ON Semiconductor Corporation (ON) Cash Flow Statement

Operating cash flow has exceeded reported net income in most recent quarters, with the ratio reaching 2.03 in 2026Q2 and 3.05 in 2025Q4. Depreciation and amortization charges of roughly $135M to $287M per quarter account for much of this gap, meaning reported profits understate near-term cash generation. The 2026Q1 quarter, with a net loss of $33.4M but operating cash flow of $239.1M, shows the same pattern under stress and suggests conversion quality is driven by the capital-intensive asset base rather than aggressive accruals.

The trajectory is uneven, with 2025Q1 FCF of $454.7M and 2025Q3 FCF of $644.5M partly lifted by an unusual $225.8M capex inflow that appears non-recurring and should not be extrapolated. Excluding that item, the underlying run-rate of roughly $400M to $490M per quarter in recent periods is more representative. Investors should monitor whether this holds given that working capital swings have been large, ranging from -$201.3M to +$462.9M across the period.

The steep decline in capex intensity suggests management has reduced discretionary fab spending during the cyclical downturn, which supports near-term free cash flow but may defer capacity needed for the 200mm wafer transition. Depreciation of roughly $135M per quarter is well above current capex, implying the asset base is being consumed faster than it is being replaced. This gap warrants further investigation into whether margins are being flattered by under-investment.

No dividends appear in the reported period, so buybacks represent the sole direct shareholder return channel and their sharp reduction signals a deliberate pivot toward balance sheet flexibility. The shift is consistent with the Fab Right strategy and the need to fund SiC transition spending. Investors may read the pullback as prudent, though per-share value creation now depends more heavily on the sustainability of free cash flow.

Summing the quarterly figures, operating cash flow totals well above aggregate net income, with the gap concentrated in periods of depressed earnings such as 2025Q1 and 2026Q1. This pattern suggests reported earnings have understated the cash economics of the business during the downturn. However, the divergence also depends on the depreciation schedule of recently added SiC capacity, which warrants further investigation as those assets age.