You should read the following discussion in conjunction with our audited
historical consolidated financial statements, which are included in the 2021
Form 10-K and our unaudited consolidated financial statements for the fiscal
quarter ended April 1, 2022, which are included elsewhere in this Form 10-Q.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains statements that are forward-looking. These statements are
based on current expectations and assumptions that are subject to risks,
uncertainties and other factors. Actual results could differ materially because
of the factors discussed below or elsewhere in this Form 10-Q. See Part II, Item
1A. "Risk Factors" of this Form 10-Q and Part I, Item 1A. "Risk Factors" of the
2021 Form 10-K.

Executive Overview

onsemi Overview

We provide industry leading intelligent power and sensing solutions to help our
customers solve the most challenging problems and create cutting edge products
for a better future. Our intelligent power technologies enable the
electrification of the automotive industry that allows for lighter and
longer-range electric vehicles, empowers efficient fast-charging systems and
propels sustainable energy for the highest efficiency solar strings, industrial
power and storage systems. Our intelligent sensing technologies support the
next-generation industry, allowing for smarter factories and buildings while
also enhancing the automotive mobility experience with imaging and depth sensing
that make advanced vehicle safety and automated driving systems possible.

onsemi's intelligent power allows our customers to exceed range targets with
lower weight and reduce system cost through efficiency. With our sensing
integration, we believe onsemi's intelligent power solutions achieve higher
efficiencies compared to our peers and allow lower temperature operation,
reducing cooling requirements, saving costs and minimizing weight while
delivering the required power with less die per module and achieving higher
range for a given battery capacity. onsemi's intelligent sensing solutions offer
proprietary features in smaller packages that support customers' use cases. We
believe our intelligent sensing technology offers advanced features to achieve
optimal results and our product integration drives improved efficiency. This
performance is delivered in a smaller footprint while reducing system latency to
increase safety and throughput by providing a proprietary feature set to solve
different use cases.

We serve a broad base of end-user markets, including automotive, industrial and
others which include communications, computing and consumer. We believe the
evolution of automotive, with advancements in autonomous driving, ADAS, vehicle
electrification and the increase in electronics content for vehicle platforms,
is reshaping the boundaries of transportation. With our extensive portfolio of
AEC-qualified products, onsemi helps customers design high reliability solutions
while delivering top performance. Within the industrial space, onsemi is helping
OEMs develop innovative products to navigate the ongoing transformation across
energy infrastructure, factory automation and power conversion.

From April 1, 2022we were organized into three operational and presentable segments: PSG, ASG and ISG.

Commercial strategy developments

Our primary focus continues to be on gross margin and operating margin
expansion, while at the same time achieving revenue growth in our focused
end-markets of automotive, industrial and communications infrastructure as well
as being opportunistic in other end-markets, including obtaining longer-term
supply arrangements with strategic end-customers. We are also focused on
achieving efficiencies in our operating expenditures. While we believe we have
made significant progress on gross margin and operating margin expansion, we
continue to rationalize our product portfolio and have allocated capital,
research and development investments and resources to accelerate growth in
high-margin products and end-markets by moving away from non-differentiated
products, which have had historically lower gross margins.

During the first quarter, we divested our six-inch front-end wafer manufacturing
facility in Oudenaarde, Belgium and entered into a definitive agreement to sell
our eight-inch front-end wafer manufacturing facility in South Portland, Maine,
which is expected to close during the second quarter of 2022. We are also
exploring the sale of certain other manufacturing facilities. We believe these
actions, among others, will allow us to transition to a lighter internal
fabrication model where our financial performance will be less volatile and not
as heavily influenced by our internal manufacturing volumes. As actions are
initiated to achieve our business strategy goals, we could incur accounting
charges in the future.

We are focused on sustainability as we drive a common theme across all markets.
During 2021, onsemi announced its commitment to achieving net zero emissions by
2040. As we initiate steps to achieve our sustainability goals, additional
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Table of Contents Investments may be required in the future under such actions, although the timing and amounts of such investments are uncertain at this time.

Impact of the novel coronavirus disease 2019 (“COVID-19”) pandemic on our business

We have implemented proactive preventative protocols and updated our business
practices in response to the ongoing COVID-19 pandemic. These changes are
intended to safeguard our employees, contractors, suppliers and communities.
While all of our global manufacturing sites and most of our distribution centers
are currently operational, government mandates may order us to curtail
production levels or temporarily suspend manufacturing or distribution
operations in response to further outbreaks or new COVID-19 variants.





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Contents

Operating results

Quarter ended April 1, 2022 compared to the quarter ended April 2, 2021

The following table summarizes certain information relating to our results of operations that has been derived from our unaudited consolidated financial statements (in millions):

Quarters ended

                                                                     April 1, 2022           April 2, 2021           Dollar Change
Revenue                                                            $      

1,945.0 $1,481.7 $463.3
Revenue cost (excluding depreciation shown below)

                     983.7                   960.5                    23.2
Gross profit                                                                961.3                   521.2                   440.1
Operating expenses:
Research and development                                                    156.8                   173.6                   (16.8)
Selling and marketing                                                        71.1                    78.9                    (7.8)
General and administrative                                                   77.9                    72.4                     5.5

Amortization of acquisition-related intangible assets                        21.3                    25.0                    (3.7)
Restructuring, asset impairments and other charges, net                     (13.0)                   42.5                   (55.5)
Intangible asset impairment                                                     -                     2.9                    (2.9)
Total operating expenses                                                    314.1                   395.3                   (81.2)
Operating income                                                            647.2                   125.9                   521.3
Other income (expense), net:
Interest expense                                                            (21.6)                  (33.4)                   11.8
Interest income                                                               0.4                     0.4                       -

Other income (expense)                                                        2.1                     4.5                    (2.4)
Other income (expense), net                                                 (19.1)                  (28.5)                    9.4
Income before income taxes                                                  628.1                    97.4                   530.7
Income tax provision                                                        (97.1)                   (7.1)                  (90.0)
Net income                                                                  531.0                    90.3                   440.7
Less: Net income attributable to non-controlling interest                    (0.8)                   (0.4)                   (0.4)
Net income attributable to ON Semiconductor Corporation            $        530.2          $         89.9          $        440.3



Revenue

Revenue was $1,945.0 million and $1,481.7 million for the quarters ended
April 1, 2022 and April 2, 2021, respectively, representing an increase of
$463.3 million, or approximately 31%. We had one customer, a distributor, whose
revenue accounted for approximately 12.4% and 10.6% of our total revenue for the
quarters ended April 1, 2022 and April 2, 2021, respectively.

Revenue by operating and reportable segments was as follows (dollars in
millions):

                                        Quarter Ended              As a % of              Quarter Ended              As a % of
                                        April 1, 2022          Total Revenue (1)          April 2, 2021          Total Revenue (1)
PSG                                    $      986.7                        50.7  %       $      747.0                        50.4  %
ASG                                           689.3                        35.4  %              531.5                        35.9  %
ISG                                           269.0                        13.8  %              203.2                        13.7  %
Total revenue                          $    1,945.0                                      $    1,481.7



(1) Some amounts may not total due to rounding of individual amounts.

Revenue from PSG increased by $239.7 million, or approximately 32%, for the
quarter ended April 1, 2022 compared to the quarter ended April 2, 2021. The
revenue from our Advanced Power Division and our Integrated Circuits, Protection
and Signal Division increased by $170.6 million and $69.1 million, respectively,
primarily due to our strategy to focus on a product mix
                                       26
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TOC driving higher margins and higher average selling prices due to improved economic conditions, compared to the quarter ended April 2, 2021.

Revenue from ASG increased by $157.8 million, or approximately 30%, for the
quarter ended April 1, 2022 compared to the quarter ended April 2, 2021. The
revenue from our Automotive Division, Industrial Solutions Division and Mobile,
Computing and Cloud Division increased by $55.2 million, $53.4 million and $43.2
million, respectively. The increases were primarily due to our strategy to focus
on a product mix that yields higher margins and increase in average selling
prices driven by strong market demand, compared to the quarter ended April 2,
2021.

Revenue from ISG increased by $65.8 million, or approximately 32%, for the
quarter ended April 1, 2022 compared to the quarter ended April 2, 2021, largely
driven by an increase in revenue from our Automotive Sensing Division of $62.2
million. The increase was due to our strategy to focus on a product mix that
yields higher margins, better demand and an increase in average selling prices.

Revenues by geographic location, based on sales billed from the respective country or region, were as follows (in millions of dollars):

                                       Quarter Ended              As a % of              Quarter Ended               As a % of
                                       April 1, 2022         Total Revenue (1)           April 2, 2021           Total Revenue (1)
Singapore                             $      555.7                        28.6  %       $       509.0                        34.4  %
Hong Kong                                    529.6                        27.2  %               342.2                        23.1  %
United Kingdom                               345.5                        17.8  %               268.9                        18.1  %
United States                                311.7                        16.0  %               184.3                        12.4  %
Other                                        202.5                        10.4  %               177.3                        12.0  %
Total revenue                         $    1,945.0                                      $     1,481.7


(1) Some amounts may not total due to rounding of individual amounts.

Gross profit and gross margin (excluding amortization of acquisition-related intangible assets)

Our gross profit by operating and reportable segments was as follows (dollars in
millions):

                                          Quarter Ended                    As a % of                   Quarter Ended                    As a % of
                                          April 1, 2022               Segment Revenue (1)              April 2, 2021               Segment Revenue (1)
PSG                                      $       474.7                                  48.1  %       $       246.5                                  33.0  %
ASG                                              366.7                                  53.2  %               206.8                                  38.9  %
ISG                                              119.9                                  44.6  %                67.9                                  33.4  %
Total gross profit                       $       961.3                                  49.4  %       $       521.2                                  35.2  %


(1) Some amounts may not total due to rounding of individual amounts.


Our gross profit increased by $440.1 million, or approximately 84%, from $521.2
million for the quarter ended April 2, 2021 to $961.3 million for the quarter
ended April 1, 2022. Our overall gross margin increased to 49.4% for the quarter
ended April 1, 2022 from approximately 35.2% for the quarter ended April 2,
2021.

The significant increases in gross profit and gross margin were due to an
increase in average selling prices and a favorable product mix with higher gross
margins and improved manufacturing efficiencies. The favorable economic
environment and significant improvement in demand in all end-markets,
specifically in the automotive and industrial end-markets, contributed to
increased demand and better pricing for our products. We were also able to pass
most of the increases in input cost of raw materials and external manufacturing
services to our customers.
Operating Expenses

Research and development expenses were $156.8 million for the quarter ended
April 1, 2022compared to $173.6 million for the quarter ended April 2, 2021representing a decrease of $16.8 million, or about 10%. The decrease is mainly due to a decrease in payroll expenses following the restructuring programs implemented in 2021.

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Selling and marketing expenses were $71.1 million for the quarter ended April 1,
2022, as compared to $78.9 million for the quarter ended April 2, 2021,
representing a decrease of $7.8 million, or approximately 10%. The decrease was
primarily due to a decrease in payroll-related expenses as a result of the
restructuring programs implemented during 2021.

General and administrative expenses were $77.9 million for the quarter ended
April 1, 2022, as compared to $72.4 million for the quarter ended April 2, 2021,
representing an increase of $5.5 million, or approximately 8%.

Other operating expenses

Amortization of acquisition-related intangible assets

Amortization of acquisition-related intangible assets was $21.3 million for the
quarter ended April 1, 2022, as compared to $25.0 million for the quarter ended
April 2, 2021, representing a decrease of $3.7 million, or approximately 15%.
The decrease in expense was primarily due to full amortization of certain of our
technology-related assets from our previous acquisitions during 2021.

Restructuring, asset impairments and others, net

Restructuring, asset impairments and other, net was a credit of $13.0 million
for the quarter ended April 1, 2022, as compared to $42.5 million for the
quarter ended April 2, 2021. There were no new restructuring programs
implemented during the quarter ended April 1, 2022. The credit includes a gain
from the sale of an office building. Amounts incurred for the quarter ended
April 2, 2021 primarily relate to the 2021 involuntary severance plan. For
additional information, See Note 5: ''Restructuring, Asset Impairments and
Other, Net'' in the notes to our unaudited consolidated financial statements
included elsewhere in this Form 10-Q.

Interest charges

Interest expense decreased by $11.8 million to $21.6 million during the quarter
ended April 1, 2022, as compared to $33.4 million during the quarter ended
April 2, 2021. The decrease was primarily due to a decrease in our long-term
debt, repayment of interest bearing debt using the proceeds from 0% Notes and
the lack of amortization of debt discount on our convertible notes due to the
adoption of ASU 2020-06. Our average gross long-term debt balance (including
current maturities) for the quarter ended April 1, 2022 was $3,256.3 million at
a weighted-average interest rate of 2.7%, as compared to $3,512.5 million at a
weighted-average interest rate of 3.8% for the quarter ended April 2, 2021.

Other income (expenses)

Other income (expense) decreased by $2.4 million from an income of $4.5 million
during the quarter ended April 2, 2021 to an income of $2.1 million during the
quarter ended April 1, 2022.

Income Tax Provision

We recorded an income tax provision of $97.1 million and $7.1 million for the
quarters ended April 1, 2022 and April 2, 2021, respectively, representing
effective tax rates of 15.5% and 7.3%. The increase in our effective tax rate
was substantially driven by the impact of discrete tax benefits in the prior
year, relative to prior year pre-tax income. The prior year discrete benefits
primarily related to releases in uncertain tax positions and net equity award
windfalls.

For more information, see Note 13: “Income Taxes” in the Notes to the Unaudited Consolidated Financial Statements included elsewhere in this Form 10-Q.

Cash and capital resources

This section includes a discussion and analysis of our cash needs, contingencies, sources and uses of cash, operations, working capital, and long-term assets and liabilities.

Contingencies

We are a party to a variety of agreements entered into in the ordinary course of
business pursuant to which we may be obligated to indemnify other parties for
certain liabilities that arise out of or relate to the subject matter of the
agreements. Some of the agreements entered into by us require us to indemnify
the other party against losses, including but not limited to, losses due to
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IP infringement, environmental contamination and other property damage, personal
injury, our failure to comply with applicable laws, our negligence or willful
misconduct or our breach of representations, warranties or covenants related to
such matters as title to sold assets.

We face risk of exposure to warranty and product liability claims in the event
that our products fail to perform as expected or such failure of our products
results, or is alleged to result, in economic damage, bodily injury or property
damage. In addition, if any of our designed products are alleged to be
defective, we may be required to participate in their recall. Depending on the
significance of any particular customer and other relevant factors, we may agree
to provide more favorable rights to such customer for valid defective product
claims.

We maintain directors’ and officers’ insurance policies which indemnify our directors and officers against various liabilities, including certain liabilities under the Exchange Act which may be incurred by any director or officer in their capacity as such.

While our future obligations under certain agreements may contain limitations on
liability for indemnification, other agreements do not contain such limitations,
and under such agreements, it is not possible to predict the maximum potential
amount of future payments due to the conditional nature of our obligations and
the unique facts and circumstances involved in each particular agreement.
Historically, payments made by us under any of these indemnities have not had a
material effect on our business, financial condition, results of operations or
cash flows, and we do not believe that any amounts that we may be required to
pay under these indemnities in the future will be material to our business,
financial condition, results of operations or cash flows.

See Note 10: ''Commitments and Contingencies'' in the notes to our unaudited
consolidated financial statements under the heading "Legal Matters" included
elsewhere in this Form 10-Q for possible contingencies related to legal matters.
See also Part I, Item 1 "Business - Government Regulation" of the 2021 Form 10-K
for information on certain environmental matters.

Sources and uses of species

Our balance of cash and cash equivalents was $1,645.1 million as of April 1,
2022. We require cash to: (i) fund our operating expenses, working capital
requirements, outlays for strategic acquisitions and investments; (ii) service
our debt, including principal and interest; (iii) conduct research and
development; (iv) incur capital expenditures; and (v) repurchase our common
stock.

Our principal sources of liquidity are cash on hand, cash generated from
operations, funds from external borrowings and equity issuances. In the near
term, we expect to fund our primary cash requirements through cash generated
from operations and with cash and cash equivalents on hand. We also have the
ability to utilize our Revolving Credit Facility, which has approximately
$1.97 billion available for future borrowings.

We believe that the main factors that could affect our internal and external sources of cash include:

•changes in demand for our products, including as a result of the COVID-19
pandemic, competitive pricing pressures, supply chain constraints, effective
management of our manufacturing capacity, our ability to achieve further
reductions in operating expenses, our ability to make progress on the
achievement of our business strategy and sustainability goals, the impact of our
restructuring programs on our production and cost efficiency and our ability to
make the research and development expenditures required to remain competitive in
our business; and

•our access to bank financing and the debt and equity capital markets that could
impair our ability to obtain needed financing on acceptable terms or to respond
to business opportunities and developments as they arise, including interest
rate fluctuations, macroeconomic conditions, sudden reductions in the general
availability of lending from banks or the related increase in cost to obtain
bank financing and our ability to maintain compliance with covenants under our
debt agreements in effect from time to time.

Our ability to service our long-term debt, including our 0% Notes, 3.875% Notes,
1.625% Notes, the Revolving Credit Facility and the Term Loan "B" Facility, to
remain in compliance with the various covenants contained in our debt agreements
and to fund working capital, capital expenditures and business development
efforts will depend on our ability to generate cash from operating activities,
which is subject to, among other things, our future operating performance and
the timing of the full economic recovery from the COVID-19 pandemic, as well as
financial, competitive, legislative, geopolitical, regulatory and other
conditions, some of which may be beyond our control.

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If we fail to generate sufficient cash from operations, we may need to raise
additional equity or borrow additional funds to achieve our longer-term
objectives. There can be no assurance that such equity or borrowings will be
available or, if available, will be at rates or prices acceptable to us.

During the ordinary course of business, we evaluate our cash requirements and,
if necessary, adjust our expenditures for inventory, operating expenditures and
capital expenditures to reflect the current market conditions and our projected
sales and demand. Our capital expenditures are primarily directed towards
manufacturing equipment, and can materially influence our available cash for
other initiatives. During the quarters ended April 1, 2022 and April 2, 2021, we
paid $173.8 million and $77.0 million, respectively, for capital expenditures.
We expect our capital expenditures to be in the range of 12% to 14% of revenue
in 2022 to expand our manufacturing capabilities to meet the market demands and
further improve our manufacturing cost structure. Future capital expenditures
may be impacted by events and transactions that are not currently forecasted.

Main sources of cash flow

Our long-term cash generation is dependent on the ability of our operations to
generate cash. Our cash flows from operating activities were $478.6 million and
$218.5 million for the quarters ended April 1, 2022 and April 2, 2021,
respectively. The increase of $260.1 million was primarily attributable to a
significant increase in net income due to our strategy to focus on a product mix
that yields higher margins combined with better economic conditions resulting in
increased demand for our products. Our ability to maintain positive operating
cash flows is dependent on, among other factors, our success in achieving our
revenue goals and manufacturing and operating cost targets. Management of our
assets and liabilities, including both working capital and long-term assets and
liabilities, also influences our operating cash flows, and each of these
components is discussed below.

Working capital

Working capital, calculated as total current assets less total current
liabilities, fluctuates depending on end-market demand and our effective
management of certain items such as receivables, inventory and payables. Our
working capital, excluding cash and cash equivalents and the current portion of
long-term debt, was $1,326.6 million as of April 1, 2022, and has fluctuated
between $1,326.6 million and $885.0 million at the end of each of our last eight
fiscal quarters. Our working capital, including cash and cash equivalents and
the current portion of long-term debt, was $2,801.3 million as of April 1, 2022,
and has fluctuated between $2,801.3 million and $1,457.6 million at the end of
each of our last eight fiscal quarters. We expect an increase in capital
expenditures during 2022.

Long-term assets and liabilities

Our long-term assets consist primarily of property, plant and equipment,
intangible assets, deferred taxes and goodwill. Our manufacturing
rationalization plans have included efforts to utilize our existing
manufacturing assets and supply arrangements more efficiently. We have taken
actions to add manufacturing capacity with the acquisition of GTAT during 2021
and with the expected completion of the acquisition of the East Fishkill, New
York fabrication facilities and certain related assets and liabilities on or
around December 31, 2022. In connection with divestiture activities, we have
wafer supply agreements in place for a period of time such that there is no
disruption in our current ability to meet the demand for our products.

Our long-term liabilities, excluding long-term debt and deferred taxes, consist
of liabilities under our foreign defined benefit pension plans, operating lease
liabilities and contingent tax reserves. With regard to our foreign defined
benefit pension plans, our annual funding of these obligations is equal to the
minimum amount legally required in each jurisdiction in which the plans operate.
This annual amount is dependent upon numerous actuarial assumptions. For
additional information, See Note 6: ''Balance Sheet Information and Other'' and
Note 13: ''Income Taxes'' in the notes to our unaudited consolidated financial
statements included elsewhere in this Form 10-Q.

Main financings and capital events

Insight

Over the past several years, we have undertaken various measures to secure
liquidity to pursue acquisitions, repurchase shares of our common stock, reduce
interest costs, amend existing key financing arrangements and, in some cases,
extend a portion of our debt maturities to continue to provide us additional
operating flexibility.

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Cash Management

Our ability to manage cash is limited, as our primary cash inflows and outflows
are dictated by the terms of our sales and supply agreements, contractual
obligations, debt instruments and legal and regulatory requirements. While we
have some flexibility with respect to the timing of capital equipment purchases,
we must invest in capital equipment on a timely basis to allow us to maintain
our manufacturing efficiency and support our platforms for new products.

Debt guarantees and related commitments

As of April 1, 2022, we were in compliance with the indentures relating to our
0% Notes, 3.875% Notes and 1.625% Notes and with covenants relating to our Term
Loan "B" Facility and Revolving Credit Facility. The 0% Notes, 3.875% Notes and
1.625% Notes are senior to the existing and future subordinated indebtedness of
onsemi and its guarantor subsidiaries, rank equally in right of payment to all
of our existing and future senior debt and, as unsecured obligations, are
subordinated to all of our existing and future secured debt to the extent of the
assets securing such debt.

Recent accounting pronouncements

For a discussion of recent accounting pronouncements, see our 2021 Form 10-K and Note 3: “Recent Accounting Pronouncements” in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q.

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