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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 June 30, 2023
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.)
5701 N. Pima Road
Scottsdale, AZ 85250
(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 July 26, 2023:
Title of Each ClassNumber of Shares
Common Stock, par value $0.01 per share431,528,954



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
0.50% Notes0.50% Convertible Senior Notes due 2029
1.625% Notes1.625% Convertible Senior Notes due 2023
3.875% Notes3.875% Senior Notes due 2028
ADASAdvanced driver-assistance systems
Amended and Restated SIPON Semiconductor Corporation Amended and Restated Stock Incentive Plan, as amended
ASUAccounting Standards Update
Commission or SECSecurities and Exchange Commission
New Credit AgreementCredit agreement, dated as of June 22, 2023, by and among the Company, as borrower, the several lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, and certain other parties, providing for the Revolving Credit Facility due 2028
EFKEast Fishkill, New York fabrication facility
ESPPON Semiconductor Corporation 2000 Employee Stock Purchase Plan, as amended
Exchange ActSecurities Exchange Act of 1934, as amended
GTATGT Advanced Technologies Inc.
IPIntellectual property
IRSUnited States Internal Revenue Service
ITInformation Technology
Existing 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 Revolver due 2024 and the Term Loan “B” Facility
Revolver due 2024A $1.97 billion revolving credit facility created pursuant to the Existing Credit Agreement
QCSDivision within ASG, primarily associated with the legacy Quantenna division
Revolving Credit FacilityA $1.5 billion senior revolving credit facility created pursuant to the New Credit Agreement
ROURight-of-use
RSURestricted stock unit
SCI LLCSemiconductor Components Industries, LLC
SiCSilicon carbide
Securities ActSecurities Act of 1933, as amended
Term Loan "B" FacilityA $2.4 billion term loan "B" facility created pursuant to the Existing Credit Agreement
U.S. or United StatesUnited States of America

* 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)
June 30,
2023
December 31,
2022
Assets
Cash and cash equivalents$2,622.2 $2,919.0 
Receivables, net944.4 842.3 
Inventories1,964.4 1,616.8 
Other current assets399.2 351.3 
Total current assets5,930.2 5,729.4 
Property, plant and equipment, net3,991.4 3,450.7 
Goodwill1,577.6 1,577.6 
Intangible assets, net326.3 359.7 
Deferred tax assets502.4 376.7 
ROU financing lease assets44.6 45.8 
Other assets390.2 438.6 
Total assets$12,762.7 $11,978.5 
Liabilities and Stockholders’ Equity
Accounts payable$907.5 $852.1 
Accrued expenses and other current liabilities654.1 1,047.3 
Current portion of financing lease liabilities7.0 14.2 
Current portion of long-term debt912.1 147.8 
Total current liabilities2,480.7 2,061.4 
Long-term debt2,539.6 3,045.7 
Deferred tax liabilities37.7 34.1 
Long-term financing lease liabilities24.1 23.0 
Other long-term liabilities677.0 607.3 
Total liabilities5,759.1 5,771.5 
Commitments and contingencies (Note 9)
ON Semiconductor Corporation stockholders’ equity:
Common stock ($0.01 par value, 1,250,000,000 shares authorized, 611,286,417 and 608,367,713 issued, 431,520,606 and 431,936,415 outstanding, respectively)
6.1 6.1 
Additional paid-in capital4,714.6 4,670.9 
Accumulated other comprehensive loss(37.4)(23.2)
Accumulated earnings5,402.7 4,364.4 
Less: Treasury stock, at cost: 179,765,811 and 176,431,298 shares, respectively
(3,101.9)(2,829.7)
Total ON Semiconductor Corporation stockholders’ equity6,984.1 6,188.5 
Non-controlling interest19.5 18.5 
Total stockholders’ equity7,003.6 6,207.0 
Total liabilities and stockholders’ equity$12,762.7 $11,978.5 


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 EndedSix Months Ended
 June 30,
2023
July 1,
2022
June 30,
2023
July 1,
2022
Revenue$2,094.4 $2,085.0 $4,054.1 $4,030.0 
Cost of revenue1,101.0 1,047.9 2,143.2 2,031.6 
Gross profit993.4 1,037.1 1,910.9 1,998.4 
Operating expenses:
Research and development145.3 161.6 283.7 318.4 
Selling and marketing71.6 73.1 143.4 144.2 
General and administrative87.2 83.2 163.1 161.1 
Amortization of acquisition-related intangible assets12.0 21.9 27.0 43.2 
Restructuring, asset impairments and other charges, net2.6 (1.7)54.1 (14.7)
Goodwill and intangible asset impairment charges 115.0  115.0 
Total operating expenses318.7 453.1 671.3 767.2 
Operating income674.7 584.0 1,239.6 1,231.2 
Other income (expense), net:
Interest expense(16.4)(22.1)(42.8)(43.7)
Interest income24.0 1.1 41.1 1.5 
Loss on debt prepayment (7.3)(13.3)(7.3)
Gain (loss) on divestiture of business0.5 1.9 (0.6)1.9 
Other income (expense)(1.3)6.4 3.4 8.5 
Other income (expense), net6.8 (20.0)(12.2)(39.1)
Income before income taxes681.5 564.0 1,227.4 1,192.1 
Income tax provision(104.4)(107.4)(188.1)(204.5)
Net income577.1 456.6 1,039.3 987.6 
Less: Net income attributable to non-controlling interest(0.5)(0.8)(1.0)(1.6)
Net income attributable to ON Semiconductor Corporation$576.6 $455.8 $1,038.3 $986.0 
Net income for diluted earnings per share of common stock (Note 7)$577.0 $456.3 $1,039.1 $987.0 
Net income per share of common stock attributable to ON Semiconductor Corporation:
Basic$1.34 $1.05 $2.40 $2.27 
Diluted$1.29 $1.02 $2.32 $2.20 
Weighted-average shares of common stock outstanding:
Basic431.7 434.2 431.8 433.8 
Diluted448.7 447.0 448.6 448.1 
Comprehensive income (loss), net of tax:
Net income$577.1 $456.6 $1,039.3 $987.6 
Foreign currency translation adjustments(3.0)(4.2)(2.7)(6.6)
Effects of cash flow hedges and other adjustments(4.8)1.3 (11.5)17.9 
Other comprehensive income (loss), net of tax(7.8)(2.9)(14.2)11.3 
Comprehensive income569.3 453.7 1,025.1 998.9 
Comprehensive income attributable to non-controlling interest(0.5)(0.8)(1.0)(1.6)
Comprehensive income attributable to ON Semiconductor Corporation$568.8 $452.9 $1,024.1 $997.3 

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 March 31, 2023610,278,043 $6.1 $4,633.6 $(29.6)$4,826.1 (178,426,953)$(2,988.2)$19.0 $6,467.0 
Shares issued pursuant to the ESPP83,858 — 5.9 — — — — — 5.9 
RSUs released and stock grant awards issued396,303   — — — — —  
Partial settlement - 1.625% Notes
528,213   — — — — —  
Partial settlement of bond hedges - 1.625% Notes
— — 43.5 — — (528,205)(43.5)—  
Payment of tax withholding for RSUs— — — — — (116,917)(9.8)— (9.8)
Share-based compensation— — 31.6 — — — — — 31.6 
Repurchase of common stock— — — — — (693,736)(60.4)— (60.4)
Comprehensive income (loss)— — — (7.8)576.6 — — 0.5 569.3 
Balance at June 30, 2023611,286,417 $6.1 $4,714.6 $(37.4)$5,402.7 (179,765,811)$(3,101.9)$19.5 $7,003.6 
Balance at December 31, 2022608,367,713 $6.1 $4,670.9 $(23.2)$4,364.4 (176,431,298)$(2,829.7)$18.5 $6,207.0 
Shares issued pursuant to the ESPP220,714 — 13.2 — — — — — 13.2 
RSUs released and stock grant awards issued2,076,679   — — — — —  
Warrants and bond hedges, net - 0.50% Notes
— — (171.5)— — — — — (171.5)
Tax impact of warrants and bond hedges, net— — 92.3 — — — — — 92.3 
Partial settlement - 1.625% Notes
621,311   — — — — —  
Partial settlement of bond hedges - 1.625% Notes
— — 50.4 — — (621,303)(50.4)—  
Payment of tax withholding for RSUs— — — — — (695,323)(57.4)— (57.4)
Share-based compensation— — 59.3 — — — — — 59.3 
Repurchase of common stock— — — — — (2,017,887)(164.4)— (164.4)
Comprehensive income (loss)— — — (14.2)1,038.3 — — 1.0 1,025.1 
Balance at June 30, 2023611,286,417 $6.1 $4,714.6 $(37.4)$5,402.7 (179,765,811)$(3,101.9)$19.5 $7,003.6 

Balance at April 1, 2022606,021,655 $6.1 $4,533.3 $(26.4)$2,992.4 (171,526,902)$(2,507.2)$19.8 $5,018.0 
Shares issued pursuant to the ESPP127,830 — 5.5 — — — — — 5.5 
RSUs released and stock grant awards issued277,961   — — — — —  
Partial settlement - 1.625% Notes
238   — — — — —  
Partial settlement of bond hedges - 1.625% Notes
— —  — — (232) —  
Payment of tax withholding for RSUs— — — — — (77,690)(4.5)— (4.5)
Share-based compensation— — 27.1 — — — — — 27.1 
Repurchase of common stock— — — — — (1,500,000)(89.7)— (89.7)
Comprehensive income (loss)— — — (2.9)455.8 — — 0.8 453.7 
Balance at July 1, 2022606,427,684 $6.1 $4,565.9 $(29.3)$3,448.2 (173,104,824)$(2,601.4)$20.6 $5,410.1 
Balance at December 31, 2021603,044,079 $6.0 $4,633.3 $(40.6)$2,435.1 (170,571,261)$(2,448.4)$19.0 $4,604.4 
Impact of the adoption of ASU 2020-06— — (129.1)— 27.1 — — — (102.0)
Shares issued pursuant to the ESPP254,218 — 12.2 — — — — — 12.2 
RSUs released and stock grant awards issued3,129,149 0.1 (0.1)— — — — —  
Partial settlement - 1.625% Notes
238   — — — — —  
Partial settlement of bond hedges - 1.625% Notes
— —  — — (232) —  
Payment of tax withholding for RSUs— — — — — (1,033,331)(63.3)— (63.3)
Share-based compensation— — 49.6 — — — — — 49.6 
Repurchase of common stock— — — — — (1,500,000)(89.7)— (89.7)
Comprehensive income— — — 11.3 986.0 — — 1.6 998.9 
Balance at July 1, 2022606,427,684 $6.1 $4,565.9 $(29.3)$3,448.2 (173,104,824)$(2,601.4)$20.6 $5,410.1 

See accompanying notes to consolidated financial statements

6


ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) 
(unaudited)
 Six Months Ended
 June 30,
2023
July 1,
2022
Cash flows from operating activities:
Net income$1,039.3 $987.6 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization293.8 279.0 
Loss (gain) on sale or disposal of fixed assets4.8 (16.6)
Loss (gain) on divestiture of business0.6 (1.9)
Loss on debt prepayment13.3 7.3 
Amortization of debt discount and issuance costs5.8 6.0 
Share-based compensation59.3 49.6 
Non-cash asset impairment charges12.7 6.7 
Goodwill and intangible asset impairment charges 115.0 
Change in deferred tax balances(29.6)6.7 
Other(9.3)1.3 
Changes in assets and liabilities (exclusive of divestitures):
Receivables(106.0)(344.4)
Inventories(347.8)(184.5)
Other assets(29.6)(51.5)
Accounts payable(25.6)58.1 
Accrued expenses and other current liabilities(175.3)9.2 
Other long-term liabilities93.3 (28.2)
Net cash provided by operating activities$799.7 $899.4 
Cash flows from investing activities:
Purchase of property, plant and equipment$(752.1)$(391.9)
Proceeds from sale of property, plant and equipment2.6 38.2 
Deposits utilized (made) for purchase of property, plant and equipment19.5 (31.4)
Divestiture of business, net of cash transferred 90.5 
Purchase of available-for-sale securities (16.3)
Proceeds from sale or maturity of available-for-sale securities20.8 13.8 
Payments related to acquisition of business(236.3)(2.4)
Net cash used in investing activities$(945.5)$(299.5)
Cash flows from financing activities:
Proceeds for the issuance of common stock under the ESPP$13.2 $12.5 
Payment of tax withholding for RSUs(56.5)(63.3)
Repurchase of common stock(164.1)(89.7)
Issuance and borrowings under debt agreements1,845.0 500.0 
Reimbursement of debt issuance and other financing costs4.5  
Payment of debt issuance and other financing costs(11.3) 
Repayment of borrowings under debt agreements(1,603.7)(506.8)
Payment for purchase of bond hedges(414.0) 
Proceeds from issuance of warrants242.5  
Payment of financing lease obligations(8.6)(10.9)
Dividend to non-controlling shareholder (2.2)
Net cash used in financing activities$(153.0)$(160.4)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1.0)(2.6)
Net increase (decrease) in cash, cash equivalents and restricted cash(299.8)436.9 
Cash, cash equivalents and restricted cash, beginning of period (Note 5)2,933.0 1,377.7 
Cash, cash equivalents and restricted cash, end of period (Note 5)$2,633.2 $1,814.6 

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 (“onsemi,” “we,” “us,” “our,” or the “Company”), with its wholly and majority-owned subsidiaries, operates under the onsemiTM brand. The Company is organized into three operating and reportable segments: the Power Solutions Group ("PSG"), the Advanced Solutions Group ("ASG"), and the Intelligent Sensing Group ("ISG").

The Company's fiscal calendar year begins on January 1 and ends on December 31, with each fiscal quarter containing a thirteen-week accounting period. The quarters ended June 30, 2023 and July 1, 2022 contained 91 days each. The six months ended June 30, 2023 and July 1, 2022 contained 181 days and 182 days, respectively.

The accompanying unaudited financial statements as of and for the quarter and six months ended June 30, 2023 have been prepared following generally accepted accounting principles in the United States of America ("GAAP") for interim financial reporting and the rules and regulations of the SEC for interim reporting. 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, 2022 was derived from the Company's audited financial statements but does not include all disclosures required by GAAP for annual financial statements. In management's opinion, the interim information contains all adjustments, which include normal recurring adjustments necessary for a fair statement of the results for the interim periods. The footnote disclosures related to the interim financial information contained 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, 2022, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 6, 2023 (the "2022 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) calculating future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) measurement of valuation allowances against deferred tax assets and evaluations of uncertain tax positions; and (iv) cash flow projections for impairment of long-lived assets and goodwill. Additionally, during periods where it becomes applicable, significant estimates will be used by management in determining the future cash flows in assumptions used in 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

A significant portion of the Company’s revenue orders are firm commitments that are non-cancellable, including certain orders or contracts with a duration of one year or less. Certain customer contracts are multi-year agreements that include committed amounts ("Long-term Supply Agreements" or "LTSAs").

The estimated remaining performance obligations as of June 30, 2023 are approximately $20.0 billion (excluding the remaining performance obligations for contracts having an original duration of one year or less). This amount is subject to contractual increases based on negotiated contract prices and volumes, defined product mix flexibility, and the timing of new part introductions, among other contractual provisions. The Company expects to recognize approximately 32% of the remaining purchase obligation as revenue during the next 12 months upon shipment of products under these contracts. Total revenue estimates could be influenced by risks and uncertainties, including manufacturing or supply chain constraints, modifications to customer agreements, and regulatory changes, among other factors. Accordingly, the actual revenue recognized for the remaining performance obligation in future periods may significantly fluctuate from these estimates.

Certain LTSAs include non-cancellable capacity payments from the customer, which are generally due within 30 days of the agreement. These payments reserve production availability or are prepayments for the same purpose and are not recognized as revenue until the performance obligations are satisfied. For the quarters and six months ending June 30, 2023, and July 1, 2022, the Company recognized revenue of $16.8 million and $4.6 million, and $31.6 million and $9.1 million, respectively, representing the corresponding portions of performance obligations fulfilled.

As of June 30, 2023, and December 31, 2022, the remaining capacity payments were $317.9 million and $190.4 million, respectively, of which $88.8 million and $60.5 million were recorded as other current liabilities, with the remainder recorded as other long-term liabilities.

The Company is organized into three operating and reportable segments consisting of PSG, ASG and ISG. These segments represent management's view of the business, and gross profit is used to evaluate its performance, the progress of major initiatives and the allocation of resources. During the quarter ended June 30, 2023, management reorganized and consolidated the existing divisions within ASG from the divisions of Automotive (AUT), Mobile, Computing and Cloud (MCC), and Industrial Solutions (ISD) to the divisions of Power Management (PMD) and Sensor Interface (SID). Management performed a goodwill impairment analysis on AUT, MCC and ISD (which are the reporting units) prior to the reorganization and no impairments were identified. Goodwill assigned to AUT, MCC and ISD was reallocated to PMD and SID based on the relative fair value of the businesses transferred. There were no changes to the presentation of operating and reportable segments due to this reorganization.

Revenue and gross profit for the operating and reportable segments are as follows (in millions):
PSGASGISGTotal
For the quarter ended June 30, 2023:
Revenue from external customers$1,119.8 $649.5 $325.1 $2,094.4 
Gross profit$536.7 $301.5 $155.2 $993.4 
For the quarter ended July 1, 2022:
Revenue from external customers$1,057.0 $716.7 $311.3 $2,085.0 
Gross profit$511.2 $380.3 $145.6 $1,037.1 
For the six months ended June 30, 2023:
Revenue from external customers$2,132.6 $1,242.3 $679.2 $4,054.1 
Gross profit$1,017.0 $561.6 $332.3 $1,910.9 
For the six months ended July 1, 2022:
Revenue from external customers$2,043.7 $1,406.0 $580.3 $4,030.0 
Gross profit$985.9 $747.0 $265.5 $1,998.4 

The Company had one customer, a distributor, whose revenue accounted for approximately 10.9% and 12% of the total revenue for the quarters ended June 30, 2023 and July 1, 2022, respectively, and 10.1% and 12% of the total revenue for the six months ended June 30, 2023 and July 1, 2022, respectively.
9

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




Revenue for the 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 June 30, 2023
PSGASGISGTotal
Geographic Location
Hong Kong$325.6 $144.6 $60.0 $530.2 
Singapore331.2 138.4 49.7 519.3 
United Kingdom227.0 130.7 91.7 449.4 
United States159.7 144.8 76.4 380.9 
Other76.3 91.0 47.3 214.6 
Total$1,119.8 $649.5 $325.1 $2,094.4 
Sales Channel
Distributors$682.6 $292.4 $152.7 $1,127.7 
Direct customers437.2 357.1 172.4 966.7 
Total$1,119.8 $649.5 $325.1 $2,094.4 
Six Months Ended June 30, 2023
PSGASGISGTotal
Geographic Location
Hong Kong$612.5 $284.3 $123.8 $1,020.6 
Singapore607.6 254.5 107.9 970.0 
United Kingdom431.1 258.8 172.8 862.7 
United States326.0 266.1 177.9 770.0 
Other155.4 178.6 96.8 430.8 
Total$2,132.6 $1,242.3 $679.2 $4,054.1 
Sales Channel
Distributors$1,311.9 $515.2 $339.8 $2,166.9 
Direct customers820.7 727.1 339.4 1,887.2 
Total$2,132.6 $1,242.3 $679.2 $4,054.1 

10

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


Quarter Ended July 1, 2022
PSGASGISGTotal
Geographic Location
Hong Kong$326.5 $181.7 $76.2 $584.4 
Singapore292.3 221.0 42.4 555.7 
United Kingdom182.7 109.4 67.7 359.8 
United States180.1 107.0 74.1 361.2 
Other75.4 97.6 50.9 223.9 
Total$1,057.0 $716.7 $311.3 $2,085.0 
Sales Channel
Distributors$696.4 $372.8 $164.5 $1,233.7 
Direct customers360.6 343.9 146.8 851.3 
Total$1,057.0 $716.7 $311.3 $2,085.0 
Six Months Ended July 1, 2022
PSGASGISGTotal
Geographic Location
Hong Kong$629.6 $355.6 $128.8 $1,114.0 
Singapore572.8 454.8 83.9 1,111.5 
United Kingdom369.5 216.0 119.7 705.2 
United States325.0 199.3 148.7 673.0 
Other146.8 180.3 99.2 426.3 
Total$2,043.7 $1,406.0 $580.3 $4,030.0 
Sales Channel
Distributors$1,330.3 $729.7 $315.0 $2,375.0 
Direct customers713.4 676.3 265.3 1,655.0 
Total$2,043.7 $1,406.0 $580.3 $4,030.0 

The Company operates in various geographic locations. Sales to external customers have little correlation to where products are manufactured or the location of the end-customers. It is, therefore, not meaningful to present operating profit by geographical location. The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information. The consolidated assets used in manufacturing are generally shared across and are not specifically ascribed to operating and reportable segments.


11

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


Property, plant and equipment, net by geographic location, is summarized below (in millions):
As of
June 30, 2023December 31, 2022
United States$1,380.0 $1,329.2 
South Korea1,133.1 871.0 
Czech Republic448.5 279.3 
Philippines273.5 296.8 
China239.9 215.3 
Malaysia199.2 190.2 
Japan125.7 133.2 
Other191.5 135.7 
Total$3,991.4 $3,450.7 


Note 3: Acquisition and Divestitures

Acquisition:

During the quarter ended June 30, 2023, the Company finalized its determination relating to the fair value of assets acquired and liabilities assumed from the EFK acquisition, which was completed on December 31, 2022. The final allocation of the purchase price, which is materially consistent with the preliminary allocation disclosed in the 2022 Form 10-K, is as follows (in millions):

Purchase Price Allocation
Inventory$3.3 
Other current assets4.4 
Property, plant and equipment396.5 
Other non-current assets11.4 
Total assets acquired415.6 
Current liabilities3.0 
Other long-term liabilities6.3 
Total liabilities assumed9.3 
Net assets acquired/purchase price$406.3 

All other assumptions and disclosures are materially consistent with the amounts included in the 2022 Form 10-K. The Company paid the remaining acquisition consideration of $236.3 million on January 3, 2023, which is disclosed under investing activities in the Consolidated Statement of Cash Flows.


12

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


Note 4: Restructuring, Asset Impairments and Other Charges, Net

Details of restructuring, asset impairments and other charges, net are as follows (in millions):        
RestructuringAsset ImpairmentsOther ChargesTotal
Quarter ended June 30, 2023
2023 Business Realignment$3.1 $ $ $3.1 
Other  (0.5)(0.5)
Total$3.1 $ $(0.5)$2.6 
RestructuringAsset ImpairmentsOther ChargesTotal
Six months ended June 30, 2023
2023 Business Realignment$39.2 $2.5 $2.8 $44.5 
QCS wind down  (2.4)(2.4)
Other 10.2 
(1)
1.8 12.0 
Total$39.2 $12.7 $2.2 $54.1 

(1)Relates to property, plant and equipment and ROU asset impairment charges associated with site consolidation efforts in the U.S.

A summary of changes in accrued restructuring balance is as follows (in millions):
As ofAs of
December 31, 2022ChargesUsageJune 30, 2023
Employee separation charges$4.4 $39.2 $(14.6)$29.0 
Total$4.4 $39.2 $(14.6)$29.0 

2023 Business Realignment

During the first quarter of 2023, the Company announced the elimination of approximately 400 jobs in an effort to realign its operating models, drive organizational effectiveness and efficiencies, and increase collaboration primarily within its ASG operating segment and IT support organizations. As a result, ASG ceased its design and test operations in certain Asia and U.S.-based locations and initiated a plan to exit its Toulouse, France design center location. The announcement also included changes in the IT operating model by transferring selected IT functions to strategic service providers. During the second quarter of 2023, an additional 60 employees were notified of their employment termination for similar reasons.

In connection with these actions, severance costs, related benefit expenses and other ancillary charges of $39.2 million were recognized with an insignificant amount expected to be recorded during the remainder of 2023. The Company paid approximately $11.5 million of the aggregate expense for the 293 terminated employees and had $27.7 million accrued as of June 30, 2023. The remaining employees subject to this realignment are expected to be terminated and paid any applicable severance and related benefit payments over the next nine months.

The Company continues to evaluate employee positions and locations for potential operating improvements and efficiencies, and may incur additional severance and related charges in the future.

QCS wind down

As of June 30, 2023, $0.7 million of severance costs and other benefits originally accrued under the QCS wind down plan remained accrued and, based on the exit dates of the notified employees, is expected to be paid during the fourth quarter of 2023.




13

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



Note 5: Balance Sheet Information and Other Supplemental Disclosures

Goodwill

There was no change in the balance of goodwill from December 31, 2022 to June 30, 2023. Goodwill is tested for impairment annually on the first day of the fourth quarter or more frequently if events or changes in circumstances (each, a "triggering event") would more likely-than-not reduce the fair value of a reporting unit below its carrying value. Management did not identify any triggering events during the quarter ended June 30, 2023 that would require an interim impairment analysis.

Inventory

Details of Inventory included in the Consolidated Balance Sheets are as follows (in millions):
As of
June 30, 2023December 31, 2022
Inventories:
Raw materials$336.9 $236.8 
Work in process1,177.9 951.0 
Finished goods449.6 429.0 
$1,964.4 $1,616.8 

Defined Benefit Plans

The Company recognizes the aggregate amount of all over-funded plans as assets and the aggregate amount of all underfunded plans as liabilities in its financial statements. As of June 30, 2023, the net assets for the over-funded plans totaled $12.9 million. The total accrued pension liability for underfunded plans was $68.8 million, of which the current portion of $1.3 million was classified as accrued expenses and other current liabilities. As of December 31, 2022, the net funded status for all the plans was a liability of $53.8 million, of which the current portion of $0.4 million was classified as accrued expenses and other current liabilities.

The components of the net periodic pension expense were as follows (in millions):
Quarters EndedSix Months Ended
June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Service cost$1.2 $2.2 $2.4 $4.4 
Interest cost1.6 1.0 3.2 2.1 
Expected return on plan assets(1.2)(1.1)(2.4)(2.3)
Total net periodic pension cost$1.6 $2.1 $3.2 $4.2 

Leases

Operating lease arrangements are comprised primarily of real estate and equipment agreements.