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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 2021
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
(Commission File Number) 001-39317 
ON SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)  
Delaware 36-3840979
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
5005 E. McDowell Road
Phoenix, AZ 85008
(602244-6600

(Address, zip code and telephone number, including area code, of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareONThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act
Large Accelerated Filer
  
Accelerated filer 
Non-accelerated filer 
  
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x

The number of shares outstanding of the issuer's class of common stock as of the close of business on October 27, 2021:
Title of Each ClassNumber of Shares
Common Stock, par value $0.01 per share430,833,656



ON SEMICONDUCTOR CORPORATION FORM 10-Q

TABLE OF CONTENTS
 
Part I: Financial Information
Item 1. Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II: Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Signatures

(See the glossary of selected terms immediately following this table of contents for definitions of certain abbreviated terms)


ON SEMICONDUCTOR CORPORATION
FORM 10-Q
GLOSSARY OF SELECTED ABBREVIATED TERMS*
Abbreviated TermDefined Term
0% Notes0% Convertible Senior Notes due 2027
1.00% Notes1.00% Convertible Senior Notes due 2020
1.625% Notes1.625% Convertible Senior Notes due 2023
3.875% Notes3.875% Senior Notes due 2028
ADASAdvanced driver-assistance systems
AECAutomotive Electronics Council
Amended Credit AgreementCredit Agreement, dated as of April 15, 2016, as subsequently amended, by and among the Company, as borrower, the several lenders party thereto, Deutsche Bank AG, New York Branch, as administrative agent and collateral agent, and certain other parties, providing for the Revolving Credit Facility and the Term Loan “B” Facility
Amended and Restated SIPON Semiconductor Corporation Amended and Restated Stock Incentive Plan, as amended
ASUAccounting Standards Update
BEPSBase Erosion and Profit Shifting
CCDCharge-coupled device
Commission or SECSecurities and Exchange Commission
ESPPON Semiconductor Corporation 2000 Employee Stock Purchase Plan, as amended
Exchange ActSecurities Exchange Act of 1934, as amended
FairchildFairchild Semiconductor International, Inc.
FASBFinancial Accounting Standards Board
IoTInternet-of-things
IPIntellectual property
LIBO RateA base rate per annum equal to the London Interbank Offered Rate as administered by the International Exchange Benchmark Administration
QuantennaQuantenna Communications, Inc.
Revolving Credit FacilityA $1.97 billion revolving credit facility created pursuant to the Amended Credit Agreement
RSURestricted stock unit
SiCSilicon Carbide
SoCSystem on chip
Securities ActSecurities Act of 1933, as amended
Term Loan "B" FacilityA $2.4 billion term loan "B" facility created pursuant to the Amended Credit Agreement

* Terms used, but not defined, within the body of the Form 10-Q are defined in this Glossary.



PART I: FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)
ON SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
October 1,
2021
December 31,
2020
Assets
Cash and cash equivalents$1,389.2 $1,080.7 
Receivables, net720.0 676.0 
Inventories1,327.6 1,251.4 
Other current assets205.0 176.0 
Total current assets3,641.8 3,184.1 
Property, plant and equipment, net2,427.8 2,512.3 
Goodwill1,662.7 1,663.4 
Intangible assets, net390.3 469.0 
Deferred tax assets382.1 429.0 
Other assets436.0 410.2 
Total assets$8,940.7 $8,668.0 
Liabilities, Non-Controlling Interest and Stockholders’ Equity
Accounts payable$599.3 $572.9 
Accrued expenses and other current liabilities641.8 570.0 
Current portion of long-term debt203.0 531.6 
Total current liabilities1,444.1 1,674.5 
Long-term debt2,910.5 2,959.7 
Deferred tax liabilities46.8 57.3 
Other long-term liabilities394.9 418.4 
Total liabilities4,796.3 5,109.9 
Commitments and contingencies (Note 10)
ON Semiconductor Corporation stockholders’ equity:
Common stock ($0.01 par value, 1,250,000,000 shares authorized, 599,738,476 and 570,766,439 issued, 430,824,004 and 411,842,629 outstanding, respectively)
6.0 5.7 
Additional paid-in capital4,498.5 4,133.1 
Accumulated other comprehensive loss(48.6)(57.6)
Accumulated earnings2,009.2 1,425.5 
Less: Treasury stock, at cost: 168,914,472 and 158,923,810 shares, respectively
(2,341.4)(1,968.2)
Total ON Semiconductor Corporation stockholders’ equity4,123.7 3,538.5 
Non-controlling interest20.7 19.6 
Total stockholders' equity4,144.4 3,558.1 
Total liabilities and stockholders' equity$8,940.7 $8,668.0 

See accompanying notes to consolidated financial statements
4

ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions, except per share data)
(unaudited)
 Quarters EndedNine Months Ended
 October 1,
2021
October 2,
2020
October 1,
2021
October 2,
2020
Revenue$1,742.1 $1,317.3 $4,893.7 $3,808.7 
Cost of revenue (exclusive of amortization shown below)1,021.3 876.1 3,011.6 2,590.5 
Gross profit720.8 441.2 1,882.1 1,218.2 
Operating expenses:
Research and development154.5 156.1 494.4 483.2 
Selling and marketing68.4 65.3 223.4 207.7 
General and administrative75.7 62.2 221.3 196.3 
Amortization of acquisition-related intangible assets24.7 29.6 74.5 91.0 
Restructuring, asset impairments and other charges, net(1.7)9.0 58.3 58.0 
Intangible asset impairment  2.9 1.3 
Total operating expenses321.6 322.2 1,074.8 1,037.5 
Operating income399.2 119.0 807.3 180.7 
Other income (expense), net:
Interest expense(31.9)(42.2)(98.4)(126.6)
Interest income0.5 0.9 1.1 4.3 
Loss on debt refinancing and prepayment   (26.2) 
Gain on divestiture of business10.2  10.2  
Other income (expense)(5.8)0.4 (2.4)(2.3)
Other income (expense), net(27.0)(40.9)(115.7)(124.6)
Income before income taxes372.2 78.1 691.6 56.1 
Income tax (provision) benefit(61.8)83.1 (106.8)90.5 
Net income310.4 161.2 584.8 146.6 
Less: Net income attributable to non-controlling interest(0.7)(0.6)(1.1)(1.4)
Net income attributable to ON Semiconductor Corporation$309.7 $160.6 $583.7 $145.2 
Comprehensive income, net of tax:
Net income$310.4 $161.2 $584.8 $146.6 
Foreign currency translation adjustments(0.3)0.6 (2.8)1.1 
Effects of cash flow hedges3.9 3.6 11.8 (10.2)
Other comprehensive income (loss), net of tax3.6 4.2 9.0 (9.1)
Comprehensive income314.0 165.4 593.8 137.5 
Comprehensive income attributable to non-controlling interest(0.7)(0.6)(1.1)(1.4)
Comprehensive income attributable to ON Semiconductor Corporation$313.3 $164.8 $592.7 $136.1 
Net income per share of common stock attributable to ON Semiconductor Corporation:
Basic$0.72 $0.39 $1.38 $0.35 
Diluted$0.70 $0.38 $1.32 $0.35 
Weighted-average shares of common stock outstanding:
Basic430.6 410.8 423.8 410.5 
Diluted440.7 418.3 443.1 414.4 

See accompanying notes to consolidated financial statements
5

ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions, except share data) 
(unaudited)
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossTreasury StockNon-Controlling Interest
Number of sharesAt Par ValueAccumulated EarningsNumber of sharesAt CostTotal Equity
Balance at July 2, 2021599,397,171 $6.0 $4,470.3 $(52.2)$1,699.5 (168,864,960)$(2,339.2)$20.0 $3,804.4 
Shares issued pursuant to the ESPP171,146 — 5.5 — — — — — 5.5 
RSUs and stock grant awards issued170,159 — — — — — — —  
Payment of tax withholding for RSUs— — — — — (49,512)(2.2)— (2.2)
Share-based compensation— — 22.7 — — — — — 22.7 
Comprehensive income— — — 3.6 309.7 — — 0.7 314.0 
Balance at October 1, 2021599,738,476 $6.0 $4,498.5 $(48.6)$2,009.2 (168,914,472)$(2,341.4)$20.7 $4,144.4 
Balance at December 31, 2020570,766,439 $5.7 $4,133.1 $(57.6)$1,425.5 (158,923,810)$(1,968.2)$19.6 $3,558.1 
Stock option exercises4,000 — — — — — — —  
Shares issued pursuant to the ESPP570,732 — 17.6 — — — — — 17.6 
RSUs and stock grant awards issued2,782,381 — — — — — — —  
Shares issued for warrants exercise - 1.00% Notes13,424,951 0.1 (0.1)— — — — —  
Partial settlement - 1.625% Notes5,425,239 0.1 (141.7)— — — — — (141.6)
Partial settlement of warrants - 1.625% Notes6,764,734 0.1 (0.1)— — — — —  
Partial settlement of bond hedges - 1.625% Notes— — 339.0 — — (9,120,930)(339.0)—  
Equity component - 0% Notes— — 136.6 — — — — — 136.6 
Warrants and bond hedges, net - 0% Notes— — (66.5)— — — — — (66.5)
Tax impact of convertible notes, warrants and bond hedges, net— — 6.5 — — — — — 6.5 
Payment of tax withholding for RSUs— — — — — (869,732)(34.2)— (34.2)
Share-based compensation— — 74.1 — — — — — 74.1 
Comprehensive income— — — 9.0 583.7 — — 1.1 593.8 
Balance at October 1, 2021599,738,476 $6.0 $4,498.5 $(48.6)$2,009.2 (168,914,472)$(2,341.4)$20.7 $4,144.4 

Balance at July 3, 2020569,611,277 $5.7 $3,854.6 $(67.6)$1,175.9 (158,801,656)$(1,732.5)$23.2 $3,259.3 
Stock option exercises3,125 — — — — — — —  
Shares issued pursuant to the ESPP342,461 — 5.5 — — — — — 5.5 
RSUs and stock grant awards issued89,132 — — — — — — —  
Payment of tax withholding for RSUs— — — — — (24,435)(0.5)— (0.5)
Share-based compensation— — 17.5 — — — — — 17.5 
Comprehensive income— — — 4.2 160.6 — — 0.6 165.4 
Balance at October 2, 2020570,045,995 $5.7 $3,877.6 $(63.4)$1,336.5 (158,826,091)$(1,733.0)$23.8 $3,447.2 
Balance at December 31, 2019565,562,607 $5.7 $3,809.5 $(54.3)$1,191.3 (154,249,943)$(1,650.5)$22.4 $3,324.1 
Stock option exercises3,125 — — — — — — —  
Shares issued pursuant to the ESPP1,496,264 — 16.9 — — — — — 16.9 
RSUs and stock grant awards issued2,983,999 — — — — — — —  
Payment of tax withholding for RSUs— — — — — (964,735)(17.1)— (17.1)
Share-based compensation— — 51.2 — — — — — 51.2 
Repurchase of common stock— — — — — (3,611,413)(65.4)— (65.4)
Comprehensive (loss) income— — — (9.1)145.2 — — 1.4 137.5 
Balance at October 2, 2020570,045,995 $5.7 $3,877.6 $(63.4)$1,336.5 (158,826,091)$(1,733.0)$23.8 $3,447.2 

See accompanying notes to consolidated financial statements

6

ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) 
(unaudited)
 Nine Months Ended
 October 1,
2021
October 2,
2020
Cash flows from operating activities:
Net income$584.8 $146.6 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization456.4 471.3 
Loss (gain) on sale and disposal of fixed assets2.3 (1.8)
Gain on divestiture of business(10.2) 
Loss on debt refinancing and prepayment26.2  
Amortization of debt discount and issuance costs8.0 9.1 
Share-based compensation74.1 51.2 
Non-cash interest on convertible notes17.6 29.4 
Non-cash asset impairment charges10.8 14.2 
Intangible asset impairment charges 1.3 
Change in deferred tax balances39.5 (149.1)
Other0.2 5.3 
Changes in assets and liabilities (exclusive of divestiture):
Receivables(38.1)(21.5)
Inventories(71.5)(52.1)
Other assets(32.0)(27.2)
Accounts payable25.6 3.4 
Accrued expenses and other current liabilities55.6 (13.0)
Other long-term liabilities6.1 16.8 
Net cash provided by operating activities$1,155.4 $483.9 
Cash flows from investing activities:
Purchase of property, plant and equipment$(275.0)$(267.2)
Deposits and proceeds from sale of property, plant and equipment6.6 1.5 
Deposits utilized (made) for purchase of property, plant and equipment(21.5)2.3 
Divestiture of business, net of cash transferred3.4  
Purchase of business, net of cash acquired (4.5)
Purchase of available-for-sale securities(43.8) 
Proceeds from sale or maturity of available-for-sale securities2.8  
Settlement of purchase price from previous acquisition 26.0 
Net cash used in investing activities$(327.5)$(241.9)
Cash flows from financing activities:
Proceeds for the issuance of common stock under the ESPP$18.5 $17.8 
Payment of tax withholding for RSUs(34.2)(17.1)
Repurchase of common stock (65.4)
Issuance and borrowings under debt agreements787.3 1,858.0 
Reimbursement of debt issuance costs2.7  
Payment of debt issuance costs(3.8)(2.2)
Repayment of borrowings under debt agreements(1,218.8)(1,264.6)
Payment for purchase of bond hedges(160.3) 
Proceeds from issuance of warrants93.8  
Payments related to prior acquisition(3.0)(8.3)
Net cash provided by (used in) financing activities$(517.8)$518.2 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1.0)0.4 
Net increase in cash, cash equivalents and restricted cash309.1 760.6 
Beginning cash, cash equivalents and restricted cash (Note 6)1,081.5 894.2 
Ending cash, cash equivalents and restricted cash (Note 6)$1,390.6 $1,654.8 

See accompanying notes to consolidated financial statements
7

ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1: Background and Basis of Presentation

ON Semiconductor Corporation, together with its wholly and majority-owned subsidiaries ("onsemi," "we," "us," "our" or the "Company"), uses a thirteen-week fiscal quarter accounting period for the first three fiscal quarters of each year, with the third quarter of 2021 having ended on October 1, 2021 and each fiscal year ending on December 31. The quarters ended October 1, 2021 and October 2, 2020 each contained 91 days. The nine months ended October 1, 2021 and October 2, 2020 contained 274 and 276 days, respectively. As of October 1, 2021, the Company was organized into the following three operating and reportable segments: the Power Solutions Group ("PSG"), the Advanced Solutions Group ("ASG") and the Intelligent Sensing Group ("ISG").

The accompanying unaudited financial statements as of and for the quarter and nine months ended October 1, 2021 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Accordingly, the unaudited financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. The balance sheet as of December 31, 2020 was derived from the Company's audited financial statements, but does not include all disclosures required by GAAP for audited financial statements. In the opinion of the Company's management, the interim information includes all adjustments, which include normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Certain reclassifications have been made to prior period amounts to conform to current-period presentation. The footnote disclosures related to the interim financial information included herein are also unaudited. Such financial information should be read in conjunction with the consolidated financial statements and related notes thereto for the year ended December 31, 2020 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 16, 2021 (the "2020 Form 10-K").

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. Significant estimates have been used by management in conjunction with the following: (i) future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) variable and share-based compensation; and (iv) measurement of valuation allowances against deferred tax assets and evaluations of uncertain tax positions. Additionally, during periods where it becomes applicable, significant estimates will be used by management in determining the future cash flows used to assess and test for impairment of long-lived assets and goodwill and in assumptions used in connection with business combinations. Actual results may differ from the estimates and assumptions used in the consolidated financial statements.



8

ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)

Note 2: Revenue and Segment Information

The Company is organized into three operating and reportable segments consisting of PSG, ASG and ISG. These segments represent the Company’s view of the business, and its gross profit is used to evaluate the performance of the Company’s segments, the progress of major initiatives and the allocation of resources. Gross profit is exclusive of the amortization of acquisition-related intangible assets.

Revenue and gross profit for the Company’s operating and reportable segments are as follows (in millions):
PSGASGISGTotal
For the quarter ended October 1, 2021:
Revenue from external customers$892.1 $613.5 $236.5 $1,742.1 
Gross profit$346.0 $280.1 $94.7 $720.8 
For the quarter ended October 2, 2020:
Revenue from external customers$647.4 $494.6 $175.3 $1,317.3 
Gross profit (1)$194.2 $191.2 $55.8 $441.2 
For the nine months ended October 1, 2021:
Revenue from external customers$2,485.7 $1,752.6 $655.4 $4,893.7 
Gross profit$906.8 $739.2 $236.1 $1,882.1 
For the nine months ended October 2, 2020:
Revenue from external customers$1,889.7 $1,388.4 $530.6 $3,808.7 
Gross profit (1)$549.2 $500.4 $168.6 $1,218.2 

(1)Beginning in the first quarter of 2021, the Company started including unallocated manufacturing costs as part of segment operating results to determine segment gross profit. As a result, the prior-period amounts have been reclassified to conform to current-period presentation.

The Company had one customer, a distributor, whose purchases accounted for approximately 14% and 13% of the Company's total revenue for the quarter and nine months ended October 1, 2021.
























9

ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)

Revenue for the Company's operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channels are as follows (in millions):
Quarter Ended October 1, 2021
PSGASGISGTotal
Geographic Location
Singapore$285.4 $219.3 $39.3 $544.0 
Hong Kong281.8 152.2 53.0 487.0 
United Kingdom145.0 86.8 41.4 273.2 
United States115.8 74.3 48.6 238.7 
Other64.1 80.9 54.2 199.2 
Total$892.1 $613.5 $236.5 $1,742.1 
Sales Channel
Distributors$644.2 $355.6 $149.0 $1,148.8 
Direct Customers247.9 257.9 87.5 593.3 
Total$892.1 $613.5 $236.5 $1,742.1 
Nine Months Ended October 1, 2021
PSGASGISGTotal
Geographic Location
Singapore$833.0 $647.8 $105.2 $1,586.0 
Hong Kong738.9 397.0 142.6 1,278.5 
United Kingdom435.1 254.3 129.2 818.6 
United States299.2 220.9 128.5 648.6 
Other179.5 232.6 149.9 562.0 
Total$2,485.7 $1,752.6 $655.4 $4,893.7 
Sales Channel
Distributors$1,779.2 $988.8 $410.7 $3,178.7 
Direct Customers706.5 763.8 244.7 1,715.0 
Total$2,485.7 $1,752.6 $655.4 $4,893.7 
10

ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)

Quarter Ended October 2, 2020
PSGASGISGTotal
Geographic Location