Clint Bolton's questions to ON Semiconductor Corp (ON) leadership • Q1 2025
Question
Clint Bolton asked for updated metrics to model gross margin potential, specifically the revenue and utilization levels needed to reach targets after the recent capacity reduction actions.
Answer
CFO Thad Trent reiterated that each point of utilization improvement now contributes 25-30 basis points to gross margin. He highlighted that the Q2 gross margin guidance includes a 900 basis point headwind from under-absorption charges. He explained that achieving the company's standard gross margin in the mid-40s is a function of returning to full utilization, with the path being linear based on the new sensitivity metric.