76.0 $ 37.8 $ 20.1 $ 133.9
Year ended December 31, 2023:
2023 Business Realignment $ 59.1 $ 9.3 (1)
$ 2.8 $ 71.2
Other ( 0.6 ) 10.2 (3)
( 5.9 ) 3.7
Total $ 58.5 $ 19.5 $ ( 3.1 ) $ 74.9
(1) Primarily relates to property, plant and equipment impairment charges associated with the manufacturing and business realignment programs.
(2) Primarily relates to accelerated depreciation of property, plant and equipment and accelerated amortization of ROU assets related to the realignment programs.
(3) Property, plant and equipment and ROU asset impairment charges related to the site consolidation efforts in the U.S.
A summary of changes in accrued restructuring charges was as follows (in millions):
Accrued Restructuring
Balance as of December 31, 2023 $ 17.9
Charges 76.0
Usage ( 39.5 )
Balance as of December 31, 2024 54.4
Charges 65.3
Usage ( 113.7 )
Balance as of December 31, 2025 $ 6.0
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2025 Manufacturing Realignment
During 2025, the Company announced restructuring and cost reduction initiatives based on an evaluation of its operating structure, business strategy, manufacturing technologies and internal capabilities to realign internal manufacturing capacity and capabilities with anticipated long-term needs. The program also included certain business strategy changes primarily related to headcount reductions in the sales and engineering teams to deemphasize certain aspects of the business within each of the PSG and ISG reportable segments. These initiatives resulted in a reduction of global workforce, impairments of certain long-lived assets that met the held-for-sale criteria, inventory obsolescence and certain other charges primarily during the year ended December 31, 2025.
Restructuring
Restructuring charges include estimated severance payments and related benefit expenses for employees who were notified of their employment termination or terminated during the period.
On February 24, 2025, the Company initiated a restructuring plan that involved reducing its global workforce by approximately 2,400 employees, and in connection with such plan, the Company incurred total severance and other related benefit expenses of approximately $ 67.1 million for the year ended December 31, 2025. Of the aggregate expenses relating to these actions, the Company paid approximately $ 64.4 million to terminated employees and had approximately $ 2.7 million accrued as of December 31, 2025.
Asset Impairment
The Company recorded impairment charges of $ 496.0 million during the year ended December 31, 2025 related to previous investments in manufacturing equipment at certain manufacturing facilities pursuant to held-for-sale accounting guidance due to the assets no longer being needed to meet anticipated long-term customer demand. During each quarter of 2025, it was determined that the assets identified by the Company met all criteria to be classified as assets held-for-sale with the expectation that these assets would be disposed of within 12 months from the end of each respective quarter. The impairment charges were determined as the difference between the carrying value of these long-lived assets and their estimated fair values, less estimated costs to sell such assets. Fair values were determined primarily by using unobservable inputs such as estimated sales prices based on available market prices, underlying equipment condition and market demand for similar equipment, inputs categorized as Level 3 within the fair value hierarchy. The Company utilized a third-party valuation specialist to assist in the determination of assets held-for-sale. Fair value was estimated primarily using market and income approaches, including third‑party appraisals where available. Key unobservable inputs included expected sales proceeds, estimated equipment condition, and discount adjustments for certain specialized tooling.
Other
Other charges of $ 103.9 million for the year ended December 31, 2025 consisted primarily of $ 85.9 million of accelerated depreciation and amortization of ROU assets and related improvements and other assets. We expect to incur additional accelerated deprecation and amortization of approximately $ 135 million in the first half of 2026. Additionally, we recognized a $ 6.5 million loss on the disposal of assets previously recognized as held-for-sale, with the remaining charges attributable to contract termination and site consolidation costs related to adjusting the Company's operating structure in connection with the 2025 Manufacturing Realignment Program.
Restructuring related charges in Cost of revenue
During 2025, the Company recorded $ 45.4 million related to the write-off of consumables, manufacturing supplies and obligations for certain unfulfilled purchase commitments due to the manufacturing capacity reduction actions taken under the 2025 Manufacturing Realignment Program. These charges were recorded within Cost of revenue in the Consolidated Statement of Operations.
During 2025, the Company also recorded $ 268.2 million related to excess and obsolete inventory charges. Of this, $ 37.9 million and $ 230.3 million related to inventory primarily considered work in progress within the PSG and ISG reportable segments, respectively. This was done as a result of the changes in business strategy to deemphasize certain aspects of the business within each of the PSG and ISG reportable segments as part of the 2025 Manufacturing Realignment Program. These charges were recorded within Cost of revenue in the Consolidated Statement of Operations.
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ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2024 Business Realignment