{"schemaVersion":1,"research":true,"symbol":"on","name":"On Semiconductor","topic":"moat","path":"/stock/on/moat","status":"published","version":3,"updatedAt":"2026-10-18T13:56:35.927Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"uncertain","summary":"Onsemi has proprietary technology, longstanding customer relationships and binding supply commitments, but the passages do not establish durable competitive superiority or substantial switching costs. Contract renegotiations and declining remaining commitments weaken the case for customer dependency, although they do not prove customer losses. Pricing power is unproven: disclosed margin recovery reflects demand, mix and fewer charges rather than demonstrated price increases. This is insufficient evidence of a moat, rather than established competitive weakness.","advantages":[{"mechanism":"intangible_assets","claim":"Patents, trade secrets and technical know-how are existing assets that could support differentiation; their ability to exclude competitors or sustain superior customer economics is not demonstrated.","durability":"Unestablished. The issuer considers its protection adequate, but the passages provide no technology-specific protection periods or demonstrated persistence of superiority.","risks":"Competing technology could erode differentiation. New technology introductions and customer sampling demonstrate development activity, not durable commercial leadership.","invalidation":"The differentiation thesis would be undermined by disclosed product substitution, loss of important IP protection or repeated commercial failures attributable to inferior technical performance.","competitors":[],"evidenceIds":["e1","e2","e3","e4"],"counterEvidenceIds":["e5","e6"]},{"mechanism":"switching_costs","claim":"Longstanding customer relationships, multi-year commitments and non-cancelable capacity payments provide some contractual attachment. They do not establish substantial technical or economic switching costs.","durability":"Limited to disclosed contractual protections; persistence beyond those commitments is unproven. Remaining LTSA obligations declined from $16.5 billion at year-end 2023 to $11.9 billion in 2024, $7.1 billion in 2025 and $6.5 billion in April 2026.","risks":"Agreements were modified in 2024 and 2025, and standard orders allow cancellation. The decline in remaining obligations includes contractual fulfillment and cannot be treated entirely as cancellations or lost customers.","invalidation":"The attachment thesis would be undermined by evidence of customers replacing onsemi without meaningful qualification costs, repeat commitments failing to replenish fulfilled contracts, or capacity-payment protections being waived without compensation.","competitors":[],"evidenceIds":["e7","e8","e9","e10","e11","e12"],"counterEvidenceIds":["e13","e14","e15","e16"]}],"evidence":[{"id":"e1","sourceId":"filing-1","location":"Business / Intellectual property protection","excerpt":"Patents, Trademarks, Copyrights and Other Intellectual Property Rights We market our products under worldwide trademarks, including ON Semiconductor, ON, onsemi, and various product names and logos, and, in the United States and internationally, we rely primarily on a combination of patents, trademarks, copyrights, 12 Table of Contents trade secrets, employee and non-disclosure agreements and licensing agreements to protect our IP."},{"id":"e2","sourceId":"filing-1","location":"Business / Issued and pending patents","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":"e3","sourceId":"filing-1","location":"Business / Management assessment of IP adequacy","excerpt":"We believe the scope and duration of our IP rights, including trade-secrets and technical know-how, are adequate to protect our products and processes."},{"id":"e4","sourceId":"filing-3","location":"Proxy summary / 2025 financial and strategic highlights","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":"e5","sourceId":"filing-1","location":"Risk factors / Technological competition","excerpt":"Products or technologies developed by competitors may render our products or technologies obsolete or noncompetitive."},{"id":"e6","sourceId":"filing-1","location":"Risk factors / Competitor categories","excerpt":"We face significant competition within each of our product lines from major global semiconductor companies as well as smaller companies focused on specific market niches."},{"id":"e7","sourceId":"filing-4","location":"Business / Long-term customer relationships","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":"e8","sourceId":"filing-5","location":"Revenue note / December 2023 LTSA obligations","excerpt":"Certain of the Company's customer contracts are multi-year agreements that include firmly committed amounts (\"Long-term Supply Agreements\" or \"LTSA's\") for which the remaining performance obligations as of December 31, 2023 were approximately $16.5 billion (excluding the remaining performance obligations for contracts having a duration of one year or less)."},{"id":"e9","sourceId":"filing-4","location":"Revenue note / December 2024 LTSA obligations","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":"e10","sourceId":"filing-1","location":"Revenue note / December 2025 LTSA obligations","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":"e11","sourceId":"filing-6","location":"Revenue note / April 2026 LTSA obligations","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 April 3, 2026 were approximately $6.5 billion (excluding the remaining performance obligations for contracts having a duration of one year or less)."},{"id":"e12","sourceId":"filing-1","location":"Revenue note / Non-cancelable customer capacity payments","excerpt":"Certain LTSAs include non-cancelable capacity payments from the customer, which are generally due within 30 days of agreement."},{"id":"e13","sourceId":"filing-4","location":"Business / Actual 2024 LTSA modifications","excerpt":"During 2024, certain long-term supply agreements with strategic end-customers were modified upon mutual agreement."},{"id":"e14","sourceId":"filing-1","location":"Revenue note / Actual 2025 LTSA modifications","excerpt":"During 2025, certain LTSAs were modified in response to changes in demand."},{"id":"e15","sourceId":"filing-1","location":"Business / Standard and custom 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":"e16","sourceId":"filing-1","location":"Revenue note / LTSA pricing, timing and cancellation provisions","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":"e17","sourceId":"filing-1","location":"Business / Prices and quantities fixed at booking","excerpt":"Generally, prices and quantities are fixed at the time of booking."},{"id":"e18","sourceId":"filing-5","location":"Results of operations / Capacity allocation to higher-ASP products","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":"e19","sourceId":"filing-1","location":"Results of operations / 2025 gross margin decline","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":"e20","sourceId":"filing-1","location":"Results of operations / Inventory charges from manufacturing realignment","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":"e21","sourceId":"filing-2","location":"Results of operations / Second-quarter 2026 operating 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":"e22","sourceId":"filing-2","location":"Results of operations / AMG margin improvement from 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":"e23","sourceId":"filing-6","location":"Results of operations / First-quarter profit recovery and absent prior-year charges","excerpt":"Gross 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":"e24","sourceId":"filing-2","location":"Results of operations / Second-quarter demand recovery","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":"e25","sourceId":"filing-2","location":"Note 5 / Actual manufacturing realignment charges","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":"e26","sourceId":"filing-2","location":"Notes 6 and 7 / Cash balances and debt issuance","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":"e27","sourceId":"filing-2","location":"Equity note / Actual 2026 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":"e28","sourceId":"filing-2","location":"Liquidity / Actual first-half capital expenditure intensity and annual 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":"e29","sourceId":"filing-6","location":"Liquidity / First-quarter operating cash flows","excerpt":"Our cash flows from operating activities were $239.1 million and $602.3 million for the quarters ended April 3, 2026 and April 4, 2025, respectively."},{"id":"e30","sourceId":"filing-3","location":"Compensation discussion / Actual results versus 2025 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":"e31","sourceId":"filing-3","location":"Compensation discussion / Actual short-term incentive payout outcomes","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":"e32","sourceId":"filing-3","location":"Compensation discussion / Actual 2025 performance-based equity grant mix","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":"e33","sourceId":"filing-3","location":"Compensation discussion / 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":"e34","sourceId":"filing-3","location":"Governance practices / Insider hedging and pledging restrictions","excerpt":"☒ No Hedging or Pledging: Certain company insiders, including our NEOs and directors, are prohibited from engaging in hedging transactions with our stock and from pledging our stock as collateral for a loan."},{"id":"e35","sourceId":"filing-3","location":"Governance practices / Adopted clawback policies","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":"e36","sourceId":"filing-3","location":"Governance practices / 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":"e37","sourceId":"filing-3","location":"Governance / Audit committee meetings and oversight responsibilities","excerpt":"14 onsemi 2026 Proxy Statement The Board of Directors and Corporate Governance AUDIT COMMITTEE 10 meetings in 2025 Primary Responsibilities ■ Monitor the integrity of the Company’s corporate accounting and financial reporting processes and the audits of financial statements ■ Appoint, determine funding for and oversee our independent registered public accounting firm ■ Review the independence, qualifications and performance of our internal and independent auditors ■ Pursuant to SEC rules, establish procedures for: (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters ■ Discuss with management the Company’s major financial risk exposures and processes in place to monitor and control such exposures ■ Review insurance coverage for directors and officers and make recommendations to the Board with respect to such insurance ■ Oversee the Company’s cybersecurity posture and actions remediating any issues related to the protection or privacy of the Company’s data ■ Review and oversee related party transactions in accordance with applicable securities laws ■ Review, discuss and recommend the Company’s quarterly and annual audited financial statements for inclusion in the Company’s quarterly reports and annual report, respectively ■ Periodically review the tax strategy of the Company ■ Oversee the effectiveness of the Company’s legal compliance policies and programs, as well as the handling of (i) any known material non-compliance with applicable regulations and (ii) other legal and regulatory matters that may have a material impact on the Company’s finances or compliance policies ■ Provide guidance for the Company’s ERM Program and review and oversee the Company’s ethics and compliance program Members: Susan K."},{"id":"e38","sourceId":"filing-3","location":"Governance / Separation of CEO and board chair","excerpt":"We currently separate the roles of CEO and Chair of the Board."},{"id":"e39","sourceId":"filing-2","location":"Merger note / Expected ownership dilution 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":"e40","sourceId":"filing-2","location":"Merger note / Expected closing and outstanding conditions","excerpt":"The transaction is expected to close in mid-2027, subject to approval by Synaptics stockholders, the receipt of required regulatory approvals and other customary conditions."},{"id":"e41","sourceId":"filing-2","location":"Liquidity / Earnings improvement versus operating cash generation","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."}],"changes":["Retain the previous uncertain verdict: the expanded evidence still does not demonstrate durable superiority or substantial switching costs.","Add the multi-year decline in LTSA obligations and April 2026 balance, while distinguishing fulfillment from unquantified modifications and cancellations.","The supplied proxy now supports assessments of actual incentive alignment and governance; these are no longer wholly missing.","Add capital-allocation and execution evidence covering cash generation, repurchases, financing and recurring realignment charges. Treat the pending Synaptics transaction as an uncompleted commitment, not an achieved advantage."],"limitations":["All evidence comes from supplied issuer filings. Technology leadership and IP adequacy statements remain management assertions rather than demonstrated comparative superiority.","Competition passages disclose generic categories. Named compensation peers, acquisition counterparties and collaboration partners do not establish product-market competitor coverage, so competitor arrays are empty.","No comparable-product pricing series, realized price-change decomposition, market-share history, customer switching-cost measurements or quantified qualification barriers are supplied.","Remaining LTSA obligations are not a retention rate; the passages do not reconcile fulfillment, modifications, cancellations and new commitments.","The proxy supplies adopted policies and actual compensation outcomes, but the passages do not establish executive beneficial ownership or compliance with ownership guidelines.","Source dates are filing dates, retaining dateKind=filed. The latest supplied operating report covers July 3, 2026; subsequent merger approvals, closing and operating developments are not established."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":null,"rationale":"Existing IP and customer commitments are established, but neither demonstrates a structural competitive advantage. The overall moat remains uncertain.","evidenceIds":["e1","e2","e10","e12"]},{"criterion":"durability","grade":null,"rationale":"The passages do not establish persistence of technical superiority or customer dependence beyond contractual commitments.","evidenceIds":["e3","e5","e16"]},{"criterion":"customer_dependency","grade":null,"rationale":"Longstanding relationships and capacity payments indicate attachment, but technical switching friction and customer reliance on irreplaceable products are unestablished.","evidenceIds":["e7","e12","e15"]},{"criterion":"erosion_resilience","grade":null,"rationale":"Contract modifications and operating volatility identify concerns, while demand recovery provides a counterweight. Their competitive causes are insufficiently established to grade moat resilience.","evidenceIds":["e14","e19","e24"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":null,"rationale":"Higher ASPs arose from capacity allocation to different products, and recent margin gains include favorable mix. Neither isolates realized pricing on comparable products; contract modifications do not disclose price concessions.","evidenceIds":["e18","e22","e14"]},{"criterion":"retention","grade":2,"rationale":"Longstanding customer relationships, multi-year commitments, capacity payments and renewed demand support mixed retention evidence indirectly. Renegotiations and declining remaining obligations temper it; no retention rate or customer-loss inference is warranted.","evidenceIds":["e7","e8","e9","e10","e11","e12","e14","e24"]},{"criterion":"margin_resilience","grade":2,"rationale":"Resilience is mixed: 2025 gross margin fell from 45.4% to 33.1%, including substantial realignment-related inventory charges. Second-quarter 2026 margin recovered to 38.4% versus 37.6% a year earlier, and AMG improved despite lower revenue. These results assess resilience without establishing pricing power.","evidenceIds":["e19","e20","e21","e22","e23"]},{"criterion":"contractual_freedom","grade":2,"rationale":"Negotiated commitments and non-cancelable capacity payments provide protection, but prices are generally fixed at booking and standard orders permit cancellation. Actual LTSA modifications demonstrate bilateral flexibility, not unilateral repricing freedom.","evidenceIds":["e12","e14","e15","e16","e17"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"2025 cash generation and reduced 2026 capital spending support discipline, but repeated impairments indicate costly capacity adjustments. First-quarter operating cash flow weakened; first-half repurchases of $677.5 million accompanied $1.5 billion of new gross debt. Pending merger dilution has no demonstrated return yet. Cash accumulation alone therefore does not establish superior allocation.","evidenceIds":["e4","e25","e26","e27","e28","e29","e39","e40"]},{"criterion":"incentive_alignment","grade":3,"rationale":"Actual 2025 grants were predominantly performance based, incentive payouts reflected below-target performance, and relative-TSR adjustments reduced financial-metric payouts. The CEO received no short-term bonus under his prior commitment. Hedging restrictions and clawbacks reinforce alignment. Actual beneficial ownership is missing, and these disclosures do not establish exceptional durability.","evidenceIds":["e31","e32","e33","e34","e35"]},{"criterion":"execution","grade":2,"rationale":"Execution is mixed based on indirect operating evidence: 2025 revenue and operating margin missed plan, and substantial manufacturing realignment charges continued in 2026. Second-quarter revenue and operating income improved with demand, but earnings recovery did not directly produce higher operating cash flows. Technology launches and partnerships are issuer-reported achievements with limited commercial outcome evidence.","evidenceIds":["e4","e21","e24","e25","e30","e41"]},{"criterion":"governance","grade":3,"rationale":"Existing proxy access, separate CEO and chair roles, adopted clawback policies, and an audit committee that held ten meetings in 2025 support strong governance structures and activity. The passages do not demonstrate exceptional long-term oversight effectiveness or provide complete board-independence coverage.","evidenceIds":["e35","e36","e37","e38"]}]}],"financialAssessments":[],"qualityPolicy":"quality-scores-2","sourcePolicy":"issuer-evidence-4","basisHash":"8c78eede0880049fd8ea43319286b39fd1f031b36338f981666de3c0920c48fc","updatedAt":"2026-10-18T13:56:35.927Z","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"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000017/on-20260703.htm","publishedAt":"2026-08-03","sha256":"8b42bc4f2c7bc11a401619f6deb3f802244757f3f5aab958be1734fc7397903c","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000010/on-20260401.htm","publishedAt":"2026-04-02","sha256":"cacb5dbd387f44a3214763302e5b000cbe7b0f5ca8c40c4ecfbd4e13dfe8168d","dateKind":"filed"},{"id":"filing-4","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828025004557/on-20241231.htm","publishedAt":"2025-02-10","sha256":"c5816e4ca4f30cc3188fb822c722ae63e6ae0000f8210fcc4acdd550f756a3c4","dateKind":"filed"},{"id":"filing-5","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828024003201/on-20231231.htm","publishedAt":"2024-02-05","sha256":"8f9c91b498e6ff95d9d3c84bb39068c3862e2de16a49da668a66d279a6a3d9ca","dateKind":"filed"},{"id":"filing-6","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000014/on-20260403.htm","publishedAt":"2026-05-04","sha256":"5d18f1f87f0908779c89001dd2c604c620228b73481524b847333e38697999fa","dateKind":"filed"}],"model":"gpt-6.1-sol","providerId":"codex:32f84f980db75155bcb517c1ded2ba8f2e1f80087c521c39e0e777e7cf5ec7e5","usage":{"input_tokens":83310,"cached_input_tokens":21120,"cache_write_input_tokens":0,"output_tokens":3854,"reasoning_output_tokens":86}},"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"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000017/on-20260703.htm","publishedAt":"2026-08-03","sha256":"8b42bc4f2c7bc11a401619f6deb3f802244757f3f5aab958be1734fc7397903c","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000010/on-20260401.htm","publishedAt":"2026-04-02","sha256":"cacb5dbd387f44a3214763302e5b000cbe7b0f5ca8c40c4ecfbd4e13dfe8168d","dateKind":"filed"},{"id":"filing-4","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828025004557/on-20241231.htm","publishedAt":"2025-02-10","sha256":"c5816e4ca4f30cc3188fb822c722ae63e6ae0000f8210fcc4acdd550f756a3c4","dateKind":"filed"},{"id":"filing-5","url":"https://www.sec.gov/Archives/edgar/data/1097864/000162828024003201/on-20231231.htm","publishedAt":"2024-02-05","sha256":"8f9c91b498e6ff95d9d3c84bb39068c3862e2de16a49da668a66d279a6a3d9ca","dateKind":"filed"},{"id":"filing-6","url":"https://www.sec.gov/Archives/edgar/data/1097864/000109786426000014/on-20260403.htm","publishedAt":"2026-05-04","sha256":"5d18f1f87f0908779c89001dd2c604c620228b73481524b847333e38697999fa","dateKind":"filed"}],"history":[{"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":"completed","researchIssue":null,"archivedMoat":null,"scope":"supported_catalog"}