Onsemi Stock Crashes 16%: Short-Term Panic or Long-Term Trouble?

Is this the moment onsemi loses its spark or sets up its biggest comeback yet?

On August 5th, onsemi’s stock (NASDAQ:ON) nosedived 16% in a single day, capping off a brutal year that has already seen the company shed over 22% of its value. It was the worst-performing stock in the S&P 500 that Monday, and not without reason. The company’s Q2 results revealed a cooling in automotive demand, with sales falling 4% quarter over quarter. 

But it wasn’t just the numbers that rattled investors—it was the CEO’s warning: Europe and North America are weakening, and the outlook for EVs is clouded in uncertainty.

For a company once championed as a key enabler of the EV and automation boom, the shift in tone was jarring. Has the market overreacted to short-term headwinds, or are deeper cracks forming beneath the surface.

 

onsemi Explained: The Tech Behind EVs, Solar, and Smart Machines

Before we dive into where OnSemi might be headed, let’s take a moment to understand what this company actually does and why it matters.

At its core, OnSemi builds the brains and nerves behind the electric and intelligent future. It’s a semiconductor company, but not the kind chasing smartphone trends or gaming chips. Instead, onsemi focuses on power and sensing, the behind-the-scenes tech that makes electric vehicles run longer, factories run smarter, and energy grids run cleaner.

If you’ve ever marveled at how fast an EV charges, how a solar panel feeds into a battery, or how a car “sees” the road ahead, there’s a good chance OnSemi had something to do with it.

 

ON Semi 3 Key Revenue Segments

• The Power Solutions Group (PSG) makes high-performance chips that manage electricity in EVs, solar systems, and industrial machines, helping companies charge faster, reduce energy waste, and boost efficiency.

 

• The Analog and Mixed-Signal Group (AMG) designs chips that help machines process signals and communicate, essential for things like EV battery management and motor control in automated factories.

 

•  And then there’s the Intelligent Sensing Group (ISG), which develops advanced sensors and imaging tech that act like digital eyes, powering features like autonomous driving, safety systems, and industrial vision.

 

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What Onsemi’s Q2 Results Say About the Road Ahead (Q2 2025)

 

Investors were hoping for strength; instead, onsemi delivered a slowdown.

Revenue analysis

In its latest earnings report, revenue dropped 15% year over year to $1.47 billion, down from $1.74 billion. What stood out wasn’t just the size of the decline, but the fact that all three of Onsemi’s key segments, power, analog, and sensing, fell by a similar amount. For a company positioned at the heart of booming trends like electric vehicles and AI, that kind of broad weakness raised some eyebrows.

Isn’t this supposed to be a golden era for smart cars and automation?

The reality is more complex. Major customers in North America and Europe are pressing pause, especially in the EV and industrial markets, as economic uncertainty and inventory pullbacks take hold. Meanwhile, China is surging ahead in EV development, reshaping the competitive landscape and putting pressure on companies like onsemi.

Profitability analysis 

Still, profitability offers some comfort. While gross margins came in at 37.6%, below the chip sector average of 50%, operating margins held firm at 13.2%, more than double the industry median. That speaks to a lean and efficient business model, which remains a competitive advantage.

Free Cash Flow Analysis 

But there’s no ignoring the concerns. Net income fell sharply, and free cash flow dropped by $221 million compared to the same period last year. One soft quarter doesn’t define a company, but if the trend continues, it could mark the beginning of a more challenging chapter in onsemi’s growth story.

 

Investor Summary

From an investor’s perspective, I rate Onsemi as a hold. While the stock may look cheap on paper, management’s cautious tone on market recovery through the rest of 2025 is hard to ignore. Geopolitical tensions and import restrictions have weighed heavily on both the semiconductor and automotive sectors, adding layers of uncertainty to ON’s outlook.

The company is taking steps to tackle challenges like underused factories and elevated inventory by cutting fab capacity and reducing its workforce, aiming to protect margins. However, its once high-flying silicon carbide (SiC) business is now facing intense competition and price pressure, which could lead to weaker performance in 2025.

In short, Onsemi remains a strong player in the long-term EV and automation story, but the near-term headwinds are significant enough to keep this stock in “hold” territory for now.

If you’re interested in more semiconductor stock ideas, read our coverage on Weebit Nano.