On Semiconductor Corp. (ON) is not just another semiconductor company. Instead of making semiconductors on silicon wafers, the firm is the leader in using gallium nitride (GaN) and silicon carbide (SiC) substrates. I believe ON can triple over the next five years as its global markets recover and grow, highlights Michael Murphy, editor of New World Investor.
Its chips are more difficult to make than silicon wafer semiconductors, but they are known for high efficiency and power density. That makes them ideal for certain applications in electronics, such as LEDs, power amplifiers, and high-frequency devices.
Specifically, their unique properties allow them to operate at higher voltages and temperatures compared to traditional silicon semiconductors, leading to smaller and more efficient electronic systems. Because they are faster and more robust than silicon-based devices, they have particular applications in intelligent power management and sensing technologies. Their chips were in the Godzilla controller on my Bonneville Salt Flats record-setting EV.
SiC is the basic building block for advanced image sensors and analog solutions for energy storage, smart grids, robotics, and medical imaging. It is being rapidly adopted in industrial automation, with 45% year-over-year growth. It also has applications in data centers (where revenues doubled year-over-year), networking, and edge computing.
ON Semi financials show resilience despite the cyclical challenges of slow growth in 2025 at their major customers: global automakers, renewable energy companies, and industrial automation leaders. Over the next five years, ON Semi is positioned to expand its leadership in SiC and sensing solutions.
Today, electric vehicles are a $15.5 billion market opportunity projected to grow 25% a year and, yes, ON Semi has customers in China. Factory Automation is a $9.1 billion opportunity growing 8% a year. Energy infrastructure is a $7.8 billion market growing at 18% a year. Advanced Safety – primarily assisted and autonomous driving systems – is a $5.6 billion market growing 15% a year.
Meanwhile, AI data centers are a $4.4 billion opportunity growing 19% a year. EV charging stations are a smaller opportunity - $1.1 billion – but growing at a rapid 28% clip. Altogether, ON Semi has a $44 billion total available market growing at 18% a year.
Clearly, this is just a story of execution. As their end markets recover in 2026, Wall Street will realize how many megatrends an investment in ON captures. Management is also very shareholder-conscious. In 2025, the company returned 100% of its free cash flow to shareholders through stock buybacks.
Recommended Action: Buy ON.
