February 26, 2025 /SemiMedia/ — onsemi announced plans to lay off 2,400 employees, or 9% of its workforce, as part of its restructuring efforts in response to declining demand and revenue. Despite these challenges, the company is focusing on maintaining innovation and staying competitive, particularly as the AI boom accelerates and competition from Chinese firms intensifies.

CEO Hassane El-Khoury stated that onsemi expects a weaker-than-expected start to 2025, and is taking steps to optimize its financial scale while driving innovation. The company anticipates annual savings of $105 million to $115 million from the layoffs, with restructuring costs estimated at $50 million to $60 million, to be recorded in 2025.

According to a filing on Tuesday, onsemi had 26,400 full-time employees as of mid-February. El-Khoury emphasized that R&D funding would not be cut, as was the case during the company’s 2020 restructuring. Instead, the company is halting non-core projects that do not directly contribute to business growth.

Amid overall semiconductor industry downturns, onsemi faces challenges in maintaining its leadership in silicon carbide (SiC) devices. Benchmark analyst David Williams noted that onsemi’s SiC products have outperformed Chinese competitors in quality, but the company must continue to stay ahead as competitors evolve.

The company also reported a 15% drop in fourth-quarter revenue, falling to $1.72 billion, largely due to declining demand in the automotive sector, which accounts for about half of onsemi’s revenue. Rising vehicle prices have dampened consumer demand, leading to a sustained slowdown.

El-Khoury clarified that the layoffs would not affect core R&D investments. Rather, the company is focusing on the rapidly growing AI sector, where demand for power chips is expected to soar. onsemi revealed that powering 112,000 GPUs requires about 12 million power chips, and as AI projects accelerate, the demand for onsemi’s products will rise significantly.

“We are adapting to this surge in demand,” El-Khoury said. “This restructuring is not just about cutting costs, but ensuring we remain responsive to market changes.”