Chip Stock Investor Podcast Episode 292: Market Crash: Cheap Chip Stock to Back Up the Truck and Buy Now? Onsemi (ON Stock) Analysis
Apr 7, 2025
This discussion dives into the challenges facing On Semiconductor and the semiconductor industry overall, particularly due to recent tariffs. Hosts Nick and Kasey analyze the company's strategic moves, including a high-stakes acquisition proposal for Allegro Microsystems. They explore valuation insights, comparing historical trends and market conditions, while weighing the potential benefits of this merger against the risks. With intriguing investment strategies at play, it's a deep dive into whether OnSemi is poised for recovery or further pitfalls.
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On Semiconductor's Performance
- On Semiconductor (ON) has performed well over the past five years, with a 157% return.
- However, the automotive and industrial chip sector is currently facing a downturn.
Market Conditions and Inventory
- On Semiconductor sells chips to various markets, including automotive and industrial.
- Despite this diversification, high chip inventory across these markets is hindering a quick recovery.
Overinvestment in Chip Fabs
- Initial predictions of excess chip manufacturing capacity by 2030 were incorrect for some sectors.
- However, overinvestment in auto and industrial chip fabs has led to an earlier downturn in 2024.