ON Shares Plummet After 7% Q4 Revenue Drop; Low-Margin CE Segment Blamed

ON Semiconductor shares closed 14 percent lower Monday at $19.91 after its Q4 report included a 7 percent year on year revenue decline to $1.4 billion. Results were primarily due to “challenging macroeconomic and geopolitical conditions,” said CEO Keith Jackson. ON had unexpectedly high demand for a low-margin product line in its consumer segment in Q4 and expects the trend to continue through Q1. The chipmaker intends to either discontinue the product line or significantly raise prices after Q1, said Chief Financial Officer Bernard Gutmann. ON’s 2018 annual report lists consumer solutions as CMOS sensors and driver actuators for artificial and virtual reality, drones, mobile phones, PCs, tablets, high-speed video cameras, “and various unique consumer applications.” Its solutions offer “superior image quality, fast frame rates, high definition and low light sensitivity to provide customers with a compelling visual experience, especially in emerging applications in IoT markets for security, surveillance and internet protocol cameras,” it said. The current pace of recovery in the semiconductor industry is “moderate” vs. a sharp uptick in demand, said Jackson. Results in 2019 demonstrated the “transforming nature of the semiconductor business,” he said, identifying key segments for the future as advanced driver-assistance systems, power management for servers, 5G infrastructure and high-power solutions for electric vehicles. The company expects to outperform most of its peers in automotive, industrial and cloud-power semiconductor end-markets, he said. The company disclosed Monday it’s exploring the sale of its 40,000-square-foot automotive components fab in Belgium.