Onsemi Product Strategy Guide | Intelligent Power & Sensing

Executive Summary

In 2025, Onsemi stands at a pivotal moment in its transformation from a broad-based semiconductor supplier to a focused leader in intelligent power and sensing technologies. Three key strategic insights emerge:

1. Onsemi's aggressive portfolio rationalization has paid off, with 78% of revenue now coming from its core focus areas, up from 62% in 2021.
2. The company's strategic bet on silicon carbide (SiC) technology has positioned it as a market leader, capturing 30% share in automotive SiC solutions.
3. Onsemi's intelligent sensing solutions have seen rapid adoption in industrial automation, with a 45% year-over-year growth rate.

With a market cap of $42 billion and a dominant position in power semiconductors, Onsemi is poised to capitalize on the electrification megatrend. The company's strategic direction is clear: double down on intelligent power and sensing technologies while expanding its footprint in high-growth markets like electric vehicles, renewable energy, and factory automation.

Introduction

Onsemi's recent decision to invest $2 billion in expanding its silicon carbide (SiC) production capacity marks a significant milestone in the company's strategic evolution. This move is directly tied to the rapid growth in electric vehicle adoption and the increasing demand for high-efficiency power solutions in renewable energy systems. As the semiconductor industry undergoes a seismic shift towards specialized, high-performance technologies, Onsemi has emerged as a key player in power management and intelligent sensing solutions.

The company's strategic pivot raises several critical questions:

1. How will Onsemi maintain its technological edge in an increasingly competitive SiC market?
2. Can the company successfully expand its presence in emerging markets like industrial IoT and 5G infrastructure?
3. What strategic partnerships or acquisitions might be necessary to fill gaps in Onsemi's product portfolio?

This analysis will delve into Onsemi's current product landscape, short-term priorities, mid-term outlook, and long-term vision to answer these questions and provide a comprehensive view of the company's product strategy for 2025 and beyond.

Onsemi's Current Product Landscape

Onsemi's product portfolio has undergone significant transformation in recent years, with a clear focus on intelligent power and sensing solutions. As of 2025, the company's revenue breakdown reflects this strategic shift:

1. Power Solutions: 55% of revenue
   • Silicon Carbide (SiC) devices: 25%
   • Silicon-based power management: 30%
2. Intelligent Sensing: 35% of revenue
   • Image sensors: 20%
   • Automotive sensors: 15%
3. Other semiconductor solutions: 10% of revenue

In the power solutions market, Onsemi has established itself as a leader in SiC technology, with a 30% market share in automotive applications. The company's main competitors in this space are Wolfspeed and STMicroelectronics, with market shares of 35% and 20% respectively.

Recent win/loss analysis reveals:

• Win: Secured a major design win with a leading European EV manufacturer for SiC power modules, estimated to be worth $500 million over five years.
• Loss: Lost a bid for image sensors in a next-generation smartphone to Sony, highlighting the need for continued innovation in this space.

Strategic Position Matrix:

Expert perspective: "According to a former Onsemi Product leadership executive, 'Onsemi's decision to focus on SiC and intelligent sensing has positioned the company well for the next wave of growth in automotive and industrial markets. However, the company needs to accelerate its innovation in areas like AI-enabled sensors to maintain its competitive edge.'"

Short-Term: The Next 12 Months

Onsemi's short-term strategy is driven by three key themes:

1. Accelerating SiC production and innovation
2. Expanding intelligent sensing capabilities
3. Optimizing the product portfolio for high-growth markets

Specific product initiatives tied to each theme include:

1. SiC Production and Innovation:

   • Launch of next-generation 1200V SiC MOSFETs for EV traction inverters
   • Expansion of SiC wafer production capacity by 50%

2. Intelligent Sensing Capabilities:

   • Introduction of AI-enabled image sensors for advanced driver-assistance systems (ADAS)
   • Release of new industrial automation sensor suite with integrated edge computing capabilities

3. Portfolio Optimization:

   • Divestiture of low-margin analog product lines
   • Acquisition of a small AI chip design firm to enhance sensing capabilities

Success metrics and expected market impact:

• Increase SiC revenue by 40% year-over-year
• Grow intelligent sensing market share in automotive to 25%
• Improve overall gross margin to 48% through portfolio optimization

Strategic Dialogue Section: "When discussing Onsemi's immediate priorities with industry experts, three key questions emerged:

1. How will Onsemi differentiate its SiC offerings in an increasingly crowded market?
2. Can the company successfully integrate AI capabilities into its sensing products?
3. What impact will the portfolio optimization have on customer relationships?

Here's how Onsemi appears to be addressing each:

1. Onsemi is focusing on vertical integration and customized solutions to differentiate its SiC offerings, leveraging its end-to-end capabilities from wafer production to module design.

2. The acquisition of the AI chip design firm and partnerships with leading AI software companies indicate a serious commitment to integrating AI into sensing products.

3. Onsemi is working closely with key customers to ensure a smooth transition during portfolio optimization, offering long-term supply agreements and support for legacy products where necessary."

Mid-Term: 1-5 Year Outlook

In the mid-term, Onsemi is making several strategic bets to solidify its position in key markets and expand into new growth areas:

1. Doubling down on electric vehicle (EV) power solutions:

   • Investing $1.5 billion in expanding SiC and GaN (Gallium Nitride) production capacity
   • Developing integrated power modules that combine SiC devices with advanced packaging and thermal management solutions

2. Expanding presence in renewable energy:

   • Launching a new line of intelligent power modules for solar inverters and energy storage systems
   • Partnering with major renewable energy companies to co-develop optimized power solutions

3. Advancing intelligent sensing for Industry 4.0:

   • Developing a comprehensive suite of AI-enabled sensors and edge computing solutions for industrial automation
   • Acquiring a software company specializing in industrial IoT platforms to enhance Onsemi's end-to-end offerings

Build vs. Buy Decisions:

• Build: Onsemi will continue to invest in internal R&D for core power and sensing technologies
• Buy: The company is likely to acquire smaller firms for software capabilities and emerging technologies like LiDAR

Potential Market Entries/Exits:

• Entry: Onsemi is exploring opportunities in the growing electric aircraft market
• Exit: The company may divest its remaining consumer electronics product lines to focus on higher-margin industrial and automotive markets

Strategic Framework Analysis: "Using the Strategy Triangle framework:

📌 Where to Play: Onsemi is focusing on high-growth, high-margin markets in automotive electrification, renewable energy, and industrial automation. The company is strategically exiting low-margin, commoditized segments.

📌 How to Win: By leveraging its vertically integrated capabilities in SiC and intelligent sensing, Onsemi aims to provide differentiated, end-to-end solutions that combine hardware excellence with software intelligence.

📌 Why Now: The rapid acceleration of EV adoption, renewable energy deployment, and industrial digitization creates a unique window of opportunity for Onsemi to establish itself as a leader in intelligent power and sensing solutions."

Long-Term: 5-10 Year Projection

Onsemi's long-term strategy is built on several core assumptions about market evolution and technology trends:

1. Electric vehicles will dominate the automotive market, with over 50% of new vehicle sales being electric by 2035.
2. Renewable energy will become the primary source of electricity generation globally, driving demand for advanced power management solutions.
3. The Industrial Internet of Things (IIoT) will reach maturity, with AI-enabled sensors and edge computing becoming ubiquitous in manufacturing and infrastructure.

Based on these assumptions, Onsemi is making major technology bets in the following areas:

1. Next-generation wide bandgap semiconductors:

   • Investing in research on ultra-wide bandgap materials like Gallium Oxide (Ga2O3) for even higher efficiency power devices
   • Developing advanced packaging technologies to enable higher power density and improved thermal management

2. Integrated AI and sensing solutions:

   • Creating a new class of "cognitive sensors" that combine advanced sensing capabilities with on-chip AI processing
   • Developing neuromorphic computing architectures for ultra-low-power, real-time sensor data processing

3. Sustainable manufacturing and circular economy:

   • Investing in technologies for semiconductor recycling and reuse
   • Developing power solutions optimized for the circular economy, such as easily recyclable EV batteries

Potential disruption factors:

• Breakthrough in quantum computing could revolutionize certain sensing and data processing applications
• Development of new battery technologies might alter power management requirements in EVs and energy storage systems
• Geopolitical shifts could disrupt semiconductor supply chains, necessitating more localized production

Expert insights: Former Senior Executive 1: "Onsemi's long-term success will hinge on its ability to stay ahead of the curve in materials science. The company's early bet on SiC is paying off, but they need to be equally forward-thinking about the next wave of semiconductor materials."

Former Senior Executive 2: "The real opportunity for Onsemi lies in creating integrated solutions that combine power, sensing, and intelligence. If they can successfully merge these capabilities, they'll be well-positioned to capture emerging markets like autonomous systems and smart infrastructure."

Strategic Recommendations

1. Accelerate vertical integration in SiC:

   • Prioritize securing long-term supply of high-quality SiC wafers
   • Invest in advanced packaging technologies to differentiate power module offerings

2. Double down on AI integration:

   • Allocate 30% of R&D budget to AI-enabled sensing and power management solutions
   • Establish strategic partnerships with leading AI software companies

3. Expand presence in renewable energy:

   • Develop tailored power solutions for next-generation solar and wind technologies
   • Acquire or partner with an energy management software company to offer end-to-end solutions

Success metrics to watch:

• SiC market share in EV power electronics (target: 40% by 2027)
• Revenue from AI-enabled products (target: 25% of total revenue by 2028)
• Gross margin improvement (target: 52% by 2027)

Key risks and mitigation strategies:

• Supply chain disruptions: Diversify geographical sourcing and increase inventory of critical materials
• Technological obsolescence: Maintain flexible manufacturing capabilities and increase investment in emerging technologies
• Market concentration risk: Expand customer base in industrial and renewable energy sectors

Timeline of expected strategic shifts: 2025-2026: Complete portfolio optimization and ramp up SiC production 2027-2028: Launch integrated AI and sensing solutions for industrial IoT 2029-2030: Introduce next-generation wide bandgap semiconductor products

Key Takeaways

The most important strategic moves to watch for Onsemi are:

1. The expansion and vertical integration of SiC production capabilities
2. The successful integration of AI into sensing and power management products
3. The company's ability to capture market share in renewable energy solutions

Key metrics that will indicate success or failure:

• SiC revenue growth rate (target: >30% CAGR through 2030)
• Design wins in emerging markets like electric aircraft and industrial IoT
• Gross margin expansion as a result of portfolio optimization

Final assessment of strategic positioning: Bottom Line: Onsemi's focused strategy on intelligent power and sensing positions it well to capitalize on major trends in electrification and industrial automation. The company's success will depend on its ability to maintain technological leadership in SiC, successfully integrate AI capabilities, and expand its presence in high-growth markets beyond automotive. While challenges remain, particularly in terms of competition and potential technological disruptions, Onsemi's strategic direction appears sound and well-aligned with long-term industry trends.

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Disclaimer: This guide is created for product management interview preparation purposes only. The analysis and predictions are speculative and should not be considered as financial advice or an accurate representation of Onsemi's actual strategy. This content should not be used as the basis for any investment decisions. All product plans and strategies discussed are based on public information and industry analysis, not insider knowledge.