Chipmaker ON Semiconductor Corp on Monday forecast third-quarter revenue above market estimates, on optimism that strong demand from the automotive sector will offset broader weakness in the semiconductor industry.

Shares of the Arizona-based company were up more than 5% in premarket trading after gaining 68.5% so far this year.

The rising adoption of electric vehicles has been a boon for chipmakers like Onsemi and NXP Semiconductors. Onsemi said in May it was considering investing over $2 billion to boost the production of silicon carbide chips used to extend the range of EVs.

"Our brownfield capacity expansion is creating an opportunity for Onsemi to gain share in silicon carbide by capitalizing on the rapidly accelerating demand for electrification and renewable energy," Onsemi's CEO Hassane El-Khoury said in a statement.

Automotive chipmaker NXP last week forecast a strong third-quarter revenue and profit, exuding confidence over a steady automotive demand.

Onsemi, which makes sensors and supplies chips to companies like Volkswagen, expects revenue between $2.10 billion to $2.20 billion in the third quarter. Analysts on average expect revenue of $2.07 billion, according to Refinitiv IBES data.

Its forecast for adjusted earnings of $1.27 to $1.41 per share, was also above estimates of $1.21 per share.

For the second quarter ended June 30, the company's revenue rose to $2.09 billion, ahead of analysts' expectations of $2.02 billion. The revenue was boosted by Onsemi's power solutions group, which provides power management chips, making up about 53% of total quarterly revenue.

On an adjusted basis, the company earned $1.33 per share in the reported quarter, compared with estimates of $1.21 per share, according to Refinitiv.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shailesh Kuber)