On Semiconductor Corporation · NASDAQ:ON
On Semiconductor — Investor Presentation (August 2021)
26 slides from On Semiconductor's investor presentation, Aug 5, 2021
Slide 1: Creating Shareholder Value
Significant gross margin expansion driven by manufacturing consolidation, portfolio optimization and mix New leadership with history of execution and driving transformation Significant growth in Free Cash Flow – disciplined and shareholder-friendly investment policy Disciplined execution to drive su
Slide 2: Revenue Growth 2x the Semiconductor Industry
Significant gross margin expansion driven by manufacturing consolidation, portfolio optimization and mix New leadership with history of execution and driving transformation Significant growth in Free Cash Flow – disciplined and shareholder-friendly investment policy Disciplined execution to drive su
Slide 3: Slide 3
Slide 4: Intelligent Power and Sensing Drive 2X Market Growth
Intelligent Power and Sensing Drive 2X Market Growth CAGR 2021-2025 Market growth projected at 3.5-4.0% based on OMDIA and Gartner Intelligent Power – includes Power discrete, power modules, Analog Power IC Intelligent Sensing – includes image sensors, LIDAR, Ultrasonic sensor interface, image proce
Slide 5: Automotive and Industrial to Fuel Growth
Automotive and Industrial to Fuel Growth CAGR 2021-2025 Auto 17% Industrial 7% Other -1% 7-9% Automotive Electrification – SiC and IGBT ADAS – Image sensors and LiDAR Power – LED and ADAS power Industrial Alternative energy Factory automation EV fast charging stations Other Cloud / 5G expected to gr
Slide 6: Focus on Product Leadership and Exit Non-Core Businesses
CAGR 2021-2025 Strategic 13% Non-Core -15% 7-9% Strategic Invest in Product Leadership with 100% of R&D focused on Strategic products 13% CAGR drives long-term growth and margin expansion Non-Core 50% of Non-Core is Low-margin business in highly competitive markets Expect to exit 10-15% of current r
Slide 7: Highly Diversified Customer Base and Broad Channel Reach
Percentage of 2021 revenue Highly Diversified Customer Base and Broad Channel Reach Highly diversified customer base across all end-markets, products and geographies No 10% customer Customer roadmap and future technology alignment provide stickiness Engaging with strategic customers on long-term agr
Slide 8: G@ntinentals Q_eeeme 55°) Valeo crunpros x
G@ntinentals Q_eeeme 55°) Valeo crunpros x MO BIS ey Mercedes-Benz E:T-N Bloc 3 $suzuKi SIEMENS § Schneider =SUNGROW MAGNA BOSCH GM & thyssenkrupp @e TATA amazon (73) Rockwell @) L3HARRIS” TOSHIBA 3) ANIO 4 DELTA -aAPTiv: ABB YrestmA auton WHONDA HITACHI SAIC & J ACUA @nvinia. = Honeywell NOKIA Q.ZE
Slide 9: Deep engagement with all market disrupters
Deep engagement with all market disrupters Top 20 customers each purchase an average of 24 onsemi product families
Slide 10: Execution Drives 45% Gross Margin
New leadership with history of execution and driving transformation Significant growth in Free Cash Flow – disciplined and shareholder-friendly investment policy Disciplined execution to drive sustainable results Aligned to fast-growing secular megatrends in automotive and industrial end markets Cre
Slide 11: Execution Drives 45% Gross Margin
Mix Shift Portfolio Optimization Manufacturing Optimization Execution Drives 45% Gross Margin Mix Shift Product leadership drives shift to higher margin automotive and industrial end-markets Investing R&D in highly differentiated products at accretive margin Portfolio Optimization Monetize non-core
Slide 12: Shifting to Fab-Liter Manufacturing
Legacy IDM Model – fab filler strategy Excessive capacity expansion Collection of many sub-scale sites Low return on capital investments Flexible manufacturing strategy with low fixed cost footprint Minimize Gross Margin Volatility Invest in internal capacity for differentiated technologies and stra
Slide 13: Exit smaller inefficient fabs to reduce fixed cost footprint
Exit smaller inefficient fabs to reduce fixed cost footprint by $125-150 million Front-end Sites Consolidate capacity in larger fabs to drive reduction in unit cost 300mm Capacity Per Factory Adopt a flexible manufacturing model with capex investment for differentiated and critical technologies such
Slide 14: Slide 14
Slide 15: 20-25% Free Cash Flow Margin
New leadership with history of execution and driving transformation Disciplined execution to drive sustainable results Aligned to fast-growing secular megatrends in automotive and industrial end markets Significant gross margin expansion driven by manufacturing consolidation, portfolio optimization
Slide 16: Targeting $2B Free Cash Flow in 2025
Targeting $2B Free Cash Flow in 2025 ~$1B ~15% of Revenue ~$2B 20-25% of Revenue FCF to increase >2X revenue growth
Slide 17: Capital Expenditures Drive Differentiation & Leadership
Capital Expenditures Drive Differentiation & Leadership 300mm will provide significant cost advantage in front-end costs Accelerate fab consolidation process Enabling 300mm capabilities at East Fishkill Expansion in die capacity Grow competitive advantage in modules Silicon Carbide Expand capacity f
Slide 18: Investment and Capital Allocation Strategy
Investment and Capital Allocation Strategy Portfolio expansion for revenue growth and margin expansion – R&D and Capital Expenditure RoIC based investment decisions Investment in Organic Growth Adjacent and complimentary to core competencies Accelerate organic initiatives and developments Accretive
Slide 19: Operating income growth >2x revenue growth
New leadership with history of execution and driving transformation Aligned to fast-growing secular megatrends in automotive and industrial end markets Significant gross margin expansion driven by manufacturing consolidation, portfolio optimization and mix Creating Shareholder Value Significant grow
Slide 20: Driving Sustainable Performance
Focus on Profitable growth – Reduce reliance on revenue to drive margins Exit volatile and highly-competitive businesses and markets Long-term Supply Agreements (LTSA) improve visibility for investments and capacity planning Fab-Liter strategy and manufacturing optimization improves gross margin sta
Slide 21: 2025 Target Model
2025 Target Model 2021 Estimated Revenue $6.6B Gross Margin 38.6% Operating Expenses 19.1% Operating Margin 19.5% CAPEX 8% Free Cash Flow ~15% 2025 Target 7-9% CAGR Grow at 2X the semiconductor industry 20-25% ~$2B of Free Cash Flow in 2025 45% Manufacturing consolidating, mix shift, portfolio optim
Slide 22: Sustainable and climate-responsible focus
New leadership with history of execution and driving transformation Aligned to fast-growing secular megatrends in automotive and industrial end markets Significant gross margin expansion driven by manufacturing consolidation, portfolio optimization and mix Creating Shareholder Value Significant grow
Slide 23: onsemi is committed to ESG and Sustainability
is committed to ESG and Sustainability 100+ individual projects focused on conservation, reduction and recycling in 2020 Recognized as “Prime” in 2021 (top 20% of semiconductor companies) Top 1% of 768 companies in the “Manufacture of electronic components and boards industry” Most Sustainable Compa
Slide 24: onsemi commits to NET ZERO by 2040
onsemi commits to NET ZERO by 2040 onsemi commits to NET ZERO by 2040
Slide 25: Slide 25
Slide 26: Play to Win
Play to Win Focus on high-growth megatrends in Automotive and Industrial and win with onsemi intelligent power and sensing Double down and don’t dabble Invest in disruptive innovation to drive higher margin growth Implement Structural Changes Optimize organizational structure to reduce complexities
ON Semiconductor — Investor Presentation (August 2021) on 6ix