On Semiconductor has rebranded to onsemi with a shift in strategy to focus on automotive and industrial power and sensing.
The review, seven months after CEO Hassane El-Khoury (above right) joined the company, will see the company exit various product lines, with a reduction in 10 to 15 percent as a result. This follows historical acquisitions of Cherry Semiconductor, Sanyo Semiconductor, Fairchild Semiconductor, Samsung's power business, image sensor desginer Aptina and more recenly antenna specialist Quantenna. The company is also selling off fabs in Japan and Belgium.
“You don’t dabble. You pick your markets, or eco-systems, and our technology overlays on automotive and industrial and you implement structural changes for the new strategy. You have to streamline manufacturing, We no longer run after anything to fill that manufacturing. Manufacturing is there to support the innovation. We are not going to be everything for everyone,” said El-Khoury announcing the new strategy. “We are turning the On Semiconductor table and creating a path for onsemi.
“There is growth in all areas of our business,” he said “We are having to make choices today and communicating that to customers, and we are moving capacity to where growth is in strategic products. Therefore we are taking away form the legacy or non-core business. The latency between making the decision and implementing, that transition is already ongoing.
“There are products that were dragged down by the volatility in the market. Where we are competitive in technology but not in cost we are fixing the cost so we don’t throw the baby out with the bathwater, so its very surgical,” he said.
The drive is to combine power with intelligence in modules to boost efficiency and reliability in electric vehicles, safety systems at Level 2+ and heading to driverless cars at L4 and L5..
“We can get efficiency to a certain level but we need to add intelligence through integration and package development in order for us to squeeze that power efficiency out with an intelligent power module that can monitor itself in real time and adjust as it cannot fail. This drives our content,” he said.
He point to a current customer which was spending $131 for electronics for an internal combustion engine (ICE). “At 48V and L2+ the content goes up 4-5x, that’s $715 in 2022 on shipped content. There is another customer that started with EV and L2+ and that’s $850. That is happening today, we don’t have to wait until L4 and L5. That is providing us with 30 times more content,” he said.
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This move to intelligent power and sensing also works for the industrial market. “The industrial market is not longer just machines and open loop but robots and highly accurate output., Industry 4.0 is what is going to allow all of that content to be built into vehicles and we are at the centre of all of this. This is the new onsemi,” he said.
This will drive average annual growth of 7 to 9 percent, with 9 percent capital spending by 2025. “As we shrink the cost structure changes dramatically. We will right size the manufacturing to fit the size of the company,” said Thad Trent, CFO (above left). "What we are planning today is those exits but it is a multi-year process over the next four years."
“I’m not talking about reducing capacity but reducing cost,” said El-Khoury. “There are technologies that don’t have foundries, name one place where I can get a silicon carbide die to package? You can’t. There are other technologies such as mixed signal where we can go outside. So deciding to go with power says you can’t go fabless.
Part of the shift is to silicon carbide power, where the company has lagged other suppliers such as STMicroelectronics.
“When I joined the company there was dabbling vs doubling down and in the last seven months we have doubled down. We don’t break out SiC, to me it’s all power but its fuelling a lot of growth, not just in electric vehicles but charging and infrastructure. Our long term agreements are starting to ramp and will ramp further next year. I’m bullish from the long term engagements we have with customers.”
The company is also focussing on image sensing, pointing to 6 to 12 cameras in a car with ADAS for safety, with 28 cameras for a self-driving robotaxi. It is also moving into lidar sensing.
“There is a latency on lidar. We have lidar design from the end of this year through 2022 and that will continue to grow. Our latest lidar has a range of 300m+ and that is why we have won the business,” said El-Khoury.
Imaging sensor chips are one area for internal capacity. "There are some areas where it makes sense in die area to have inside capacity," said El-Khoury. "Where we are with that we have an imager with an inside fab that’s taking pictures and getting qualified right now," he said.
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