01—Abstract
Summary
Summary of the 8-K filed March 18, 2025. Cited figures are marked; the original filing is the authoritative source.
ON Semiconductor Corporation (onsemi) reported in this Form 8-K, filed March 18, 2025 under Item 2.06 (Material Impairments), that management approved on March 17, 2025 the recognition of pre-tax non-cash impairment charges of between $600 milliona and $700 million.
The charges relate to long-lived assets, specifically investments in manufacturing equipment at certain onsemi manufacturing facilities, and are being recorded under held-for-sale accounting guidance. The action is part of the restructuring plan and cost reduction initiatives previously announced on February 24, 2025. The company states that the actions are based on an evaluation of its current manufacturing technologies and capabilities, with the goal of realigning internal manufacturing capacity and capabilities with its anticipated long-term needs.
Management estimates the charges will reduce depreciation expense by between $30 millionb and $35 million in 2025. The company does not expect these charges, most of which will be incurred in the first two quarters of 2025, to result in material future cash expenditures.
The filing cautions that the timing of disposition, fair values, disposal costs, the resulting impairment charges and the depreciation impact may differ from current expectations, and such differences may be material. Investors should weigh these estimates against the risks described in the company's 2024 Annual Report on Form 10-K filed February 10, 2025.
02—Key points
Key Highlights
- Management approved pre-tax non-cash impairment charges of between $600 million and $700 million on March 17, 2025.
- Charges relate to long-lived assets, namely investments in manufacturing equipment at certain onsemi manufacturing facilities, under held-for-sale accounting guidance.
- Actions are part of the restructuring plan and cost reduction initiatives announced February 24, 2025.
- Purpose is to realign internal manufacturing capacity and capabilities with anticipated long-term needs, based on an evaluation of current manufacturing technologies.
- Estimated reduction in depreciation expense of between $30 million and $35 million in 2025.
- Company does not expect material future cash expenditures from these charges, most of which will be incurred in the first two quarters of 2025.
- Estimates are subject to change, and the actual impact may be material.
03—Questions
Frequently Asked Questions
What is the size of the impairment charges?
onsemi estimates pre-tax non-cash impairment charges of between $600 million and $700 million, approved by management on March 17, 2025.
What assets are being impaired?
The charges relate to long-lived assets, specifically investments in manufacturing equipment at certain onsemi manufacturing facilities, recorded under held-for-sale accounting guidance.
Will these charges require future cash spending?
No. The company does not expect these charges to result in material future cash expenditures. Most of the charges are expected to be incurred in the first two quarters of 2025.
How will the impairments affect depreciation expense?
Management estimates the charges will reduce depreciation expense by between $30 million and $35 million in 2025.
Why is the company taking these actions?
The actions follow an evaluation of current manufacturing technologies and capabilities and are intended to realign internal manufacturing capacity and capabilities with anticipated long-term needs, as part of the restructuring plan announced February 24, 2025.
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