ON Semiconductor Corporation's (ON.US) Q1 performance exceeded expectations, with data center revenue increasing by a staggering 30% compared to the previous quarter.

According to the Caixin Finance APP, ON Semiconductor Corporation (ON.US), a simulated chip manufacturer, announced its financial performance for the first quarter of 2026 after the market closed on Monday. The company's quarterly revenue increased by 5% year-on-year to $1.51 billion, higher than the market's expected $1.49 billion; adjusted earnings per share were $0.64, higher than the market consensus of $0.62. According to GAAP, the loss per share was $0.08, compared to a loss per share of $1.15 in the same period in 2025. As of the time of publication, the stock dropped by about 4.7% in after-hours trading, but has accumulated an 88% increase since the beginning of the year. The company's revenue growth mainly came from the Power Solutions division, which saw a 14% year-on-year increase to $736.6 million. The Analog and Mixed Signal division saw a decrease of 4.6%, while the Intelligent Sensing division saw a marginal increase of 0.9%. In the first quarter ending on March 31, the company, headquartered in Arizona, had an adjusted gross margin of 38.5%, in line with expectations but lower than the 40% in the same period last year. ON Semiconductor expects revenue for the current quarter to be between $1.54 billion and $1.64 billion, higher than the market's expected $1.53 billion; adjusted earnings per share are expected to be between $0.65 and $0.77, with a midpoint of $0.71, higher than the expected $0.67. The company stated that the adjusted gross margin could be between 38% and 40%, compared to the market expectation of 38.8%. The company also repurchased $346 million worth of stock in the first quarter. The company's management stated, "The demand continued to strengthen in this quarter, performance exceeded expectations, and we have moved beyond the cyclical bottom and into a recovery track." ON Semiconductor CEO Hassane El-Khoury said, "Our AI data center business is accelerating, with a sequential growth rate of over 30%. Looking ahead, we are encouraged by the fundamental health of our business and the long-term opportunities arising from the increasing semiconductor content in automotive, industrial, and AI data center applications." CFO Thad Trent added, "Through operational improvements, we achieved strong operating leverage, with operating profit increasing by 10% year-on-year, double the rate of revenue growth. Our strong product portfolio and optimized cost structure allow us to accelerate margin and profit levels as market conditions continue to improve." ON Semiconductor was spun off from Motorola in 1999 and has grown through a series of acquisitions to become a global analog chip supplier focused on power management in automotive, industrial, and cloud data center applications. In terms of product demand and inventory, this quarter ON Semiconductor's days inventory outstanding (DIO) was 200 days, 33 days higher than its five-year average. DIO is an important indicator for chip manufacturers, reflecting the company's capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventory levels typically remain stable, giving chip manufacturers pricing power. A continued rise in DIO could be a warning sign of weak demand, and if inventory continues to climb, the company may have to cut production.