In the fast-evolving semiconductor industry, Arm Holdings plc and SkyWater Technology, Inc. stand out with distinct innovation strategies and market focuses. Arm leads in CPU architecture and licensing, powering diverse applications globally, while SkyWater excels in specialized semiconductor manufacturing and co-development services. This comparison explores their competitive positioning and growth potential to help you decide which company could be a smarter addition to your investment portfolio.
Table of contents
Companies Overview
I will begin the comparison between Arm Holdings plc and SkyWater Technology, Inc. by providing an overview of these two companies and their main differences.
Arm Holdings plc Overview
Arm Holdings plc develops and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. Its offerings include microprocessors, systems IPs, graphics processing units, and software tools. The company serves markets such as automotive, computing infrastructure, consumer technologies, and the Internet of Things. Headquartered in Cambridge, UK, Arm operates globally and is a subsidiary of Kronos II LLC.
SkyWater Technology, Inc. Overview
SkyWater Technology, Inc. provides semiconductor development and manufacturing services, including engineering and process development support. It serves customers in computation, aerospace and defense, automotive, bio-health, consumer, and industrial IoT sectors. Incorporated in 2017 and based in Bloomington, Minnesota, SkyWater focuses on silicon-based analog, mixed-signal, power discrete, MEMS, and rad-hard integrated circuits.
Key similarities and differences
Both companies operate in the semiconductor industry and serve diverse technology markets, including automotive and IoT. Arm primarily focuses on developing and licensing semiconductor intellectual property, while SkyWater offers manufacturing and development services. Arm is a much larger entity with over 8K employees and a market cap above 110B USD, whereas SkyWater is smaller with around 700 employees and a market cap near 1.5B USD.
Income Statement Comparison
The table below presents a side-by-side comparison of key income statement metrics for Arm Holdings plc American Depositary Shares (ARM) and SkyWater Technology, Inc. (SKYT) for their most recent fiscal years.
| Metric | Arm Holdings plc American Depositary Shares (ARM) | SkyWater Technology, Inc. (SKYT) |
|---|---|---|
| Market Cap | 111B | 1.54B |
| Revenue | 4.01B | 342M |
| EBITDA | 903M | 25M |
| EBIT | 720M | 7M |
| Net Income | 792M | -7M |
| EPS | 0.75 | -0.14 |
| Fiscal Year | 2025 | 2024 |
Income Statement Interpretations
Arm Holdings plc American Depositary Shares
Arm Holdings demonstrated strong revenue growth from 2.03B in 2021 to 4.01B in 2025, nearly doubling over the period. Net income grew favorably from 388M to 792M, with net margin improving to 19.77%. In 2025, the company posted a 23.94% revenue increase and a significant 108.83% net margin growth, reflecting robust profitability and stable margin expansion.
SkyWater Technology, Inc.
SkyWater Technology’s revenue rose steadily from 140M in 2020 to 342M in 2024, reflecting a 143.72% growth over the period. Although gross margin was favorable at 20.34%, net margin remained negative at -1.98% in 2024. The latest fiscal year showed a 19.39% revenue increase alongside improved EBIT and net margin growth, but net losses persisted, indicating ongoing challenges in profitability.
Which one has the stronger fundamentals?
Arm Holdings exhibits stronger fundamentals with consistently high margins, positive net income, and substantial earnings growth. SkyWater shows encouraging top-line growth and margin improvements but remains unprofitable at the net income level. Overall, Arm’s income statement reflects greater stability and profitability, while SkyWater faces profitability challenges despite growth progress.
Financial Ratios Comparison
The table below presents a side-by-side comparison of key financial ratios for Arm Holdings plc (ARM) and SkyWater Technology, Inc. (SKYT) based on their most recent fiscal year data.
| Ratios | Arm Holdings plc (ARM) 2025 | SkyWater Technology, Inc. (SKYT) 2024 |
|---|---|---|
| ROE | 11.6% | -11.8% |
| ROIC | 10.3% | 3.4% |
| P/E | 142 | -100 |
| P/B | 16.4 | 11.8 |
| Current Ratio | 5.20 | 0.86 |
| Quick Ratio | 5.20 | 0.76 |
| D/E (Debt-to-Equity) | 0.05 | 1.33 |
| Debt-to-Assets | 4.0% | 24.5% |
| Interest Coverage | 0 | 0.74 |
| Asset Turnover | 0.45 | 1.09 |
| Fixed Asset Turnover | 5.61 | 2.07 |
| Payout Ratio | 0 | 0 |
| Dividend Yield | 0 | 0 |
Interpretation of the Ratios
Arm Holdings plc American Depositary Shares
Arm Holdings shows a mixed ratio profile with a favorable net margin of 19.77% but an unfavorable return on invested capital (10.28%) and a high weighted average cost of capital (24.3%). Its price-to-earnings ratio at 141.58 and price-to-book at 16.4 are elevated, suggesting valuation concerns. The company does not pay dividends, reflecting a reinvestment strategy likely focused on R&D, consistent with its high research and development spending relative to revenue.
SkyWater Technology, Inc.
SkyWater Technology’s ratios largely indicate weaknesses, including a negative net margin of -1.98% and return on equity of -11.79%, both unfavorable. Its current and quick ratios are below 1, signaling liquidity challenges. The firm does not pay dividends, which aligns with its negative earnings and probable reinvestment in growth or operations. Despite this, SkyWater has a favorable asset turnover of 1.09, indicating efficient use of assets.
Which one has the best ratios?
Arm Holdings exhibits a stronger ratio profile overall, with more favorable metrics such as profitability and solvency ratios, despite some valuation and capital return concerns. SkyWater Technology faces broader challenges, reflected in negative profitability and liquidity ratios. Thus, Arm’s financial ratios appear comparatively more robust, while SkyWater’s ratios suggest higher financial risk.
Strategic Positioning
This section compares the strategic positioning of Arm Holdings plc and SkyWater Technology, Inc., including market position, key segments, and exposure to technological disruption:
Arm Holdings plc American Depositary Shares
- Large market cap of 111B USD with high beta indicating significant competitive pressure.
- Focuses on licensing microprocessors, IPs, and related technologies across automotive, computing, consumer tech, and IoT sectors.
- Exposure through licensing and IP business model, relying on ongoing tech innovation and adoption in diverse end markets.
SkyWater Technology, Inc.
- Smaller market cap of 1.5B USD with moderate beta, facing competitive pressures in niche markets.
- Provides semiconductor development and manufacturing services for computation, aerospace, automotive, bio-health, and industrial IoT.
- Exposure through manufacturing services in advanced and wafer technologies, co-creating with customers to address evolving semiconductor needs.
Arm Holdings plc American Depositary Shares vs SkyWater Technology, Inc. Positioning
Arm pursues a broad licensing model targeting multiple large sectors, offering scalability but high competitive risk. SkyWater focuses on manufacturing services with a narrower scope, benefiting from close customer collaboration but smaller scale.
Which has the best competitive advantage?
Both companies are currently shedding value with ROIC below WACC; Arm’s value destruction is stable, while SkyWater shows improving profitability but remains slightly unfavorable in moat evaluation.
Stock Comparison
The stock price movements over the past year reveal contrasting dynamics, with Arm Holdings experiencing a notable decline while SkyWater Technology shows strong upward momentum and accelerating gains.
Trend Analysis
Arm Holdings plc American Depositary Shares (ARM) shows a bearish trend over the past 12 months with a -21.17% price decline, decelerating momentum, and high volatility (std deviation 19.31). The stock peaked at 181.19 and bottomed at 87.19.
SkyWater Technology, Inc. (SKYT) exhibits a robust bullish trend with a 236.8% price increase over the same period, accelerating gains, and moderate volatility (std deviation 4.41). Its price ranged from a low of 6.1 to a high of 32.03.
Comparing both, SKYT delivered the highest market performance, significantly outperforming ARM, which faced a sharp bearish trend marked by deceleration and elevated volatility.
Target Prices
Analysts present a clear target consensus for Arm Holdings plc and SkyWater Technology, Inc., indicating expectations for future price movements.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Arm Holdings plc American Depositary Shares | 210 | 120 | 166 |
| SkyWater Technology, Inc. | 25 | 25 | 25 |
Overall, analysts expect Arm Holdings to rise significantly from its current price of 105.11 USD, while SkyWater Technology’s consensus target of 25 USD is below its current price of 32.03 USD, suggesting a possible downward adjustment.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Arm Holdings plc American Depositary Shares (ARM) and SkyWater Technology, Inc. (SKYT):
Rating Comparison
ARM Rating
- Rating: B, rated Very Favorable overall.
- Discounted Cash Flow Score: 3, Moderate valuation based on future cash flows.
- ROE Score: 3, Moderate efficiency in generating profit from equity.
- ROA Score: 4, Favorable asset utilization for earnings.
- Debt To Equity Score: 4, Favorable financial risk profile.
- Overall Score: 3, Moderate overall financial standing.
SKYT Rating
- Rating: B+, rated Very Favorable overall.
- Discounted Cash Flow Score: 1, Very Unfavorable valuation indication.
- ROE Score: 5, Very Favorable profit generation efficiency.
- ROA Score: 5, Very Favorable asset utilization for earnings.
- Debt To Equity Score: 1, Very Unfavorable financial risk profile.
- Overall Score: 3, Moderate overall financial standing.
Which one is the best rated?
Based strictly on the provided data, SKT has a higher rating (B+) with superior ROE and ROA scores, indicating stronger profitability and asset use. However, ARM shows better financial stability with a favorable debt-to-equity score. Both have the same moderate overall score.
Scores Comparison
Here is a comparison of the financial health scores for Arm Holdings plc and SkyWater Technology, Inc.:
Arm Holdings plc Scores
- Altman Z-Score: 32.43, indicating a safe zone from bankruptcy risk.
- Piotroski Score: 7, showing strong financial health.
SkyWater Technology, Inc. Scores
- Altman Z-Score: 2.20, indicating a moderate risk in the grey zone.
- Piotroski Score: 5, indicating average financial strength.
Which company has the best scores?
Arm Holdings plc has a significantly higher Altman Z-Score, placing it safely away from bankruptcy risk, and a stronger Piotroski Score compared to SkyWater Technology’s more moderate and average scores.
Grades Comparison
Here is a comparison of the latest available grades from reputable grading companies for both companies:
Arm Holdings plc American Depositary Shares Grades
The following table summarizes recent grades assigned to Arm Holdings plc by recognized grading firms:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B of A Securities | Downgrade | Neutral | 2026-01-13 |
| B of A Securities | Maintain | Buy | 2025-12-16 |
| Goldman Sachs | Downgrade | Sell | 2025-12-15 |
| Loop Capital | Maintain | Buy | 2025-11-12 |
| TD Cowen | Maintain | Buy | 2025-11-06 |
| Rosenblatt | Maintain | Buy | 2025-11-06 |
| Wells Fargo | Maintain | Overweight | 2025-11-06 |
| Mizuho | Maintain | Outperform | 2025-11-06 |
| Barclays | Maintain | Overweight | 2025-11-06 |
| UBS | Maintain | Buy | 2025-11-06 |
Overall, Arm Holdings shows a majority of buy and overweight ratings, though recent downgrades to neutral and sell indicate some caution among analysts.
SkyWater Technology, Inc. Grades
Below is a summary of recent grades assigned to SkyWater Technology, Inc. by established grading companies:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Needham | Maintain | Buy | 2025-11-06 |
| Piper Sandler | Maintain | Overweight | 2025-11-06 |
| TD Cowen | Maintain | Buy | 2025-11-06 |
| Needham | Maintain | Buy | 2025-08-07 |
| Needham | Maintain | Buy | 2025-05-08 |
| Needham | Maintain | Buy | 2025-02-27 |
| Needham | Maintain | Buy | 2024-11-11 |
| Piper Sandler | Maintain | Overweight | 2024-10-25 |
| Piper Sandler | Maintain | Overweight | 2024-08-08 |
| Needham | Maintain | Buy | 2024-05-09 |
SkyWater Technology has consistently received buy and overweight ratings without any downgrades, indicating stable analyst confidence.
Which company has the best grades?
SkyWater Technology maintains a steady record of buy and overweight grades without recent downgrades, whereas Arm Holdings has several buy ratings but also recent downgrades to neutral and sell. This suggests SkyWater’s grades are currently more favorable, potentially reflecting steadier analyst sentiment for investors.
Strengths and Weaknesses
Below is a comparison of key strengths and weaknesses for Arm Holdings plc (ARM) and SkyWater Technology, Inc. (SKYT) based on the most recent financial and operational data.
| Criterion | Arm Holdings plc American Depositary Shares (ARM) | SkyWater Technology, Inc. (SKYT) |
|---|---|---|
| Diversification | Moderate: Revenue mainly from licensing and royalties (approx. $4.0B in 2025) | Moderate: Multiple advanced technology and wafer service segments with $154M revenue in 2024 |
| Profitability | Strong net margin (19.77%), but ROIC (10.28%) below WACC (24.3%) indicating value destruction | Negative net margin (-1.98%) and ROE (-11.79%), ROIC (3.4%) below WACC (19.8%), also value destroying but improving ROIC trend |
| Innovation | High: Key player in semiconductor IP with strong licensing and royalty model | Moderate: Focus on advanced technology services and wafer manufacturing, improving asset turnover |
| Global presence | Extensive: Global semiconductor ecosystem participation | Limited: Primarily US-focused with niche technology services |
| Market Share | Significant in semiconductor IP licensing globally | Smaller niche player in semiconductor manufacturing services |
Key takeaways: ARM shows strong profitability in net margin but struggles with capital efficiency, leading to value destruction despite stable returns. SKYT faces profitability challenges but exhibits a rising ROIC trend and operational improvement, though it remains less diversified and less globally established. Both require cautious consideration regarding their economic moats and investment viability.
Risk Analysis
Below is a comparison of key risks for Arm Holdings plc (ARM) and SkyWater Technology, Inc. (SKYT) based on the most recent data:
| Metric | Arm Holdings plc (ARM) | SkyWater Technology, Inc. (SKYT) |
|---|---|---|
| Market Risk | High beta of 4.36 indicates significant volatility | High beta of 3.49 suggests considerable volatility |
| Debt level | Low debt-to-equity (0.05), very favorable | High debt-to-equity (1.33), unfavorable |
| Regulatory Risk | Moderate, with global operations including China and Taiwan | Moderate, serving aerospace and defense with regulatory scrutiny |
| Operational Risk | Moderate; strong IP portfolio but high P/E and P/B ratios indicate valuation concerns | High; negative margins and low liquidity ratios highlight operational challenges |
| Environmental Risk | Moderate, standard for semiconductor industry | Moderate, with some focus on specialized manufacturing processes |
| Geopolitical Risk | Elevated due to exposure in China and Taiwan regions | Moderate, primarily US-based but serving global sectors |
Arm faces significant market risk due to its high beta and geopolitical exposure in Asia, while maintaining a strong balance sheet. SkyWater shows elevated financial and operational risks, with high debt and negative profitability, which could impact its stability. The most impactful risks are ARM’s geopolitical tensions and SKYT’s financial distress signs.
Which Stock to Choose?
Arm Holdings plc (ARM) shows a strong income evolution with a 23.94% revenue growth in 2025 and favorable net margin at 19.77%. Financial ratios are mixed, with 42.86% favorable and 50% unfavorable, highlighting low debt and strong liquidity but high valuation multiples. Profitability is solid with an 11.58% ROE, while debt levels remain low and the overall rating is very favorable (B). However, ARM’s economic moat is unfavorable as ROIC is below WACC, indicating value destruction.
SkyWater Technology, Inc. (SKYT) exhibits positive income growth with 19.39% revenue increase and a favorable gross margin of 20.34%, but net margin remains negative at -1.98%. Most financial ratios are unfavorable (71.43%), reflecting higher debt and weaker liquidity, though asset turnover is favorable. Profitability is challenged with negative ROE and ROIC below WACC, though ROIC shows a growing trend. SKYT’s rating is very favorable (B+), supported by strong ROA and ROE scores despite valuation concerns.
Considering ratings, income statements, and financial ratios, ARM appears more stable with favorable income quality and low financial risk, suited for investors seeking established profitability. SKYT’s improving but volatile profitability and higher leverage might appeal to risk-tolerant investors pursuing growth potential. Thus, stock preference could depend on the investor’s risk tolerance and strategy focus.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Arm Holdings plc American Depositary Shares and SkyWater Technology, Inc. to enhance your investment decisions:
