onsemi Q2 Earnings Call Highlights

Strong second-quarter performance: onsemi reported $1.6 billion in revenue, up 6% sequentially and 9% year over year, with non-GAAP EPS of $0.74, 39.3% gross margin and $425 million in free cash flow. AI data centers are the primary growth engine: “Other” revenue rose 34% sequentially to $400 million, and the company expects AI data-center revenue to more than double in 2026. onsemi also cited expanded relationships with Nvidia’s MGX ecosystem, AWS and Chinese cloud-infrastructure customers. Improving outlook and operational leverage: onsemi forecast third-quarter revenue of $1.65 billion to $1.75 billion and gross margin of 40% to 42%, while higher factory utilization, price increases and facility divestitures are expected to support future margins and generate about $35 million in annual savings.

onsemi NASDAQ: ON reported second-quarter 2026 results above the midpoint of its guidance, citing recovering demand, continued growth in AI data-center applications and improving operating leverage. The semiconductor company generated $1.6 billion in revenue, up 6% sequentially and 9% from a year earlier. Non-GAAP gross margin rose 80 basis points from the prior quarter to 39.3%, while non-GAAP diluted earnings per share reached $0.74. The company generated $425 million in free cash flow and repurchased $332 million of shares during the quarter.

“Our second quarter results reflect the progress we have made in reshaping the business and our technology portfolio over the past several years and the strengthening demand environment,” President and CEO Hassane El-Khoury said on the company’s earnings call.

AI data-center demand remained the company’s fastest-growing market and was the primary driver of growth in its “other” revenue category, which increased 34% sequentially to $400 million. The company said it now expects AI data-center revenue to more than double in 2026 compared with 2025.

El-Khoury said onsemi expanded its role in Nvidia’s MGX ecosystem, supplying advanced power systems for next-generation AI data centers. The company also secured two power-supply platform wins with Great Wall, a provider of power solutions for China’s cloud and AI-infrastructure market, and added design wins for AWS power-supply and battery-backup systems. The company expects silicon carbide revenue in AI data-center applications to rise nearly 60% year over year in 2026.

El-Khoury said the opportunity extends across the AI power chain, from high-voltage infrastructure to low-voltage delivery near processing units, rather than being limited to silicon carbide products. Management also pointed to a transition toward 800-volt DC distribution architectures as a longer-term catalyst for higher semiconductor content. El-Khoury said the company expects that transition to begin ramping around late 2027 or early 2028, although deployments are expected to build gradually rather than create an immediate revenue step-up.

Automotive revenue totaled $781 million, down 2% sequentially but up 7% year over year. Chief Financial Officer Thad Trent said the sequential decline reflected seasonal demand patterns among certain European customers, partially offset by China. Automotive revenue was up approximately 6% year to date compared with 2025. In China, onsemi said automotive revenue increased 13% in the first half of 2026 from the year-earlier period, despite a 4% decline in total vehicle sales. The company attributed the performance to expandin...