Analysis of Reportable Segments
ON Semiconductor Corp. operates in 3 segments: Power Solutions Group (PSG); Advanced Solutions Group (ASG); and Intelligent Sensing Group (ISG).
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Segment Profit Margin
ON Semiconductor Corp., profit margin by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Power Solutions Group (PSG) | |||||
| Advanced Solutions Group (ASG) | |||||
| Intelligent Sensing Group (ISG) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The annual reportable segment profit margin data reveals distinct trends across the three business groups over the five-year period ending December 31, 2023. Each segment demonstrates varying degrees of profitability progression with some notable fluctuations.
- Power Solutions Group (PSG)
- The profit margin for this segment exhibits a general upward trend throughout the period. Starting at 35% in 2019, the margin declines to a low of 30.76% in 2020. Thereafter, it experiences consistent increases, reaching 38.33% in 2021 and 47.39% in 2022. The margin stabilizes in 2023, registering a slight increase to 47.46%. This pattern suggests a recovery followed by sustained improvement and stabilization at a higher profitability level compared to the initial years.
- Advanced Solutions Group (ASG)
- This segment shows a somewhat volatile yet overall positive trajectory. The profit margin starts at 40.3% in 2019 and declines to 38.24% in 2020. It then rises notably to 43.99% in 2021 and peaks at 51.9% in 2022. However, in 2023, the margin declines to 45.49%, indicating some profit pressure or increased costs after a strong peak. Despite this dip, the margin remains higher than the earlier years, implying robust profitability with some recent challenges.
- Intelligent Sensing Group (ISG)
- The profit margin trend for this group reflects a pattern of recovery and growth. Starting at 36.37% in 2019, the margin decreases to 32.19% in 2020. It then improves steadily over the next three years, reaching 37.79% in 2021, 47.65% in 2022, and further to 48.67% in 2023. This consistent upward progression from 2020 onward indicates effective strategic adjustments or favorable market conditions driving profitability gains.
Overall, the data indicates a general improvement in segment profitability after a downturn in 2020 for all three groups. The year 2020 appears to have been a challenging period, potentially due to broader economic or industry-specific factors. The subsequent recovery and growth through 2022 and 2023 suggest effective operational or market responses leading to enhanced profit margins. Notably, the Advanced Solutions Group shows the most pronounced volatility, while the Power Solutions Group demonstrates a steadier post-2020 margin increase, and the Intelligent Sensing Group exhibits the most consistent improvement in recent years.
Segment Profit Margin: Power Solutions Group (PSG)
ON Semiconductor Corp.; Power Solutions Group (PSG); segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segment gross profit | |||||
| Revenue from external customers | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment profit margin = 100 × Segment gross profit ÷ Revenue from external customers
= 100 × ÷ =
The financial data for the Power Solutions Group (PSG) reflects notable changes in revenue, gross profit, and profit margin over the five-year period from 2019 to 2023.
- Revenue from External Customers
- Revenue experienced a decline from 2019 to 2020, dropping from approximately $2.79 billion to $2.61 billion. However, from 2020 onward, there was a consistent upward trajectory in revenue, increasing significantly to $3.44 billion in 2021, $4.21 billion in 2022, and reaching $4.45 billion by 2023. This suggests a strong recovery and growth phase after the initial downturn.
- Segment Gross Profit
- Gross profit mirrored the revenue trends but with even more pronounced growth following 2020. It fell from $976 million in 2019 to $801.7 million in 2020, then rebounded sharply to $1.32 billion in 2021. Subsequently, it continued to climb to $1.99 billion in 2022 and $2.11 billion in 2023. This pronounced increase in gross profit indicates improved cost management or more profitable product mix alongside revenue growth.
- Segment Profit Margin
- The profit margin shows a clear upward trend throughout the period under review. It decreased from 35.00% in 2019 to 30.76% in 2020, paralleling the decline in revenue and gross profit. From 2021 onwards, the margin increased considerably, reaching 38.33% in 2021, and then rising sharply to 47.39% in 2022 and slightly more to 47.46% in 2023. The margin expansion signals more efficient operations or enhanced pricing power in the group's segment.
Overall, the PSG segment demonstrates resilience and strong recovery after a dip in 2020, with consistent growth in revenue and gross profit from 2021 forward. The margin improvements highlight enhanced profitability and operational efficiency during this period.
Segment Profit Margin: Advanced Solutions Group (ASG)
ON Semiconductor Corp.; Advanced Solutions Group (ASG); segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segment gross profit | |||||
| Revenue from external customers | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment profit margin = 100 × Segment gross profit ÷ Revenue from external customers
= 100 × ÷ =
- Revenue from external customers
- The revenue from external customers showed a fluctuating trend over the analyzed periods. It decreased slightly from 1,972,300 thousand US dollars in 2019 to 1,910,400 thousand US dollars in 2020. This was followed by a significant recovery and increase to 2,399,900 thousand US dollars in 2021 and further growth to a peak of 2,841,300 thousand US dollars in 2022. In 2023, the revenue declined to 2,488,500 thousand US dollars, indicating a shift after the previous year's peak.
- Segment gross profit
- Segment gross profit mirrored a similar pattern to revenue, with an initial decrease from 794,800 thousand US dollars in 2019 to 730,500 thousand US dollars in 2020. Subsequently, there was an increase to 1,055,600 thousand US dollars in 2021, followed by a substantial rise to 1,474,500 thousand US dollars in 2022. In 2023, gross profit decreased significantly to 1,131,900 thousand US dollars, although remaining above the levels observed in 2019 and 2020.
- Segment profit margin
- The segment profit margin demonstrated notable variability. In 2019, the margin was 40.3%, declining to 38.24% in 2020. It then increased to 43.99% in 2021 and reached its highest point at 51.9% in 2022, indicating enhanced profitability during that period. In 2023, the margin declined to 45.49%, reflecting a reduction in profitability compared to the previous year but still maintaining a higher margin than the 2019 and 2020 levels.
- Overall trends and insights
- The data indicates an overall growth trajectory in revenue and gross profit from 2019 through 2022, with peak performance observed in 2022 for both revenue and profitability margin. The decline in 2023 suggests a possible market contraction or increased costs impacting revenue and profit, although profitability remains relatively strong compared to earlier periods. The sharp increase in profit margin in 2022 implies improved operational efficiency or pricing strategies during that year. Monitoring these fluctuations will be critical to understanding underlying business dynamics affecting the segment going forward.
Segment Profit Margin: Intelligent Sensing Group (ISG)
ON Semiconductor Corp.; Intelligent Sensing Group (ISG); segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segment gross profit | |||||
| Revenue from external customers | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment profit margin = 100 × Segment gross profit ÷ Revenue from external customers
= 100 × ÷ =
- Revenue from External Customers
- The revenue exhibited a fluctuating yet overall increasing trend over the five-year period. After a slight decrease from approximately $757.3 million in 2019 to $738.5 million in 2020, revenue rebounded strongly to $900.8 million in 2021. This upward trajectory continued considerably, reaching $1.277 billion in 2022 and slightly increasing further to about $1.315 billion in 2023.
- Segment Gross Profit
- Gross profit demonstrated a similar pattern to revenue but with a more pronounced recovery and growth. From $275.4 million in 2019, gross profit decreased to $237.7 million in 2020. Subsequently, there was a marked recovery and growth, climbing to $340.4 million in 2021, and then experiencing substantial increases in 2022 and 2023, reaching $608.4 million and $640.3 million respectively. This reflects strong improvement in profitability at the gross profit level in the latter years.
- Segment Profit Margin
- The profit margin followed a notable upward trend despite initial downturns. The margin decreased from 36.37% in 2019 to 32.19% in 2020, indicating some margin pressure during that period. However, there was significant recovery starting in 2021 with a margin of 37.79%, followed by a sharp increase to 47.65% in 2022. The margin improved slightly further to 48.67% in 2023, reflecting enhanced efficiency or favorable product mix contributing to overall profitability.
- Summary of Trends
- Overall, the data reveals that the segment faced some challenges in 2020, shown by decreased revenue, gross profit, and margin. Starting from 2021, the segment exhibited strong recovery and robust growth in both revenue and profitability. The accelerating gross profit and expanding margin from 2021 through 2023 suggest effective cost management, improved operational leverage, or higher-value product offerings contributing to superior financial performance in recent years.
Revenue from external customers
ON Semiconductor Corp., revenue from external customers by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Power Solutions Group (PSG) | |||||
| Advanced Solutions Group (ASG) | |||||
| Intelligent Sensing Group (ISG) | |||||
| Total |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Revenue Trends by Segment
-
The data reveals distinct revenue trends across the three business segments from the end of 2019 through the end of 2023.
- Power Solutions Group (PSG)
-
This segment displays a generally upward trend in revenue over the five-year period. Starting at approximately 2.79 billion USD in 2019, revenue experienced a slight decline in 2020 to about 2.61 billion USD. However, from 2020 onwards, the segment consistently grew, reaching roughly 4.45 billion USD in 2023. This indicates strong and sustained growth post-2020, with a particularly notable acceleration between 2020 and 2022.
- Advanced Solutions Group (ASG)
-
The ASG segment’s revenue shows a less consistent pattern. Beginning at approximately 1.97 billion USD in 2019, it slightly declined to around 1.91 billion USD in 2020. Subsequently, the segment's revenue grew to nearly 2.40 billion USD in 2021 and further to 2.84 billion USD in 2022. However, in 2023, the revenue declined to about 2.49 billion USD. This fluctuation suggests that while the segment experienced growth during 2021 and 2022, it faced a contraction in the most recent year.
- Intelligent Sensing Group (ISG)
-
The ISG segment shows a consistent increase in revenue throughout the five-year period. Starting at about 757 million USD in 2019, revenue experienced a slight dip in 2020 to around 739 million USD. Following this, the segment progressively grew each year, reaching approximately 1.32 billion USD by 2023. The growth is particularly strong from 2021 onwards, indicating increasing contribution and expansion of this segment's market presence.
- Total Revenue
-
Total reported segment revenues declined slightly from approximately 5.52 billion USD in 2019 to 5.26 billion USD in 2020. After 2020, total revenues rose sharply to about 8.33 billion USD in 2022 before marginally decreasing to approximately 8.25 billion USD in 2023. This pattern aligns with the observed behaviors of the individual segments, highlighting the dominant influence of PSG and ISG in driving overall growth, and the impact of ASG’s recent revenue contraction on total figures.
- Overall Insights
-
The analysis indicates a strong recovery and growth trajectory after the 2020 dip across most segments, particularly in PSG and ISG. The slight downturn in ASG's revenue in 2023 warrants attention, as it contrasts with the otherwise positive growth trend in the company's overall segment revenues. The consistent increase in ISG suggests a growing strategic focus or market demand in this area. The data supports an overall narrative of resilience and expansion with nuanced segment performance variations.
Segment gross profit
ON Semiconductor Corp., segment gross profit by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Power Solutions Group (PSG) | |||||
| Advanced Solutions Group (ASG) | |||||
| Intelligent Sensing Group (ISG) | |||||
| Total |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of the gross profit data for the reportable segments over the five-year period reveals distinct trends and shifts in performance among the three groups.
- Power Solutions Group (PSG)
-
The PSG segment experienced fluctuations in gross profit, starting at $976 million in 2019 with a noticeable decline to $801.7 million in 2020. This was followed by a significant rebound in 2021, increasing to $1.3183 billion. The segment continued to grow strongly in 2022, reaching $1.9943 billion, and experienced a moderate increase to $2.1113 billion in 2023. Overall, PSG demonstrated strong growth momentum after the initial dip.
- Advanced Solutions Group (ASG)
-
The ASG segment displayed a downward trend from 2019 through 2020, decreasing from $794.8 million to $730.5 million. A recovery was observed in 2021, with gross profit rising to $1.056 billion, and growth continued in 2022 to $1.4745 billion. However, in 2023, this segment saw a decline to $1.1319 billion, suggesting some challenges in sustaining growth in the most recent year.
- Intelligent Sensing Group (ISG)
-
The ISG segment showed consistent growth throughout the period. Starting at $275.4 million in 2019, it decreased slightly to $237.7 million in 2020 but then saw substantial increases in the subsequent years: $340.4 million in 2021, a significant jump to $608.4 million in 2022, and further growth to $640.3 million in 2023. The trend indicates strong and accelerating growth in this segment, likely reflecting expanding market opportunities or improved operational effectiveness.
- Total Gross Profit
-
The total gross profit across all segments shows an overall upward trajectory, despite some volatility. From $2.0462 billion in 2019, there was a decline to $1.7699 billion in 2020, followed by a sharp increase to $2.7143 billion in 2021. Growth accelerated markedly in 2022, reaching $4.0772 billion, before a slight decrease to $3.8835 billion in 2023. The data reflects robust recovery and expansion after 2020, with a modest pullback in the latest year.