Semiconductors▲3
onsemi to Divest Two Fabs, Expects $35 Million in Annual Savings
ON Semiconductor has agreed to sell its manufacturing facilities in Tarlac, Philippines, to Greatek Electronics and in Mountain Top, Pennsylvania, to Silex Microsystems, a move management says will optimize its manufacturing footprint and improve long-term economics. The transactions include structured transition plans and long-term supply agreements to ensure uninterrupted customer deliveries, with onsemi expecting approximately $35 million in annual cost savings beginning in 2027 and fully realized in 2028. The divestitures reinforce the company's Fab Right strategy by concentrating production in higher-efficiency facilities aligned with AI data centers, automotive, and industrial markets, and follow three consecutive quarters of gross-margin expansion to 38.5% in the first quarter of 2026. The company faces competition from Texas Instruments, which reported a 58% gross margin in the first quarter, and Navitas Semiconductor, which is targeting high-power gallium nitride and silicon carbide applications. Shares of onsemi have risen 68.2% year to date, and the Zacks Consensus Estimate for 2026 earnings is $3.09 per share, implying 31.5% growth from 2025.