The analog semiconductor sector experienced varied Q2 earnings, with Impinj (PI) seeing a significant stock surge after exceeding revenue and EPS expectations, driven by strong RAIN RFID performance. Conversely, onsemi (ON) reported a revenue decline and stock drop due to challenges in the automotive sector. The overall sector showed a modest revenue beat.

Analog Semiconductor Sector Navigates Mixed Q2 Earnings; Impinj (PI) Shares Surge Amidst RFID Growth

U.S. equities in the analog semiconductor sector experienced varied movements following their Q2 earnings reports, with Impinj (NASDAQ:PI) demonstrating remarkable resilience and investor confidence through a significant stock surge, while onsemi (NASDAQ:ON) faced headwinds resulting in a notable share price decline. The broader sector, encompassing 15 tracked companies, saw revenues collectively surpass consensus estimates by 2%, indicating a mixed but generally improving demand environment.

The Event in Detail

Impinj (NASDAQ:PI), a key player in radio-frequency identification (RFID) hardware and software, reported robust fiscal 2025 Q2 earnings that propelled its stock price significantly higher. The company achieved a record revenue of $200.4 million, representing a substantial 170% increase from Q1 2025 and significantly exceeding its prior guidance of $91-$96 million. This revenue comprised $97.9 million from its Systems segment and $102.5 million from its Endpoint ICs segment. Despite some earlier reports indicating a year-over-year revenue decrease, Impinj notably outperformed analysts' revenue expectations by 4.3%. Adjusted Earnings Per Share (EPS) also surpassed forecasts, coming in at $0.80 against a consensus of $0.70, an outperformance of 13.6%. Following these strong results, Impinj's stock has surged 53.9%, trading at $188.49.

Conversely, onsemi (NASDAQ:ON) reported its second-quarter 2025 results with revenues of $1.47 billion, marking a 15.4% decline year-over-year. While this figure still exceeded analysts' expectations by 1.2% to 1.5%, the market reacted negatively, pushing onsemi's stock down 15.2% to trade at $48.20. Non-GAAP earnings per share (EPS) were reported at $0.53, aligning with some analyst estimates. The company experienced significant margin compression, with its non-GAAP gross margin contracting 770 basis points year-over-year to 37.6%. All three of onsemi's business segments—Automotive, Industrial, and other end-markets—saw declines ranging from 14% to 16%.

Analysis of Market Reaction

The divergent market reactions highlight investor priorities within the analog semiconductor space. Impinj's impressive stock surge can be attributed to its ability to not only exceed financial expectations but also demonstrate operational efficiency. The company's non-GAAP gross margin improved to 60.4% in Q2 2025 from 58.2% in Q2 2024, signaling effective business management amidst a challenging environment. The market appears to be rewarding Impinj for its strong position and execution in the high-growth RAIN RFID market, showcasing resilience and potential for continued expansion.

onsemi's stock decline, despite beating revenue estimates, reflects broader concerns regarding its heavy exposure to the automotive and electric vehicle (EV) industry, which is currently experiencing a downturn in demand. Significant margin compression and declines across all key segments, particularly automotive revenues which constitute 50% of its total, underscored these anxieties. Investor caution was further fueled by management's acknowledgment of cautious customers and an expected low-single-digit percentage decline in pricing in certain business areas.

Broader Context & Implications

The overall analog semiconductor sector reported a collective 2% revenue beat against consensus estimates. However, average share prices remained relatively unchanged since the latest earnings results, indicating that while companies are managing to meet or slightly exceed revenue expectations, significant positive catalysts are often company-specific.

Impinj's performance underscores the growing importance of RFID technology in supply chain optimization and inventory management. The RFID market is projected to grow from $15.49 billion in 2024 to $37.71 billion by 2032, at a Compound Annual Growth Rate (CAGR) of 11.9%. Impinj's focus on RAIN RFID, a low-cost, high-performance variant, strategically positions it to capture a substantial share of this expanding market, which currently has only about 0.5% penetration. Improved operational efficiency and a shift towards disciplined profitability are also critical factors.

For onsemi, the current period is characterized as "short-term pain" with "long-term upside" by analysts. The company's factories are operating at approximately 68% capacity, impacting gross margins by about 900 basis points. Strategically, onsemi is streamlining its product portfolio by exiting non-core businesses, a move expected to remove approximately $300 million (5%) of 2025 revenue. This aims to improve future profitability by focusing on higher-margin products, particularly silicon carbide chips, and strengthening its position in electric vehicles, industrial power, and data centers. The company's valuation, with a blended Price-to-Earnings (P/E) ratio of 16.9x, is currently lower than the tech sector average of 23.2x, suggesting potential for future revaluation as its strategy takes hold.

Expert Commentary

onsemi Chief Executive Officer Hassane El-Khoury offered an outlook on the company's strategic direction and market positioning:

"Our ongoing transformation is resulting in a more predictable business model, reflecting the strength of our strategy and our commitment to long-term value creation. We are beginning to see signs of stabilization across our end markets, and we remain well-positioned to benefit from a market recovery."

Looking Ahead

Looking forward, Impinj is poised to benefit from the continued, widespread adoption of RAIN RFID technology. The vast untapped market for RFID across various industries presents significant growth opportunities for the company. Investors will be keen to monitor the progress in market penetration and the expansion of its platform adoption.

For onsemi, the immediate future will likely see continued navigation of inventory adjustments within the automotive sector, which is expected to conclude by the end of 2025. While analysts anticipate a significant rebound in EPS from 2026 onwards, a full recovery of EPS and sales to peak levels could take 2-3 years. The potential for swift interest rate cuts could act as a catalyst by stimulating demand for EVs and related components, thereby easing pressure on onsemi. The company's disciplined approach to cost structure and its focus on in-house manufacturing of components are seen as key advantages for long-term growth and margin improvement in a recovering market. Investors will be watching for signs of market stabilization and the effectiveness of onsemi's portfolio rationalization initiatives.