ON Semiconductor Corp at Bank of America Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vivek Arya - BofA Global Research - Analyst : We'll go through the kind of the near to medium term. But Hassane, I was hoping you could just maybe -- let's take a step back, right? I mean, both yourself and Thad have been there for roughly about 3.5 years, right, or so. And I think we have essentially seen a transformation of the company from what used to be a deep cyclical to now more of a cyclical growth with multiple product cycles. And another, right, aspect of that transformation has been the (inaudible) strategy. I was hoping to tell us where onsemi is in that journey. How much more is still ahead of you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 8:20PM, ON.OQ - ON Semiconductor Corp at Bank of America Global Technology Conference

Question: Vivek Arya - BofA Global Research - Analyst : Got it. And also, as part of that -- the Fab Right strategy, what is the progress of the East Fishkill fab, right? How does that kind of fit in your journey towards this 53% gross margin? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 8:20PM, ON.OQ - ON Semiconductor Corp at Bank of America Global Technology Conference

Question: Vivek Arya - BofA Global Research - Analyst : Got it. Does that change that underutilization or the utilization of the fab if GF moves out of there?

Question: Vivek Arya - BofA Global Research - Analyst : So I wanted to talk about the two big parts of the business. So let's start with industrial, then we'll get to a lot more exciting stuff in automotive. So maybe industrial, help us unpack what is in your industrial business right now. What are the big applications there? And then where are those big ones in their state of inventory adjustments?

Question: Vivek Arya - BofA Global Research - Analyst : (inaudible) goods.

Question: Vivek Arya - BofA Global Research - Analyst : All right. Some of your industrial and analog peers have suggested sort of a -- I wouldn't call it a hard bottom, but at least some bottoming and some recovery over the next several quarters. I think you have been more conservative, Hassane, if I'm right about calling for a bottom in that market. What is preventing you from calling for some bottom if you're seeing some of these KPIs start to improve?

Question: Vivek Arya - BofA Global Research - Analyst : Any specific parts of industrial where you think things are still pretty bad and where do you think those --

Question: Vivek Arya - BofA Global Research - Analyst : Let's talk about automotive. So last year, auto production was up 9%. You obviously grew better than that. This year, auto production from what we are hearing is either side of [Platt], it's not really. So what does that tell you about how your auto business can do this year?

Question: Vivek Arya - BofA Global Research - Analyst : Why is that content helping you on the non-SEC side?

Question: Vivek Arya - BofA Global Research - Analyst : Got it. Do you have a -- if you set aside silicon carbide, Hassane, do you have a greater sense of comfort in automotive versus industrial? Because you have worked in the automotive industry. Do you think you are getting dependable signals for them? Or you think we should be prepared for another let down in overall automotive demand?

Question: Vivek Arya - BofA Global Research - Analyst : All right. How fast do you think the silicon carbide market can grow this year?

Question: Vivek Arya - BofA Global Research - Analyst : What is x?

Question: Vivek Arya - BofA Global Research - Analyst : But if you're saying nobody is canceling orders, everyone in the --

Question: Vivek Arya - BofA Global Research - Analyst : And how do you know it's 2x? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 8:20PM, ON.OQ - ON Semiconductor Corp at Bank of America Global Technology Conference

Question: Vivek Arya - BofA Global Research - Analyst : All right. Makes sense. Medium to longer term, are you concerned about the amount of silicon carbide capacity and the competition? Because we have [VOLspeed] who is ramping a lot of capacity. They are expecting to get big grants from CHIPS Act, right? I think STMicro announced more fabs. I'm sure that (inaudible) is also ramping. And there's, of course, like a whole bunch of people in China. So are you not concerned that there is -- there could be overcapacity in acquiring silicon carbide over the next few years?

Question: Vivek Arya - BofA Global Research - Analyst : There is talk of low-priced EVs coming to the market. How is ON positioned with that? Because what I find unique about you guys is the right you have access to both, as Thad mentioned, both the silicon side with IGBTs and silicon carbide. So you can mix and match combinations depending on market requirements.

Question: Vivek Arya - BofA Global Research - Analyst : One area that ON hasn't spoken about as much as the AI and the data center, right? We have to talk about AI and (inaudible) so what is ON's -- is this a market of interest? Is it a big enough market for you to go after? Like can you do it organically or something inorganic might be needed?

Question: Vivek Arya - BofA Global Research - Analyst : Do you think this segment becomes interesting enough that you actually start to break it out and not just put it in other?

Question: Vivek Arya - BofA Global Research - Analyst : Got it. And then finally, in closing, Hassane, any -- as we look at the second half, everyone is interested and excited. I think you're taking a little more measured view of second half recovery. How are you feeling about second half recovery right now?

Question: Vivek Arya - BofA Global Research - Analyst : How are you feeling today?

Question: Vivek Arya - BofA Global Research - Analyst : Makes a lot of sense. Thank you so much, Hassane. Thank you, Thad. Thank you.