ON Semiconductor, a chipmaker scrambling to satisfy the excessive demand for automotive parts, expects to alleviate a bottleneck in auto chip manufacturing by the second half of the yr on the newest.

In an interview Monday with CNBC’s Jim Cramer, CEO Hassane El-Khoury stated the corporate is experiencing a rush in orders for its merchandise amid an industrywide shortage in chips.

The scarcity, which started when demand for digital merchandise akin to computer systems surged throughout the pandemic, has compelled carmakers together with Common Motors and Ford to chop again on manufacturing some autos.

“The orders got here on so robust that we’re not in a position to sustain, however we do have the capability,” El-Khoury stated in an look on “Mad Money.” “For our chips, we’re in a position to assist the capability. We began the brand new demand, and we will be by means of this in a single or two quarters.”

Serving a number of finish markets, ON Semiconductor started warning clients about tight inventories within the later components of the summer season as homebound shoppers loaded up on electronics. Many companies on the time remained unsure concerning the future because of financial fallout from coronavirus lockdowns as executives in the reduction of on or shunned putting orders for parts.

The most recent vehicles, more and more geared up with linked applied sciences and different capabilities, want quite a few tiny chips for capabilities akin to energy administration, energy steering and infotainment techniques.

The auto market is the most important driver of all ON Semiconductor finish markets, El-Khoury stated.

“Pushed primarily by the automotive trade, we’re very effectively positioned,” he stated. “We’re not simply going to develop at market. We will develop above market, identical with industrial, identical actually throughout the power in each single considered one of our finish markets, which is a superb place to be.”

Among the many 5 segments ON Semiconductor serves, automotive makes up practically a 3rd of revenues. The corporate can be a provider to industrial and army, communications, computing and shopper markets.

After whole revenues declined about 8% within the first half of 2020 on the onset of coronavirus lockdowns, the computing section was the primary to rebound within the second quarter. Automotive income wouldn’t improve till the fourth quarter, when the determine grew 6% from the yr prior.

For the total yr, ON Semiconductor revenues declined 4.8% to about $5.26 billion. Revenues fell 6% to roughly $5.52 billion in 2019.

Citing order developments and backlog, ON Semiconductor tasks income within the vary of $1.41 billion to $1.51 billion within the present quarter. If it meets the quick finish of steerage, enterprise would develop a minimum of 10% from what it reported within the first quarter final yr.

ON Semiconductor shares offered off greater than 3% on Monday, exceeding declines within the general market. Regardless of a destructive begin to the week, the inventory is up greater than 23% to $40.44.