Q1 Revenue Drops 8% at ON Semiconductor on Supply Constraints, Macroeconomic Impact

ON Semiconductor Q1 revenue fell 8% to $1.3 billion year on year and 9% sequentially, it said Monday, citing significant impact from the slowdown in global macroeconomic activity, supply constraints and “underutilization” due to coronavirus-related government shutdowns. Citing the need to take “aggressive, substantial and immediate measures" to meet gross margin targets, CEO Keith Jackson said on an earnings call the company is still looking to sell its automotive-qualified 6-inch fab in Belgium. The company took “restructuring actions” to cut expenses by $25 million annually, he said. ON saw a “modest” improvement in order rates in Q1, and improvement has continued in Q2, driven by “improving macroeconomic and geopolitical conditions and utilization of supply chain inventories.” Data from China shows “resilient manufacturing activity” that has been “especially encouraging.” Inventory levels are in line with the current demand outlook, said the executive, adding the company is “fully aware of risks” associated with the ongoing coronavirus crisis. Shares closed 8.5% lower Monday at $15.66.