ON Semiconductor Corp (NASDAQ:ON), a leading semiconductor manufacturer with a market capitalization of $18.28 billion, announced it will recognize pre-tax non-cash impairment charges ranging from $600 million to $700 million. This move is part of a broader restructuring and cost reduction plan first disclosed on February 24, 2025.

The impairment charges stem from long-lived assets, primarily manufacturing equipment at specific facilities, and follow held-for-sale accounting guidance. The company's leadership aims to realign its manufacturing capacity to better match anticipated long-term needs after evaluating its current technological capabilities.

These charges are projected to reduce ON Semiconductor's depreciation expenses by approximately $30 million to $35 million in 2025. Most of the charges will be recorded in the first half of the year, and the company does not expect significant future cash expenditures as a result. The valuation of these impairments was determined by comparing asset carrying values to estimated fair market values, adjusted for anticipated sales costs. However, the company cautioned that the final figures could fluctuate depending on the timing of asset sales, market conditions, and other unforeseen variables.

Job Cuts and Cost-Saving Measures

As part of its restructuring efforts, ON Semiconductor also announced plans to cut approximately 2,400 jobs globally — about 10% of its workforce. The move is expected to yield annual savings between $105 million and $115 million, though the company anticipates incurring restructuring-related charges of $50 million to $60 million.

Allegro Acquisition Bid and Market Reaction

In parallel with its internal restructuring, ON Semiconductor recently made an unsolicited acquisition proposal to Allegro MicroSystems (WA:ALEP), offering $35.10 per share in cash. Allegro's Board, supported by financial advisors PJT Partners (NYSE:PJT), rejected the offer as inadequate. The bid reflects ongoing consolidation efforts across the semiconductor industry, driven by growing competition and a push for operational synergies.

Market analysts have responded cautiously. Baird revised ON Semiconductor's price target from $75 to $48, while Stifel adjusted its target from $60 to $52, citing challenging market conditions. Both firms maintained neutral ratings — Baird noted historically low utilization rates, while Stifel acknowledged long-term potential despite near-term economic pressures.

Future Outlook

Despite a 37.64% stock decline over the past six months, ON Semiconductor remains focused on reshaping its operations to improve profitability and position itself for growth in key markets, including automotive and industrial applications. Investor attention now turns to whether the company's restructuring efforts and acquisition pursuits will stabilize its performance and restore confidence.

The evolving semiconductor landscape, coupled with ON Semiconductor's strategic maneuvers, will be closely watched by analysts and investors alike in the months ahead.