Onsemi Cuts Workforce by 9% Amid Restructuring

Onsemi, a semiconductor company, is restructuring its workforce, cutting approximately 2,400 jobs, or about 9% of its staff, as reported by The Wall Street Journal. This move follows a less optimistic outlook for early 2025 and aims to streamline finances while fostering innovation in a competitive landscape.

The job cuts, expected to save $105 million to $115 million annually, come as Onsemi navigates a challenging market environment marked by slowing demand and intensifying competition, particularly from Chinese rivals. Chief Executive Hassane El-Khoury emphasized the need to right-size the company's operations while prioritizing key investments to maintain competitiveness.

"We're reducing projects that don't impact the fundamentals of the company; don't impact the future of the company," El-Khoury stated, highlighting the importance of strategic resource allocation.

The company's silicon carbide devices have so far outperformed Chinese competitors in terms of quality, but maintaining this advantage will be crucial as rivals advance their technologies, according to Benchmark analyst David Williams.

The automotive sector, representing about half of Onsemi's revenue, has experienced a prolonged decline in demand as rising car prices deter buyers. This trend contributed to a 15% drop in fourth-quarter revenue, as reported earlier this month.

Despite the restructuring, El-Khoury emphasized that research and development investments remain a priority, aligning with his previous approach when he first assumed the CEO role in 2020. Instead, the company is pausing projects deemed less essential to its core objectives and long-term growth.

"We have to look different," El-Khoury said, emphasizing the need for a strategic focus and targeted investments.

One key area of focus is artificial intelligence (AI), where demand is expected to surge. Onsemi estimates that powering 112,000 GPUs requires approximately 12 million of its power chips, underscoring the company's critical role in supporting the growing AI infrastructure.

"That's why we have to be able to pivot," El-Khoury explained. "That's why the focus for me was not on cost reduction, but on restructuring, which means we will still be able to respond."