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onsemi (ON) Expands Portfolio With New Simulation Tools

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onsemi (ON - Free Report) is expanding its product portfolio with the launch of the online Elite Power Simulator and Self-Service PLECS Model Generator.

At the early stage of the development cycle, these tools through system-level simulations provide accurate data for complex power electronic applications that save time.

These latest tools will enable onsemi’s EliteSiC Silicon Carbide (SiC) product to develop custom applications, instead of costly and time-consuming hardware fabrication and testing.

Moreover, deploying Elite Power Simulator and Self-Service PLECS Model Generator in combination helps in creating high-fidelity system-level PLECS models.

onsemi’s dominant position in silicon carbide has been a major factor driving its growth trajectory. In 2022, onsemi shipped more than $200 million in silicon carbide revenues and remains on track to deliver $1 billion in 2023. onsemi expects to generate more than $4.5 billion in silicon carbide revenues between 2023 and 2025.

The company’s shares have gained 30.8% in the past year, outperforming the Zacks Computer & Technology sector, which has declined 15.3%.



Strong Auto End-Market Driving onsemi’s Prospects

onsemi is benefiting from strong automotive and industrial end-markets. In fourth-quarter 2022, automotive (47% of revenues) revenues were $988.7 million, up 54.2% year over year. Industrial (26.3% of revenues) end-market (including military, aerospace and medical) revenues increased 5.8% year over year to $552.4 million.

The company is winning market share in the automotive segment thanks to its silicon carbide dominance as well as intelligent power and sensing solution. onsemi's EliteSIC silicon carbide modules increase the efficiency and lower the weight of the traction inverters, extending electric vehicle range and improving performance.

Electronic vehicles are expected to be long-term growth drivers and onsemi is aggressively adding capacity in the Hudson, Czech Republic and South Korea manufacturing sites. Moreover, an expanding clientele that includes Volkswagen, Tesla (TSLA - Free Report) , Jaguar Land Rover and Hyundai Motor Group benefits top-line growth.  

onsemi’s partnership with Volkswagen to provide the silicon carbide modules that enable a complete traction inverter solution for its entire fleet of next-generation electric vehicles enhances prospects. The company has started generating revenues from the Tesla for silicon carbide shipments and expects revenue to grow in 2023.

onsemi expects revenues between $1.87 billion and $1.97 billion for first-quarter 2023. Non-GAAP earnings are envisioned between $1.02 per share and $1.14 per share.

The Zacks Consensus Estimate for earnings currently stands at $1.09 per share, unchanged over the past 30 days. The consensus estimate for revenues stands at $1.92 billion, indicating a decline of 1.22% year over year.

Zacks Rank & Stocks to Consider

onsemi currently has a Zacks Rank #3 (Hold).

Airbnb (ABNB - Free Report) and Arista Networks (ANET - Free Report) are some better-ranked stocks in the broader sector.

While Airbnb has gained 23.6%, Arista Networks has declined 25.6%, in the past year.

The Zacks Consensus Estimate for Airbnb’s first-quarter 2023 earnings is pegged at 14 cents per share, unchanged in the past 30 days. The consensus mark for Arista Networks’ first-quarter 2023 earnings stands at $1.34 per share, up by a penny in the past 30 days.

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