By Stephen Nellis
– Chipmaker Onsemi delivered a better-than-expected sales and profit forecast on Monday after shifting its focus to its highest-profit products, sending its shares to a record high.
The results come as Chief Executive Hassane El-Khoury, who took the helm late last year, has reset the company’s strategy to zero in on areas including power electronics for electric vehicles and sensors for driver-assistance technologies.
Onsemi makes some of its chips from silicon carbide, a new and exotic material that is key to helping electric vehicles to get better range. The company said Monday it has closed its $415 million deal to buy GT Advanced Technologies (GTAT), a supplier of the raw material for the chips.
The move will help lessen Onsemi’s need for raw materials from Wolfspeed, which supplies silicon carbide to multiple chipmakers but also sells its own chips directly to automakers.
“I don’t want to be in that tug of war,” El-Khoury told Reuters in an interview. “By the end of ‘22, the majority of our silicon carbide revenue will be on GTAT.”
Onsemi, which makes about 70% of its own chips, is working to bring online factories with greater capacity. But El-Khoury believes the company won’t be able to satisfy demand from automakers until at least 2023.
“We’re not going to be at 100% of what customers want in ‘22. We’re still going to be supply constrained,” he said.
Onsemi shares closed up 14.3% at $54.99 after the company forecast fourth-quarter revenue and adjusted profits with midpoints of $1.79 billion and 95 cents per share, beating analyst expectations of $1.72 billion and 77 cents per share, according to IBES data from Refinitiv.
For the third quarter ended Oct. 1, Onsemi reported sales of $1.74 billion and adjusted profits of 84 cents per share, above estimates of $1.71 billion and 74 cents per share, according to Refinitiv data.