ON Semiconductor is the latest electronics company downgrading its first-quarter guidance as the coronavirus epidemic strengthens its grip on global business conditions. The semiconductor supplier also said it would implement restructuring measures expected to achieve cost savings of about $90 million.
“Based on preliminary assessment of the current business environment, we anticipate that our revenue for first quarter of 2020 will be in range of $1,275 million to $1,325 million, as compared to our earlier guidance of $1,355 million to $1,405 million, which we issued on February 3, 2020,” said Keith Jackson, president and CEO of ON Semiconductor, in a statement. “We saw soft order trends in China in the weeks following Lunar New Year holidays, but orders have since picked up, and we have not seen any significant cancellations of orders.”
Jackson added, “Furthermore, our factories in China have returned to normal levels of operations after mandatory shutdown following the end of Lunar New Year holidays.”
ON Semiconductor’s planned restructuring measures are expected to be in operating expenses. These cost savings would be in addition to approximately $25 million of expected annual cost savings ON announced February 3, 2020 when it reported its Q4 2019 earnings. The company expects to achieve targeted cost savings by the end of 2020 on quarterly run rate basis.