Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against ON Semiconductor Corporation (“onsemi” or the “Company”) (NASDAQ: ON) in the United States District Court for the District of Delaware on behalf of all persons and entities who purchased or otherwise acquired onsemi common stock between May 1, 2023, and October 27, 2023, both dates inclusive (the “Class Period”). Investors have until February 12, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.

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Onsemi manufactures and sells semiconductor components for various electronic devices worldwide, including power and sensing solutions, and technologies for the electrification of the automotive industry. Critical to onsemi’s long-term growth and success is its strategy to focus on the development, manufacture, and sale of a variety of products incorporating silicon carbide (“SiC”). A substantial portion of onsemi’s SiC products are necessary components of a number of systems used in the production of electric vehicles (“EVs”). Throughout the Class Period, Defendants made repeated misrepresentations to investors regarding the “stability” and “visibility” of the demand for onsemi’s SiC and other products, and the sustainability of onsemi’s revenue growth, by overstating the impact of onsemi’s long-term supply agreements (“LTSAs”) on the achievability of its revenue streams.

On May 1, 2023, the first day of the Class Period, onsemi released its first quarter 2023 earnings and accompanying investor earnings call with equity analysts. During that call, Defendants spoke extensively on the growth of onsemi’s SiC business and touted the fact that the company has “more and more confidence” in its claim that it would reach $1 billion in annual revenue for its SiC products in 2023. Specifically, Defendants explained that onsemi’s outlook was “actually very, very predictable,” which was “the benefit that we’ve been talking about with the LTSAs that have us really, with our customers, align on pricing and volume through the duration of the LTSAs.”

Thereafter and throughout the Class Period, Defendants continued to tout onsemi’s sales of SiC products, particularly to EV manufacturers. Defendants lauded onsemi’s LTSAs for the “extended visibility” and the “very, very clear view of where demand is,” aiding Defendants in their ability to effectively manage changing macroeconomic conditions and sustain onsemi’s revenue growth targets. Indeed, Defendants consistently disclosed increasing expected revenue figures for every new LTSA onsemi had signed with customers and assured investors that the LTSAs built “a more strategic relationship and partnership” with onsemi’s customers. Thus, Defendants told investors that, if onsemi’s customers “have . . . softness in their market and they have an LTSA, we’re going to get the call 6 months in advance.”

Notwithstanding Defendants’ assurances, on October 30, 2023, before the market opened, investors began to learn the truth about the purported benefits of onsemi’s LTSA strategy and the achievability of projected revenue from the company’s products subject to LTSAs, when onsemi announced its third quarter 2023 financial results. During the investor earnings call held that day, Defendants disclosed to investors that onsemi was “taking a very cautious approach” with its SiC products due to signs of a weakening demand in the company’s automotive business segment (which generates between 75% and 90% of onsemi’s SiC revenues), while also revealing that onsemi would miss its $1 billion 2023 SiC revenue target by approximately $200 million. Defendants claimed that the approximately 20% reduction in onsemi’s expected SiC revenue was solely attributable to one customer (identified by many analysts as Tesla, Inc.). Defendants added, however, that onsemi expects “greater sequential declines in industrial and other end markets” as well.

On this news, the price of onsemi common stock plummeted $18.18 per share, or nearly 22%, from a close of $83.52 per share on October 27, 2023, to close at $65.34 per share on October 30, 2023.

The Complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business and operations. Specifically, Defendants misrepresented and/or failed to disclose that: (1) revenues from billions of dollars in reported LTSAs were “committed” and “locked in,” and were effectively certain to be obtained by onsemi when, in fact, onsemi could and would abrogate the LTSAs at a customer’s request; (2) LTSA’s provided “predictable” and “sustainable” performance to drive onsemi’s growth, even in tough macroeconomic conditions, when, in fact, they would be modified or eliminated as conditions changed; and (3) Defendants had “good visibility” into customer demand when, in fact, demand could be reduced on short notice, even where LTSAs were in effect. As a result of the foregoing, Defendants’ positive statements about onsemi’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis.

If you purchased or otherwise acquired onsemi shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.

About Bragar Eagel & Squire, P.C.:

Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.

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