In the fast-evolving semiconductor industry, Monolithic Power Systems, Inc. (MPWR) and Microchip Technology Incorporated (MCHP) stand out as key players driving innovation. Both companies serve overlapping markets, delivering critical components for power management and embedded control solutions across automotive, industrial, and consumer electronics sectors. This article will explore their strategies and performance to help you identify which company presents the most compelling investment opportunity in 2026.
Table of contents
Companies Overview
I will begin the comparison between Monolithic Power Systems and Microchip Technology by providing an overview of these two companies and their main differences.
Monolithic Power Systems Overview
Monolithic Power Systems, Inc. specializes in designing and marketing semiconductor-based power electronics solutions for diverse markets including computing, automotive, industrial, and consumer electronics. The company focuses on DC to DC integrated circuits and lighting control ICs used in various electronic systems. Headquartered in Kirkland, Washington, it operates globally with a market cap of approximately 48.4B USD.
Microchip Technology Overview
Microchip Technology Incorporated develops and manufactures embedded control solutions including microcontrollers, microprocessors, and analog products. It serves automotive, industrial, communications, and computing sectors with a broad product portfolio that also includes memory, FPGA products, and engineering services. Based in Chandler, Arizona, Microchip has a market cap near 40.2B USD and employs over 22K people.
Key similarities and differences
Both companies operate in the semiconductor industry, providing critical components for electronics and embedded control systems. Monolithic Power Systems emphasizes power management ICs, while Microchip offers a wider range of embedded controllers and memory products. Their global reach and technology focus align, but Microchip’s larger workforce and broader product scope differentiate it from Monolithic Power Systems’ specialized power electronics niche.
Income Statement Comparison
The table below compares the most recent full fiscal year income statement metrics for Monolithic Power Systems, Inc. and Microchip Technology Incorporated, providing a snapshot of their financial performance.
| Metric | Monolithic Power Systems, Inc. (MPWR) | Microchip Technology Incorporated (MCHP) |
|---|---|---|
| Market Cap | 48.4B | 40.2B |
| Revenue | 2.21B | 7.63B |
| EBITDA | 576M | 3.44B |
| EBIT | 539M | 2.56B |
| Net Income | 1.79B | 1.91B |
| EPS | 36.76 | 3.52 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
Monolithic Power Systems, Inc.
Monolithic Power Systems has shown strong revenue growth from 2020 to 2024, reaching $2.21B in 2024, with net income surging to $1.79B. Margins remain robust, with a gross margin above 55% and net margin exceeding 80%, reflecting efficient cost control. The 2024 performance showed a favorable 21.2% revenue increase and a remarkable 244.94% net margin growth, though operating expenses rose proportionally.
Microchip Technology Incorporated
Microchip Technology’s revenue peaked at $8.44B in 2023 but declined sharply by 42.35% to $4.40B in 2025, accompanied by a net loss of $2.7M. Gross margin remains stable at about 56%, but EBIT margin and net margin deteriorated, with the latter turning negative. The 2025 results reflect significant challenges, including an 88.65% EBIT decline and negative net margin growth, indicating operational and profitability pressures.
Which one has the stronger fundamentals?
Monolithic Power Systems exhibits stronger fundamentals, supported by consistent revenue and net income growth, high and improving margins, and favorable income statement metrics. In contrast, Microchip Technology faces declining revenues, negative net income, and weakening margins, with unfavorable growth trends across key income statement indicators, signaling fundamental weakness relative to Monolithic Power Systems.
Financial Ratios Comparison
The table below presents key financial ratios for Monolithic Power Systems, Inc. (MPWR) and Microchip Technology Incorporated (MCHP) based on their most recent fiscal year data, enabling a straightforward comparison.
| Ratios | Monolithic Power Systems, Inc. (MPWR) FY 2024 | Microchip Technology Incorporated (MCHP) FY 2025 |
|---|---|---|
| ROE | 56.8% | -0.007% |
| ROIC | 16.2% | -0.027% |
| P/E | 16.1 | -52021 |
| P/B | 9.14 | 3.67 |
| Current Ratio | 5.31 | 2.59 |
| Quick Ratio | 3.89 | 1.47 |
| D/E (Debt-to-Equity) | 0.0050 | 0.80 |
| Debt-to-Assets | 0.44% | 36.9% |
| Interest Coverage | 0 (no interest coverage reported) | 1.18 |
| Asset Turnover | 0.61 | 0.29 |
| Fixed Asset Turnover | 4.17 | 3.72 |
| Payout ratio | 13.5% | -1951 (negative, indicating net loss) |
| Dividend yield | 0.84% | 3.75% |
Interpretation of the Ratios
Monolithic Power Systems, Inc.
Monolithic Power Systems shows a generally favorable ratio profile with strong net margin at 80.95% and a robust return on equity of 56.8%, highlighting efficient profitability. However, concerns arise from an unfavorable current ratio of 5.31 and a high price-to-book ratio of 9.14. The company pays dividends with a modest yield of 0.84%, indicating cautious shareholder returns supported by solid free cash flow coverage.
Microchip Technology Incorporated
Microchip Technology’s ratios reflect challenges with negative net margin and return on equity, indicating profitability issues. While liquidity ratios such as current (2.59) and quick ratio (1.47) are favorable, the high debt level and weak interest coverage pose risks. The company maintains a relatively attractive dividend yield of 3.75%, despite the overall slightly unfavorable ratio outlook and negative earnings yield.
Which one has the best ratios?
Monolithic Power Systems exhibits a stronger ratio landscape with more favorable profitability and capital structure metrics compared to Microchip Technology, which faces profitability and leverage challenges. Monolithic’s disciplined dividend policy and cash flow coverage contrast with Microchip’s higher dividend yield but weaker financial health, leading to a more favorable overall ratios evaluation for Monolithic Power Systems.
Strategic Positioning
This section compares the strategic positioning of Monolithic Power Systems, Inc. (MPWR) and Microchip Technology Incorporated (MCHP), focusing on market position, key segments, and exposure to technological disruption:
Monolithic Power Systems, Inc. (MPWR)
- Strong market presence in semiconductor power electronics with moderate competitive pressure.
- Focused on DC to DC products and lighting control ICs for automotive, computing, and industrial sectors.
- Exposure driven by power electronics innovation and integration in portable and automotive devices.
Microchip Technology Incorporated (MCHP)
- Large semiconductor market player facing intense competition globally.
- Broad product portfolio including microcontrollers, microprocessors, analog, and memory products across diverse industries.
- Faces disruption risks from evolving embedded control solutions and advanced semiconductor technologies.
MPWR vs MCHP Positioning
MPWR has a more concentrated focus on power electronics and lighting control, enabling specialization but limiting diversification. MCHP operates a diversified product and technology portfolio across multiple sectors, potentially reducing segment risk but facing broader competitive challenges.
Which has the best competitive advantage?
MPWR exhibits a very favorable moat with growing ROIC above its cost of capital, indicating durable competitive advantage and value creation. In contrast, MCHP shows a very unfavorable moat with declining ROIC, suggesting value destruction and weaker competitive positioning.
Stock Comparison
The stock price movements over the past 12 months reveal a strong bullish trend for Monolithic Power Systems, Inc. (MPWR) with notable acceleration, while Microchip Technology Incorporated (MCHP) has experienced a bearish trend despite recent positive momentum.
Trend Analysis
Monolithic Power Systems, Inc. (MPWR) posted a 39.99% price increase over the past year, reflecting a bullish trend with accelerating gains and a wide price range from 477.39 to 1074.91. Its recent trend shows a neutral 0.45% rise with lower volatility.
Microchip Technology Incorporated (MCHP) recorded a -10.13% price decline over the same period, indicating a bearish trend with accelerating downward pressure. However, recent weeks show a 19.27% rebound with moderate volatility and positive slope.
Comparing both stocks, MPWR has delivered the highest market performance over the 12-month period, outperforming MCHP’s overall decline despite the latter’s recent recovery.
Target Prices
The target price consensus from analysts indicates promising upside potential for both companies.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Monolithic Power Systems, Inc. | 1375 | 1025 | 1187.5 |
| Microchip Technology Incorporated | 85 | 60 | 77.44 |
Analysts expect Monolithic Power Systems to trade well above its current price of $1009.54, suggesting strong growth prospects. Microchip Technology’s target consensus of $77.44 is moderately above its current price of $74.45, indicating cautious optimism.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Monolithic Power Systems, Inc. (MPWR) and Microchip Technology Incorporated (MCHP):
Rating Comparison
MPWR Rating
- Rating: A-, classified as Very Favorable overall rating.
- Discounted Cash Flow Score: 3, indicating a moderate valuation based on cash flow.
- ROE Score: 5, reflecting very favorable efficiency in generating profit from equity.
- ROA Score: 5, indicating very favorable asset utilization to generate earnings.
- Debt To Equity Score: 5, signaling very favorable financial risk with low leverage.
- Overall Score: 4, representing a favorable overall financial standing.
MCHP Rating
- Rating: C-, classified as Very Favorable overall rating.
- Discounted Cash Flow Score: 3, indicating a moderate valuation based on cash flow.
- ROE Score: 1, reflecting very unfavorable efficiency in generating profit from equity.
- ROA Score: 1, indicating very unfavorable asset utilization to generate earnings.
- Debt To Equity Score: 1, signaling very unfavorable financial risk with high leverage.
- Overall Score: 1, representing a very unfavorable overall financial standing.
Which one is the best rated?
Based strictly on the provided data, MPWR is clearly better rated than MCHP. MPWR holds higher scores across ROE, ROA, debt-to-equity, and overall rating, while MCHP lags significantly in these critical financial metrics.
Scores Comparison
The comparison of scores for Monolithic Power Systems, Inc. and Microchip Technology Incorporated is as follows:
MPWR Scores
- Altman Z-Score: 46.83, indicating a safe zone with very low bankruptcy risk.
- Piotroski Score: 4, classified as average financial strength.
MCHP Scores
- Altman Z-Score: 4.00, also in the safe zone, showing low bankruptcy risk.
- Piotroski Score: 3, considered very weak financial strength.
Which company has the best scores?
MPWR has a significantly higher Altman Z-Score indicating stronger financial stability, while its Piotroski Score is slightly better but still average. MCHP shows a safe zone Altman Z-Score but a weaker Piotroski Score.
Grades Comparison
Here is a detailed comparison of the recent grades assigned to Monolithic Power Systems, Inc. and Microchip Technology Incorporated:
Monolithic Power Systems, Inc. Grades
This table summarizes the latest grades from reputable grading companies for Monolithic Power Systems, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Truist Securities | Maintain | Buy | 2025-12-19 |
| Citigroup | Maintain | Buy | 2025-11-03 |
| TD Cowen | Maintain | Buy | 2025-10-31 |
| Keybanc | Maintain | Overweight | 2025-10-31 |
| Rosenblatt | Maintain | Neutral | 2025-10-31 |
| Keybanc | Maintain | Overweight | 2025-10-23 |
| Wells Fargo | Maintain | Equal Weight | 2025-10-20 |
| Stifel | Maintain | Buy | 2025-10-17 |
| Wolfe Research | Upgrade | Outperform | 2025-10-14 |
| Citigroup | Maintain | Buy | 2025-10-03 |
The overall trend for Monolithic Power Systems shows consistent buy and overweight ratings, with a recent upgrade to outperform, indicating stable positive sentiment.
Microchip Technology Incorporated Grades
This table presents the recent grades from recognized grading companies for Microchip Technology Incorporated:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Piper Sandler | Maintain | Overweight | 2026-01-15 |
| B. Riley Securities | Maintain | Buy | 2026-01-12 |
| Mizuho | Maintain | Outperform | 2026-01-09 |
| Wells Fargo | Maintain | Equal Weight | 2026-01-07 |
| JP Morgan | Maintain | Overweight | 2026-01-06 |
| Morgan Stanley | Maintain | Equal Weight | 2026-01-06 |
| Stifel | Maintain | Buy | 2026-01-06 |
| Rosenblatt | Maintain | Buy | 2026-01-06 |
| Needham | Maintain | Buy | 2026-01-06 |
| Cantor Fitzgerald | Upgrade | Overweight | 2025-12-16 |
Microchip Technology’s grades consistently reflect buy and overweight ratings, with several equal weight assessments; an upgrade to overweight was recently recorded, showing generally positive analyst views.
Which company has the best grades?
Both companies exhibit predominantly buy and overweight ratings from leading grading firms, but Microchip Technology Incorporated has a higher number of buy and outperform grades, including multiple recent upgrades. This stronger consensus may influence investor perception of relative strength and confidence.
Strengths and Weaknesses
Below is a comparative table highlighting the key strengths and weaknesses of Monolithic Power Systems, Inc. (MPWR) and Microchip Technology Incorporated (MCHP) based on recent financial and strategic data.
| Criterion | Monolithic Power Systems, Inc. (MPWR) | Microchip Technology Incorporated (MCHP) |
|---|---|---|
| Diversification | Moderate diversification: mainly DC to DC and lighting control products, steady revenue growth in core segments | Broad semiconductor product range with technology licensing, but high dependency on semiconductor products |
| Profitability | Very high net margin (80.95%) and ROIC (16.22%), creating value with growing profitability | Negative net margin and ROIC, value destroying with declining profitability |
| Innovation | Strong innovation reflected in durable competitive advantage and very favorable moat rating | Innovation impact limited, reflected by very unfavorable moat and declining ROIC trend |
| Global presence | Global operations with solid financial health and high interest coverage | Global presence but higher debt levels and weaker interest coverage ratio |
| Market Share | Smaller revenue base (~1.82B USD in 2023) but efficiently leveraged | Larger revenue base (~4.27B USD in 2025) but facing profitability challenges |
Key takeaways: MPWR demonstrates a durable competitive advantage with strong profitability and efficient capital use, making it a favorable investment. In contrast, MCHP faces profitability and value creation challenges despite a larger revenue base, indicating caution for investors.
Risk Analysis
Below is a comparison table of key risks for Monolithic Power Systems, Inc. (MPWR) and Microchip Technology Incorporated (MCHP) based on the most recent data from 2025-2026.
| Metric | Monolithic Power Systems, Inc. (MPWR) | Microchip Technology Incorporated (MCHP) |
|---|---|---|
| Market Risk | Moderate (Beta 1.46) – exposed to semiconductor cyclical demand | Moderate (Beta 1.45) – similar industry exposure |
| Debt level | Very low (D/E 0.01) – minimal financial risk | High (D/E 0.8) – increased leverage risk |
| Regulatory Risk | Moderate – global semiconductor regulations, especially in US and Asia | Moderate – automotive and industrial product regulations impact |
| Operational Risk | Low – focused product portfolio with strong margins | Moderate – broader product range, margin pressure |
| Environmental Risk | Low – limited direct environmental impact, but supply chain exposure | Low to moderate – manufacturing footprint and energy use |
| Geopolitical Risk | Moderate – reliance on Asian markets, potential supply chain disruptions | Moderate to high – significant exposure to Asia, trade tensions |
Synthesis: MPWR shows very low debt and strong financial stability, reducing bankruptcy risk, but remains exposed to semiconductor market cycles and geopolitical tensions in Asia. MCHP carries higher debt and weaker profitability, raising financial risk, with operational complexity adding to vulnerability. Geopolitical and market risks are significant for both due to global supply chains and sector volatility.
Which Stock to Choose?
Monolithic Power Systems, Inc. (MPWR) shows strong income growth with a 21.2% revenue increase in 2024 and a very favorable global income statement evaluation. Its financial ratios are largely positive, including a 56.8% ROE and very low debt levels, supported by a very favorable rating of A-. MPWR maintains a very favorable moat with ROIC exceeding WACC by 5.58% and a growing ROIC trend, indicating durable competitive advantage.
Microchip Technology Incorporated (MCHP) has experienced declining income, with a -42.35% revenue drop in 2025 and an unfavorable global income statement assessment. Its financial ratios reveal weaknesses, including negative net margin and ROE, moderate debt, and a slightly unfavorable overall ratios evaluation. The company’s rating stands at C-, reflecting very unfavorable overall scores, and its moat evaluation is very unfavorable due to declining profitability and ROIC below WACC.
For investors seeking growth and financial stability, MPWR’s strong income evolution, favorable financial ratios, and very favorable rating might signal a more resilient investment profile. Conversely, MCHP’s current challenges and weaker financial indicators could be more suited to those with a higher risk tolerance or focused on potential turnaround scenarios.
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 Monolithic Power Systems, Inc. and Microchip Technology Incorporated to enhance your investment decisions:
