May 4 - Onsemi projected second-quarter revenue that exceeds Wall Street expectations on Monday, citing resilient demand from the automotive sector as a core driver. Management highlighted strengthening orders for silicon carbide chips, which the company says play an important role in extending electric vehicle range.
CEO Hassane El-Khoury said: "We exceeded expectations as demand strengthened through the quarter and we have moved beyond the cyclical trough on a path to recovery." That comment accompanied guidance that signals an upswing from the company’s recent trough in demand.
Guidance and consensus
- Onsemi set second-quarter revenue guidance in a range of $1.54 billion to $1.64 billion. That compares with analyst estimates of $1.53 billion, based on data compiled by LSEG.
- The company expects adjusted quarterly earnings per share of $0.65 to $0.77, while analysts are modeling $0.65.
Recent results and market reaction
For the first quarter, Onsemi reported revenue of $1.51 billion, topping estimates of $1.49 billion but reflecting a 1% decline versus the prior quarter. On an adjusted basis, the company recorded earnings of $0.64 per share, ahead of the $0.60 per-share estimate.
Shares of the company fell roughly 5% in extended trading despite a sharp run-up earlier in the year. The stock had risen more than 88% year-to-date and over 64% in the prior month before the after-hours decline.
Context within the auto and EV supply chain
Management tied the stronger outlook to demand improvement in the automotive industry and to traction for silicon carbide semiconductors, which the company characterizes as important for boosting electric vehicle driving range. The guidance suggests the company expects that improvement to continue through the coming quarter.
Key points
- Onsemi issued Q2 revenue guidance of $1.54 billion to $1.64 billion, above the $1.53 billion Street estimate.
- Adjusted EPS guidance for the quarter is $0.65 to $0.77, matching or exceeding analyst expectations.
- First-quarter revenue beat estimates at $1.51 billion but declined 1% sequentially; adjusted EPS was $0.64 versus a $0.60 estimate.
Sectors impacted
- Semiconductor industry: demand dynamics and pricing outlook tied to automotive customers.
- Automotive and electric vehicle supply chain: silicon carbide components influence EV range economics.
Risks and uncertainties
- Market reaction remains uncertain - shares dropped about 5% in extended trading despite strong year-to-date gains, indicating volatility in investor sentiment for semiconductor stocks.
- Sequential revenue softness - first-quarter revenue was down 1% from the prior quarter, reflecting potential near-term variability in orders.