The Real Downturn Risk In ON Semiconductor Stock

Its history in market shocks reveals a pattern of steep falls. The question is whether you can stomach the ride.

ON Semiconductor (ON) stock fell 23.7% in a single session on June 26, 2026, a sharp reminder of its volatility. The company makes essential semiconductors for the automotive and industrial sectors, but the current investor focus is squarely on its pivot to high-growth markets. On its latest earnings call, management reported that revenue from AI data centers grew more than 30% quarter-over-quarter and is now expected to double year-over-year in 2026. This powerful growth narrative is compelling.

But that sharp one-day drop is a small taste of a much larger risk. For any shareholder, whether you are a long-term holder or tempted by the recent dip, the urgent question is how this stock behaves in a true, market-wide shock. History provides a clear picture of the potential drawdown, and it is vital to ask if you can ride that out.

A 72% Fall In The 2008 Crisis

Across the 15 market shocks it has traded through, ON Semiconductor stock fell an average of 29% from peak to trough. That is substantially deeper than the 16% average fall for the S&P 500 over the same periods. Its history shows amplified downside. The single deepest drawdown was a 72% plunge during the 2008-2009 Global Financial Crisis.

The environment where it has historically suffered most has been a “Growth & Demand Scare.” That abstract label covers very real events that investors will recall: the 2015-2016 China devaluation scare, the sharp Q4 2018 correction, and the 2020 pandemic crash. When broad economic fear takes hold, this stock has been hit harder than the market.

A Median Recovery Time Of 7 Months

Riding out a steep drop means being underwater for a meaningful period. Of the shocks the company has fully recovered from, the median time for the stock to climb back to its pre-shock high was about 7 months. But an investor’s patience can be tested for much longer.

The slowest full recovery on record took about 33 months to complete, following the Summer-Fall 2023 Five Percent Yield Shock. While many past recoveries have been relatively swift, that history is not a promise for the next downturn.

Every Major Shock ON Semiconductor Has Traded Through

Peak-to-trough drawdown in each shock, and how long the stock took to reclaim its pre-shock high. Stock vs. the S&P 500, long-duration bonds, and its sector.

[1] Summer 2007 Credit Crunch: Subprime hedge fund failures froze interbank lending, prompting an emergency Fed rate cut.
[2] 2008-2009 Global Financial Crisis: Lehman’s collapse froze global credit, crashing every asset class and spiking unemployment.
[3] 2010 Eurozone Sovereign Debt Crisis / Flash Crash: Greece’s deficit revelation collapsed European banks and triggered the May Flash Crash.
[4] 2011 US Debt Ceiling Crisis & European Contagion: US credit downgrade and European sovereign stress triggered a broad risk-off selloff.
[5] 2013 Taper Tantrum: Bernanke’s taper hint spiked Treasury yields, triggering emerging market capital flight.
[6] 2014-2016 Oil Price Collapse: OPEC refused to cut output, crashing crude from $100 to $26.
[7] 2015-2016 China Devaluation / Global Growth Scare: Yuan devaluation sparked global recession fears, crushing cyclicals and emerging markets.
[8] 2016-2017 Trump Reflation Bond Selloff: Trump’s election spurred fiscal stimulus hopes, rotating capital from bonds into cyclicals.
[9] Q4 2018 Fed Policy Error / Growth Scare: Powell’s hawkish comments and trade war fears triggered the worst December since 1931.
[10] 2020 COVID-19 Crash: Pandemic lockdowns caused history’s fastest bear market before massive stimulus drove recovery.
[11] 2022 Inflation Shock & Fed Tightening: 9.1% CPI forced aggressive rate hikes, crushing both stocks and bonds simultaneously.
[12] 2023 SVB Regional Banking Crisis: SVB’s rate-driven bond losses triggered a social-media bank run, seized by FDIC.
[13] Summer-Fall 2023 Five Percent Yield Shock: Strong economic data pushed 10-year yields to 5%, compressing yield-sensitive sector valuations.
[14] 2024 Yen Carry Trade Unwind: BOJ rate hike unwound yen carry trades, briefly crashing tech stocks globally.
[15] 2025 US Tariff Shock: 145% China tariffs crashed equities and the dollar on supply chain disruption fears.

AI Growth Vs. A Lagging Auto Market

The company that endured those past shocks is not the same one that exists today. The bull case is that ON is now a stronger, more focused business with a clear growth engine in AI data centers, where management expects revenue to double in 2026. New, high-margin products are ramping, and executives project sequential gross margin expansion throughout the year.

Yet risks remain. The company’s large automotive market “has not seen a recovery yet,” according to the CEO on the May 2026 call. Its trailing twelve-month operating margin of 17.5% is still well below its three-year peak of 33.2%. While the business is arguably better positioned, its historical pattern of amplified downside in a market shock remains the key risk to internalize.

A 10% Position Takes A 7% Hit

That deepest 72% drawdown would have cut about 7% from an entire portfolio if ON Semiconductor were a 10% position. At a 20% weight, the hit would be about 14%. These numbers show that the most important lever a shareholder controls is not predicting the market, but managing exposure.

The size of your position in any single stock directly determines the size of the risk you carry, and watching for a real recovery in its core automotive market will be key.

Where Else Could A Drop Like This Be Waiting?

You have just seen, in hard numbers, how far ON Semiconductor has fallen when markets break and how long it took to climb back. The natural next question is how much the rest of what you own could fall, and the options market puts a forward number on exactly that: the expected move it prices in for each stock over the year ahead. Our Expected Move screen ranks which S&P 500 names carry the widest priced-in swings so you can see whether your other holdings are sitting on more downside than you have accounted for.

So Where Should A Stock That Can Fall This Far Actually Sit?

The first instinct is to spread it out, and that is a real step. Owning a semiconductor ETF like SOXX instead of just the one name takes the single-company risk off the table, so a rough stretch at ON Semiconductor alone no longer decides your year.

But a sector basket is still one sector. You get the laggards alongside the leaders, and as the table above shows, the whole group still falls when the market breaks. Spreading single-stock risk is not the same as managing risk. That is the gap the Trefis High Quality (HQ) Portfolio is built to close: not a whole index, the 30 strongest names across sectors, sized and rebalanced with rules so no one company, or sector, decides your year. It has a track record of outpacing a benchmark that combines all major indices – the S&P 500, S&P Mid-cap, and Russell 2000.