On Semiconductor Expands Portfolio With SWIR Acquisition

On Semiconductor ON is expanding its footprint in the intelligent image sensing industry by acquiring SWIR Vision Systems, a leading provider of CQD (colloidal quantum-dot-based) short wavelength infrared technology.

The acquisition enhances ON's portfolio by integrating advanced SWIR capabilities into its industry-leading Complementary Metal-Oxide-Semiconductor (CMOS) sensors, enabling the detection of extended light spectra for unprecedented imaging possibilities.

By merging SWIR Vision Systems patented technology with its expertise in silicon-based CMOS manufacturing, the company aims to deliver cost-effective, high-volume SWIR sensors.
The acquisition of SWIR Vision will enhance key markets, such as industrial, automotive and defense, with applications ranging from surveillance and machine vision to autonomous vehicle imaging and food inspection.

Expanding Portfolio Aids Prospect

The latest move reflects ON's focus on expanding its intelligent sensing capabilities.

ON's SiC solutions are also gaining traction in automotive and industrial applications. In the first quarter of 2024, ON Semiconductor's silicon carbide business demonstrated robust performance, with more than 50% of substrates coming from internal production.

ON's dominant position in silicon carbide has been a major factor driving its strong partner base with the likes of BorgWarner BWA, Volkswagen VWAGY and Magna International MGA, thereby driving growth.

ON Semiconductor's extended silicon carbide partnership with BorgWarner has been a major positive. It integrates EliteSiC technology for enhanced efficiency and performance in EV traction inverters, reinforcing its commitment to innovative mobility solutions.

Volkswagen partnered with ON to use EliteSiC technology in its electric vehicles. Its EliteSiC 1200 V silicon carbide power module supports VW models front and rear traction inverters.

ON Semiconductor and Magna signed a long-term supply agreement (LTSA) to incorporate ON Semiconductor's EliteSiC intelligent power solutions into Magna's eDrive systems, enhancing electric vehicle efficiency and performance.

Conclusion

Despite a broadening portfolio across diverse end markets and a strong partner base, ongoing macroeconomic uncertainty and frequent buyouts have been affecting ON's financial position.

The stock has declined 12.7% against the Zacks Computer & Technology sector's growth of 24.4% year to date.

This Zacks Rank #4 (Sell) company expects second-quarter 2024 revenues to be between $1.68 billion and $1.78 billion. The Zacks Consensus Estimate is pegged at $1.73 billion, indicating a decline of 17.32% year over year.

Non-GAAP earnings are expected between 86 cents per share and 98 cents. The Zacks Consensus estimate for earnings is pegged at 93 cents, unchanged in the past 30 days and indicating a year-over-year fall of 30.8%.

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