onsemi — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue reached $1,722.3 million, an 11% increase year-over-year compared to $1,550.9 million in Q3 2025.
• GAAP diluted earnings per share (EPS) were $0.79, while non-GAAP diluted EPS were $0.90, representing over 40% year-over-year growth.
• GAAP gross margin was 41.4% and non-GAAP gross margin was 41.2%, expanding 190 basis points sequentially.
• GAAP operating margin was 22.0% and non-GAAP operating margin was 23.2%.
• Cash from operations increased 23% year-over-year to $516.4 million.
• Free cash flow was $488.6 million, a 31% year-over-year increase, representing 28% of revenue.
• Net income attributable to ON Semiconductor Corporation was $313.9 million (GAAP) and $354.0 million (non-GAAP).
• Total debt included $802.8 million in current portion of long-term debt and $3,660.2 million in long-term debt as of October 2, 2026.

Guidance and Future Outlook:

• Fourth Quarter 2026 revenue is projected between $1,715 million and $1,815 million.
• Q4 2026 non-GAAP gross margin is expected to be between 41.5% and 43.5%.
• Q4 2026 non-GAAP operating expenses are projected between $303 million and $318 million.
• Q4 2026 non-GAAP diluted EPS guidance is $0.95 to $1.07.
• AI data center revenue grew 175% year-over-year and 39% sequentially in Q3 2026.
• The company raised its AI data center 2030 revenue target by $500 million to greater than $3 billion.

Business Segments and Product Lines:

• Power Solutions Group (PSG) revenue was $889.9 million, up 21% year-over-year.
• Automotive, Motor, and Grid (AMG) revenue was $597.3 million, up 2% year-over-year.
• Industrial, Sensors, and Other (ISG) revenue was $235.1 million, up 2% year-over-year.
• Sungrow adopted onsemi's latest EliteSiC silicon carbide hybrid power module technology.
• onsemi entered a strategic technology engagement with Subaru for early access to the Embedded Power Platform (EPP).

Market and Competitive Landscape:

• Increasing power requirements are driving accelerated demand in AI data center and industrial end markets.
• Customers are adopting and ramping onsemi's differentiated products to meet growing electricity demand from AI, renewable energy, and electrification.

Risks and Challenges:

• The press release includes standard forward-looking statement disclaimers regarding risks, uncertainties, and factors that could cause results to differ materially from expectations, referencing the 2025 Form 10-K.
• Special items, including restructuring costs and amortization, are noted as being out of the company's control and could change significantly.

Management Commentary and Tone:

• CEO Hassane El-Khoury stated that Q3 revenue, gross margin, and EPS exceeded the midpoint of guidance, driven by AI data center and industrial demand.
• CFO Thad Trent highlighted the fifth consecutive quarter of gross margin expansion and operating leverage, noting earnings per share grew more than 40% year-over-year on 11% revenue growth.
• Management emphasized ongoing fab right initiatives and the ramping of new differentiated products to drive further margin and earnings expansion.

Other Key Points:

• onsemi announced an agreement to acquire Ferric to establish leadership in next-generation AI processor power delivery.
• The company announced revised terms for the planned acquisition of Synaptics, changing the consideration from $7 billion in stock to approximately $5.7 billion in cash, which is expected to be immediately accretive to non-GAAP EPS.
• The company repurchased common stock for $19.9 million in Q3 2026.
• Proceeds from the divestiture of a business were $31.7 million in Q3 2026.
• Cash and cash equivalents increased to $4,157.7 million as of October 2, 2026, from $3,514.5 million in Q2 2026.