Company announces restructuring measures to accelerate progress towards target financial model
PHOENIX — (BUSINESS WIRE) — March 6, 2020 — ON Semiconductor Corporation (Nasdaq: ON) today provided an update to its first quarter 2020 revenue outlook. This update incorporates the potential impact of change in business conditions due to the novel coronavirus known as COVID-19.
“Based on preliminary assessment of the current business environment, we anticipate that our revenue for first quarter of 2020 will be in range of $1,275 million to $1,325 million, as compared to our earlier guidance of $1,355 million to $1,405 million, which we issued on February 3, 2020,” said Keith Jackson, President and CEO of ON Semiconductor. “We saw soft order trends in China in the weeks following Lunar New Year holidays, but orders have since picked up, and we have not seen any significant cancellations of orders. Furthermore, our factories in China have returned to normal levels of operations after mandatory shutdown following the end of Lunar New Year holidays. The health and safety of our employees and their families are of paramount importance to us, and we are thankful for efforts of our employees in China, Korea, Hong Kong, and other countries affected by COVID-19.”
Public health outlook due to COVID-19 is uncertain and continues to evolve, and business impact of these conditions is difficult to forecast. The revised guidance is based on the information available to date. ON Semiconductor undertakes no obligation to update information in this release based on changes occurring after the date of this release.
ON Semiconductor further announced today that it intends to take restructuring measures during the first quarter of 2020 to realign its investments. These restructuring measures are expected to result in annual cost savings of approximately $90 million, the majority of which are expected to be in operating expenses. These cost savings would be in addition to approximately $25 million of expected annual cost savings that were announced on February 3, 2020 on the earnings conference call for the fourth quarter of 2019. The company expects to achieve targeted cost savings by the end of 2020 on quarterly run rate basis. The company believes that these restructuring measures should enable it to optimize its cost structure and accelerate its progress towards its target financial model. These targeted cost reductions are structural in nature, and do not impact the company’s ability to respond to a significant recovery in demand.
About ON Semiconductor
ON Semiconductor (Nasdaq: ON) is driving energy efficient innovations, empowering customers to reduce global energy use. The Company is a leading supplier of semiconductor-based solutions, offering a comprehensive portfolio of energy efficient power management, analog, sensors, logic, timing, connectivity, discrete, SoC and custom devices. The Company’s products help engineers solve their unique design challenges in automotive, communications, computing, consumer, industrial, medical, aerospace and defense applications. ON Semiconductor operates a responsive, reliable, world-class supply chain and quality program, a robust compliance and ethics program and a network of manufacturing facilities, sales offices and design centers in key markets throughout North America, Europe and the Asia Pacific regions. For more information, visit http://www.onsemi.com.
ON Semiconductor and the ON Semiconductor logo are registered trademarks of Semiconductor Components Industries, LLC. All other brand and product names appearing in this document are registered trademarks or trademarks of their respective holders. Although the Company references its website in this news release, information on the website is not to be incorporated herein.
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Additional factors that could affect our future results or events are described under Part I, Item 1A “Risk Factors” in our 2019 Annual Report on Form 10-K filed with the SEC on February 19, 2020 (our "2019 Form 10-K"), and from time-to-time in our other SEC reports. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information, except as may be required by law.
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