Cases
ON Semiconductor Corporation
Securities Class Action
Overview
Overview
- Date:
- 2/12/2024
- Company Name:
- ON Semiconductor Corporation
- Stock Symbol:
- OH
- Class Period:
- FROM 5/1/2023 TO 10/27/2023
- Status:
- Filed
- Filing Date:
- 12/13/2023
- Court:
- U.S. District Court: District of Delaware
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against ON Semiconductor Corporation (“onsemi” or the “Company”) (NASDAQ: ON) in the United States District Court for the District of Delaware on behalf of all persons and entities who purchased or otherwise acquired onsemi common stock between May 1, 2023, and October 27, 2023, both dates inclusive (the “Class Period”). Investors have until February 12, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Onsemi manufactures and sells semiconductor components for various electronic devices worldwide, including power and sensing solutions, and technologies for the electrification of the automotive industry. Critical to onsemi’s long-term growth and success is its strategy to focus on the development, manufacture, and sale of a variety of products incorporating silicon carbide (“SiC”). A substantial portion of onsemi’s SiC products are necessary components of a number of systems used in the production of electric vehicles (“EVs”). Throughout the Class Period, Defendants made repeated misrepresentations to investors regarding the “stability” and “visibility” of the demand for onsemi’s SiC and other products, and the sustainability of onsemi’s revenue growth, by overstating the impact of onsemi’s long-term supply agreements (“LTSAs”) on the achievability of its revenue streams.
On May 1, 2023, the first day of the Class Period, onsemi released its first quarter 2023 earnings and accompanying investor earnings call with equity analysts. During that call, Defendants spoke extensively on the growth of onsemi’s SiC business and touted the fact that the company has “more and more confidence” in its claim that it would reach $1 billion in annual revenue for its SiC products in 2023. Specifically, Defendants explained that onsemi’s outlook was “actually very, very predictable,” which was “the benefit that we’ve been talking about with the LTSAs that have us really, with our customers, align on pricing and volume through the duration of the LTSAs.”
Thereafter and throughout the Class Period, Defendants continued to tout onsemi’s sales of SiC products, particularly to EV manufacturers. Defendants lauded onsemi’s LTSAs for the “extended visibility” and the “very, very clear view of where demand is,” aiding Defendants in their ability to effectively manage changing macroeconomic conditions and sustain onsemi’s revenue growth targets. Indeed, Defendants consistently disclosed increasing expected revenue figures for every new LTSA onsemi had signed with customers and assured investors that the LTSAs built “a more strategic relationship and partnership” with onsemi’s customers. Thus, Defendants told investors that, if onsemi’s customers “have . . . softness in their market and they have an LTSA, we’re going to get the call 6 months in advance.”
Notwithstanding Defendants’ assurances, on October 30, 2023, before the market opened, investors began to learn the truth about the purported benefits of onsemi’s LTSA strategy and the achievability of projected revenue from the company’s products subject to LTSAs, when onsemi announced its third quarter 2023 financial results. During the investor earnings call held that day, Defendants disclosed to investors that onsemi was “taking a very cautious approach” with its SiC products due to signs of a weakening demand in the company’s automotive business segment (which generates between 75% and 90% of onsemi’s SiC revenues), while also revealing that onsemi would miss its $1 billion 2023 SiC revenue target by approximately $200 million. Defendants claimed that the approximately 20% reduction in onsemi’s expected SiC revenue was solely attributable to one customer (identified by many analysts as Tesla, Inc.). Defendants added, however, that onsemi expects “greater sequential declines in industrial and other end markets” as well.
On this news, the price of onsemi common stock plummeted $18.18 per share, or nearly 22%, from a close of $83.52 per share on October 27, 2023, to close at $65.34 per share on October 30, 2023.
The Complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business and operations. Specifically, Defendants misrepresented and/or failed to disclose that: (1) revenues from billions of dollars in reported LTSAs were “committed” and “locked in,” and were effectively certain to be obtained by onsemi when, in fact, onsemi could and would abrogate the LTSAs at a customer’s request; (2) LTSA’s provided “predictable” and “sustainable” performance to drive onsemi’s growth, even in tough macroeconomic conditions, when, in fact, they would be modified or eliminated as conditions changed; and (3) Defendants had “good visibility” into customer demand when, in fact, demand could be reduced on short notice, even where LTSAs were in effect. As a result of the foregoing, Defendants’ positive statements about onsemi’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis.
If you purchased or otherwise acquired onsemi shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
Onsemi manufactures and sells semiconductor components for various electronic devices worldwide, including power and sensing solutions, and technologies for the electrification of the automotive industry. Critical to onsemi’s long-term growth and success is its strategy to focus on the development, manufacture, and sale of a variety of products incorporating silicon carbide (“SiC”). A substantial portion of onsemi’s SiC products are necessary components of a number of systems used in the production of electric vehicles (“EVs”). Throughout the Class Period, Defendants made repeated misrepresentations to investors regarding the “stability” and “visibility” of the demand for onsemi’s SiC and other products, and the sustainability of onsemi’s revenue growth, by overstating the impact of onsemi’s long-term supply agreements (“LTSAs”) on the achievability of its revenue streams.
On May 1, 2023, the first day of the Class Period, onsemi released its first quarter 2023 earnings and accompanying investor earnings call with equity analysts. During that call, Defendants spoke extensively on the growth of onsemi’s SiC business and touted the fact that the company has “more and more confidence” in its claim that it would reach $1 billion in annual revenue for its SiC products in 2023. Specifically, Defendants explained that onsemi’s outlook was “actually very, very predictable,” which was “the benefit that we’ve been talking about with the LTSAs that have us really, with our customers, align on pricing and volume through the duration of the LTSAs.”
Thereafter and throughout the Class Period, Defendants continued to tout onsemi’s sales of SiC products, particularly to EV manufacturers. Defendants lauded onsemi’s LTSAs for the “extended visibility” and the “very, very clear view of where demand is,” aiding Defendants in their ability to effectively manage changing macroeconomic conditions and sustain onsemi’s revenue growth targets. Indeed, Defendants consistently disclosed increasing expected revenue figures for every new LTSA onsemi had signed with customers and assured investors that the LTSAs built “a more strategic relationship and partnership” with onsemi’s customers. Thus, Defendants told investors that, if onsemi’s customers “have . . . softness in their market and they have an LTSA, we’re going to get the call 6 months in advance.”
Notwithstanding Defendants’ assurances, on October 30, 2023, before the market opened, investors began to learn the truth about the purported benefits of onsemi’s LTSA strategy and the achievability of projected revenue from the company’s products subject to LTSAs, when onsemi announced its third quarter 2023 financial results. During the investor earnings call held that day, Defendants disclosed to investors that onsemi was “taking a very cautious approach” with its SiC products due to signs of a weakening demand in the company’s automotive business segment (which generates between 75% and 90% of onsemi’s SiC revenues), while also revealing that onsemi would miss its $1 billion 2023 SiC revenue target by approximately $200 million. Defendants claimed that the approximately 20% reduction in onsemi’s expected SiC revenue was solely attributable to one customer (identified by many analysts as Tesla, Inc.). Defendants added, however, that onsemi expects “greater sequential declines in industrial and other end markets” as well.
On this news, the price of onsemi common stock plummeted $18.18 per share, or nearly 22%, from a close of $83.52 per share on October 27, 2023, to close at $65.34 per share on October 30, 2023.
The Complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business and operations. Specifically, Defendants misrepresented and/or failed to disclose that: (1) revenues from billions of dollars in reported LTSAs were “committed” and “locked in,” and were effectively certain to be obtained by onsemi when, in fact, onsemi could and would abrogate the LTSAs at a customer’s request; (2) LTSA’s provided “predictable” and “sustainable” performance to drive onsemi’s growth, even in tough macroeconomic conditions, when, in fact, they would be modified or eliminated as conditions changed; and (3) Defendants had “good visibility” into customer demand when, in fact, demand could be reduced on short notice, even where LTSAs were in effect. As a result of the foregoing, Defendants’ positive statements about onsemi’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis.
If you purchased or otherwise acquired onsemi shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
The individual or institution below (“Plaintiff”) has reviewed and agrees to the Bragar Eagel & Squire, P.C. (“BESPC”) retainer agreement and authorizes BESPC to prosecute an action on Plaintiff’s behalf under the federal securities laws or applicable state laws to recover damages on behalf of investors in ON Semiconductor Corporation. BESPC will prosecute the action on a full contingency basis and will forward all costs and expenses.
Case Updates
Retainer Agreement
This will confirm that you have retained Bragar Eagel & Squire, P.C. (“BESPC”) to represent you in connection with potential litigation against ON Semiconductor Corporation (the “Company”) and its directors and officers. BESPC has conducted an investigation and believes that there is a valid basis to assert claims against the Company and its directors and/or officers for violation of federal or state securities laws.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 5/1/2023 to 10/27/2023 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time.
Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 5/1/2023 to 10/27/2023 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders, i.e., the “Class,” and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
No Special Treatment
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.