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Auto-Industry Chip Makers Are Being Driven in Opposite Directions

It seems like electric vehicle makers slamming on the brakes and cutting back chip orders.

After two seemingly conflicting earnings reports this week, investors can be forgiven some confusion.

ON Semiconductor, better known as OnSemi—saw its shares slide more than 20% on Monday following a disappointing third-quarter report.

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Wolfspeed saw its share price jump 20% Tuesday morning following its own results for the same period.

Both companies produce silicon carbide wafers that are key in chips used extensively by makers of electric vehicles, but each painted a very different picture of the state of the industry.

In its conference call Monday, OnSemi said it was seeing order “pushouts” even from automotive customers who struck long-term supply agreements with the company, while a sharp reduction from one major buyer took about 20% off its shipping target for silicon carbide chips this year. Analysts widely believe that the customer to be Tesla.

The report has shaken confidence in the chipmaker’s longer-term outlook. Tim Arcuri of UBS said “The bloom is ‘off the rose’ with respect to ON’s long-term supply agreements” in a note to clients on Tuesday.

Meanwhile, Wolfspeed used its call to describe “very, very heavy demand” for silicon carbide—adding that its CEO now fields weekly calls from customers seeking more.

Source: Bloomberg
Image: Chips