Semiconductor manufacturer Onsemi announced second quarter revenue projections above market expectations on Monday, demonstrating resilience in its electric vehicle (EV) chip business despite economic uncertainties stemming from US President Donald Trump's recent auto import tariffs, says a report by ET Auto.
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Chinese, European EV Markets Drive Silicon Carbide Demand
Orders for Onsemi's specialised silicon carbide chips saw growth during the first quarter, bolstered by expanding electric vehicle sales across China and Europe. This positive trend continues even as the 25 per cent US tariff on automotive imports, implemented April 3, threatens to escalate vehicle pricing.
President Trump's new duties could disrupt supply chains and increase car prices by thousands of dollars, causing numerous automakers to withdraw their financial forecasts. Despite these challenges, Onsemi maintains its position as one of the limited suppliers of silicon carbide chips crucial for extending EV range.
Restructuring Plans
The company recently abandoned its $6.9 billion acquisition proposal for competitor Allegro MicroSystems, citing the target company's board's unwillingness to fully engage with the offer. Additionally, Onsemi announced in February plans to reduce its workforce by approximately 2,400 employees globally in 2025.
Performance Beats Analyst Projections
For the upcoming quarter, Onsemi projects revenue between $1.40 billion and $1.50 billion, with the midpoint surpassing analysts' expectations of $1.42 billion according to LSEG data. The company anticipates second-quarter adjusted earnings per share between 48 cents and 58 cents, compared to market estimates of 52 cents.
In its first-quarter performance, Onsemi reported revenue of $1.45 billion, exceeding analyst projections of $1.40 billion. However, this figure represents a 22 per cent decrease compared to the same period last year.
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