On Semi doubles buyback during pivot from legacy chips.
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On Semi announces new $6B share repurchase program
Story by TheFly • 12h
On Semi ( ON) announced that its board of directors has authorized a new share repurchase program of up to $6B over the next three years. The new share repurchase program will launch on January 1, 2026 after the previous $3B authorization expires on December 31. Under the prior authorization, On Semi has repurchased $2.1B of its common stock over the last three years, in particular spending approximately 100% of the company’s free cash flow in 2025 for share repurchase.
Copilot:
Yes, ON Semiconductor’s $6B buyback signals strong confidence—especially in its high-growth silicon carbide (SiC) and power solutions for automotive and industrial markets.
Here’s how the repurchase ties into chip demand and strategic focus:
Capital Allocation Reflects Strategic Conviction
- Doubling the buyback authorization from $3B to $6B—roughly one-third of ON’s $18.3B market cap—demonstrates management’s belief that the stock is undervalued and that future cash flows are robust enough to support aggressive capital return.
- Spending 100% of 2025 free cash flow on buybacks underscores confidence in long-term earnings power and margin expansion, not just short-term optics.
Where That Confidence Comes From: SiC and Power Leadership
- ON has pivoted away from legacy, low-margin segments and is now laser-focused on automotive and industrial electrification, particularly:
- Silicon Carbide (SiC): ON is ramping SiC capacity to meet demand from EVs, renewable energy, and industrial drives. SiC offers superior efficiency and thermal performance over traditional silicon.
- Intelligent power and sensing: These are critical for ADAS, EV powertrains, and energy infrastructure, where ON has secured long-term supply agreements.
- The company’s design win funnel grew 38% YoY, suggesting strong customer pull for its differentiated offerings.
Strategic Implications
- The buyback isn’t just financial engineering—it’s a signal that ON sees durable demand for its SiC and power portfolio, and that it expects to maintain pricing power and margin strength.
- It also reflects confidence in execution: ON has been methodically transforming its product mix and fab footprint to align with secular megatrends like EVs, automation, and energy transition.
If you’re tracking wafer-scale or power semiconductor plays, ON’s move is a strong tell. Want to dig into their SiC capacity roadmap or how they stack up against Wolfspeed and STMicro in EV inverters? |
