QS Research · Michael Burry's Scion Capital analyst template · 2006
ON SEMICONDUCTOR CORP (ON)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +29% · downside +5% · upside +38%
Verdict is watch, not long: at $63.31 the section-13 normalized-EBITDA base is 15.8x x $2.02B = $31.9B EV, less ~$0.09B net debt = $31.8B equity / 389.28M shares = ~$81.7, +29%, just below the +30% long threshold, while 12.9x gives ~$66.7 (+5%) and 16.9x gives ~$87.4 (+38%). The normalization matters: cycle-average EBITDA is ~$2.02B versus TTM EBITDA $1.56B, so the central case leans on a recovery the Q3 2026 print is beginning to show (revenue +11% YoY, FCF $489M), not on today's depressed EBITDA. But the FCF cross-check is the problem: normalized FCF ~$1.08B at the given 6.6% yield implies only ~$42/share (-33%), because TTM FCF $1.62B is above the FY2020-FY2025 average. The market is missing a cyclical turn and cash returns, but not by enough to meet the long rule; the Synaptics cash deal and $2.45B term loan add execution and leverage risk.
Key numbers
- Share price: $63.31
- Market cap: $24.65B
- Latest financial period: TTM to Oct 2, 2026
- Revenue (TTM): $6.37B
- EV / EBITDA (TTM): 15.8x
- P/E (TTM): 35.8x
- Price / book: 3.26x
The 15 boxes
- ✓ 1. Long-form business notes
ON sells power and sensing semiconductors into automotive (51% of FY2025 revenue), industrial (28%) and other markets including AI data center (21%), organized in FY2025 into PSG (47% of revenue), AMG (38%) and ISG (15%). The cycle is extreme in the numbers: revenue went $5.25B (FY2020) to $8.33B (FY2022) and back to $6.00B (FY2025), and operating income went $348.7M to $2.54B (FY2023) then to $84.2M (FY2025). FY2025 reported earnings are distorted by roughly $981M of restructuring, impairment and inventory charges, so the $121.0M net income is not a clean read on the franchise; operating cash flow of $1.76B against capex of $341.2M is the better cycle signal. Between the FY2020 and FY2025 10-Ks the middle segment was rebuilt (ASG with Wi-Fi and foundry services became AMG), portfolio pruning was executed, East Fishkill was absorbed, and the strategy was re-pointed at SiC and AI data center power.
- ✓ 2. Competitive advantage
The sources do not support a durable competitive advantage: gross profit fell from $4.08B in FY2022 to $1.98B in FY2025, and operating income fell from $2.54B in FY2023 to $84.2M in FY2025. Competition is broad across all three segments, with Infineon, STMicroelectronics, TI, ADI, Wolfspeed, ROHM, Nexperia, Renesas, Monolithic Power, NXP, Sony, Samsung and Omnivision named. Cash flow stayed positive ($1.76B operating cash flow in FY2025), but that reflects D&A and working capital, not demonstrated pricing power. No TTM figures were provided in the sources.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-10-02) shows the cyclical turn: revenue $1,722.3M, up 11% year over year from $1,550.9M, with gross margin 41.4% versus 37.9% and operating income $378.3M versus $264.4M. The nine-month comparison is flattered: prior-year gross profit carried $235.8M of excess and obsolete inventory charges and $608.1M of restructuring/impairment versus $375.1M this year. Cash is strong ($4.4B cash plus short-term investments, $1,215.2M nine-month operating cash flow, buybacks $703.2M year to date), but the pending $123.00-per-share cash Synaptics merger (mid-2027 close) commits up to $2,450.0M of new term debt and adds deal costs to G&A. No revenue or EPS guidance is given in these sources.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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