ON Semiconductor Corporation

Good day, everyone, and welcome to ONCEM's fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 11 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please note, This conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Investor Relations and Corporate Development, Parag Agarwal. Please go ahead.

Thank you, Carmen. Good morning, and thank you for joining us on this fourth quarter and full year 2025 results conference call. I'm joined today by Hassan El Khoury, our President and CEO, and Thad Tan, our CFO. This call is being webcast on the investor relations section of our website at www.onsami.com. A replay of this webcast, along with our fourth quarter and full year 2025 earnings release, will be available on our website approximately one hour following this conference call. And the recorded webcast will be available for approximately 30 days following this conference call. Additional information is posted on the investor relations section of our website. Our earnings release and this information includes certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and a discussion of certain limitations when using non-GAAP financial measures are included in our earnings release, which is posted separately on our website in the investor relations section. During the course of this conference call, we will make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are subject to risk and uncertainties that could cause actual events or results to differ materially from projections. Important factors that can affect our business, including factors that could cause actual results to defer materially from the forward-looking statements are described in our most recent Form 10Qs and other filings with the Securities and Exchange Commission and in our earnings list for the fourth quarter and full year 2025. Our estimates of the forward-looking statements might change, and the company assumes no obligation to update forward-looking statements to reflect actual results change assumptions, or other events that may occur except as required by law. Now, let me turn the call over to Hassan. Hassan?

Thank you, Farag. Good afternoon, and thank you all for joining us on this first call of the year. In 2025, amid a challenging demand environment, we delivered $6 billion of revenue and non-GAAP gross margin of 38.4% by staying disciplined in our execution and tightly aligning to our long-term strategy. With focused investments, we advance our technology leadership while positioning ourselves better in the growth markets that define our future. We strengthen our portfolio through organic investments, acquisitions, and partnerships. We launched a multi-market growth engine with our Treo platform. We delivered more than $250 million in AI data center revenue across the power tree. We expanded our content and automotive for zonal architecture. We further optimized our cost structure through FabRite actions, and we returned $1.4 billion of free cash flow through share repurchases. Over the last five years of our transformation, we have evolved from a manufacturing company to a product-centric company, launching more breakthrough products than we had in the prior decade and strengthening our portfolio with technologies that position us to win the most critical market transitions. Our disciplined investments combined with our FabRite actions have created operating leverage in our model and set the foundation for long-term growth and margin expansion. On the new product front, market proliferation continues with our Treo platform. We doubled the number of products sampling year-over-year, reinforcing Treo as a key contributor to our long-term mixed shift towards high-margin product revenue and supporting our new design funnel, which is now over a billion dollars. TREO is already being designed into a broad set of automotive applications, including zonal architectural, ultrasonic sensors, and LED drivers, and we are proliferating into industrial applications like HVAC, energy storage systems, or ESS, and medical, with customers like Dexcom, who designed our low-power analog front end and their continuous glucose monitors, or CGM. We broaden our leadership in wide bandgap technologies by introducing our lateral and vertical GAN or VGAN strategy with a differentiated product roadmap, solving our customers' problems at favorable margins. This year, we are preparing to sample more than 30 new GAN devices spanning 40 to 1,200 volts, including both discrete devices and integrated driver plus GAN solutions. To deliver lateral GAN to the market, we announced new foundry partnership to broaden regional supply options, giving us the product breadth and manufacturing flexibility to serve high-growth applications with revenue beginning in 2026. For VGAN, we are already collaborating with GM on the development of electric drive systems. As a reminder, VGAN is built on proprietary GAN-on-GAN technology, is manufactured in our fab in the U.S., and positions us for multi-year competitive advantage in high voltage and high power density applications spanning AI data centers, EVs, renewables, and aerospace defense and security. We expect first vegan revenue in 2027. Turning to the demand environment, we are seeing seasonal patterns and are encouraged by improving order trends across our core markets contributing to fourth quarter revenue of $1.53 billion, non-GAAP gross margin of 38.2%, and earnings per share of 64 cents, both exceeding the midpoint of our guidance. Automotive inventory digestion is largely behind us. AI data center is increasingly becoming a meaningful growth engine for the company, and we believe we have seen the bottom for industrial with global PMI trends pointing to early signs of expansion. In automotive, we continue to expand our content as the industry accelerates towards a zonal architecture for software-defined vehicles and autonomous driving. We are proliferating our 8-megapixel image sensor for front-facing vision and have introduced our Treo-based advanced ultrasonic sensors for ADAS. In zonal, we have already exceeded $400 million in design funnel for our SmartFETs, eFuses, and 10BASE T1S Ethernet transceivers, As customers, we architect their vehicles. Most OEMs have already started their migration towards zonal, and industry estimates suggest that in the next five to eight years, nearly 40% of new vehicles will feature this architecture. All of this is incremental to our existing leadership in silicon and silicon carbide devices in XEVs. In industrial, we are expanding our opportunity in machine vision factory automation, drones, and robotics with new families of image sensors with competitive performance, differentiated features, and strong interest from customers seeking a U.S.-based supplier. In aerospace, defense, and security, revenue increased 70% year-over-year, driven by North America and Europe. We secured a strategic design win for a solid-state circuit breaker using our SIGJFET demonstrating our ability to win in high barrier industrial segments where mission critical performance depends on resilient, reliable power distribution and optimized size and weight. Turning to our AI data center business, as previously mentioned, we delivered more than $250 million in revenue in 2025. With the rapid expansion of AI compute infrastructure and our unmatched ability to deliver power efficiency across all stages of power conversion, this market remains one of the strongest and fastest scaling opportunities for us. Over the last year, we have reinforced our role as the only broad-based U.S. power semiconductor supplier addressing power density bottlenecks that limit AI growth, aligning with national priorities for resilient AI infrastructure. With a broad portfolio of silicon, silicon carbide, SICK, JFET, GAN, and our newest vCore assets, we are perfectly positioned to deliver the power efficiency requirements our customers need. Going through the power tree, starting outside the data center, we lead the utility string ESS market with more than 50% worldwide share. We are ramping our IGBT hybrid power module to multiple global customers and seeing strong interest in our next generation SICK MOSFET hybrid power module, delivering even higher power efficiency, nearing 99.5%, and the highest power density at 430 kilowatts, with a first win at SunGrow in their global platform. We are already sampling our 1,200-volt ultra-low RDS-6 JFET for AI data center platforms, and our AI data center funnel is increasing as AI workloads scale and more platforms move to higher voltage bus architectures, expanding opportunities from power supplies to battery backup disconnect and hot swaps. At the UPS stage, we want a high-end design with a leading US power supplier that cuts their system footprint by about 50% using our SICK power module to increase power density and improve thermal performance. We expect production volumes to begin this quarter. At the rack level, we have secured designs for our SICK and Silicon MOSFET and our SICK JFET in both the BBU and PSU systems with Delta, LightOn and Great Wall to serve both their Western and China customers as the AI ecosystem continues to build out. At the XPU board level, we extended our reach by securing several next-gen design wins with our multi-phase controllers, smart power stages and point-of-load devices. We began sampling our dual 5x5 vCore solutions, as well as two-phase power modules using a next-generation regulator architecture that dramatically improves transient response for AI and server processors, referred to as TLVR for trans-inductor voltage regulator. As we integrate our recently acquired vCore assets, we are strengthening our portfolio and positioning ourselves to win the next-generation architectures. As we move into 2026, we are encouraged by a market environment that is showing clearer signs of improvement across automotive, industrial, and AI infrastructure. The groundwork we have laid out over the last several years has positioned us to benefit as demand conditions continue to get better. Our portfolio is aligned to the highest growth opportunities in power and sensing. Our manufacturing footprint is structurally stronger. and our customer engagements are deeper and more strategic. I'll now turn it over to Thad to give you more details on our results and guidance for the first quarter.