ON Semiconductor Is a Buy for Long-Term Growth on EV and AI Market Expansion

ON Semiconductor Corp. (ON) is emerging as a key player in two of the fastest-growing technology markets: electric vehicle (EV) and AI data centres. The company’s advanced silicon carbide solutions are gaining adoption from major automakers and tech leaders, boosting efficiency and performance while lowering costs. Moreover, the strategic partnerships, strong US manufacturing capacity, and favourable tariff policies enhance its competitive edge. This article presents the financial and technical performance of ON Semiconductor to assess its long-term investment appeal.

Recent Catalysts Driving ON Semiconductor’s Growth

ON Semiconductor is gaining momentum in the electric vehicle market. Xiaomi’s YU7 electric SUV line now features ON’s advanced 800V drive platform powered by EliteSiC M3e technology. This system delivers industry-leading efficiency and power density while reducing cost. It enables a more extended driving range, faster acceleration, and greater reliability. These features strengthen ON’s position in the fast-growing EV power electronics segment.

Moreover, the adoption of EliteSiC M3e in Xiaomi’s SUV lineup is significant. It demonstrates automakers’ confidence in ON’s silicon carbide solutions. The technology’s ability to combine high performance with lower system cost offers a competitive edge. As EV demand rises globally, such partnerships can expand ON’s customer base and boost revenue in high-margin markets.

On the other hand, ON is entering a strategic position in AI data centre infrastructure. Its collaboration with Nvidia Corp. (NVDA) focuses on the transition to 800VDC power architectures. This shift promises higher efficiency, improved power density, and better sustainability for next-generation AI facilities. ON’s role in delivering high-efficiency power conversion at every stage strengthens its relevance in the fast-growing AI sector.

These catalysts target industries with strong secular growth: EVs and AI data centres. By leveraging its silicon carbide and intelligent power solutions, ON can capture a larger share of these high-growth markets. The company’s ability to provide scalable, efficient, and high-performance designs positions it for sustained revenue growth and margin expansion in the years ahead.

Trump’s Tariff Policy Could Strengthen ON Semiconductor’s US Advantage

President Donald Trump announced plans for a 100% tariff on imported semiconductors, with a major exemption for companies manufacturing in the US. This policy aims to boost domestic chip production and encourage major tech firms to invest in US facilities. While details remain unclear, the tariffs are expected to hit China’s SMIC and Huawei, while companies with established US operations, like ON Semiconductor, would avoid these penalties. This approach mirrors Trump’s broader strategy to link market access to domestic investment.

For ON Semiconductor, this exemption provides a strategic advantage. The company already operates significant manufacturing capacity in the US, aligning with the administration’s reshoring goals. Avoiding these tariffs could protect ON’s cost structure while competitors relying on overseas production face higher import expenses. This policy may also push more global customers toward US-based suppliers. It could boost demand in sectors such as automotive, EV power systems, and industrial electronics. This tariff-driven supply chain shift could enhance ON’s market share and pricing power in strategic high-growth segments.

Financial Performance Overview

ON Semiconductor reported Q2 2025 revenue of $1.469 billion, as shown in the chart below. The revenue has been increasing consistently since 2005, indicating steady long-term growth.

The revenue mix for Q2 2025 is seen using the chart below. The Power Solutions Group segment leads with 47.5% of total revenue. The Advanced Solutions Group follows with 37.8%, while the Intelligent Sensing Group contributes 14.6%. This heavy reliance on Power Solutions means that growth in this segment will strongly influence overall performance.

However, weakness here could have a disproportionate impact on total revenue. Diversifying and boosting growth in AMG and ISG could help stabilise results and reduce dependence on a single segment.

The recent drop in revenue is because Margins remained solid, with a GAAP gross margin of 37.58%. These margins reflect disciplined cost control and a focus on higher-value products such as silicon carbide solutions. The company’s strategy to shift toward high-growth, high-margin markets is helping protect profitability despite market headwinds.

Moreover, the operating margins came in at 13.2% on a GAAP basis and 17.3% on a non-GAAP basis. This performance shows that ON is managing expenses effectively while continuing to invest in growth. The strong pricing in strategic markets like EVs and data centres contributed to this resilience.

On the other hand, the cash from operations was $184.3 million, with free cash flow of $106.1 million, as shown in the chart below. The company returned over 100% of free cash flow to shareholders year-to-date through share repurchases, signalling confidence in its long-term outlook. This capital return strategy, combined with investments in next-generation technologies, positions ON to benefit from the eventual market recovery.

ON Semiconductor: Long-Term Buy Despite 2025 Volatility

Multi-Decade Bullish Formation and Major Support Zones

ON Semiconductor has shown a strong bullish formation over the past two decades. The long-term yearly chart below illustrates this trend. From 2000 to 2015, the stock price formed a solid base pattern. It then initiated a strong surge, breaking above the pivotal resistance of $28 to reach a record high of $111.35 in 2023. The years 2021 and 2023 marked the most significant rallies in ON Semiconductor’s history, with the peak occurring in 2023.

After reaching this peak, the stock price corrected lower toward a significant support zone. This support is around the $28 level, which was the highest point in the year 2000. When the price retested this zone, a strong rebound emerged in 2025 due to the firm support level.

The sharp correction in 2025 was driven by high volatility, primarily triggered by Trump’s tariff policies, which created significant uncertainty in the semiconductor sector and the broader stock market.

Historical Buy Signals and Rebound Patterns

To better understand the 2025 correction, the quarterly chart below highlights two major buy signals in ON Semiconductor’s history. The first buy signal appeared in 2021, when the price bottomed at $8.17 and then surged sharply to reach $111.35 in 2023. After this peak, a strong correction followed, with the stock finding a bottom in 2025 at the $31.04 area.

This $31.04 level acted as a key support zone. After hitting bottom in early 2025, the stock reversed higher, moving above the $60 level and forming a bullish hammer candle in Q2 2025. This rebound was fueled by strong technical support and heightened volatility in the semiconductor market.

However, the Q3 2025 candle is still forming, and the price is showing signs of a short-term pullback. This correction could find support again near the $30 level, potentially setting the stage for another rebound toward higher levels.

Based on the presence of a significant support zone around $30 and the bullish hammer pattern on the quarterly chart, investors may consider buying into the correction in Q3 2025. Additional accumulation could be done if the price dips further into the $17–$30 range, positioning for long-term gains as market conditions stabilise.

Key Technical Levels and Strategic Buy Zones

To further understand the key levels for ON Semiconductor, the chart below highlights critical price points for the stock. The analysis shows that the price formed a head and shoulders pattern from the 2023 peak.

The key support at $60 was broken, sending the stock toward the 78.6% Fibonacci retracement level at $30.42. After hitting this retracement, the price rebounded toward the $60 region, which aligns with the neckline of the head and shoulders pattern. The stock is now approaching the 61.8% retracement level near $48.

A long-term red-dotted trendline, converging near the $17 region, also acts as a significant support zone where the stock may find a long-term bottom. As the price has recently tested the $60 region, a strong correction has emerged around the 61.8% retracement zone.

Given this setup, investors can consider buying the stock within the $30 to $48 range and adding more positions if it approaches the $17 support area. A decisive monthly close above $60 would likely trigger another strong rally, potentially leading to new record highs in the coming months. Therefore, accumulating shares at lower levels within these long-term support zones is considered a strategic move for long-term investors.

Risk Factors

ON Semiconductor faces demand uncertainty in its key markets. A slowdown in EV sales or AI data centre investments could delay customer orders. The company’s reliance on the Power Solutions Group means weakness in this segment could weigh heavily on overall revenue. Moreover, the competition from other semiconductor makers, especially in silicon carbide technology, could also pressure margins and market share.

On the other hand, the geopolitical and trade risks remain high. Trump’s tariff policy benefits ON due to its US production, but global supply chain disruptions could raise component costs and delay shipments. Any escalation in US-China tensions could reduce access to overseas markets and impact long-term growth.

From a technical perspective, a break below the long-term support of $17 could trigger deeper declines.

Conclusion: ON Semiconductor’s Long-Term Growth Potential

ON Semiconductor is well-positioned for long-term growth. The company benefits from strong demand in EV and AI data centres. Its silicon carbide technology delivers efficiency, cost savings, and performance advantages. Moreover, the partnerships with major players like Xiaomi and Nvidia enhance its market presence. The US manufacturing base offers a competitive edge under current tariff policies. These factors support revenue growth and margin stability in high-value markets.

On the other hand, the technical charts also favour a long-term bullish view. The stock price trades near key support zones, offering attractive entry points for long-term investors. A breakout above $60 could trigger another rally toward record highs. ON Semiconductor benefits from strong industry catalysts, strategic positioning, and resilient financial performance, despite the short-term volatility. These factors make it an appealing option for investors seeking long-term capital appreciation. Investors can buy ON Semiconductor within the $45 to $30 range and position for long-term growth potential.