ON · 10-Q · 2026Q4 · Full report
Gross Margin Drivers
ON SEMICONDUCTOR CORP · 2026-11-02 · Importance 43 · Surprise 32 · No source text
Quarterly gross margin increased 3.5 percentage points to 41.4%, as higher revenue, improved manufacturing utilization and favorable product mix outweighed higher prices for certain manufacturing inputs. Nine-month gross margin rose 7.4 percentage points to 39.5%, primarily reflecting the absence of prior-year excess and obsolete inventory charges and lower consumables and manufacturing-supply write-offs. PSG quarterly gross margin rose 9.7 percentage points to 38.2%, while AMG fell 0.6 points to 50.2% and ISG fell 3.9 points to 31.3%, each segment’s change reflecting product mix or utilization factors.
Key facts
- Nine-month gross profit increased $479.5 million, or approximately 33%, to $1,912.4 million, primarily because prior-year excess and obsolete inventory charges of $235.8 million were absent and consumables and manufacturing-supply write-offs declined, partly offset by higher input prices. source
- Quarterly gross profit increased $125.8 million, or approximately 21%, to $713.0 million, primarily from higher revenue, improved manufacturing utilization and favorable product mix, partly offset by higher manufacturing-input prices. source
- Nine-month ISG gross margin increased to 37.3% from 5.9%, primarily due to the absence of $230.3 million of prior-year excess and obsolete inventory charges. source
- Quarterly gross margin increased 3.5 percentage points, from 37.9% to 41.4%, primarily due to improved utilization and favorable product mix, partly offset by higher manufacturing-input prices. source
- Quarterly PSG gross margin rose 9.7 percentage points to 38.2% from 28.5%, due primarily to improved utilization, operating leverage on higher volumes and favorable product mix. source
- Quarterly AMG gross margin declined 0.6 percentage points to 50.2% from 50.8%, primarily due to unfavorable product mix. source
- Quarterly ISG gross margin declined 3.9 percentage points to 31.3% from 35.2%, primarily due to unfavorable product mix. source
- Nine-month gross margin rose 7.4 percentage points from 32.1% to 39.5%, primarily reflecting the absence of prior-year inventory charges, lower write-offs, improved utilization and favorable mix, partly offset by higher input prices. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| margin | positive | realized | +31.4% | Nine-month ISG gross margin increased to 37.3% from 5.9%, primarily due to the absence of $230.3 million of prior-year excess and obsolete… |
| operating_income | positive | realized | +27.8% | Nine-month gross profit increased $479.5 million, or approximately 33%, to $1,912.4 million, primarily because prior-year excess and… |
| operating_income | positive | realized | +7.3% | Quarterly gross profit increased $125.8 million, or approximately 21%, to $713.0 million, primarily from higher revenue, improved… |