ON Semiconductor and Denso Team Up to Boost Self-Driving Tech

On Tuesday, ON Semiconductor Corp ON and tier-one automotive supplier Denso Corp DNZOF DNZOY announced that they are strengthening their long-term relationship to support the procurement of autonomous driving (AD) and advanced driver assistance systems (ADAS) technologies.

ON Semiconductor has supplied Denso with the latest intelligent automotive sensors to enhance ADAS and AD performance for over a decade.

These semiconductors have become increasingly vital in improving vehicle intelligence, including connectivity, to help reduce traffic accident fatalities.

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Denso President Shinnosuke Hayashi emphasized the importance of a strong supply chain for critical materials like semiconductors, noting that Denso, the world’s second-largest supplier of automotive systems and parts, relies on this to deliver innovative products to customers.

He highlighted the need for collaboration with industry leaders like ON Semiconductor, which has advanced vehicle safety and autonomy through intelligent sensing technologies while providing reliable supply assurance.

Denso intends to acquire ON Semiconductor stock on the open market as a mark of their collaboration.

Bank of America analyst Vivek Arya identified ON Semiconductor among his top picks for 2025, projecting a recovery from cyclical trends. He expects the automotive and industrial sectors to drive significant semiconductor demand in the latter half of the year.

Arya anticipates that in the first half of 2025, investments in artificial intelligence (AI) will continue to surge, driven by AI training and model scaling. He notes that cloud customers will likely accelerate the deployment of Nvidia Corp’s NVDA Blackwell architecture during this period.

Regarding the CHIPS Act, Arya expects the legislation, enacted under President Joe Biden, to remain in effect following President-elect Donald Trump’s inauguration. He projects that the remaining funding will be distributed in 2025, substantially supporting the U.S. semiconductor industry.

After ON Semiconductor’s third-quarter print, Needham analyst Quinn Bolton projected an L-shaped recovery for the company through the first half of 2025. Datacenter opportunities will gain traction as key design wins ramp up next year.

Goldman Sachs analyst Toshiya Hari, Benchmark analyst David Williams, and JP Morgan analyst Harlan Sur flagged China’s EV market strength and silicon carbide (SiC) growth.

Investors can gain exposure to stocks of companies that manufacture semiconductors through the VanEck Semiconductor ETF SMH and the iShares Semiconductor ETF SOXX.

Price Action: ON stock closed higher by 0.72% at $66.44 on Monday.

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