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ON Semiconductor Corporation beats Wall Street estimates with 2Q earnings after demand for chips rockets

The company said it has a pipeline of new products and will strengthen customer engagement

computer chip
The company makes chips for power management, analog, sensors and logic

ON Semiconductor Corporation (NASDAQ:ON) announced better-than-expected second-quarter earnings Sunday, and delivered a sunny third-quarter outlook, as demand for chips used in consumer products grew.

The Phoenix-based company reported net income of US$155.3mln, or earnings of US$0.46 per share, on revenue of US$1,46bn compared with EPS of US$0.36 on revenue of US$1.38bn in the previous year’s second quarter.

The semiconductor maker beat Wall Street estimates for EPS of US$0.45 on revenue of US$1.43bn as it delivered better-than-expected sales of chips for consumer and communications devices.

Still, investors sent shares 4.3% lower to US$22.16 in morning trading as tech stocks overall took a beating.

READ: Chips for everything: Microchip Technology agrees US$8.3bn deal to buy Microsemi

"Demand for our products continues to accelerate as customers are increasingly relying on us to provide key technologies for newly emerging applications in automotive and industrial markets," said Keith Jackson, CEO of ON Semiconductor.

The company said it has a pipeline of new products and will strengthen customer engagement.

ON, which makes chips for power management, analog, sensors, logic, and other applications, said it expects revenue of between US$1.49bn and US$1.54bn in the third quarter ending October 31.

Baird analyst Tristan Gerra Gerra wrote in a note to investors Monday that while ON’s second-quarter earnings had beat estimates of US$0.44 per share and revenue of US$1405 to US$1455mln, he warned that the company could face risks next quarter, including excess capacity in times of weak end-demand and the inability to cut costs.

Gerra reiterated a Buy rating and has a price target of US$28 on the shares.

Quick facts: ON Semiconductor Corp

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Market: NASDAQ
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