Onsemi beats second-quarter results estimates on steady auto chip demand

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(Reuters) – Onsemi marginally beat Wall Street expectations for second-quarter revenue and profit on Monday, helped by resilient demand for its automotive chips in an uncertain market, sending its shares up 10% in premarket trading.

After a long period of weak demand for automotive semiconductors, carmakers are clearing existing chip inventories – which they had built up during the pandemic – to avoid a supply crunch, benefiting companies such as Onsemi.

The chipmaker’s revenue forecast however, was mostly below analysts’ expectations, casting doubt over the future of the automotive chips market as consumers have been curbing spending on costlier electric cars, opting for cheaper hybrid alternatives instead.

Peer NXP Semiconductors presented a weak third-quarter revenue forecast last week on sluggish automotive demand.

Onsemi has also been investing in artificial intelligence for the past few years. It unveiled a lineup of chips using silicon carbide technology last month, which are designed to make data centers more energy efficient.

Silicon carbide is a more expensive alternative to standard silicon and is used to extend electric vehicles’ driving range.

For the second quarter, Onsemi reported revenue of $1.74 billion, beating analysts’ average estimate of $1.73 billion, according to LSEG data.

On an adjusted basis, the company earned 96 cents per share, compared with an estimate of 92 cents, while its forecast for third-quarter profit was in line with expectations.

The company forecast third-quarter revenue in the $1.70 billion to $1.80 billion range, the midpoint of which was below the $1.78 billion estimate.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Pooja Desai)