ON Semiconductor Corp. (NASDAQ:ON)

The analysis of the property, plant, and equipment (PP&E) financial data reveals several notable trends across the examined five-year period.

Land

The value of land has shown a slight decline, decreasing from 125,200 thousand US dollars in 2019 to 117,800 thousand US dollars by 2023. This represents a gradual reduction primarily occurring between 2019 and 2021, after which the value stabilized through 2023.

Buildings

Buildings indicate a consistent upward trend with an initial slight decline from 860,600 thousand US dollars in 2019 to 850,000 thousand US dollars in 2020. Subsequently, there is a steady increase reaching 1,324,200 thousand US dollars by the end of 2023, reflecting significant investment or revaluation in this category over the period.

Machinery, Equipment, and Other

This category demonstrates continuous growth throughout the period, rising from 4,275,200 thousand US dollars in 2019 to 6,489,000 thousand US dollars in 2023. The increase is particularly pronounced between 2021 and 2023, indicating substantial acquisitions or capital expenditures in machinery and equipment during recent years.

Property, Plant and Equipment, Gross

The gross PP&E follows a steady upward trajectory, expanding from 5,261,000 thousand US dollars in 2019 to 7,931,000 thousand US dollars in 2023. This growth aligns with the increases seen in buildings and machinery categories, suggesting overall asset base expansion.

Accumulated Depreciation

Accumulated depreciation generally increases from -2,669,400 thousand US dollars in 2019 to -3,529,500 thousand US dollars in 2023, which is consistent with asset aging and usage over time. Notably, there is a slight dip in 2022 to -3,155,100 thousand US dollars from the previous year's higher balance, which may indicate asset disposals, write-downs, or changes in depreciation methods during that year.

Property, Plant and Equipment, Net

The net PP&E value shows a relatively flat trend from 2019 through 2021, fluctuating around 2,590,000 to 2,520,000 thousand US dollars. However, a significant increase occurs in 2022 and 2023, with net PP&E reaching 3,450,700 and then 4,401,500 thousand US dollars respectively. This suggests a combination of rapid asset growth and possibly lower relative depreciation charges or asset revaluations, resulting in a strengthening net asset base in recent years.

The analysis of the property, plant, and equipment data over the five-year period reveals several notable trends and changes in asset aging and useful life estimates.

Average Age Ratio (%)

This ratio shows a fluctuating but overall declining trend starting from 51.98% in 2019 and peaking at 58.13% in 2021 before decreasing significantly to 45.17% by the end of 2023. This decline in the average age ratio suggests a relative rejuvenation of the asset base in recent years, implying either new asset acquisitions or disposals of older assets.

Estimated Total Useful Life (in years)

The estimated total useful life shows minor fluctuations, starting at 13 years in 2019, dropping to 12 years in 2020, then returning to 13 years in 2021, and increasing to 16 years from 2022 onwards. The increase in 2022 and 2023 indicates a reassessment of asset longevity, likely reflecting changes in asset mix or improvements in asset durability or maintenance policies.

Estimated Age, Time Elapsed Since Purchase (in years)

The estimated age of the assets has remained relatively stable around 7 to 8 years throughout the period. It increased slightly to 8 years in 2021 and 2022, before returning to 7 years in 2023. This stability suggests a consistent aging profile of the assets, without major asset retirements or new purchases causing significant shifts in the average age.

Estimated Remaining Life (in years)

The estimated remaining life has shown a positive trend, starting at 6 years in 2019, dipping to 5 years in 2020, then gradually increasing to 9 years by 2023. This increase aligns with the extension of the total useful life estimate and suggests an improved outlook on the usability and maintenance of existing assets or the impact of newer assets extending the overall asset life.

In summary, the data indicates that while the assets have aged moderately, the company has adjusted its useful life estimates upward, contributing to a lower average age ratio and increased estimated remaining life. This suggests a strategic extension in the useful duration of property, plant, and equipment, likely reflecting updated asset management practices or technological improvements.

Accumulated depreciation

The accumulated depreciation values demonstrate a generally upward trend from 2019 to 2023, increasing from 2,669,400 thousand US dollars in 2019 to 3,529,500 thousand US dollars in 2023. An exception is observed in 2022 when the value decreased to 3,155,100 thousand dollars from 3,340,500 thousand dollars in 2021.

Property, plant and equipment, gross

The gross value of property, plant, and equipment shows a consistent increase over the five-year period, growing from 5,261,000 thousand US dollars in 2019 to 7,931,000 thousand US dollars in 2023. The most notable jump occurs between 2022 and 2023, indicating significant investment or acquisition during that period.

Land

The land value remains relatively stable with a slight downward trend from 125,200 thousand US dollars in 2019 to 117,800 thousand US dollars in 2023. The values fluctuate minimally, suggesting little change in land holdings or revaluation during the period.

Average age ratio

The average age ratio, expressed as a percentage, increases steadily from 51.98% in 2019 reaching a peak of 58.13% in 2021, followed by a sharp decline to 48.63% in 2022 and further down to 45.17% in 2023. This pattern suggests that the asset base was aging until 2021, after which newer assets were likely added, reducing the average age of the property, plant, and equipment.

Property, Plant and Equipment, Gross

There is a consistent increase in the gross value of property, plant, and equipment over the five-year period. The value increased from approximately 5,261,000 thousand US dollars at the end of 2019 to about 7,931,000 thousand US dollars at the end of 2023. This illustrates a significant growth, with the most notable acceleration occurring between 2022 and 2023.

Land

The value of land shows a slight decreasing trend from 125,200 thousand US dollars in 2019 to 117,800 thousand US dollars in 2023. The changes are minor, suggesting relative stability or slight asset revaluation/adjustments in this category.

Depreciation Expense for Property, Plant and Equipment

Depreciation expense increased from 409,700 thousand US dollars in 2019 to 485,300 thousand US dollars in 2023, though it experienced some fluctuations during the intermediate years. It peaked in 2020 at 444,100 thousand US dollars, slightly declined in subsequent years, reaching a low in 2022 before rising sharply again in 2023. This variability may reflect changes in asset composition or useful life estimations.

Estimated Total Useful Life

The estimated total useful life metric fluctuated slightly but showed a notable increase from 13 years in 2019 and 2021 to 16 years by 2022 and 2023. The useful life was 12 years in 2020, indicating some revisions in asset longevity assumptions, which could affect depreciation calculations and asset valuation.

Accumulated Depreciation

The accumulated depreciation shows a generally increasing trend over the five-year period, rising from $2,669,400 thousand in 2019 to $3,529,500 thousand in 2023. There is a slight decline observed in 2022, where the accumulated depreciation decreased to $3,155,100 thousand from $3,340,500 thousand in 2021, before increasing again in 2023.

Depreciation Expense for Property, Plant, and Equipment

Depreciation expense has fluctuated moderately across the years. Starting at $409,700 thousand in 2019, it rose to $444,100 thousand in 2020, decreased slightly to $436,500 thousand in 2021, then further decreased to $398,100 thousand in 2022, before experiencing a notable increase to $485,300 thousand in 2023. This pattern suggests variability in depreciation expense possibly due to changes in asset base or depreciation rates applied.

Time Elapsed Since Purchase

The time elapsed since purchase remained relatively stable, with 7 years recorded in 2019 and 2020, increasing to 8 years in 2021 and 2022, before returning to 7 years in 2023. This change likely reflects the acquisition of newer assets or revisions in the asset portfolio.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment experienced a slight decrease from 2,591,600 thousand US dollars at the end of 2019 to 2,512,300 thousand US dollars in 2020, followed by a minor increase to 2,524,300 thousand US dollars in 2021. A significant upward trend commenced in 2022, with the figure rising to 3,450,700 thousand US dollars and further increasing sharply to 4,401,500 thousand US dollars by the end of 2023. This suggests substantial investment or acquisition of property, plant, and equipment during the last two years covered.

Land

The value attributed to land showed a gradual decline from 125,200 thousand US dollars at the end of 2019 to 119,700 thousand US dollars in 2020, continuing to decrease marginally to 118,500 thousand US dollars in 2021. Subsequently, it remained stable at 117,800 thousand US dollars for the last two years into 2022 and 2023. This relative stability after a slight decline indicates limited land transactions or revaluations over the period.

Depreciation Expense for Property, Plant and Equipment

Depreciation expense rose from 409,700 thousand US dollars in 2019 to 444,100 thousand US dollars in 2020, then slightly decreased to 436,500 thousand US dollars in 2021. A noticeable decline to 398,100 thousand US dollars occurred in 2022, followed by a considerable increase to 485,300 thousand US dollars in 2023. This fluctuation in depreciation expense could be reflective of asset base changes, including additions, disposals, or changes in useful life estimations.

Estimated Remaining Life

The estimated remaining life of property, plant, and equipment decreased from 6 years in 2019 to 5 years in 2020, recovered to 6 years in 2021, and then increased to 8 years in 2022 and further to 9 years in 2023. This upward trend in estimated remaining life suggests an extension of asset useful lives, possibly due to asset renewals or reassessments, which impacts depreciation calculations and asset valuation.

Summary Insights

The overall data indicates a phase of consolidation and minor decline in net property, plant, and equipment values through 2020 and 2021, followed by robust growth in 2022 and 2023, likely driven by considerable capital expenditure or asset acquisitions. Despite steady land values, depreciation expense and estimated asset life underwent notable shifts, reflecting active asset management including reassessments and potentially improved asset longevity. These factors combined suggest a strategic emphasis on expanding and upgrading the fixed asset base in the most recent years analyzed.