ON Semiconductor Corp (NASDAQ:ON), a leader in intelligent power and sensing technologies, stock rose 4.75% (As on Feb 8, 11:44:37 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY 21. The company invests in internal capacity for differentiated technologies and strategic growth areas (Intelligent Power and Silicon Carbide). Utilize external manufacturing for non-proprietary technologies with flex capacity internally and externally. The company posted record GAAP and non-GAAP gross margins of 45.1% and 45.2%, respectively. The company delivered record quarterly GAAP and non-GAAP operating margins of 26.0% and 28.6%, respectively. 2021 free cash flow increased 167% year-over-year, with fourth quarter at $457.0 million or 25% of revenue. Operating income and free cash flow increased 6 times faster than the revenue as the company focus on the portfolio on secular megatrends of electric vehicles, ADAS, alternative energy and industrial automation. The company continues to expand gross margins as the company shift the mix into these high-value strategic markets while ramping new products, rationalizing our manufacturing footprint, and improving our overall cost structure. Outlook for the company business remains robust as evidenced by over 60% year-over-year growth in the design win funnel driven by the highly differentiated intelligent power and sensing portfolio.
Meanwhile, the company has completed its acquisition of GT Advanced Technologies (“GTAT”), a producer of silicon carbide (SiC). The acquisition enhances onsemi’s ability to secure and grow supply of SiC. onsemi’s customers will benefit from GTAT’s extensive experience in crystalline growth as well as its impressive technical capabilities and expertise in the development of wafering-ready SiC. SiC is a key component of next-generation semiconductors that provide technical benefits and improve system efficiency in many applications, including electric vehicles (EVs), EV charging and energy infrastructure. onsemi intends to scale and accelerate GTAT’s development of SiC to assure customers supply of critical components and further commercialize intelligent power technologies. The acquisition reinforces onsemi’s commitment to make substantial investments in disruptive, high-growth technologies to drive differentiation and leadership, including in the SiC ecosystem. onsemi plans to invest in expanding GTAT’s manufacturing facilities, supporting research and development efforts to advance 150mm and 200mm SiC crystal growth technology, while also investing in the broader SiC supply chain, including Fab capacity and packaging.
ON in the fourth quarter of FY 21 has reported the adjusted earnings per share of $1.09, beating the analysts’ estimates for the adjusted earnings per share of 94 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $1.85 billion in the fourth quarter of FY 21, beating the analysts’ estimates for revenue by 3.07.