You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included in our Form 10-K, filed with the SEC on February 27, 2009, and our unaudited consolidated financial statements for the fiscal quarter and nine months ended October 2, 2009, included elsewhere in this Form 10-Q. Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks, uncertainties and other factors. Actual results could differ materially because of certain factors discussed below or elsewhere in this Form 10-Q. See Part II, Item 1A. "Risk Factors" of this Form 10-Q and our most recent Form 10-K.

Executive Overview

This Executive Overview presents summary information regarding our industry, markets and operating trends only. For further information regarding the events summarized herein, you should read "Management's Discussion and Analysis of Financial Condition and Results of Operations" in its entirety.

Industry Overview

We participate in unit and revenue surveys and use data summarized by the World Semiconductor Trade Statistics ("WSTS") group to evaluate overall semiconductor market trends and also to track our progress against the total market in the areas we provide semiconductor components. The most recently published estimates of WSTS project a compound annual revenue growth rate in our total addressable market of approximately negative 1.4% during 2009 through 2012. These are not our projections and may not be indicative of actual results.

Business and Company Overview

We classify our products broadly as power, analog, digital signal processing, mixed-signal, advanced logic, memory, data management semiconductors and standard semiconductor components. We design, manufacture and market an extensive portfolio of semiconductor components that addresses the design needs of sophisticated electronic systems and products. Our power management semiconductor components control, convert, protect and monitor the supply of power to the different elements within a wide variety of electronic devices. Our custom application specific integrated circuits use analog, digital signal processing, mixed-signal and advanced logic capabilities to act as the brain behind many of our automotive, medical, military, aerospace, consumer and industrial customers' unique products. Our data management semiconductor components provide high-performance clock management and data flow management for precision computing and communications systems. Our standard semiconductor components serve as "building block" components within virtually all electronic devices. These various products fall into the logic, analog and discrete categories used by WSTS.

We serve a broad base of end-user markets, including power supply, automotive, communications, computer, consumer, medical, industrial, mobile phone and military/aerospace. Applications for our products in these markets include portable electronics, computers, game stations, servers, automotive and industrial automation control systems, routers, switches, storage-area networks and automated test equipment.

Our extensive portfolio of devices enables us to offer advanced integrated circuits and the "building block" components that deliver system level functionality and design solutions. Our product portfolio currently comprises approximately 46,700 products and we shipped approximately 20.5 billion units in the first nine months of 2009 as compared to approximately 25.8 billion units in the first nine months of 2008. We specialize in micro packages, which offer increased performance characteristics while reducing the critical board space inside today's ever shrinking electronic devices. We believe that our ability to offer a broad range of products provides our customers with single source purchasing on a cost-effective and timely basis.

On November 4, 2009, we announced that we had completed the acquisition of PulseCore Holdings (Cayman) Inc. ("PulseCore") in an all cash transaction for approximately $17 million. PulseCore's previous

owners and other stakeholders also have the ability to receive additional proceeds through an earnout if PulseCore is able to meet certain revenue and gross margin objectives in 2010 and 2011. The acquisition of PulseCore expands our high gross margin clock and circuit protection offerings for the consumer, wireless and computing end-market customers. PulseCore's capabilities in standard and custom high-speed and low power analog and mixed signal solutions for EMI (electromagnetic interference) reduction also enhance our overall EMI filtering and circuit protection portfolios. In addition, PulseCore's history in India represents our first foray of design activity in that country.

On March 17, 2008, we completed the purchase of AMIS Holdings, Inc., a Delaware corporation ("AMIS"), whereby AMIS became our wholly-owned subsidiary. We believe the combination has enhanced and will continue to enhance shareholder value by (1) accelerating our transformation from a discrete supplier to a key supplier with scale; (2) strengthening our end-market presence, facilitating our entry into new markets and deepening customer relationships; (3) obtaining significant scale and cash flow generation; and (4) achieving cost savings by leveraging our operational excellence and accelerating the ramp of activity in our Gresham, Oregon wafer fabrication facility (see Note 5: "Acquisitions" of the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for further discussion).

On October 10, 2008, we completed the purchase of Catalyst Semiconductor, Inc., a Delaware corporation ("Catalyst") whereby Catalyst became our wholly-owned subsidiary. We believe the combination has enhanced and will continue to enhance shareholder value by (1) accelerating our higher margin analog products for the digital consumer market; (2) providing entry into the EEPROM business;
(3) leveraging scale to drive growth in the business; and (4) achieving cost savings by leveraging our operational excellence and increasing the activity in our Gresham, Oregon wafer fabrication facility (see Note 5: "Acquisitions" of the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for further discussion).

In January 2009, we implemented a change in our organizational structure and previously-reported reporting segment information has been recast to reflect the new organizational structure. We are organized into four operating segments, which also represent four reporting segments: automotive and power group, standard products, computing and consumer products and digital and mixed-signal product group. Each of our major product lines has been assigned to a segment, as illustrated in the table below, based on our operating strategy. Because many products are sold into different end markets, the total revenue reported for a segment is not indicative of actual sales in the end market associated with that segment, but rather is the sum of the revenues from the product lines assigned to that segment. From time to time we reassess the alignment of our product families and devices to our operating segments and may move product families or individual devices from one operating segment to another.

                             Computing & Consumer     Digital & Mixed-Signal
Automotive & Power Group     Products                 Products Group              Standard Products

Low & Medium MOSFET          DC-DC Conversion         Medical                     Bipolar Power

Analog Automotive            Analog Switches          Integrated Sensor           Thyristor
                                                      Products ("ISP")

Auto Power                   AC-DC Conversion         Military & Aerospace        Small Signal

LDO & Vregs                  Low Voltage              Industrial                  Zener

Automotive                   Standard Logic           Communications &            Protection
                                                      High Voltage

                             Power Switching          High Frequency              Rectifier

                             Signal & Interface       Foundry                     Filters

                                                                                  Memory Products

We have over 428 direct customers worldwide, and we also service approximately 255 significant original equipment manufacturers indirectly through our distributor and electronic manufacturing service provider customers. Our direct and indirect customers include: (1) leading original equipment manufacturers in a broad variety of industries, such as Motorola, Delta, Hewlett-Packard, Hella, Schneider, GE, Samsung, Continental Automotive Systems, Siemens, Honeywell, Apple, Dell, Nokia, Intel, and Sony; (2) electronic manufacturing service providers, such as Flextronics and Jabil; and (3) global distributors, such as Arrow, Avnet, EBV Elektronik, Future, Solomon Enterprise and World Peace.

We currently have major design operations in Arizona, Rhode Island, Idaho, California, Texas, Oregon, China, Romania, Switzerland, the Czech Republic, Korea, Belgium, Canada, Germany, Bulgaria, Ireland and France, and we currently operate manufacturing facilities in Arizona, Oregon, Idaho, Belgium, China, the Czech Republic, Japan, Malaysia, the Philippines, and Thailand. In the first quarter of 2007, we announced the planned closing of one of our Arizona manufacturing facilities adjacent to our headquarters offices. During the second quarter of 2008, we began the process of closing our wafer fabrication facility in Piestany, Slovakia for cost savings purposes. The wafer manufacturing that takes place at these facilities is being transferred to our other off-shore, low-cost manufacturing facilities. On February 4, 2009, we announced plans to close our remaining Arizona manufacturing facility adjacent to our headquarters offices for cost savings purposes. The remaining unused property and buildings associated with our headquarters offices are currently being marketed for sale or lease. We will maintain our headquarters offices and any remaining manufacturing facilities on the portions of the property that are not for sale.

New Product Innovation

As a result of the success of our research and development initiatives, excluding the introduction of lead-free products, we introduced 241 new product families in 2008, of which 73 were generated from the acquisitions of AMIS and Catalyst, and 168 were generated from our existing business operations. During the nine months ended October 2, 2009, we introduced an additional 141 new product families. Our new product development efforts continue to be focused on building solutions in power management that appeal to customers in focused market segments and across multiple high growth applications. As always, it is our practice to regularly re-evaluate our research and development spending, to assess the deployment of resources and to review the funding of high growth technologies regularly. We deploy people and capital with the goal of maximizing our investment in research and development in order to position us for continued growth. As a result, we often invest opportunistically to refresh existing products in our commodity logic, analog, and discrete products. We invest in these initiatives when we believe there is a strong customer demand or opportunities to innovate our current portfolio in high growth markets and applications.

Cost Savings and Restructuring Activities

We continue to implement profitability enhancement programs to improve our cost structure and, as a result, we expect to rank, as compared to our primary competitors, among the lowest in terms of cost structure.

During the second quarter of 2008, we began the process of closing our wafer fabrication facility in Piestany, Slovakia which resulted in the elimination of approximately 430 positions. We expect full annual savings from this announcement to be approximately $12.0 million to $16.0 million annually which began in the second quarter of 2009 and is reflected in our outlook for the fourth quarter of 2009.

During the first quarter of 2009, in response to the economic downturn, we commenced certain actions to reduce overall spending levels. These actions include: a reduction in 2009 planned capital expenditures to approximately $75.0 million compared to normalized levels of between $130.0 million and $140.0 million; a temporary hiring freeze; the elimination of bonus payments during 2009; three weeks of unpaid time off for senior executives in both the first and second quarters of 2009; two weeks of unpaid time off or 4 day work week (based upon local legal requirements) for other employees in both the first and second quarters of 2009; no

annual merit increases; and a reduction in worldwide personnel. During the second quarter of 2009 we announced a reduction, for cost savings purposes, of 21 employees in Belgium. In addition, during the third quarter of 2009, we announced, among other things, that employees were required to take one week of unpaid and one week of paid vacation in the third quarter of 2009 and two weeks of paid vacation will be required during the fourth quarter of 2009.

Our profitability enhancement programs will continue to focus on:

• consolidating manufacturing sites to improve economies of scale;

• transferring production to lower cost regions;

• increasing die manufacturing capacity in a cost-effective manner by moving production form 4" and 6" to 8" wafers and smaller geometrics resulting in an increase to the number of die per wafer;

• reducing the number of product platforms and process flows; and

• focusing on production on profitable product families.

Macroeconomic Environment

While we have recognized efficiencies from implemented restructuring activities and continue to implement profitability enhancement programs to improve our cost structure, the United States and global economy is currently undergoing a period of slowdown and unprecedented volatility, and the future economic environment may continue to be less favorable for the foreseeable future. In addition, the semiconductor industry has traditionally been highly cyclical and has often experienced significant downturns in connection with, or in anticipation of, declines in general economic conditions. These macroeconomic factors have affected our customers and suppliers which in turn has affected our business, including sales, the collection of receivables, and results of operations. In particular, certain of our automotive customers have been experiencing downturns in their business due in large part to macroeconomic factors beyond their control and have commenced reorganization proceedings under Chapter 11 of the U.S. Federal Bankruptcy Code. Our ability to collect receivables from these customers is dependent upon the resolution of the reorganization proceedings. The total amount of automotive customers collectively account for approximately 18% and 17% of our total revenues for the quarter and nine months ended October 2, 2009, respectively. Although we view many of these macroeconomic environment issues as temporary, our continuing outlook for the future of the automotive industry, in light of the indicators highlighted by the present environment, will ultimately affect our future emphasis on marketing to this industry, our future research and developments efforts into new product lines and our segments in general. For additional information regarding these certain automotive customers, see Note 3: "Significant Accounting Policies" of the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q for further discussion.

Outlook

Based upon current product booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be approximately $480.0 million to $495.0 million in the fourth quarter of 2009. Backlog levels at the beginning of the fourth quarter of 2009 were up from backlog levels at the beginning of the third quarter of 2009 and represent over 90% of our anticipated fourth quarter 2009 revenues. We expect that average selling prices for the fourth quarter 2009 will be down approximately 1% to 2% from the third quarter of 2009. We expect cash capital expenditures of approximately $25.0 million in the fourth quarter of 2009.

For the fourth quarter of 2009, we expect gross profit as a percentage of revenues to be approximately 38% to 39%. For the fourth quarter of 2009, we also expect total operating expenses of approximately $130.0 million to $135.0 million, which includes amortization of acquisition-related intangible assets, share based compensation expense, restructuring, asset impairment and other charges of approximately $25.0 million.

We anticipate that interest expense, net of interest income, and other expenses will be approximately $10.0 million to $11.0 million for the fourth quarter of 2009, which includes non-cash interest expense of approximately $8.0 million relating to our convertible senior subordinated notes. We expect the provision for income taxes to be approximately $5.0 million, with cash payments of income taxes to be approximately $2.0 million in the fourth quarter of 2009. We also expect share-based compensation expense of approximately $12.0 million to $13.0 million in the fourth quarter of 2009.

Results of Operations

Quarter Ended October 2, 2009 Compared to Quarter Ended September 26, 2008

The following table summarizes certain information relating to our operating
results that has been derived from our unaudited consolidated financial
statements for the quarters ended October 2, 2009 and September 26, 2008. The
amounts in the following table are in millions:



                                                      Quarter Ended
                                            October 2,           September 26,
                                               2009                  2008                Dollar Change
Revenues                                   $      472.9         $         581.5         $        (108.6 )
Cost of revenues                                  297.1                   359.9                   (62.8 )

Gross profit                                      175.8                   221.6                   (45.8 )
Operating expenses:
Research and development                           53.8                    67.2                   (13.4 )
Selling and marketing                              30.0                    37.3                    (7.3 )
General and administrative                         27.1                    34.2                    (7.1 )
Amortization of acquisition-related
intangible assets                                   7.3                     6.8                     0.5
Restructuring, asset impairments and
other net                                           7.9                     2.5                     5.4

Total operating expenses                          126.1                   148.0                   (21.9 )

Operating income                                   49.7                    73.6                   (23.9 )

Other income (expenses):
Interest expense                                  (15.8 )                 (20.3 )                   4.5
Interest income                                     0.1                     1.7                    (1.6 )
Other                                              (1.5 )                   0.5                    (2.0 )

Other income (expenses), net                      (17.2 )                 (18.1 )                   0.9

Income (loss) before income taxes and
minority interests                                 32.5                    55.5                   (23.0 )
Income tax provision                               (1.9 )                  (4.5 )                   2.6

Net income (loss)                                  30.6                    51.0                   (20.4 )
Net (income) loss attributable to
minority interests                                 (0.7 )                  (0.4 )                  (0.3 )

Net income (loss) attributable to ON
Semiconductor Corporation                  $       29.9         $          50.6         $         (20.7 )

Revenues

Revenues were $472.9 million and $581.5 million during the quarters ended October 2, 2009 and September 26, 2008, respectively. The decrease from the third quarter of 2008 to the third quarter of 2009 was primarily due to the drop in product volume and mix of 16% combined with a reduction in average selling prices of 5%, partially offset by an increase in revenues from our acquisition of Catalyst of $14.5 million or 3%. The revenues by reportable segment were as follows (dollars in millions):

                                Quarter Ended       As a %            Quarter Ended          As a %            Dollar           %
                               October 2, 2009      Revenue        September 26, 2008      Revenue (1)         Change         Change
Automotive and Power
Group                         $           108.3          23 %      $             136.1              23 %      $  (27.8 )         -20 %
Computing and Consumer
Group                                     114.4          24 %                    145.9              25 %         (31.5 )         -22 %
Digital and Mixed-signal
Product Group                              97.0          21 %                    139.7              24 %         (42.7 )         -31 %
Standard Products Group                   153.2          32 %                    159.8              27 %          (6.6 )          -4 %

Total revenues                $           472.9                    $             581.5                        $ (108.6 )

(1) Certain amounts may appear not to total correctly due to rounding of individual amounts.

Revenues from the automotive and power group decreased $27.8 million, or 20%, in the third quarter of 2009 as compared to the third quarter of 2008. The decrease is attributed to decreases in revenues from automotive products from the former AMIS of 29%, low and medium voltage MOSFET of 20%, LDO and voltage regulators of 19%, analog automotive of 5% and power products of 1%.

Revenues from the computing and consumer products decreased $31.5 million, or 22%, in the third quarter of 2009 as compared to the third quarter of 2008. The decrease is attributed to decreases in revenues from power switching products of 25%, low voltage power products of 30%, analog switch products of 40%, standard logic products of 20%, signal and interface products of 11%, DC to DC conversion products of 33% and AC to DC conversion products of 8%.

Revenues from the digital and mixed-signal product group decreased $42.7 million, or 31%, in the third quarter of 2009 as compared to the third quarter of 2008. The decrease is attributed to decreases in revenues from military and aerospace products of 41%, industrial products of 32%, manufacturing service products of 58%, high frequency products of 27%, foundry products of 18%, integrated sensor products of 51% and communication and high voltage products of 72%, partially offset by increases in revenues from medical products of 7%.

Revenues from the standard products decreased $6.6 million, or 4%, in the third quarter of 2009 as compared to the third quarter of 2008. The decrease is attributed to decreases in revenues from rectifier products of 17%, protection products of 16%, small signal products of 8%, zener products of 23%, bipolar power products of 24%, partially offset by increases in revenues from former Catalyst products, filter products of 28% and thyristor products 5%.

Revenues by geographic area as a percentage of total revenues were as follows (dollars in millions):

                    Quarter Ended        As a %            Quarter Ended      As a %
                   October 2, 2009    Revenue  (1)      September 26, 2008    Revenue
   Americas       $            73.6             16 %    $             110.6        19 %
   Asia/Pacific               320.2             68 %                  361.2        62 %
   Europe                      79.1             17 %                  109.7        19 %

   Total          $           472.9            100 %    $             581.5       100 %

(1) Certain amounts may appear not to total correctly due to rounding of individual amounts.

A majority of our end customers, served directly or through distribution channels, are manufacturers of electronic devices. For the quarter ended October 2, 2009, we had one customer that accounted for 12% our total revenues. For the quarter ended September 26, 2008, one of our customers accounted for 11% of our total revenues.

Gross Profit

Our gross profit was $175.8 million in the third quarter of 2009 compared to $221.6 million in the third quarter of 2008. As a percentage of revenues, our gross profit was 37.2% in the third quarter of 2009 as compared to 38.1% in the third quarter of 2008. Gross profit as a percentage of revenue decreased during the third quarter of 2009 as compared to the third quarter of 2008 primarily due to decreases in price and volume in the third quarter of 2009 as compared to the third quarter of 2008, partially offset by cost savings from profitability enhancement programs and a lower amount of expensing of the fair market value step up of inventory in the third quarter of 2009 as compared to the third quarter of 2008. The gross profit by reportable segment in each of these quarters were as follows (dollars in millions):

                                                            As a % of Total                                     As a % of Total
                                    Quarter Ended             Company Net              Quarter Ended              Company Net           Dollar            %
                                   October 2, 2009              Revenue             September 26, 2008              Revenue             Change          Change
Automotive & Power Group          $            38.1                     8.1 %       $              49.8                     8.6 %       $ (11.7 )          -23 %
Computing and Consumer
Products                                       41.1                     8.7 %                      61.6                    10.6 %         (20.5 )          -33 %
Digital & Mixed-Signal
Product Group                                  54.5                    11.5 %                      61.1                    10.5 %          (6.6 )          -11 %
Standard Products                              49.5                    10.5 %                      57.8                     9.9 %          (8.3 )          -14 %

Gross profit by segment                       183.2                                               230.3                                 $ (47.1 )
. . .