{"schemaVersion":1,"research":true,"symbol":"on","name":"On Semiconductor","topic":"moat","path":"/stock/on/moat","status":"stale","version":8,"updatedAt":"2026-10-19T16:09:42.435Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"uncertain","summary":"Onsemi has proprietary technologies, established customer relationships and substantial supply commitments, but the passages do not establish durable competitive superiority or material switching costs. Production shipments and demand recovery demonstrate commercial relevance. Contract renegotiations and manufacturing impairments temper the case without establishing an inherently weak competitive position. Realized pricing has benefited from product mix; sustained pricing power for unchanged products remains unproven.","advantages":[{"mechanism":"intangible_assets","claim":"Patents, technical know-how and commercially deployed technologies are credible sources of differentiation. Their ability to sustain an economic moat remains unestablished; manufacturing cost competitiveness is principally an issuer assertion.","durability":"Potentially supported by continued innovation and IP protection, but the catalog does not establish the duration of a technological lead or comparative customer economics.","risks":"Competitor integration, customer-developed ICs and technological substitution could erode differentiation. Repeated manufacturing impairments demonstrate investment risk, without proving technological inferiority.","invalidation":"The differentiation thesis would weaken materially if deployed products lost repeat orders to substitutes, required sustained price concessions, or became subject to IP restrictions that prevented commercial sales. A demonstrated multi-generation performance lead with repeat customer adoption would strengthen the moat case.","competitors":[],"evidenceIds":["q31","q244","q287","q1649"],"counterEvidenceIds":["q282","q303","q230","q448"]},{"mechanism":"switching_costs","claim":"Longstanding customer relationships, multi-year supply commitments and non-cancellable capacity payments provide some contractual attachment. They do not establish substantial technical or economic switching costs.","durability":"Commitments extend across multiple years, but their pricing, timing and quantities can change. No qualification costs, redesign costs or replacement timelines are quantified.","risks":"Actual LTSA modifications and standard-order cancellation rights limit contractual protection. Remaining commitments have declined, although fulfillment and contract aging also reduce that balance.","invalidation":"The customer-attachment thesis would be undermined by disclosed customer departures, repeated cancellation of committed volumes without meaningful compensation, or customers replacing onsemi products with minimal disruption. Falling remaining obligations alone would not establish those outcomes.","competitors":[],"evidenceIds":["q257","q622","q626","q629"],"counterEvidenceIds":["q94","q156","q625","q1159"]}],"evidence":[{"id":"q31","sourceId":"filing-1","location":"Patents, Trademarks, Copyrights and Other Intellectual Property Rights","excerpt":"We hold a substantial number of issued and pending patents worldwide and continue to prosecute applications in areas that are material to our business."},{"id":"q244","sourceId":"filing-1","location":"Business / PSG vertically integrated manufacturing strategy","excerpt":"Our vertically integrated SiC manufacturing strategy enhances supply assurance, cost competitiveness, and device performance."},{"id":"q287","sourceId":"filing-1","location":"Business / Competition / claimed competitive strengths","excerpt":"Our competitive strengths include core competencies such as leading-edge fabrication technologies, micro and module packaging expertise, breadth of product line and IP portfolio, high-quality, cost-effective manufacturing and supply chain management."},{"id":"q1649","sourceId":"filing-7","location":"Q1 2026 results / Business Highlights / initial production shipments","excerpt":"•\n Increasing software-defined vehicle momentum with initial production shipments of Treo-based 10BASE-T1S Ethernet solutions, supporting the next-generation zonal architecture at a leading North American OEM."},{"id":"q282","sourceId":"filing-1","location":"Business / Competition / integrated and customer-developed ICs","excerpt":"Because some of our components include functionality that in some cases may be integrated into more complex ICs, we also face competition from manufacturers of ICs, ASICs and fully-customized ICs, as well as customers who develop their own IC products."},{"id":"q303","sourceId":"filing-1","location":"Risk Factors / intellectual property coverage","excerpt":"In addition, some of our products and technologies are not covered by any patents or pending patent applications."},{"id":"q230","sourceId":"filing-1","location":"2025 Manufacturing Realignment Program / equipment impairments","excerpt":"Additionally, we recorded non-cash impairment charges of $496.0 million during the year ended December 31, 2025 related to previous investments in manufacturing equipment at certain manufacturing facilities pursuant to held-for-sale accounting guidance."},{"id":"q448","sourceId":"filing-2","location":"Note 5 / Restructuring, Asset Impairments and Other, Net","excerpt":"Note 5: Restructuring, Asset Impairments and Other, Net Details of restructuring, asset impairments and other, net were as follows (in millions): Restructuring Asset Impairments Other Total For the quarter ended July 3, 2026: 2026 Manufacturing Realignment Program $ 2.5 $ 16.3 $ 22.4 $ 41.2 Total $ 2.5 $ 16.3 $ 22.4 $ 41.2 Restructuring Asset Impairments Other Charges Total For the quarter ended July 4, 2025: 2025 Manufacturing Realignment Program $ 2.9 $ 40.6 $ 5.6 $ 49.1 2024 Business Realignment (0.2) — 0.3 0.1 Total $ 2.7 $ 40.6 $ 5.9 $ 49.2 15 Table of Contents ON SEMICONDUCTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Restructuring Asset Impairments Other Total For the six months ended July 3, 2026: 2026 Manufacturing Realignment Program $ 22.7 $ 163.3 $ 184.5 $ 370.5 Total $ 22.7 $ 163.3 $ 184.5 $ 370.5 Restructuring Asset Impairments Other Charges Total For the six months ended July 4, 2025: 2025 Manufacturing Realignment Program $ 63.1 $ 472.1 $ 50.5 $ 585.7 2024 Business Realignment 0.7 — 2.1 2.8 Total $ 63.8 $ 472.1 $ 52.6 $ 588.5 A summary of changes in the accrued restructuring balance by program was as follows (in millions): As of As of December 31, 2025 Charges Usage July 3, 2026 2026 Manufacturing Realignment Program $ — $ 22.7 $ (18.6) $ 4.1 2025 Manufacturing Realignment Program 2.7 — (2.0) 0.7 Other 3.3 — (1.3) 2.0 Total $ 6.0 $ 22.7 $ (21.9) $ 6.8 The amounts recorded under the 2026 Manufacturing Realignment Program represent new restructuring activities that expand upon the Company’s 2025 Manufacturing Realignment Program for actions and decisions taken in 2026."},{"id":"q257","sourceId":"filing-1","location":"Business / customer relationships and sales agreements","excerpt":"In general, we have maintained long-term relationships with our key customers, and our sales agreements are renewable periodically and contain certain terms and conditions with respect to payment, delivery, warranty and supply."},{"id":"q622","sourceId":"filing-2","location":"Remaining Performance Obligations / July 3, 2026 LTSAs","excerpt":"Certain of the Company's customer contracts are multi-year agreements that include committed amounts (\"Long-term Supply Agreements\" or \"LTSAs\") for which the remaining performance obligations as of July 3, 2026 were approximately $6.1 billion (excluding the remaining performance obligations for contracts having a duration of one year or less)."},{"id":"q626","sourceId":"filing-2","location":"Remaining Performance Obligations / non-cancellable capacity payments","excerpt":"Certain LTSAs include non-cancellable capacity payments from the customer, which are generally due within 30 days of the agreement."},{"id":"q629","sourceId":"filing-2","location":"Remaining Performance Obligations / revenue recognized from prior-year contract liabilities","excerpt":"The Company fulfilled certain performance obligations and recognized revenue of $12.9 million and $24.4 million for each of the quarters ended July 3, 2026 and July 4, 2025, respectively, and $28.3 million and $48.4 million for the six months ended July 3, 2026 and July 4, 2025, respectively, related to contract liabilities outstanding as of the end of each respective prior year."},{"id":"q94","sourceId":"filing-1","location":"Revenue recognition / actual 2025 LTSA modifications","excerpt":"During 2025, certain LTSAs were modified in response to changes in demand."},{"id":"q156","sourceId":"filing-1","location":"Business / customer order cancellation terms","excerpt":"Unless otherwise agreed in writing, customers may cancel orders 45-120 days prior to shipment, depending on the product, for standard products without penalty and, for custom products, prior to shipment, provided they pay onsemi's actual costs incurred as of the date we receive the cancellation notice."},{"id":"q625","sourceId":"filing-2","location":"Remaining Performance Obligations / LTSA modification and cancellation terms","excerpt":"The timing, pricing or amounts of products delivered under LTSAs may be modified or canceled in certain circumstances, and the actual revenue recognized for the remaining performance obligations in future periods may significantly differ from current estimates."},{"id":"q1159","sourceId":"filing-4","location":"Remaining Performance Obligations / December 31, 2024 LTSAs","excerpt":"Certain of the Company's customer contracts are multi-year agreements that include committed amounts (\"Long-term Supply Agreements\" or \"LTSAs\") for which the remaining performance obligations as of December 31, 2024 were approximately $11.9 billion (excluding the remaining performance obligations for contracts having a duration of one year or less)."},{"id":"q90","sourceId":"filing-1","location":"Remaining Performance Obligations / December 31, 2025 LTSAs","excerpt":"Certain of the Company's customer contracts are multi-year agreements that include committed amounts (\"Long-term Supply Agreements\" or \"LTSAs\") for which the remaining performance obligations as of December 31, 2025 were approximately $7.1 billion (excluding the remaining performance obligations for contracts having a duration of one year or less)."},{"id":"q1424","sourceId":"filing-5","location":"2023 Results of Operations / ISG revenue and higher selling-price product mix","excerpt":"Revenue from ISG increased by $38.8 million, or approximately 3.0%, during 2023 compared to 2022, which was largely driven by an increase in revenue from our Automotive Sensing Division of $117.4 million primarily due to the reallocation of internal capacity to products yielding higher average selling prices."},{"id":"q488","sourceId":"filing-2","location":"Q2 2026 Results of Operations / demand-led revenue growth","excerpt":"Revenue Revenue was $1,603.5 million and $1,468.7 million for the quarters ended July 3, 2026 and July 4, 2025, respectively, representing an increase of $134.8 million, or approximately 9%, year over year due to increased demand across all end-markets."},{"id":"q495","sourceId":"filing-2","location":"Q2 2026 Results of Operations / AMG margin and product mix","excerpt":"AMG gross profit increased by $9.4 million and gross margin increased by 2.7 percentage points to 53.4% from 50.7%, primarily due to a more favorable product mix, including a higher proportion of higher-margin products, which more than offset lower industrial end-market revenue."},{"id":"q68","sourceId":"filing-1","location":"2025 Results of Operations / Gross Profit and Gross Margin","excerpt":"Our gross margin decreased by 12.3 percentage points from 45.4% for the year ended December 31, 2024 to 33.1% for the year ended December 31, 2025, primarily due to the impact of the factors explained in the segment gross margin sections below."},{"id":"q65","sourceId":"filing-1","location":"2025 Results of Operations / excess and obsolete inventory charges","excerpt":"We recorded excess and obsolete inventory charges of $268.2 million, of which $230.3 million related to inventory primarily considered work in progress within the ISG reportable segment, as a result of changes in business strategy due to the 2025 Manufacturing Realignment Program."},{"id":"q67","sourceId":"filing-1","location":"2025 Results of Operations / sales volume decline","excerpt":"We also continued to experience a decline in sales volume across end-markets."},{"id":"q487","sourceId":"filing-2","location":"Q2 2026 Results of Operations / consolidated and segment results","excerpt":"31 Table of Contents Results of Operations Quarter Ended July 3, 2026 compared to the Quarter Ended July 4, 2025 The following table summarizes certain information relating to our operating results that has been derived from our unaudited consolidated financial statements (in millions): Quarters Ended July 3, 2026 July 4, 2025 Dollar Change Revenue $ 1,603.5 $ 1,468.7 $ 134.8 Cost of revenue 987.2 916.8 70.4 Gross profit 616.3 551.9 64.4 Operating expenses: Research and development 140.8 143.8 (3.0) Selling and marketing 63.3 63.3 — General and administrative 101.9 91.2 10.7 Amortization of intangible assets 10.5 11.0 (0.5) Restructuring, asset impairments and other, net 41.2 49.2 (8.0) Total operating expenses 357.7 358.5 (0.8) Operating income 258.6 193.4 65.2 Other income (expense), net: Interest expense (13.7) (17.9) 4.2 Interest income 17.4 25.2 (7.8) Other income 8.6 1.5 7.1 Other income (expense), net 12.3 8.8 3.5 Income before income taxes 270.9 202.2 68.7 Income tax provision (43.4) (30.5) (12.9) Net income 227.5 171.7 55.8 Less: Net income attributable to non-controlling interest (0.7) (1.4) 0.7 Net income attributable to ON Semiconductor Corporation $ 226.8 $ 170.3 $ 56.5 32 Table of Contents The following table summarizes certain information relating to our segment results (in millions): Quarter Ended July 3, 2026 As a % of Total Quarter Ended July 4, 2025 As a % of Total Dollar Change Revenue: PSG $ 829.0 51.7 % $ 698.2 47.5 % $ 130.8 AMG 545.7 34.0 % 555.9 37.9 % (10.2) ISG 228.8 14.3 % 214.6 14.6 % 14.2 Total $ 1,603.5 100.0 % $ 1,468.7 100.0 % $ 134.8 Cost of revenue: PSG $ 598.7 60.6 % $ 517.4 56.4 % $ 81.3 AMG 254.5 25.8 % 274.1 29.9 % (19.6) ISG 134.0 13.6 % 125.3 13.7 % 8.7 Total $ 987.2 100.0 % $ 916.8 100.0 % $ 70.4 Gross profit: (1) PSG $ 230.3 27.8 % $ 180.8 25.9 % $ 49.5 AMG 291.2 53.4 % 281.8 50.7 % 9.4 ISG 94.8 41.4 % 89.3 41.6 % 5.5 Total $ 616.3 38.4 % $ 551.9 37.6 % $ 64.4 (1) Gross profit margin as a percentage of respective segment revenue balances."},{"id":"q1603","sourceId":"filing-6","location":"Q1 2026 Results of Operations / gross profit recovery and absent prior-year charges","excerpt":"Gross Profit and Gross Margin\nGross profit increased by $289.3 million, or approximately 98%, to $583.1 million for the quarter ended April 3, 2026 compared to $293.8 million for the quarter ended April 4, 2025 primarily due to the absence of $237.7 million of excess and obsolete inventory charges and a $43.9 million write‑off of consumables and manufacturing supplies recognized during the quarter ended April 4, 2025, which did not reoccur in 2026."},{"id":"q166","sourceId":"filing-1","location":"Business / Backlog / prices fixed at booking","excerpt":"Generally, prices and quantities are fixed at the time of booking."},{"id":"q690","sourceId":"filing-3","location":"Proxy Statement Summary / 2025 financial and strategic achievements","excerpt":"Key highlights for onsemi in fiscal year 2025 include: Financial ■ Revenue of $6.0 billion, with PSG, AMG and ISG generating 47%, 38% and 15% of revenue, respectively ■ Automotive and industrial end-markets represent almost 80% of total revenue ■ Aerospace, defense and security revenue grew 70% year-over-year ■ Generated $1.8 billion of cash from operations and $1.4 billion of free cash flow* and achieved record high free cash flow margin of 24% while returning 100% of annual free cash flow to stockholders through share repurchases ■ GAAP operating income of $84.2 million and non-GAAP operating income of $1.1 billion* ■ GAAP gross margin of 33.1% and non-GAAP gross margin of 38.4%* ■ GAAP diluted EPS of $0.29 and non-GAAP diluted EPS of $2.35* Strategic ■ Treo platform delivered strong growth, doubling number of products year-over-year ■ Introduced vertical GaN (vGaN) technology — first to scale vGaN; began sampling to early-access customers ■ Completed acquisition of SiC Junction Field-Effect Transistor business and gained traction in AI data center ■ Announced partnerships with Schaeffler (EliteSiC-based plug-in hybrid electric vehicle platform) and Nvidia (800 VDC power solutions), as well as collaborations with Innoscience (vGaN power devices) and GlobalFoundries (GaN power devices) * Reconciliations of GAAP to non-GAAP measures included in the proxy statement are located in the Appendix."},{"id":"q608","sourceId":"filing-2","location":"Liquidity / Investing Activities / actual first-half capital expenditure intensity and outlook","excerpt":"Our capital expenditures as a percentage of revenue were approximately 2%, and we expect capital expenditures of less than 5% of revenue for the year ended December 31, 2026."},{"id":"q603","sourceId":"filing-2","location":"Liquidity / Operating Activities / cash conversion","excerpt":"However, these improvements in earnings did not directly translate to higher operating cash flows, as working capital requirements had a more significant impact on cash generation during the period."},{"id":"q449","sourceId":"filing-2","location":"Notes 6 and 7 / cash balances and long-term debt","excerpt":"Supplemental Disclosure of Cash Flow Information Certain of the cash and non-cash activities were as follows (in millions): Six Months Ended July 3, 2026 July 4, 2025 Non-cash investing activities: Capital expenditures in accounts payable and other long-term liabilities $ 61.7 $ 111.6 Operating ROU assets obtained in exchange for lease liabilities 2.5 13.1 Cash paid for: Interest expense $ 18.6 $ 29.3 Income taxes 97.4 86.5 Operating lease payments in operating cash flows 21.1 34.8 The following table shows a reconciliation of the captions in the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows (in millions): As of July 3, 2026 December 31, 2025 July 4, 2025 December 31, 2024 Consolidated Balance Sheets: Cash and cash equivalents $ 3,514.5 $ 2,147.6 $ 2,526.7 $ 2,691.3 Restricted cash (included in other current assets) 1.4 1.4 2.9 2.1 Cash, cash equivalents and restricted cash in Consolidated Statements of Cash Flows $ 3,515.9 $ 2,149.0 $ 2,529.6 $ 2,693.4 19 Table of Contents ON SEMICONDUCTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Note 7: Long-Term Debt Long-term debt consisted of the following (in millions, with annualized interest rates): As of July 3, 2026 December 31, 2025 Revolving Credit Facility due 2028 $ — $ — 0.50% Notes due 2029 (1) 1,500.0 1,500.0 0% Notes due 2031 1,500.0 — 0% Notes due 2027 804.9 804.9 3.875% Notes due 2028 (2) 700.0 700.0 Gross long-term debt 4,504.9 3,004.9 Less: Unamortized debt discount (3) (1.9) (2.5) Less: Unamortized debt issuance costs (4) (43.6) (21.9) Net long-term debt, including current maturities 4,459.4 2,980.5 Less: Current maturities (802.1) — Net long-term debt $ 3,657.3 $ 2,980.5 (1)Interest is payable on March 1 and September 1 of each year at 0.50% annually."},{"id":"q455","sourceId":"filing-2","location":"Note 8 / actual share repurchases","excerpt":"Activity under the New Share Repurchase Program and the Share Repurchase Program during the quarters and six months ended July 3, 2026 and July 4, 2025, respectively, was as follows (in millions, except per share data): Quarters Ended Six Months Ended July 3, 2026 July 4, 2025 July 3, 2026 July 4, 2025 Number of repurchased shares (1) 3.1 6.9 8.8 13.0 Aggregate purchase price $ 331.9 $ 300.0 $ 677.5 $ 600.0 Fees, commissions and excise tax 2.8 3.0 5.8 5.6 Total $ 334.7 $ 303.0 $ 683.3 $ 605.6 Weighted-average purchase price per share (2) $ 105.77 $ 43.26 $ 76.58 $ 46.11 (1) None of these shares had been reissued or retired as of July 3, 2026, but may be reissued later."},{"id":"q619","sourceId":"filing-2","location":"Definitive Agreement to Acquire Synaptics Incorporated / expected ownership upon closing","excerpt":"Based on this exchange ratio, the Company expects Synaptics stockholders will own approximately 12% of the combined company on a pro forma basis upon the closing."},{"id":"q590","sourceId":"filing-2","location":"Proposed merger / conditional regulatory termination fee","excerpt":"In certain circumstances in which the Merger Agreement is terminated due to the failure to obtain required regulatory approvals, we may be required to pay Synaptics a termination fee of $320.0 million, as more fully described in the Merger Agreement."},{"id":"q600","sourceId":"filing-2","location":"Liquidity / unresolved treatment of acquisition target indebtedness","excerpt":"The ultimate treatment of Synaptics' existing indebtedness following the closing of the transaction is unknown at this time"},{"id":"q824","sourceId":"filing-3","location":"Compensation Discussion and Analysis / 2025 results versus operating-plan targets","excerpt":"For 2025, we achieved revenue and non-GAAP operating margin of $5,995.4 million and 18.7%, respectively, both of which fell below their respective target levels that were tied to our Board-approved annual operating plan (AOP) for 2025, but above their respective threshold levels."},{"id":"q826","sourceId":"filing-3","location":"Compensation Discussion and Analysis / actual 2025 short-term incentive payouts","excerpt":"The final STI combined performance percentage (Corporate Multiplier x Individual Goals achieved) for our CEO was just below 59% of target (although his actual payout was 0% in accordance with his previous commitment to forgo any bonus payouts) and between 44-61% of target for each of our other NEOs."},{"id":"q828","sourceId":"filing-3","location":"Compensation Discussion and Analysis / granted 2025 performance-based equity","excerpt":"As noted above, 70% of Mr. El-Khoury’s 2025 LTI grant consisted of PBRSUs while, as in prior years, 60% of each other NEO’s annual LTI grant consisted of PBRSUs."},{"id":"q766","sourceId":"filing-3","location":"Compensation Discussion and Analysis / actual relative-TSR payout adjustments","excerpt":"Based on these results, the payouts related to financial metrics for each were reduced by 50%, resulting in the following overall combined payouts for each award: Award Tranche Step 1 Payout Percentage (1) (%) Relative TSR Performance Period Resulting Relative TSR Percentile Final Combined Payout Percentage (2) (%) Compared to Maximum Possible Payout Percentage (%) 2023 PBRSUs Third (Final) 133% 1/1/2023-12/31/2025 24th Percentile 104% 213% 2024 PBRSUs Second 111% 1/1/2024-12/31/2025 15th Percentile 89% 213% (1) Reflects the combined payout percentage for the award before any relative TSR adjustment."},{"id":"q814","sourceId":"filing-3","location":"Corporate Governance / Board Leadership Structure","excerpt":"Board Leadership Structure\nWe currently separate the roles of CEO and Chair of the Board."},{"id":"q702","sourceId":"filing-3","location":"Corporate Governance / existing stockholder proxy access","excerpt":"ü Stockholder Proxy Access: We permit a stockholder, or a group of up to 20 stockholders, owning at least 3% of the Company’s outstanding shares of common stock continuously for at least three years, to nominate and include in our annual meeting proxy materials director nominees constituting up to the greater of two nominees or 20% of the board, subject to the requirements specified in our bylaws."},{"id":"q706","sourceId":"filing-3","location":"Corporate Governance / conduct-based clawback policy","excerpt":"ü Conduct-based Clawback Policy: In addition to our Dodd-Frank clawback policy, we have a conduct-based clawback policy that allows us to recoup compensation awards paid to NEOs and other employees if the individual engages in intentional misconduct or certain acts detrimental to our interests."},{"id":"q923","sourceId":"filing-3","location":"Board Independence and Related Party Transactions / reportable transactions","excerpt":"Since January 1, 2025, there have been no related party transactions required to be reported under SEC rules."},{"id":"q925","sourceId":"filing-3","location":"Board and Committee Meetings and Attendance / actual 2025 attendance","excerpt":"In 2025, each director attended at least 75% of all meetings of the Board and any committees on which he or she served."}],"changes":["Retained the uncertain verdict: the current catalog supports commercial capabilities and contractual attachment but does not establish durable superiority.","Revalidated the eight previously graded pricing and management criteria against current catalog passages; their grades remain unchanged.","Explicitly assessed all four moat criteria as null, consistent with the uncertain moat verdict.","Used the historical 2023 mix-related selling-price outcome for realized pricing, while distinguishing it from current like-for-like pricing power.","Compared remaining LTSA obligations of $11.9 billion at December 2024, $7.1 billion at December 2025 and $6.1 billion at July 2026 without treating the decline as a measured cancellation or customer-loss rate."],"limitations":["All supplied sources are issuer disclosures. Operating results and contractual terms support numerical assessments, while claims of technological leadership and cost competitiveness lack comparative substantiation.","Competition passages identify generic categories, not named direct competitors. Compensation peers, collaborators, customers, acquisition targets and transaction counterparties are not established as competitors; competitor arrays therefore remain empty.","No quantified redesign burden, qualification timeline, customer replacement cost, market-share persistence or comparative manufacturing cost establishes a durable moat.","Pricing evidence includes historical product-mix improvement, booking terms and renegotiation provisions; it does not isolate current like-for-like price changes or cost pass-through.","Retention is assessed indirectly from relationships, contractual commitments, fulfilled obligations and demand. No retention rate is disclosed or inferred.","Ownership guidelines are disclosed, but actual executive beneficial ownership and compliance with those guidelines are not established by the supplied passages.","The proposed acquisition, expected dilution and termination exposure remain conditional as of the August 3, 2026 filing; later closing or regulatory outcomes are not supplied.","Source dates are filing dates with dateKind filed. They are not treated as retrieval dates or as evidence of subsequent events."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":null,"rationale":"IP and initial production shipments establish capabilities, but comparative technological superiority and structural cost advantages remain unestablished. This is insufficient evidence, rather than proof of interchangeable offerings.","evidenceIds":["q31","q244","q287","q1649"]},{"criterion":"durability","grade":null,"rationale":"Multi-year commitments provide visibility, but modification rights and unquantified technological renewal requirements do not establish durable excess-return protection.","evidenceIds":["q622","q625","q303"]},{"criterion":"customer_dependency","grade":null,"rationale":"Relationships and capacity payments demonstrate attachment, but the catalog does not establish material customer dependence or replacement costs.","evidenceIds":["q257","q626","q156"]},{"criterion":"erosion_resilience","grade":null,"rationale":"Demand recovery coexists with renegotiated commitments and manufacturing impairments. These outcomes cannot isolate resilience of an established competitive advantage.","evidenceIds":["q488","q94","q230","q448"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":2,"rationale":"The 2023 capacity reallocation toward higher selling-price sensing products demonstrates realized pricing improvement through mix. Q2 2026 growth reflects demand and AMG margin improvement reflects mix; neither establishes higher prices for unchanged products. Evidence is mixed and partly historical.","evidenceIds":["q1424","q488","q495"]},{"criterion":"retention","grade":2,"rationale":"Longstanding relationships, multi-year commitments, fulfilled obligations and production shipments support repeat demand indirectly. Actual LTSA modifications and cancellation rights temper that evidence. The declining commitment balance is not a retention rate or proof of customer departures.","evidenceIds":["q257","q622","q629","q1649","q94","q156","q1159","q90"]},{"criterion":"margin_resilience","grade":1,"rationale":"The 2025 gross-margin decline from 45.4% to 33.1%, lower volumes and inventory charges demonstrate fragile resilience. Q2 2026 recovery and AMG mix improvement provide counterevidence, but Q1 recovery primarily reflected absent prior-year charges. The deterioration cannot be attributed solely to pricing.","evidenceIds":["q68","q65","q67","q487","q495","q1603"]},{"criterion":"contractual_freedom","grade":1,"rationale":"Prices generally become fixed at booking, while LTSA pricing and quantities can change under specified circumstances and actual modifications occurred. Capacity payments provide partial protection, but standard-order cancellation rights constrain unilateral control of terms.","evidenceIds":["q166","q625","q94","q626","q156"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"Actual 2025 cash generation and reduced first-half 2026 capital expenditure intensity support discipline. Repeated equipment impairments, weaker cash conversion, substantial repurchases and increased debt offset this. Pending acquisition dilution, conditional termination exposure and unresolved debt treatment add commitments whose returns remain unproven.","evidenceIds":["q690","q608","q230","q448","q603","q455","q449","q619","q590","q600"]},{"criterion":"incentive_alignment","grade":3,"rationale":"Actual below-target short-term payouts, the CEO's forgone bonus and reductions to financial-metric equity payouts following weak relative TSR demonstrate performance consequences. Granted performance-based equity supports alignment. These are actual historical disclosures, not proposed awards; ownership-guideline compliance remains unestablished.","evidenceIds":["q826","q766","q828"]},{"criterion":"execution","grade":2,"rationale":"Initial production shipments, cash generation and Q2 demand-led growth demonstrate delivery. Missed 2025 revenue and operating-margin targets, repeated impairments and weak cash conversion make execution mixed. Demand recovery is indirect execution evidence and does not establish management causation.","evidenceIds":["q1649","q690","q488","q824","q230","q448","q603"]},{"criterion":"governance","grade":3,"rationale":"Existing separation of CEO and Chair roles, proxy access, a conduct-based clawback, disclosed absence of reportable related-party transactions and actual director attendance support strong governance arrangements. These disclosures do not prove exceptional control effectiveness or establish results of proposed 2026 votes.","evidenceIds":["q814","q702","q706","q923","q925"]}]}],"financialAssessments":[],"qualityPolicy":"quality-scores-2","sourcePolicy":"issuer-evidence-7","basisHash":"8c78eede0880049fd8ea43319286b39fd1f031b36338f981666de3c0920c48fc","updatedAt":"2026-10-19T16:09:42.435Z","sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000006/on-20251231.htm","publishedAt":"2026-02-09","sha256":"1a2f365ef11c68f3fa0e409bc660581d7896f537d682bf81784ef4f04984da50","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000017/on-20260703.htm","publishedAt":"2026-08-03","sha256":"8b42bc4f2c7bc11a401619f6deb3f802244757f3f5aab958be1734fc7397903c","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000010/on-20260401.htm","publishedAt":"2026-04-02","sha256":"cacb5dbd387f44a3214763302e5b000cbe7b0f5ca8c40c4ecfbd4e13dfe8168d","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-4","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828025004557/on-20241231.htm","publishedAt":"2025-02-10","sha256":"c5816e4ca4f30cc3188fb822c722ae63e6ae0000f8210fcc4acdd550f756a3c4","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-5","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828024003201/on-20231231.htm","publishedAt":"2024-02-05","sha256":"8f9c91b498e6ff95d9d3c84bb39068c3862e2de16a49da668a66d279a6a3d9ca","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-6","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000014/on-20260403.htm","publishedAt":"2026-05-04","sha256":"5d18f1f87f0908779c89001dd2c604c620228b73481524b847333e38697999fa","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-7","url":"https://www.sec.gov/Archives/edgar/data/1097864/000114036126018868/ef20072220_ex99-1.htm","publishedAt":"2026-05-04","sha256":"deb5eb1294c854274fc21dce7a80c74f7336086a17b3e78073d7a853125ffa99","citationPolicy":"numeric-lines-1","dateKind":"filed"},{"id":"filing-8","url":"https://www.sec.gov/Archives/edgar/data/1097864/000114036126004405/ef20065070_ex99-1.htm","publishedAt":"2026-02-09","sha256":"a375d19dd2e626f35cb66f39a5392b0eeaa30eefc728d011104885fc0ef6b2a8","citationPolicy":"numeric-lines-1","dateKind":"filed"}],"model":"gpt-6.1-sol","providerId":"codex:f937639e65e5199a9768c52897e22e0eba368b9e9914a386f8087884f7030dca","usage":{"input_tokens":140020,"cached_input_tokens":21120,"cache_write_input_tokens":0,"output_tokens":4107,"reasoning_output_tokens":101}},"signals":[{"period":"2021","end":"2021-12-31","values":{"gross_margin":40.272708388972966,"operating_margin":19.104424463633933,"roic":18.292893840659023,"fcf_margin":19.843318792842517,"sbc_revenue":1.503011958811834},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roiic":"NOPAT is undefined under this method: pretax profit must be positive and the effective tax rate must be between 0 and 100%.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2022","end":"2022-12-31","values":{"gross_margin":48.96831687924863,"operating_margin":28.344262688861665,"roic":29.700839701338204,"fcf_margin":19.553938171074435,"sbc_revenue":1.2106363046768032},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2023","end":"2023-12-31","values":{"gross_margin":47.0556161395856,"operating_margin":30.760935417423962,"roic":28.91309292752086,"fcf_margin":4.869744335393191,"sbc_revenue":1.467345207803223},"issues":{"pfcf_growth":"TTM FCF per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2024","end":"2024-12-31","values":{"gross_margin":45.41038928031853,"operating_margin":24.959405842734704,"roic":16.717364552627043,"fcf_margin":17.11873261511091,"sbc_revenue":1.921692105671886},"issues":{"peg":"TTM earnings per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2025","end":"2025-12-31","values":{"gross_margin":33.09036928311706,"operating_margin":1.4044100477032393,"roic":0.8809890880046779,"fcf_margin":23.661473796577376,"sbc_revenue":2.406845248023485},"issues":{"peg":"TTM earnings per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roiic":"Invested capital did not increase versus the prior year. ROIIC requires a positive increase.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}}],"sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000006/on-20251231.htm","publishedAt":"2026-02-09","sha256":"1a2f365ef11c68f3fa0e409bc660581d7896f537d682bf81784ef4f04984da50","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000017/on-20260703.htm","publishedAt":"2026-08-03","sha256":"8b42bc4f2c7bc11a401619f6deb3f802244757f3f5aab958be1734fc7397903c","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000010/on-20260401.htm","publishedAt":"2026-04-02","sha256":"cacb5dbd387f44a3214763302e5b000cbe7b0f5ca8c40c4ecfbd4e13dfe8168d","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-4","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828025004557/on-20241231.htm","publishedAt":"2025-02-10","sha256":"c5816e4ca4f30cc3188fb822c722ae63e6ae0000f8210fcc4acdd550f756a3c4","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-5","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828024003201/on-20231231.htm","publishedAt":"2024-02-05","sha256":"8f9c91b498e6ff95d9d3c84bb39068c3862e2de16a49da668a66d279a6a3d9ca","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-6","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000014/on-20260403.htm","publishedAt":"2026-05-04","sha256":"5d18f1f87f0908779c89001dd2c604c620228b73481524b847333e38697999fa","dateKind":"filed","citationPolicy":"numeric-lines-1"},{"id":"filing-7","url":"https://www.sec.gov/Archives/edgar/data/1097864/000114036126018868/ef20072220_ex99-1.htm","publishedAt":"2026-05-04","sha256":"deb5eb1294c854274fc21dce7a80c74f7336086a17b3e78073d7a853125ffa99","citationPolicy":"numeric-lines-1","dateKind":"filed"},{"id":"filing-8","url":"https://www.sec.gov/Archives/edgar/data/1097864/000114036126004405/ef20065070_ex99-1.htm","publishedAt":"2026-02-09","sha256":"a375d19dd2e626f35cb66f39a5392b0eeaa30eefc728d011104885fc0ef6b2a8","citationPolicy":"numeric-lines-1","dateKind":"filed"}],"history":[{"version":8,"updatedAt":"2026-10-24T01:15:26.940Z","verdict":"uncertain","value":null},{"version":7,"updatedAt":"2026-10-23T22:37:09.606Z","verdict":"uncertain","value":null},{"version":6,"updatedAt":"2026-10-22T22:31:12.429Z","verdict":"uncertain","value":null},{"version":5,"updatedAt":"2026-10-19T18:33:29.802Z","verdict":"uncertain","value":null},{"version":4,"updatedAt":"2026-10-19T13:57:15.039Z","verdict":"uncertain","value":null},{"version":3,"updatedAt":"2026-10-18T16:35:43.872Z","verdict":"uncertain","value":null},{"version":2,"updatedAt":"2026-10-18T02:27:49.793Z","verdict":"uncertain","value":null},{"version":1,"updatedAt":"2026-10-18T02:18:02.026Z","verdict":null,"value":null}],"hasRequested":false,"requestStatus":"queued","researchIssue":null,"archivedMoat":null,"scope":"supported_catalog"}