U.S.-based automotive semiconductor supplier Onsemi forecast a weak profit outlook for the third quarter on Monday after reporting a steep drop in second-quarter revenue, reflecting continued softness in the electric vehicle (EV) market, particularly in North America and Europe.
The company’s shares fell more than 10% following the announcement, as Onsemi highlighted sluggish demand for battery electric vehicles amid economic uncertainty, rising global import tariffs, and high interest rates in the United States. These headwinds have prompted consumers to pull back on big-ticket purchases and forced automakers to reassess production targets and delay investment decisions.
While Onsemi noted early signs of stabilization across its end markets following a period of oversupply, it warned that a broad-based recovery in automotive demand has not yet materialized. The EV segment, once a key growth driver for the chipmaker, remains under pressure in major markets, with only marginal improvements expected in the near term.
The company is among a limited number of chipmakers supplying silicon carbide chips, which are essential for enhancing the driving range of electric vehicles. However, slower-than-expected EV adoption and the recent expiry of the $7,500 federal tax credit for some electric cars in the U.S. have contributed to a more cautious industry outlook.
Onsemi guided for third-quarter adjusted earnings of 54 cents to 64 cents per share, compared with the average analyst estimate of 59 cents, according to LSEG data. It forecast revenue between $1.47 billion and $1.57 billion, with the midpoint slightly above consensus expectations.
Second-quarter revenue came in at $1.47 billion, narrowly beating estimates of $1.45 billion, but marking a year-on-year decline of around 15%.