ON Semiconductor Corp. (NASDAQ:ON) said surging demand from artificial intelligence data centers prompted the company to prioritize shipments to that market over automotive and industrial customers during the second quarter, as AI infrastructure demand rapidly reshapes the semiconductor industry.
AI Demand Took Priority Over Automotive
During the company’s second-quarter earnings call, CEO Hassane El-Khoury said the company shifted capacity toward AI data center customers after demand accelerated faster than expected, temporarily diverting supply from its automotive and industrial businesses while manufacturing catches up.
“We did prioritize AI data center that took away from our other businesses in the short term,” El-Khoury said, adding that the move reflected long-term opportunities rather than a one-quarter spike in demand.
The company expects AI data center revenue to more than double this year.
The AI infrastructure boom has created a new wave of demand beyond graphics processors, with hyperscalers investing heavily in the power systems needed to run increasingly energy-intensive data centers.
Power Infrastructure Is Becoming AI’s Next Growth Engine
El-Khoury said ON Semiconductor’s opportunity extends beyond supplying chips inside data centers, with AI deployments driving demand across the broader power infrastructure needed to support them.
He added that the company is benefiting from what it calls the “AI halo effect,” with demand increasing for products used in energy storage systems, battery backup, power conversion, and high-voltage infrastructure.
ON Semiconductor also expects energy storage revenue to grow about 40% this year as AI power requirements continue to expand.
Results Beat Estimates, Guidance Tops Expectations
The company reported second-quarter earnings of 74 cents per share, beating analysts’ estimates of 71 cents, according to Benzinga Pro.
Revenue rose to $1.6 billion from $1.47 billion a year earlier, topping the consensus estimate of $1.59 billion.
For the third quarter, the company guided for revenue of $1.65 billion to $1.75 billion and adjusted earnings of 79 cents to 91 cents per share. Wall Street expects revenue of $1.66 billion and adjusted earnings per share of 83 cents.
Price Action: The stock closed 5.78% higher on Tuesday at $80.40 and gained a further 7.38% in extended trading on the earnings announcement. In pre-market trading on Tuesday, ON was up over 7%.
Benzinga edge rankings indicate ON has a Momentum score in the 84th percentile and a Growth score in the 83rd percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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