You may have misunderstood ON Semiconductor by changing the name and abandoning the factory to IDM

When ON semiconductor changed the company’s name to ON Semiconductor, it wasn’t trying to change its past as a semiconductor company, but rather a future where emerging applications were the company’s strategic focus. For now, that future will be fulfilled by Hassane EI-Khoury, the company’s young president and CEO, who took over at the end of last year. Before Cypress Semiconductor was acquired by Infineon in April last year, he was the company’s president and CEO.

El-Khoury began his career at Continental Automotive Systems as a senior design engineer, an interesting echo of ON Semiconductor’s presence in the automotive space. As the new helm, El-Khoury focuses on defining ON Semiconductor as a leading supplier of smart power and sensing technologies, focusing its business on two areas: automotive and industrial. With a strategy to drive disruptive innovation, he expects to build a larger ecosystem within the megatrends of vehicle electrification, advanced safety, alternative energy and factory automation.

A global context is environmental protection. Overcoming greenhouse gas emissions is already a consensus of most governments, and this will be the main arena driving technological innovation in the coming decades, while the industrial and automotive end markets account for 66% of global greenhouse gas emissions – of which industry accounts for 52% , cars accounted for 14% – will be the protagonist of the application of new technologies and products. The net-zero economy presents a huge market opportunity for ON Semiconductor, which has smart power and sensing technologies, and the company has pledged to reach net-zero emissions by 2040. El-Khoury is now considering how to use ON Semiconductor’s combined capabilities in technology research and development, product design, manufacturing, and operational strategies to embrace such opportunities and maximize value.

El-Khoury believes that power and perception, which embody disruptive technologies and robust ecosystems, are two important enablers for the realization of these values. On the one hand, the automotive and industrial fields are accelerating electrification and automation, and high-efficiency power generation, distribution, and loss are the keys to meeting electrification and optimizing power efficiency; on the other hand, in the field of perception, industrial automation and L2+ autonomous driving are inseparable The development of sensing technology, these are cutting-edge topics related to climate and sustainable development. Driven by this, it is estimated that from 2021 to 2025, the compound annual growth rate of ON Semiconductor’s smart power supply and sensing products can reach 6% and 10% respectively.

5G and cloud power, factory automation, energy infrastructure and charging, ON Semiconductor has anchored 4 areas as the main direction of ecological development. Among them, each platform of cloud and telecom infrastructure will bring more than $300 value to ON Semiconductor’s power products. In terms of industry, the generation and use of renewable energy in the three fields of factory automation, energy infrastructure, and electric vehicle charging, as well as the demand for smart power sources in charging, have created new growth points for ON Semiconductor. Specifically, each factory in factory automation can bring ON Semiconductor a value of $3,000-10,000, and each IGBT and SiC inverter in the energy infrastructure will bring ON Semiconductor a value of more than $600, while each The value brought by an electric vehicle charging pile is 2000-4000 US dollars.

In the field of perception, machine vision is ON Semiconductor’s strength. Its global shutter image sensor (CIS) has been widely used in industrial automation systems and automobiles, especially automobiles. The market share is 80%. Since this series of products was originally designed for automotive applications, it has formed its own technical advantages in HDR, global shutter (good for capturing fast-moving objects), and high security levels. “In order to make the intellisense technology of automotive cameras absolutely reliable, we analyzed more than 4,000 failure modes,” El-Khoury said, “This coverage is wider than all competitors, and we have to do better than human vision. , we save an average of 9 lives every hour.”

Overall, the current value of power and sensing products in each L2+ vehicle is about $200-1000. El-Khoury sees two important growth drivers in the automotive sector coming from transmission and safety.

“In the era of internal combustion engines, the Electronic content of 0-level and L1-level vehicles is only $50, and when the 48-volt L2+ level is reached, the content may reach $280. ​​The content of pure electric vehicles and hybrid vehicles to the L2+ level will reach $750, and the future L4 level will reach $750. / L5 level autonomous driving, the opportunity for electronic content can reach $1,600 per vehicle.” El-Khoury said, “From the perspective of our customers, if it is L2+ level pure electric vehicles and hybrid vehicles, currently in autonomous driving and The electronic content of car safety is $715 per car. In 2019, it was only $131, which has increased five times in just three years.”

In terms of industry growth trends, from now to 2025, the compound annual growth rate of smart power and perception is about 7-9%, of which power supply is 15% and perception is 13%; the compound annual growth rate of automotive and industrial fields is also 7-9% %, the automotive industry is 17%, the industrial sector is 7%, and 5G is 11%. Among them, smart power and perception will drive ON Semiconductor’s market growth by 2 times, and the proportion of revenue from industry and automobiles will also increase from the current 60% to 75%.

Not long ago, ON Semiconductor announced that it would acquire GTAT, a SiC producer, for $415 million in cash. It appears that ON Semiconductor is looking to expand capacity, but El-Khoury is looking to exit some undersized fabs in the coming period in order to shift the focus to 300mm capacity while increasing production outside the GM packaging backend fab . El-Khoury is changing ON Semiconductor’s traditional IDM model, hoping to improve the cost structure by using internal capacity for differentiated technologies and strategic growth areas through Fab-Liter – a more lightweight fab manufacturing strategy.

ON Semiconductor’s last quarter’s financial report showed that 6% of its revenue was invested in advanced production capacity, and El-Khoury said the related investment will grow to 12% in the next two years, including the expansion of 300mm wafer fab capacity. In addition, a relatively large investment will be made in the entire SiC supply chain, including substrate substrates to final products to packaging-related technologies. In the next five years, the manufacturing capacity of the entire company will be 1.3 times that of the current one.

In 2020, GTAT has successively signed long-term SiC crystal supply agreements with ON Semiconductor and Infineon. Through the acquisition of GTAT, ON Semiconductor will increase its SiC strength and ensure customer supply in electric vehicles, electric vehicle charging and energy infrastructure. These areas have an impact on their competitors. El-Khoury stressed that the acquisition will not have an impact on GTAT’s existing capacity and supply.

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