Onsemi to Cut 1,000 Global Jobs

Onsemi has announced a global workforce reduction of approximately 1,000 employees as part of its strategic initiative to streamline operations and cut costs. This measure addresses the slow recovery in chip demand, particularly in the electric vehicle (EV) market, and aims to manage excess customer inventory effectively.

In a recent regulatory filing, Onsemi also revealed plans to consolidate nine of its operational sites and reassign or relocate an additional 300 employees. As of December 31, 2023, Onsemi employed around 30,000 full-time staff.

Onsemi is renowned for its advanced chips used in EV drivetrains and driver-assistance systems (ADAS) such as cameras and sensors. The company's silicon carbide (SiC) chips are also pivotal in extending the range of electric vehicles.

The company projects employment-related costs between $65 million and $80 million for 2024 and 2025, with the restructuring process expected to be completed by 2025. Onsemi plans to reinvest part of the savings into new business initiatives and opportunities.

This announcement follows a similar workforce reduction in 2023, where Onsemi cut approximately 1,900 jobs. That reduction aimed to optimize the internal production of higher-margin chips while outsourcing the manufacturing of other chips.

Onsemi’s revised forecast for second-quarter revenue and profit falls below analysts’ expectations from April. The company now projects revenue between $1.68 billion and $1.78 billion, compared to the expected $1.83 billion. This adjustment has raised concerns about a slower-than-anticipated recovery in automotive chip demand, potentially leading to a decline in orders and increased customer inventories. Consequently, Onsemi’s stock saw a slight dip in after-hours trading and has declined by 8.8% year-to-date.