ON Semiconductor CEO expects automatic chip backlog to end by Q3

ON SemiconductorChip makers scrambling to meet the high demand for auto parts are hoping to eliminate the bottleneck in auto chip production by the second half of this year at the latest.

In an interview with CNBC’s Jim Cramer on Monday, CEO Hasane El Cory said the company’s product orders are skyrocketing. Industry-wide shortage of chips..

The shortage that began when the demand for electronic products such as computers surged during the pandemic forced automakers such as General Motors and Ford to cut production on some vehicles.

“We couldn’t catch up because we had so many orders, but we have capacity,” El-Khoury said.Sick.. “For our chips, we can support capacity. We will start new demand and we plan to complete this in a quarter or two.”

ON Semiconductor serves multiple end markets and began alerting customers in late summer that inventories are tight as home consumers consume more electronics. It was. Many companies at the time remained uncertain about the future due to the economic impact of the coronavirus blockade as executives reduced or refrained from ordering parts.

Modern vehicles, increasingly equipped with connected technology and other features, require a large number of small chips for features such as power management, power steering and infotainment systems.

According to El-Khoury, the automotive market is the largest driver of all ON Semiconductor’s final markets.

“It’s driven primarily by the automotive industry and we’re in a very good position,” he said. “We don’t just grow in the market. We grow beyond the market and, like industry, beyond all the strengths of the end market. This is a great place.”

Of the five segments that ON Semiconductor serves, automobiles account for almost one-third of revenue. The company is also a supplier to the industrial and military, telecommunications, computing, and consumer markets.

The computing segment first recovered in the second quarter after a decline in total revenue of approximately 8% in the first half of 2020, when the coronavirus blockade began. Automotive sales did not increase until the fourth quarter, up 6% year-on-year.

ON Semiconductor’s full-year sales were down 4.8% to about $ 5.26 billion. Revenues in 2019 were down 6% to about $ 5.52 billion.

ON Semiconductor forecasts revenues in the range of $ 1.41 billion to $ 1.51 billion this quarter, citing order trends and backlogs. If you meet the short-end guidance, your business will grow by at least 10% from what was reported in the first quarter of last year.

ON Semiconductor’s share price sold out more than 3% on Monday, outpacing the decline in the overall market. Despite the negative start of the week, stocks rose more than 23% to $ 40.44.

ON Semiconductor CEO expects automatic chip backlog to end by Q3

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