ON Semiconductor and Denso Forge Deeper Ties to Power the Future of Autonomous Driving
ON Semiconductor and Denso, two industry giants, announced a strengthened partnership to bolster the development and production of autonomous driving (AD) and advanced driver-assistance systems (ADAS) technologies. This collaboration, built on over a decade of supplying advanced automotive sensors, signifies a major step forward in the race to bring safer and more intelligent vehicles to market. The agreement highlights the critical role of semiconductors in automotive innovation and underscores the growing demand for reliable, high-performance components in the rapidly expanding ADAS and AD markets. The strategic move also signals a significant investment in the future of autonomous vehicle technology and could impact the broader semiconductor industry.
Key Takeaways: A Look Ahead at Autonomous Driving
- Strategic Partnership: ON Semiconductor and Denso have solidified their long-term relationship to accelerate advancements in autonomous driving technologies.
- Semiconductor Demand Surge: The partnership highlights the escalating demand for advanced semiconductors crucial for ADAS and AD functionalities.
- Investment and Stock Acquisition: Denso’s plan to acquire ON Semiconductor stock underscores its commitment to this collaborative effort.
- Industry Analyst Optimism: Several prominent analysts foresee robust growth for ON Semiconductor and the broader semiconductor sector, especially in automotive and AI.
- Long-Term Growth Potential: This collaboration positions both companies for substantial growth as autonomous driving technology continues its rapid evolution.
A Decade of Collaboration: ON Semiconductor and Denso’s Shared Vision
For more than ten years, ON Semiconductor has been a key supplier of cutting-edge intelligent automotive sensors to Denso. These sensors are the backbone of many ADAS and AD features, playing a critical role in enhancing vehicle safety and performance. This long-standing partnership is now being elevated to a new level, emphasizing the companies’ shared commitment to accelerating the development and deployment of autonomous driving technology. The collaboration goes beyond simply supplying components; it represents a strategic alignment of two industry leaders aiming to shape the future of mobility.
The Importance of Intelligent Sensors
The advancements in sensor technology are pivotal to the progress of autonomous vehicles. These sensors, powered by semiconductors, provide vehicles with the “eyes” and “senses” needed to navigate complex environments. This data helps the vehicle understand its surroundings, reacting appropriately to obstacles, traffic conditions, and other factors. The enhanced intelligence provided by these sensor systems is a crucial element in reducing road accidents and improving overall traffic flow.
Denso’s Commitment: A Strong Supply Chain for Autonomous Driving
Denso President Shinnosuke Hayashi emphasized the critical importance of a robust and secure supply chain for semiconductors. He highlighted that as the world’s second-largest automotive supplier, Denso relies on a dependable supply of critical components to develop and deliver innovative products. He stressed the need for collaboration with top-tier partners like ON Semiconductor, a company known for its expertise in intelligent sensing and its ability to ensure reliable supply assurance.
Denso’s Stock Acquisition Signals Confidence
Denso’s intention to acquire ON Semiconductor stock on the open market is a clear demonstration of its confidence in the partnership and the future success of ON Semiconductor. This proactive investment underlines Denso’s belief in ON Semiconductor’s ability to meet the growing demands of the autonomous driving market. It’s a powerful testament to their belief in the synergistic value of their working relationship.
Industry Analyst Perspectives: A Positive Outlook for ON Semiconductor and the Semiconductor Sector
The collaboration between ON Semiconductor and Denso has garnered significant attention from industry analysts, fueling optimistic projections for the future. Bank of America analyst Vivek Arya named ON Semiconductor among his top picks for 2025, anticipating a recovery from recent cyclical trends. He foresees strong demand for semiconductors in the automotive and industrial sectors driving substantial growth, particularly in the latter half of the year. Arya’s projections, however, extend to Artificial Intelligence.
Artificial Intelligence: A Key Driver of Semiconductor Demand
Arya predicts a surge in artificial intelligence (AI) investments in the first half of 2025, fueled by AI training and model scaling. He anticipates increased deployment of Nvidia Corp’s Blackwell architecture by cloud customers. This highlights the interconnectedness of different tech sectors and the importance of semiconductors as a foundational component across multiple domains.
The CHIPS Act and its Continued Impact
Arya also points to the ongoing impact of the CHIPS Act, a significant piece of legislation aimed at bolstering the U.S. semiconductor industry. He projects that the remaining funding will be distributed in 2025, providing substantial support to the sector. This governmental support is expected to further enhance the growth and competitiveness of American companies like ON Semiconductor.
Other Analyst Perspectives: A Consensus on Growth
Other analysts share similarly positive views. Needham analyst Quinn Bolton projected an “L-shaped” recovery for ON Semiconductor through the first half of 2025, highlighting the growing opportunities in the datacenter sector. Meanwhile, analysts from Goldman Sachs, Benchmark, and JP Morgan emphasized the strength of China’s electric vehicle (EV) market and the growth potential of silicon carbide (SiC) technology – a key material in high-power semiconductor applications for electric vehicles.
Investing in Semiconductor Growth: ETF Opportunities
Investors interested in gaining exposure to the semiconductor industry can consider exchange-traded funds (ETFs) that focus on this sector. The VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) offer diversified investment possibilities within the semiconductor market, providing investors with access to a portfolio of leading semiconductor companies.
Conclusion: A Partnership for the Future of Mobility
The strengthened partnership between ON Semiconductor and Denso marks a significant milestone in the development of autonomous driving technology. This collaboration, backed by strong industry analyst support and growing market demand, positions both companies for long-term growth and success. As the automotive industry continues its rapid transformation towards autonomous vehicles, innovative partnerships like this are crucial in driving progress and shaping the future of mobility.
