ON Semiconductor Stock and 2 Chip Picks Near the CHIPS Act Funding Shift

The Trump administration’s decision to expand CHIPS Act equity funding across 30 semiconductor stocks, with up to US$874 million now committed, has turned government policy into a direct shareholder in parts of the sector. For investors, this is a clear policy signal that could reshape how capital flows into chip design, manufacturing, and AI infrastructure. Some stocks in our US Semiconductor Industry Stocks screener now sit closer to this policy spotlight than others. This article reveals 3 positively exposed stocks and explains how this funding shift might influence their risk and opportunity profiles.

ON Semiconductor (ON)

Overview: ON Semiconductor is a US chip company that focuses on intelligent power management and sensing, supplying components that help electric vehicles, industrial automation, AI data centers and mobile devices run more efficiently. Its products range from power switches and protection circuits to advanced image sensors and depth sensing technology used in safety systems and robotics.

Operations: ON Semiconductor generates most of its revenue from the Power Solutions Group at about US$2.9b, with additional contributions of roughly US$2.2b from the Analog & Mixed-Signal Group and US$0.9b from the Intelligent Sensing Group, and sells across regions including Hong Kong, Singapore, the United States and the United Kingdom.

Market Cap: US$32.6b

Investors looking at the CHIPS Act and the Trump administration’s equity push into US semiconductors may find ON Semiconductor particularly interesting, because it already sits at the heart of EV power systems and AI data center energy efficiency. The company is leaning into higher value silicon carbide and advanced power solutions, while pruning lower margin legacy products and selling older fabs through its Fab Right plan. That shift aims to support stronger margins and cash generation, although recent earnings volatility, a large one off loss of US$769.8m and a relatively high P/E leave little room for disappointment. With analysts expecting faster earnings growth than revenue and rising AI and automotive exposure, the next phase of ON Semiconductor’s story matters for anyone tracking US chip leaders.

ON Semiconductor’s shift into higher value power and sensing chips could be more than just a margin story. Get the full picture with the 1 key reward and 2 important warning signs

Onto Innovation (ONTO)

Overview: Onto Innovation is a semiconductor equipment company that builds inspection, metrology and lithography tools that help chipmakers spot defects, measure ultra fine features and manage yields in areas like advanced packaging, AI processors and memory. Its systems and process control software are used across fabs and packaging facilities to keep complex devices such as HBM, logic and sensors within tight performance and reliability limits.

Operations: Onto Innovation generates about US$1.0b in revenue from semiconductor equipment and services, selling primarily into Taiwan (US$301.2m), South Korea (US$255.9m) and the United States (US$154.7m), with additional contributions from Japan, China, Southeast Asia and Europe.

Market Cap: US$12.5b

Onto Innovation sits at a critical chokepoint in the AI supply chain, supplying inspection and metrology tools that help customers stack and package high value AI chips and HBM memory without costly defects. Forecasts point to strong earnings and revenue growth, and recent contracts such as a US$240m volume agreement with an HBM customer, together with US policy support for domestic semiconductor infrastructure, underline how closely the company is tied to AI build outs. At the same time, a very high P/E, recent margin compression after a one off US$90.5m loss, and funding entirely from external borrowing instead of customer deposits mean expectations are already high and execution risks matter.

Onto Innovation’s AI and HBM exposure appears to be accelerating faster than many investors realise, yet that very high P/E and recent one off loss may be masking a crucial detail in the analyst forecasts for Onto Innovation

Veeco Instruments (VECO)

Overview: Veeco Instruments is a US equipment company that supplies tools used to build advanced chips and thin film devices, including systems for laser annealing, deposition, etch and advanced packaging that support GPUs, memory, photonics and power electronics across global fabs, foundries and research centers.

Operations: Veeco Instruments generates about US$655.3m in revenue from semiconductor and thin film process equipment, with sales spread across China, the rest of Asia Pacific, the United States and EMEA.

Market Cap: US$3.1b

Veeco Instruments provides direct exposure to the build out of AI chips and data center optics, from laser annealing for GPUs to ion beam and MOCVD tools used in high speed photonics and advanced packaging. Recent orders of more than US$250m tied to AI data center interconnects and Indium Phosphide lasers illustrate how closely Veeco’s tools align with current CHIPS Act priorities and domestic manufacturing investment, even though Veeco itself is not on the funding list. At the same time, a very high P/E, slim 3.5% net margins, recent one off losses and insider selling indicate that expectations are already stretched. The key consideration is whether Veeco’s AI driven order pipeline and concentrated customer base justify that risk profile.

Veeco Instruments sits at the crossroads of AI optics and stretched expectations, yet many investors still treat it as a niche equipment play. Get the fuller story in the 2 key rewards and 4 important warning signs

The three semiconductor stocks covered here are only the starting point, with the full US-based US Semiconductor Industry Stocks screener surfacing 30 more companies that each carry their own potentially compelling narrative around design, manufacturing and support for advanced computing. Use Simply Wall St to identify and analyze the specific catalysts, financial health markers and equity stories that best match your highest conviction ideas in this sector.

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Seeking Fresh Alternatives Beyond These Chips

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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