Financial Analysis

"Note 5: Acquisitions The Company pursues acquisitions and divestitures from time to time to leverage its existing capabilities and further expand its business to achieve certain strategic goals. Acquisition costs are not included as components of consideration transferred and instead are accounted for as expenses in the period in which the costs are incurred. During the years ended December 31, 2025 and 2024, the Company incurred acquisition and divestiture-related costs of approximately $3.7 million and $13.1 million, respectively, and the Company incurred an immaterial amount during the year ended 2023. Such costs were included in operating expenses in the Consolidated Statements of Operations and Comprehensive Income. 2025 Acquisitions SiC JFET acquisition On January 14, 2025, the Company acquired all of the outstanding equity of the SiC JFET technology business from Qorvo US, Inc., and certain of its subsidiaries, for $118.8 million in cash, subject to working capital adjustments. The Company believes the acquired SiC JFET technology complements the Company's EliteSiC power portfolio within the PSG reportable segment and enables the Company to help address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers. The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their relative fair values, was as follows (in millions): Purchase Price Allocation Cash $ 1.3 Inventori …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

"Note 13: Commitments and Contingencies Purchase Obligations The Company has agreements with suppliers, external manufacturers and other vendors for capital expenditures, inventory purchases, manufacturing services, information technology and other goods and services. The following is a schedule by year of future minimum purchase obligations under non-cancelable arrangements entered into during the ordinary course of business as of December 31, 2025 (in millions): 2026 $ 354.3 2027 128.5 2028 53.2 2029 34.0 2030 28.3 Thereafter 7.4 Total $ 605.7 Environmental Contingencies The Company currently leases its headquarters in Scottsdale, Arizona on Salt River Maricopa Indian Community property. Though the Company has encountered and dealt with a number of environmental issues over time relating to the various locations that comprise its operations, any costs to the Company in connection with such matters have not been, and, based on the information available, are not expected to be material. The following presents a summary of such environmental contingencies: East Greenwich, Rhode Island . The Companys design center in East Greenwich, Rhode Island is located on property that has localized soil contamination. In connection with the purchase of the facility, the Company entered into a Settlement Agreement and Covenant Not to Sue with the State of Rhode Island. This agreement requires that remedial actions be undertaken and a quarterly groundwater monitoring program be initiated by …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Note 9: Long-Term Debt The Company's long-term debt consists of the following (annualized interest rates, dollars in millions): As of December 31, 2025 2024 Revolving Credit Facility due 2028 $ $ 375.0 0.50% Notes due 2029 (1) 1,500.0 1,500.0 0% Notes due 2027 804.9 804.9 3.875% Notes due 2028 (2) 700.0 700.0 Gross long-term debt, including current maturities 3,004.9 3,379.9 Less: Unamortized debt discount (3) (2.5) (3.4) Less: Unamortized debt issuance costs (4) (21.9) (30.6) Net long-term debt $ 2,980.5 $ 3,345.9 (1) Interest is payable on March 1 and September 1 of each year at 0.50% annually. (2) Fixed rate note due September 1, 2028 with interest payable on March 1 and September 1 of each year at 3.875% annually. (3) Debt discount of $2.5 million and $3.4 million for the 3.875% Notes as of December 31, 2025 and December 31, 2024, respectively. (4) Debt issuance costs of $16.5 million and $21.7 million for the 0.50% Notes, $4.5 million and $7.7 million for the 0% Notes, $0.9 million and $1.2 million for the 3.875% Notes, in each case as of December 31, 2025 and December 31, 2024, respectively. The Companys long-term debt instruments are senior unsecured obligations and are fully and unconditionally guaranteed, on a joint and several basis, by each of the Companys subsidiaries that is a borrower or guarantor under the Revolving Credit Facility. Maturities Expected maturities of gross long-term debt as of December 31, 2025 are as follows (in millions): Expected Maturities …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Revenue for the Company's operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channels was as follows (in millions): Year ended December 31, 2025 PSG AMG ISG Total Geographic Location: Hong Kong $ 796.5 $ 622.0 $ 216.3 $ 1,634.8 United Kingdom 596.5 438.2 312.3 1,347.0 Singapore 689.4 476.9 86.1 1,252.4 United States 507.5 576.4 146.7 1,230.6 Other 215.2 148.4 167.0 530.6 Total $ 2,805.1 $ 2,261.9 $ 928.4 $ 5,995.4 Sales Channel: Distributors $ 1,650.7 $ 1,191.2 $ 425.5 $ 3,267.4 Direct Customers 1,154.4 1,070.7 502.9 2,728.0 Total $ 2,805.1 $ 2,261.9 $ 928.4 $ 5,995.4 Year ended December 31, 2024 PSG AMG ISG Total Geographic Location: Hong Kong $ 876.1 $ 661.6 $ 241.6 $ 1,779.3 Singapore 991.0 617.1 125.1 1,733.2 United Kingdom 712.8 502.5 422.5 1,637.8 United States 525.4 596.7 185.4 1,307.5 Other 242.9 231.2 150.4 624.5 Total $ 3,348.2 $ 2,609.1 $ 1,125.0 $ 7,082.3 Sales Channel: Distributors $ 2,051.5 $ 1,338.7 $ 369.4 $ 3,759.6 Direct Customers 1,296.7 1,270.4 755.6 3,322.7 Total $ 3,348.2 $ 2,609.1 $ 1,125.0 $ 7,082.3 Year ended December 31, 2023 PSG AMG ISG Total Geographic Location: Hong Kong 1,151.7 764.2 252.7 2,168.6 Singapore 1,095.1 640.4 203.3 1,938.8 United Kingdom 769.9 647.6 335.9 1,753.4 United States 604.3 642.1 327.3 1,573.7 Other 259.4 362.8 196.3 818.5 Total $ 3,880.4 $ 3,057.1 $ 1,315.5 $ 8,253.0 Sales Channel: Distributors $ 2,238.6 $ 1,494.2 $ 576.3 $ 4,309.1 Direct Cust …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Note 11: Share-Based Compensation Total share-based compensation expense related to the Company's RSUs, stock grant awards and ESPP was recorded within the Consolidated Statements of Operations and Comprehensive Income as follows (in millions): Year ended December 31, 2025 2024 2023 Cost of revenue $ 27.0 $ 24.6 $ 18.1 Research and development 27.5 24.7 20.5 Selling and marketing 20.8 21.3 18.6 General and administrative 69.0 65.5 63.9 Share-based compensation expense 144.3 136.1 121.1 Income tax benefit (30.3) (28.6) (25.4) Share-based compensation expense, net of taxes $ 114.0 $ 107.5 $ 95.7 As of December 31, 2025, total unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested RSUs with service, performance and market conditions was $153.0 million, which is expected to be recognized over a weighted-average period of 1.7 years. Upon vesting of RSUs, stock grant awards or completion of a purchase under the ESPP, the Company issues new shares of common stock. Share-Based Compensation Information The fair value per unit of each RSU and stock grant award is determined on the grant date. Share-based compensation expense is based on awards ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The annualized pre-vesting forfeitures for RSUs were estimated to be approximately 8% for the years ended December 31, 2025, 202 …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Note 14: Fair Value Measurements Fair Value of Financial Instruments The following fair value tier level hierarchy is used to determine fair values of financial instruments: Level 1: based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2: based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. Level 3: based on the use of unobservable inputs for the assets and liabilities and other types of analyses. The carrying value of cash and cash equivalents, which include money market funds and demand and time deposits, approximates fair value because of the short-term maturity of these instruments. The carrying amount of other current assets and liabilities, such as accounts receivable and accounts payable, approximates fair value due to the short-term maturity of the amounts, and such amounts are considered Level 2 in the fair value hierarchy. The Company held $400.0 million of short-term investments in time deposits and an insignificant amount of cash equivalents in the form of time deposits and money market funds as of December 31, 2025. The Company held $300.0 million of short-term investments in time deposits and an insignificant amount of cash equivalents in the form of time deposits and money market funds as of December 31, 2024. Money market funds and demand deposits are classified as Level 1 while time deposits are classified as Leve …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Note 6: Goodwill and Intangible Assets Goodwill Goodwill is tested for impairment annually on the first day of the fourth quarter or more frequently if events or changes in circumstances (each, a ""triggering event"") would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. For the year ended December 31, 2025, the Company performed a quantitative goodwill assessment as of the first day of its fourth fiscal quarter. The estimated fair values of each of the Company's reporting units were in excess of their carrying values and none of the reporting units were considered at risk for impairment. The following table summarizes goodwill by operating and reportable segments (in millions): As of December 31, 2025 As of December 31, 2024 Operating and Reportable Segments Goodwill Accumulated Impairment Losses Carrying Value Goodwill Accumulated Impairment Losses Carrying Value AMG $ 1,600.6 $ (748.9) $ 851.7 $ 1,562.3 $ (748.9) $ 813.4 PSG 735.8 (31.9) 703.9 682.1 (31.9) 650.2 ISG 124.3 124.3 124.3 124.3 Total $ 2,460.7 $ (780.8) $ 1,679.9 $ 2,368.7 $ (780.8) $ 1,587.9 The following table summarizes the change in goodwill (in millions): Net balance as of December 31, 2024 1,587.9 Addition due to business acquisitions 92.0 Net balance as of December 31, 2025 $ 1,679.9 Intangible Assets Intangible assets, net, were as follows (in millions): As of December 31, 2025 Original Cost Accumulated Amortization Accumulated Impairment Losses Carrying Value C …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

"Note 16: Income Taxes The Company's geographic sources of income before income taxes were as follows (in millions): Year ended December 31, 2025 2024 2023 United States $ (102.2) $ 1,584.3 $ 2,222.2 Foreign 233.5 253.1 313.6 Income before income taxes $ 131.3 $ 1,837.4 $ 2,535.8 The Company's provision for income taxes was as follows (in millions): Year ended December 31, 2025 2024 2023 Current: Federal $ 110.1 $ 276.6 $ 372.7 State and local 8.7 20.4 21.6 Foreign 59.5 52.0 76.9 Total 178.3 349.0 471.2 Deferred: Federal (177.2) (58.2) (107.9) State and local (7.1) (18.1) 13.2 Foreign 13.7 (9.9) (26.3) Total (170.6) (86.2) (121.0) Total provision $ 7.7 $ 262.8 $ 350.2 As further provided in Note 4: ''Recent Accounting Pronouncements and Other Developments,'' the Company has elected to prospectively adopt the guidance in ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory income tax rate to the Company's effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09 (in millions): Year ended December 31, 2025 Amount Percent U.S. federal statutory rate $ 27.5 21.0 % State and local income taxes, net of federal income tax effect (1) (1.2) (0.9) % Foreign tax effects: Japan: Withholding taxes 5.4 4.1 % Change in valuation allowance 7.6 5.8 % Other 4.7 3.6 % Malaysia: Investment credit expiration 30.8 23.4 % Change in valuation allowance (27.1) (20.7) % Other 0.6 0.4 % Korea: Currency translation gain (loss) 11 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

"Adopted Income Taxes (Topic 740): Improvements to Income Tax Disclosures (""ASU 2023-09"") In December 2023, the FASB issued ASU 2023-09 to enhance disclosures about income taxes. The amendments in this ASU require a public entity to disclose in tabular format, using both percentages and reporting currency amounts, specific categories in the rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. The amendments in this ASU also require taxes paid (net of refunds received) to be disaggregated by federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. For public business entities, the provisions of ASU 2023-09, which are required on an annual basis, are effective for fiscal years beginning after December 15, 2024 and can be applied on either a prospective or retrospective basis. The Company adopted this ASU on a prospective basis. See Note 16: ''Income Taxes'' for additional information. Income Taxes and Legislative Developments On July 4, 2025, the One Big Beautiful Bill Act (the OBBBA) was signed into law. The OBBBA includes significant provisions, such as the permanent extension and modification of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions, which become effective on various da …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"Note 12: Employee Benefit Plans Defined Benefit Pension Plans The Company maintains defined benefit pension plans for employees of certain of its foreign subsidiaries. Such plans conform to local practice in terms of providing minimum benefits mandated by law, collective agreements or customary practice. The Company recognizes the aggregate amount of all overfunded plans as assets and the aggregate amount of all underfunded plans as liabilities in its Consolidated Balance Sheets. The Company's expected long-term rate of return on plan assets is updated at least annually, taking into consideration its asset allocation, historical returns on similar types of assets and the current economic environment. For estimation purposes, the Company assumes its long-term asset mix will generally be consistent with the current mix. The Company determines its discount rates using highly rated corporate bond yields and government bond yields. Benefits under all of the plans are valued utilizing the projected unit credit cost method. The Company's policy is to fund its defined benefit plans in accordance with local requirements and regulations. The funding is primarily driven by the current assessment of the economic environment and projected benefit payments of foreign subsidiaries. The measurement date for determining the defined benefit obligations for all plans is December 31 of each year. The Company recognizes actuarial gains and losses during the period that the Company's annual pensi …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

"Note 7: Restructuring, Asset Impairments and Other, net Details of restructuring, asset impairments and other charges, net were as follows (in millions): Restructuring Asset Impairments Other Total Year ended December 31, 2025: 2025 Manufacturing Realignment $ 67.1 $ 496.0 (1) $ 103.9 (2) $ 667.0 2024 Business Realignment 0.9 1.0 1.9 Other (2.7) 0.7 (2.0) Total $ 65.3 $ 496.0 $ 105.6 $ 666.9 Year ended December 31, 2024: 2024 Business Realignment $ 75.7 $ 37.8 (1) $ 16.3 (2) $ 129.8 Other 0.3 3.8 4.1 Total $ 76.0 $ 37.8 $ 20.1 $ 133.9 Year ended December 31, 2023: 2023 Business Realignment $ 59.1 $ 9.3 (1) $ 2.8 $ 71.2 Other (0.6) 10.2 (3) (5.9) 3.7 Total $ 58.5 $ 19.5 $ (3.1) $ 74.9 (1) Primarily relates to property, plant and equipment impairment charges associated with the manufacturing and business realignment programs. (2) Primarily relates to accelerated depreciation of property, plant and equipment and accelerated amortization of ROU assets related to the realignment programs. (3) Property, plant and equipment and ROU asset impairment charges related to the site consolidation efforts in the U.S. A summary of changes in accrued restructuring charges was as follows (in millions): Accrued Restructuring Balance as of December 31, 2023 $ 17.9 Charges 76.0 Usage (39.5) Balance as of December 31, 2024 54.4 Charges 65.3 Usage (113.7) Balance as of December 31, 2025 $ 6.0 2025 Manufacturing Realignment During 2025, the Company announced restructuring and cost reduction initiat …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

"Note 3: Segments and Revenue Segments As of December 31, 2025, the Company was organized into three operating and reportable segments consisting of PSG, AMG and ISG. These segments represent management's view of the business for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker (""CODM""), which is the Companys Chief Executive Officer. The CODM uses segment gross profit for evaluating product pricing, factory utilization, allocation of capital and the assessment of segment profitability. The operating costs of manufacturing facilities which service all business units are reflected in each segment's cost of revenue on the basis of product costs. Because operating segments are generally defined by the products they design and sell, they do not sell to each other. The Company does not allocate income taxes or interest expense to its operating segments as the operating segments are principally evaluated on gross profit. Additionally, restructuring, asset impairments and other charges and certain other operating expenses, which include corporate research and development costs and miscellaneous nonrecurring expenses, are not allocated to segments. Revenue and gross profit for the Companys operating and reportable segments were as follows (in millions): PSG AMG ISG Total Year ended December 31, 2025: Revenue from external customers $ 2,805.1 $ 2,261.9 $ 928.4 $ 5,995.4 Cost of revenue 2,117.6 1,105.4 788.5 4,011.5 Segmen …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Note 2: Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the assets, liabilities, revenue and expenses of all wholly-owned and majority-owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest or is the primary beneficiary. Investments in affiliates where the Company does not exert a controlling financial interest are not consolidated. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. Significant estimates have been used by management in conjunction with the following: (i) calculation of future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) measurement of valuation allowances against deferred tax assets, and evaluations of uncertain tax p …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

"Note 10: Earnings Per Share and Equity Earnings Per Share Net income per share of common stock attributable to ON Semiconductor Corporation is shown below (in millions, except per share data): Year ended December 31, 2025 2024 2023 Net income for basic earnings per share of common stock $ 121.0 $ 1,572.8 $ 2,183.7 Add: Interest on 1.625% Notes 1.3 Net income for diluted earnings per share of common stock $ 121.0 $ 1,572.8 $ 2,185.0 Basic weighted-average shares of common stock outstanding 411.0 427.4 430.7 Dilutive effect of share-based awards 0.8 0.6 1.2 Dilutive effect of convertible notes and warrants 4.7 14.9 Diluted weighted average shares of common stock outstanding 411.8 432.7 446.8 Net income per share of common stock: Basic $ 0.29 $ 3.68 $ 5.07 Diluted $ 0.29 $ 3.63 $ 4.89 Basic income per share of common stock is computed by dividing net income attributable to the Company by the weighted average number of shares of common stock outstanding during the period. To calculate the diluted weighted-average shares of common stock outstanding, treasury stock method has been applied to calculate the number of incremental shares from the assumed issuance of shares relating to RSUs. The excluded number of anti-dilutive share-based awards was approximately 1.4 million, 0.5 million and 0.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. The dilutive impact related to the Companys 0.50% Notes and 0% Notes has been calculated using the if-converted meth …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing