onsemi is divesting its manufacturing facilities in Tarlac, Philippines, and Mountain Top, Pennsylvania, as part of its Fab Right manufacturing strategy to optimize its global footprint and improve its long-term cost structure. The agreements, signed with Greatek Electronics Inc. and Silex Microsystems, are expected to result in annual cost savings of approximately $35 million, with initial savings beginning in 2027 and the full amount realized in 2028. These actions aim to strengthen the company's competitiveness by aligning resources with the most scalable and technology-aligned operations.

Tarlac, Philippines Transaction

onsemi has entered into an agreement with Greatek Electronics Inc., a Taiwan-based semiconductor company specializing in integrated circuit packaging and testing services. The transaction is expected to close within the next three to six months, subject to customary closing conditions and regulatory approvals. To ensure continuity, the Tarlac site will continue operating as part of onsemi’s manufacturing network throughout the transition period. Additionally, the companies have established a long-term supply agreement to support ongoing production and meet customer commitments post-closure.

Mountain Top, Pennsylvania Transaction

onsemi has also agreed to sell its Mountain Top facility to Silex Microsystems, a Sweden-based semiconductor company. This transaction is scheduled to close in January 2028, pending customary closing conditions and regulatory approvals. The extended transition period is designed to facilitate an orderly transfer of products manufactured at the site to other facilities within onsemi’s network. This structured migration ensures continuity for customers and allows for the transfer of technologies.

Financial Impact and Strategic Alignment

The divestments are a key component of onsemi’s strategy to create a more focused and efficient manufacturing network. By reallocating resources to higher-value operations, the company expects to enhance its ability to deliver sustained value to customers and stakeholders. The projected savings of $35 million per year will contribute to a more optimized cost structure starting in 2027.

ON Semiconductor has generated an average annual return of 15.03% over the past 15 years, outperforming the market by 3.03% on an annualized basis. The company currently holds a market capitalization of $34.99 billion.

An investment of $1000 made in ON Semiconductor stock 15 years ago would have grown to $8,169.33 today, based on the current price of $89.91. This performance highlights the impact of compounded returns on long-term capital growth.

ON Semiconductor’s Performance Over Last 15 Years