Onsemi announces significant workforce reduction to streamline operations

Onsemi, a leading chipmaker, has recently announced a significant reduction in its global workforce by approximately 1,000 employees. This decision is part of the company's efforts to streamline operations and reduce costs in response to challenges faced in the market.

The chipmaker is currently experiencing a slow recovery in chip demand, particularly in the electric vehicles market, along with excess inventory at customer sites. To address these issues, Onsemi plans to consolidate nine sites and either reassign or relocate an additional 300 employees.

As of December 31, 2023, Onsemi had a workforce of around 30,000 full-time employees. The company is known for supplying chips used in electric car drive trains, driver-assistance systems, and silicon carbide chips that enhance the range of electric vehicles.

Onsemi anticipates incurring employment-related charges of $65 million to $80 million in 2024 and 2025 as part of the restructuring process, which is expected to be completed by 2025.

Despite the challenges, Onsemi aims to reinvest a portion of the savings from these measures into new business initiatives. In 2023, the company had previously laid off 1,900 employees as part of its strategy to internally manufacture more profitable chips while outsourcing others to reduce costs.

While Onsemi has forecasted lower revenue and profit for the second quarter of the year, the company's shares experienced a slight decline in extended trading, with a year-to-date drop of 8.8%.

Onsemi's decision to reduce its workforce and implement cost-cutting measures reflects the company's proactive approach to addressing market challenges. By restructuring its operations and reinvesting savings into new initiatives, Onsemi aims to navigate the current market conditions and emerge stronger in the future.