Can ON Semiconductor Widen Its Niche in the IoT Industry?
ON Semiconductor (NASDAQ: ON) — historically a maker of power management and commodity chips — is making headway as a specialty chip maker for the Internet of Things. The IoT space has been getting a lot of attention, though, and ON is small compared to some of its peers. Widening its niche will be crucial to the company’s longer-term success.
Sales of devices such as smartphones, tablets, and PCs have been stagnant for the last few years. That trend took its toll on the semiconductor industry, setting off a wave of mergers and acquisitions that began in 2015. ON was no exception, and snapped up smaller rival Fairchild Semiconductor in the fall of 2016 for $2.4 billion.
Consolidating businesses against a backdrop of slowing sales of traditional devices wasn’t the only option for semiconductor businesses. An area of new growth also presented itself — the IoT in which more and more things are connected to the internet — so ON made a pivot to capture the new market. Thus far, the IoT has provided plenty of new business to more than offset weakness elsewhere, and that trend could continue. Read more…