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On Semiconductor (ONNN - Analyst Report) announced its strategic partnership with privately-held CVRx Inc to launch an implantable device (the Barostim neo™) for the treatment of hypertension in Europe.

The two companies have been collaborating on the development of the implantable device, which is expected to use three ON Semi components. CVRx will also continue to use the latter’s manufacturing services, which came in particularly handy during the development process.

The three ON Semi parts include two custom application-specific integrated circuits (ASICs) and one digital control ASIC. All the three parts are designed to minimize power consumption with a view to extend the life of the device. Since energy efficiency is one of the most important elements of an implantable medical device with the ability to influence its pricing, this is an important area for semiconductor companies offering power management solutions.

In fact, semiconductors are bringing a sea change in the medical device market with their ability to increase longevity of the devices, while reducing their manufacturing costs, shrinking their sizes and expanding their uses. Databeans estimates that worldwide semiconductor shipments for medical devices will go from 6 billion units in 2011 to 10 billion by 2016, with sales going from $6 billion to $10 billion. However, average selling prices (ASPs) are expected to be slightly down from around $0.68 to around $0.52.

The partnership will help On Semiconductor to gain market share in Europe as well as in the medical segment. This will open new avenues for the company.

Medical devices remain a focus area for On Semiconductor since the company generated 20% of revenue from the segment in the first quarter of 2012. The fact that this partnership expands its presence in Europe is also encouraging (Europe accounted for 14% of its revenue in the last quarter.

ON Semi reported revenue of $744.4 million in the last quarter, down 3.1% sequentially, 14.5% year over year and in the middle of management’s guidance range of $720.0-760.0 million, or down 1-6% sequentially. On a pro forma basis, the company reported a net income of $51.1 million, or a 6.9% net income margin compared to $52.4 million, or 6.8% in the previous quarter and $113.2 million or 13.0% in the first quarter of 2012.

Currently, On Semiconductor has a Zacks Rank of #3, implying a Hold rating in the short-term (1-3 months).

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