Onsemi sells 2 chip plants in $35M annual cost-cutting push

Onsemi is selling two chipmaking facilities in the Philippines and Pennsylvania, a move expected to save about $35 million annually as the semiconductor maker streamlines its manufacturing footprint.

The planned divestitures are part of Onsemi's "Fab Right" strategy, which focuses on directing resources to the most competitive and scalable operations across its global manufacturing network, the company said. The approach is designed to improve long-term cost structure and strengthen competitiveness by enabling a more efficient manufacturing network.

Onsemi has agreed to sell its Tarlac, Philippines facility to Taiwan-based Greatek Electronics Inc., a semiconductor packaging and testing specialist, with closing expected within three to six months. The Mountain Top, Pennsylvania site will be acquired by Sweden's Silex Microsystems, with a closing date of January 2028 to allow for an orderly transfer of products to other Onsemi facilities. Both transactions are subject to customary conditions and regulatory approvals. Onsemi has also established a long-term supply agreement with Greatek to ensure continued production and customer commitments after the close.

The Tarlac site will continue operating as part of Onsemi's manufacturing network throughout the transition period. The extended timeline for the Mountain Top sale reflects the complexity of migrating the technologies and products currently manufactured there to other facilities within Onsemi's network.

The divestitures represent a step in Onsemi's broader effort to improve its cost structure and sustain gross margin expansion. The company expects initial savings of $35 million per year to begin in 2027, with the full benefit realized in 2028. Onsemi, which supplies intelligent power and sensing technologies to automotive, industrial and AI data center markets, competes with Infineon Technologies and Texas Instruments in the power semiconductor space. The company's shares trade on the Nasdaq under the ticker ON.

The semiconductor industry has seen a wave of manufacturing footprint optimization as companies balance the need for capacity with cost discipline. Onsemi's move follows similar restructuring efforts across the sector, where chipmakers are reassessing their fab networks as shifting demand patterns in automotive and industrial end markets reshape production priorities. The company's focus on power and sensing technologies positions it in a segment where manufacturing efficiency directly impacts gross margins.

For investors, the divestitures show Onsemi's commitment to margin improvement at a time when power semiconductor demand faces headwinds from slowing electric vehicle adoption and industrial inventory corrections. The $35 million in annual savings, while modest relative to Onsemi's overall cost base, represents incremental margin expansion that could compound over time as the company focuses resources on higher-value manufacturing nodes. Onsemi's ability to execute its Fab Right strategy while maintaining customer commitments through supply agreements will be key to realizing the full benefit of these moves.

This article is for informational purposes only and does not constitute investment advice.