onsemi Deepens Geely Partnership for 900V SiC EVs

What happened

onsemi announced an expanded strategic collaboration with Geely, integrating its EliteSiC power technologies into vehicles built on Geely's SEA-S architecture, supporting next-generation 900V electric vehicles. This win reinforces onsemi's position in the Chinese EV SiC market, a key growth driver amid the broader auto slowdown. However, the master report cautions that while SiC design wins are positive, the overall auto recovery remains tepid, with gross margins still in the high 30s. The Geely deal adds to the LTSA backlog but does not materially alter the near-term revenue trajectory given production ramps take time. Investors should view this as a supportive data point for the SiC narrative, but execution and utilization recovery remain the dominant swing factors.

Implication

Near-term, the Geely collaboration is a positive signal for onsemi's SiC adoption in China's 900V EV platforms, likely contributing to revenue growth in 2027 and beyond. However, the master report's WAIT rating emphasizes that the stock already embeds a SiC recovery at ~60x earnings, with limited margin of safety if auto demand disappoints. The deal does not address utilization or gross margin issues, which are stuck near 38% and require higher overall volumes. For investors, this news reduces but does not eliminate the risk of SiC underperformance, but the core thesis hinges on a broader cyclical rebound. Over the next 6-12 months, focus should remain on gross margin progression and auto segment revenue growth, not isolated design wins.

Thesis delta

The Geely partnership moderately de-risks the SiC growth narrative by adding a marquee Chinese OEM to the customer base, but does not alter the fundamental thesis that onsemi must demonstrate a sustainable gross margin recovery and auto revenue growth from the trough. The deal is consistent with the base case of moderate EV growth and does not shift the probability weights toward the bull case enough to warrant upgrading from WAIT.