Uncertainty emerges for On Semi post-Tesla Analyst Day, says Deutsche Bank

Deutsche Bank analyst Ross Seymore notes that ON Semiconductor (ON) is underperforming on Thursday due to Tesla’s (TSLA) Analyst Meeting, where the OEM indicated it can use 75% less silicon carbide, or SiC, in its next generation of vehicles. The firm has no knowledge as to exactly how such savings are achieved nor when this transition may occur. Overall, the SiC ramp at ON is incredibly important, so Deutsche will continue to dig into the details behind the risk of reduced demand from Tesla — a key customer for ON — as well as if such a technology shift could become more pervasive across more auto OEMs. The firm expects many SiC-related companies to comment on this dynamic in upcoming investor events. In the meantime, Deutsche continues to believe that the structural transformation at ON to a more focused and profitable company offers a positive risk/reward and therefore maintain its Buy rating on the name with a price target of $95.