ON Semiconductor’s $6 Billion Buyback: A Strategic Boost Amid Sector Momentum

ON Semiconductor has initiated a significantly expanded share repurchase initiative, activating a newly authorized $6 billion program effective January 1. This strategic move coincides with a powerful tailwind from the semiconductor sector, fueled by a substantial rally in TSMC shares. The central question for investors is whether this aggressive capital return will provide lasting support for the company's share price recovery.

The positive industry sentiment was notably amplified by TSMC's performance. Shares of the Taiwanese chipmaking giant surged nearly 7% following a significant analyst action: Goldman Sachs raised its price target by 35%. This momentum benefits companies like ON Semiconductor, a key supplier of power semiconductors, as it signals robust demand for components essential to data centers and AI infrastructure.

Further strengthening its operational outlook, ON Semiconductor, in partnership with GlobalFoundries, is advancing the development of 650V Gallium Nitride (GaN) power semiconductors. A critical de-risking event for this collaboration occurred on December 11, 2025, when the European Union approved €623 million in German state aid for semiconductor manufacturing investments. This approval specifically secures the legal and financial framework for ON's planned capacity expansion in Dresden, which is crucial for supporting its 2026 product roadmap.

Analyzing the Expanded Buyback Program

The new $6 billion authorization replaces a previous $3 billion buyback plan. Management frames the decision as a clear signal of confidence in the company's current valuation. From a practical standpoint, an accelerated repurchase schedule can reduce share supply in the near term, providing support for key per-share financial metrics.

Should investors sell immediately? Or is it worth buying ON Semiconductor?

The market is currently witnessing a pronounced risk-on rotation toward hardware and infrastructure stocks, driven largely by artificial intelligence themes. For ON Semiconductor, two near-term factors will likely dictate the next significant price movement. First, the market will closely monitor the pace and scale of the buyback's execution. Second, investors await evidence that the inventory adjustments of 2025 are transitioning into a tangible growth phase for 2026.

Key Data Points:
* Share Repurchase: $6 billion program commenced January 1, 2026 (replaces prior $3 billion program)
* Sector Catalyst: TSMC stock jumped almost 7% after a 35% price target increase from Goldman Sachs
* Regulatory Support: EU clearance of €623 million in German subsidies granted on December 11, 2025
* Technical Levels: The 53 EUR and 60 EUR price levels are viewed as significant markers

Final Outlook and Upcoming Catalysts

In the short term, the equity's trajectory appears heavily dependent on the implementation speed of the $6 billion repurchase plan and the upcoming Q4 earnings report, scheduled for early February. Solid margin performance in the quarterly results, coupled with swift buyback activity, could unlock further upside potential.

Conversely, should the earnings disappoint or inventory management signals remain ambiguous, the share price may face renewed pressure. From a technical analysis perspective, a sustained reclaim of the 53 EUR level is considered a positive development. Should the broader sector strength persist, a path toward 60 EUR may open for ON Semiconductor shares.