Why ON Semiconductor Deserves Attention Among Best Semiconductor Companies for Long-Term Growth

ON Semiconductor stands out as one of the more compelling best semiconductor companies to monitor for the coming decade, despite near-term market headwinds affecting the broader chip sector. The company’s diversified revenue streams and strategic positioning in transformative technologies make it a noteworthy case study for understanding the semiconductor industry’s evolution.

The Business Foundation and Revenue Mix

At its core, ON Semiconductor manufactures power semiconductors, intelligent sensing solutions, and analog mixed-signal integrated circuits serving multiple sectors. The 2024 revenue breakdown reveals a heavily automotive-weighted portfolio: automotive accounts for 55% of sales, industrial applications represent 25%, with the remaining 20% spanning consumer electronics and emerging opportunities.

Within the automotive segment, the company holds substantial exposure to silicon carbide (SiC) chip technology—a critical component in electric vehicle powertrains. Additionally, it participates in EV charging infrastructure, industrial automation systems, machine vision applications, and smart infrastructure solutions. The industrial portfolio benefits from exposure to factory automation and emerging smart building technologies.

The “other” revenue bucket encompasses participation in AI and data center infrastructure development, where ON Semiconductor functions as a manufacturing partner for next-generation computing platforms scheduled for deployment in 2027.

Near-Term Pressure Points

The semiconductor industry currently faces dual headwinds that directly impact ON Semiconductor’s near-term performance. Electric vehicle investment momentum has decelerated as higher interest rates have constrained consumer automotive purchasing power, simultaneously pressuring automakers who continue operating at losses on EV production.

Concurrently, the broader industrial sector is experiencing a cyclical slowdown. These demand-side pressures have manifested in sales deceleration trends tracking back to late 2023. The convergence of these factors creates temporary but measurable revenue growth challenges.

The Long-Term Investment Thesis

However, the medium to longer-term trajectory tells a distinctly different story. Electric vehicles represent the automotive industry’s structural growth pillar for the next decade. Major automakers including Ford Motor Company and others have committed to multibillion-dollar capital deployment to secure EV market share, signaling that near-term weakness reflects cyclicality rather than fundamental demand destruction.

Similarly, data center expansion remains a secular trend underpinning global technology infrastructure. Industrial automation adoption continues accelerating globally despite current softness. These secular tailwinds suggest that ON Semiconductor’s revenue headwinds are temporary.

Valuation and Risk-Reward Framework

Currently trading at approximately 14 times 2025 Wall Street free cash flow consensus estimates, ON Semiconductor’s valuation reflects meaningful conservatism. This pricing provides a cushion for near-term earnings shortfalls while preserving significant upside leverage to recovery scenarios.

For investors maintaining a decade-plus investment horizon and capable of tolerating cyclical volatility, the risk-reward positioning appears constructive. The company’s exposure to transformative technology trends—electrification, industrial modernization, and AI-driven computing infrastructure—positions it within the best semiconductor companies likely to benefit from structural tailwinds extending across the 2025-2035 period.