ON Semiconductor Corp

Natural and catastrophic events · Pandemic and public health crises

For example, public health crises may cause disruption to our domestic and international operations. Any associated worker absenteeism, quarantines and restrictions on certain of our employees' ability to perform their jobs, office and factory closures or restrictions, labor shortages, disruptions to ports and other shipping infrastructure, border closures and/or other travel or health-related restrictions could, depending on the magnitude of such effects on our manufacturing activities (or activities of our suppliers, third-party distributors or sub-contractors), cause disruption and delay to our supply chain, manufacturing and product shipments.

Natural and catastrophic events · Climate change and environmental impact

Regulatory and legislative developments related to climate change may materially adversely affect our business and financial condition. Various jurisdictions have developed or are developing climate change-based laws or regulations that could cause us to incur additional direct costs for compliance, as well as indirect costs resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us.

Economic and market conditions · Inflation and deflation pressures

Furthermore, inflationary pressure and increases in interest rates have and may continue to increase our costs, which could negatively impact revenue, earnings and demand for our products.

Customer and revenue · Customer concentration and key customer dependence

We had one customer, a distributor, whose revenue accounted for approximately 11% and 10% of the total revenue for the years ended 2025 and 2024, respectively, across all reportable segments. Although we are not dependent on any single customer, a significant disruption in key customer relationships could adversely affect our business.

Market position and competition · Pricing pressure and margin compression

Competitive pressures may limit our ability to raise prices, and any inability to maintain revenue or raise prices to offset increases in costs could have a significant adverse effect on our gross margin. Our gross margins may fluctuate across time periods and operating segments and could experience volatility or downward pressure due to a variety of factors.

Customer and revenue · Revenue concentration in specific products or segments

Because a significant portion of our revenue is derived from customers in the automotive and industrial end-markets, including revenue pursuant to our long-term supply agreements, a downturn or lower sales to customers in either end-market could materially adversely affect our business and results of operations. Sales into the automotive and industrial end-markets represented approximately 51% and 28% of our revenue, respectively, for the year ended December 31, 2025.

Innovation and product development · Intellectual property protection and infringement

If we fail to, or are unable to, adequately protect the IP we have developed or licensed, our competitive position, business and results of operations could be materially and adversely affected. The enforceability of our patents, trademarks, copyrights, software licenses and other IP is uncertain in certain circumstances.

Market position and competition · Disruptive competitors and new market entrants

Products or technologies developed by competitors may render our products or technologies obsolete or noncompetitive. We also may be unable to market and sell our products if they are not competitive on the basis of price, quality, technical performance, features, system compatibility, ease of use, customized design, innovation, availability, delivery timing and reliability.

Stakeholder relations · Supplier and vendor relationships

Our operating results depend, in part, on the performance of independent distributors. A portion of our sales occurs through global and regional distributors that are not under our control. We rely on distributors to grow and develop their customer base and anticipate customer needs, and any lack of or underperformance in such actions by our distributors may adversely affect our results of operations.

Reputation and brand · Brand damage and negative publicity

Additionally, if our products fail to perform as expected or their failure results in a recall, our reputation may be damaged, which could make it more difficult for us to sell our products to existing and prospective customers and could materially adversely affect our business, reputation, results of operations and financial condition.

Corporate governance · Shareholder rights and activism

Provisions in our charter documents may delay or prevent the acquisition of us, which could materially adversely affect the value of our common stock. Our certificate of incorporation and by-laws contain provisions that could make it harder for a third party to acquire us without the consent of our Board of Directors.

Legal and litigation · Litigation and legal proceedings

We have been and may be subject to or involved in litigation or threatened litigation, the outcome of which may be difficult to predict, and which may be costly to defend, divert management attention, require us to pay damages, or restrict the operation of our business.

Data and privacy · Data protection and privacy laws

We are subject to governmental laws, regulations and other legal obligations related to privacy and data protection. The legislative and regulatory framework for privacy and data protection issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.

Human capital and workforce · Talent acquisition and retention

Our success depends on our ability to attract, motivate and retain highly skilled personnel, including technical, marketing, management and staff personnel, both in the United States and internationally. In the semiconductor industry, the competition for qualified personnel, particularly experienced design engineers and other technical employees, is intense.

Core operations · Capacity utilization and efficiency

Our manufacturing efficiency is contingent upon the operations of these interdependent processes and will continue to be an important factor in our future profitability, and there can be no assurance that we will be able to maintain our manufacturing efficiency, increase our manufacturing efficiency to the same extent as our competitors when facing an increased demand, or be successful in our manufacturing rationalization plans.

Cybersecurity and data protection · Third party data security and vendors

Our extensive reliance on information technology systems, including reliance on third-party service providers, could have a materially adverse impact on our business, and our substantial investments in such information technology systems could result in significant potential risks and failures. Some of these systems are managed or provided by third-party service providers, including certain cloud platform providers.

Digital transformation and innovation · Artificial intelligence and automation

Our extensive range of power technologies are used to help power AI data centers and we expect this part of our business to grow. The emergence of big data and new tools such as machine learning and AI that capitalize on the availability of large data sets is leading semiconductor manufacturers to pursue new products and approaches, and there is intense competition to capture a share of this emerging market.

Capital structure and performance · Debt management and refinancing

Our debt could materially adversely affect our financial condition and results of operations. As of December 31, 2025, we had $3,004.9 million of outstanding principal relating to our indebtedness. We may need to incur additional indebtedness in the future to repay or refinance other outstanding debt, to make acquisitions or for other purposes.

Market and investment · Market volatility and economic cycles

The automotive industry is cyclical and the industrial sector tends to thrive during a time of economic expansion. As a result, our customers in each end-market are sensitive to changes in general economic conditions, inflationary pressure, changes in interest rates, disruptive innovation and end-market preferences, any of which can adversely affect sales of our products and, correspondingly, our results of operations.

Credit and liquidity · Debt service and covenant compliance

The obligations under the Credit Agreement are collateralized by a lien on substantially all of the assets of the guarantors under the Credit Agreement, including a pledge of the equity interests in certain of our domestic and first-tier foreign subsidiaries. As a result, if we are unable to satisfy our obligations under the Credit Agreement, the lenders could take possession of and foreclose on the pledged collateral securing the indebtedness.