onsemi ( ON Quick Quote ON - Free Report) recently announced that it is expanding its silicon carbide (SiC) facility in Roznov, Czech Republic. The newly-inaugurated hub will increase ON’s SiC wafer production capacity by five times year over year and address certain supply-chain bottlenecks.
onsemi added its SiC-polished wafer and SiC epitaxy (EPI) wafer production facility to its existing SiC fab in the Czech Republic. However, to meet the rising demand for its wafer products, onsemi constructed a new building that is set to expand SiC production capacity by 16 times. So far, ON has invested more than $150 million in the Roznov site and will be looking to spend an additional $300 million through 2023.
onesmi signed long-term supply agreements with various customers for the next three years, which helped it secure more than $4 billion of committed SiC revenues. To drive its SiC revenues, onsemi is rapidly expanding capacity across new sites like Roznov, Czech Republic.
ON initiated its capacity expansion to capitalize on the uptrend in the high-growth markets like electric vehicles (EV), ADAS, and energy infrastructure and factory automation.
onsemi Production Capacity Expansion Aids Shares
onsemi has been expanding its SiC facilities globally and internationally to diversify its product portfolio. onesmi generates a significant percentage of revenues from the computing, consumer, industrial, communications and automotive markets.
Onsemi also recently expanded its Hudson, NH facility, which will increase SiC boule production capacity by five times year over year. This will aid in meeting the rising demand for SiC-based solutions, which is critical for developing EVs and energy infrastructure and is an important contributor to decarbonization.
onsemi, the SiC total addressable market is projected to grow from $2 billion in 2021 to $6.5 billion in 2026, at a CAGR of 33%.
onsemi, which currently carries Zacks Rank #3 (Hold), is also looking to expand the 200-millimeter SiC capacity at its existing fabs and double the front-end wafer capacity by the end of 2023 from the year-ago period, besides further doubling that capacity by 2024 end. You can see
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Further positively impacting onsemi’s decision to diversify its product portfolio and expand operations is President Biden's decision to sign the CHIPS and Science Act, supporting investments in domestic semiconductor manufacturing and reducing dependence on foreign markets like China. onsemi peer
Microchip Technology ( MCHP Quick Quote MCHP - Free Report) is also looking to benefit from the recent declaration of the act by the government.
The government's recent declaration will help Microchip diversify income from its microcontroller business, which is riddled with supply-chain disturbances. Microchip continues developing and introducing a wide range of innovative and proprietary new linear, mixed-signal, power, interface and timing products to spur growth in the analog business.
However, ON is facing stiff competition from
Texas Instruments ( TXN Quick Quote TXN - Free Report) and STMicroelectronics ( STM Quick Quote STM - Free Report) .
STMicroelectronics’ third-generation STPOWER SiC MOSFETs help meet the energy-saving efficiency requirements in EVs and are a chief competitor of onsemi in the EV market. STMicroelectronics’ solutions will help EV makers achieve faster charging and reduce EV weight. This helps STM win a significant market share in the industry.
Texas Instruments is also seeing success in certain fast-growing automotive market segments. TXN is focused on infotainment, safety and ADAS, body electronics (including lighting), hybrid electric vehicle and powertrain segments of the automotive market. It also experiences significant traction from the EV megatrend.
However, onesmi is reallocating its capacity to strategic and high-margin products to drive a favorable mix shift and eliminate the price-to-value discrepancies. Due to an expanding portfolio in high-margin products and long-term supply agreements for products in high demand, onsemi is expected to witness long-term revenue growth and win market share.