Microchip Technology Incorporated (MCHP) and Skyworks Solutions, Inc. (SWKS) are two prominent players in the semiconductor industry, each driving innovation in embedded control solutions and wireless connectivity components. Both companies serve overlapping markets such as automotive, industrial, and communications, making their strategies and growth potential worthy of comparison. In this article, I will analyze their strengths and risks to help you decide which company offers the most compelling investment opportunity today.
Table of contents
Companies Overview
I will begin the comparison between Microchip Technology Incorporated and Skyworks Solutions, Inc. by providing an overview of these two companies and their main differences.
Microchip Technology Incorporated Overview
Microchip Technology Incorporated develops, manufactures, and sells embedded control solutions worldwide, focusing on microcontrollers, microprocessors, and analog products. The company serves diverse markets including automotive, industrial, communications, and security. Headquartered in Chandler, Arizona, Microchip is a significant player in the semiconductor industry with a market cap of approximately 40B USD and employs over 22,000 people.
Skyworks Solutions, Inc. Overview
Skyworks Solutions, Inc. designs and markets semiconductor products globally, specializing in analog and mixed-signal semiconductors used in aerospace, automotive, broadband, and mobile devices. Based in Irvine, California, Skyworks operates across multiple regions and industries, serving markets such as smartphones and medical devices. The company has a market cap near 8.8B USD and employs about 10,100 full-time staff.
Key similarities and differences
Both Microchip and Skyworks operate in the semiconductor sector, supplying components for a broad range of industries including automotive and communications. Microchip focuses more on embedded microcontrollers and related analog products, while Skyworks emphasizes analog system-on-chip and front-end modules for wireless applications. Microchip has a larger workforce and market cap, reflecting a broader product portfolio and scale compared to Skyworks’ specialized offerings.
Income Statement Comparison
This table presents a side-by-side comparison of key income statement metrics for Microchip Technology Incorporated and Skyworks Solutions, Inc. for their most recent fiscal year.
| Metric | Microchip Technology Incorporated | Skyworks Solutions, Inc. |
|---|---|---|
| Market Cap | 40.2B | 8.76B |
| Revenue | 4.40B | 4.09B |
| EBITDA | 1.04B | 1.02B |
| EBIT | 290M | 554M |
| Net Income | -0.5M | 477M |
| EPS | -0.005 | 3.09 |
| Fiscal Year | 2025 | 2025 |
Income Statement Interpretations
Microchip Technology Incorporated
Microchip Technology’s revenue and net income have declined significantly from 2021 to 2025, with revenue dropping by 19% overall and net income turning negative in the latest fiscal year. Gross margin remains favorable at 56.07%, but net margin deteriorated to -0.01%, reflecting a sharp decline in profitability. The 2025 fiscal year saw a steep revenue decrease of 42.35% and an 88.65% drop in EBIT, signaling a challenging performance.
Skyworks Solutions, Inc.
Skyworks Solutions experienced a downward trend in revenue and net income over the 2021-2025 period, with revenue decreasing by 20% and net income by 68%. Despite these declines, the company maintains favorable gross (41.16%), EBIT (13.55%), and net margins (11.67%). The latest fiscal year showed a modest 2.18% revenue drop and a 16.98% EBIT decline, indicating some resilience compared to peers.
Which one has the stronger fundamentals?
Both companies face unfavorable income growth trends and margin contractions, but Skyworks sustains higher and favorable EBIT and net margins with less severe revenue declines in the latest year. Microchip’s recent negative net income and drastic EBIT fall contrast with Skyworks’ more stable profitability metrics. Overall, Skyworks demonstrates comparatively stronger income statement fundamentals over the period analyzed.
Financial Ratios Comparison
The table below presents the key financial ratios for Microchip Technology Incorporated (MCHP) and Skyworks Solutions, Inc. (SWKS) based on their most recent fiscal year data, enabling a side-by-side comparison.
| Ratios | Microchip Technology Incorporated (MCHP) | Skyworks Solutions, Inc. (SWKS) |
|---|---|---|
| ROE | -0.0071% | 8.29% |
| ROIC | -0.027% | 6.35% |
| P/E | -52,021 (negative earnings) | 24.95 |
| P/B | 3.67 | 2.07 |
| Current Ratio | 2.59 | 2.33 |
| Quick Ratio | 1.47 | 1.76 |
| D/E | 0.80 | 0.21 |
| Debt-to-Assets | 36.9% | 15.2% |
| Interest Coverage | 1.18 | 18.45 |
| Asset Turnover | 0.29 | 0.52 |
| Fixed Asset Turnover | 3.72 | 2.95 |
| Payout ratio | -1951.4% (negative earnings) | 90.7% |
| Dividend yield | 3.75% | 3.63% |
Interpretation of the Ratios
Microchip Technology Incorporated
Microchip Technology shows a mixed ratio profile with a slightly unfavorable overall evaluation. Key concerns include negative net margin, return on equity, and return on invested capital, indicating profitability struggles. However, liquidity ratios like current and quick ratios are favorable, suggesting good short-term financial health. The company pays dividends with a 3.75% yield, supported by a moderate payout ratio but potential risks remain due to weak earnings coverage.
Skyworks Solutions, Inc.
Skyworks Solutions presents a generally favorable ratio set with strong net margin and liquidity ratios. Despite an unfavorable return on equity, other indicators like low debt to equity and high interest coverage are positive. The dividend yield is 3.63%, sustained by stable payout metrics and supported by free cash flow, reflecting solid shareholder returns and manageable financial risk.
Which one has the best ratios?
Skyworks Solutions holds the advantage with a higher proportion of favorable ratios and stronger profitability and solvency measures. Microchip Technology’s mix of unfavorable profitability ratios and neutral debt metrics weighs on its score, despite decent liquidity and dividend yield. Overall, Skyworks’s ratios appear more balanced and favorable for investors.
Strategic Positioning
This section compares the strategic positioning of Microchip Technology Incorporated and Skyworks Solutions, Inc. including Market position, Key segments, and disruption:
Microchip Technology Incorporated
- Large market cap ($40B) with NASDAQ listing faces semiconductor industry competition.
- Focused on embedded control solutions and a broad semiconductor product portfolio including microcontrollers, analog, and memory products.
- Exposure to technological disruption through embedded flash, FPGA, and mixed-signal devices in diverse applications.
Skyworks Solutions, Inc.
- Smaller market cap ($8.7B) on NASDAQ, competes in semiconductor sector with global presence.
- Designs and markets proprietary semiconductor products including amplifiers, front-end modules, and analog system on chip products.
- Faces disruption risks via proprietary semiconductor IP and products serving diverse markets like automotive and wireless.
Microchip Technology Incorporated vs Skyworks Solutions, Inc. Positioning
Microchip exhibits a diversified product portfolio spanning multiple semiconductor segments, while Skyworks concentrates on proprietary analog and front-end modules. Microchip’s broader scope may offer resilience, whereas Skyworks’ focus targets specific markets with specialized products.
Which has the best competitive advantage?
Both companies show very unfavorable MOAT evaluations with declining ROIC below WACC, indicating value destruction and decreasing profitability, thus neither currently demonstrates a sustainable competitive advantage.
Stock Comparison
The stock price chart highlights contrasting trading dynamics over the past year, with Microchip Technology Incorporated showing a partial recovery after a bearish trend, while Skyworks Solutions, Inc. experienced a deeper decline and decelerating negative momentum.
Trend Analysis
Microchip Technology Incorporated recorded a bearish trend with a -10.13% price change over the past 12 months, showing acceleration in the downward movement despite a recent 19.27% rebound from November 2025 to January 2026.
Skyworks Solutions, Inc. faced a more severe bearish trend with a -43.71% decline over the same period, accompanied by deceleration and a further -24.78% drop in the recent two and a half months.
Comparing both, Microchip Technology delivered the stronger market performance with a smaller overall loss and recent positive momentum, while Skyworks Solutions sustained a larger price decrease and ongoing downward pressure.
Target Prices
The current analyst consensus on target prices indicates a generally positive outlook for both Microchip Technology Incorporated and Skyworks Solutions, Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Microchip Technology Incorporated | 85 | 60 | 77.44 |
| Skyworks Solutions, Inc. | 140 | 60 | 85.11 |
Analysts expect Microchip Technology’s price to rise above the current 74.45 USD, while Skyworks Solutions shows a higher upside potential from its current 58.46 USD, reflecting bullish sentiment in both cases.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Microchip Technology Incorporated (MCHP) and Skyworks Solutions, Inc. (SWKS):
Rating Comparison
MCHP Rating
- Rating: C-, classified as Very Favorable overall.
- Discounted Cash Flow Score: 3, indicating a Moderate valuation based on future cash flows.
- ROE Score: 1, considered Very Unfavorable, showing low efficiency in generating profit from equity.
- ROA Score: 1, Very Unfavorable, indicating poor asset utilization to generate earnings.
- Debt to Equity Score: 1, Very Unfavorable, reflecting higher financial risk due to debt levels.
- Overall Score: 1, Very Unfavorable, summarizing weaker financial standing.
SWKS Rating
- Rating: B+, classified as Very Favorable overall.
- Discounted Cash Flow Score: 4, indicating a Favorable valuation based on future cash flows.
- ROE Score: 3, considered Moderate, showing better efficiency in profit generation from equity.
- ROA Score: 4, Favorable, demonstrating efficient use of assets to generate earnings.
- Debt to Equity Score: 3, Moderate, suggesting a more balanced financial risk profile.
- Overall Score: 3, Moderate, reflecting a stronger overall financial position.
Which one is the best rated?
Based solely on the provided data, SWKS holds a higher rating (B+) and better scores across discounted cash flow, ROE, ROA, debt-to-equity, and overall financial standing compared to MCHP’s lower ratings and mostly unfavorable scores.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for Microchip Technology Incorporated (MCHP) and Skyworks Solutions, Inc. (SWKS):
MCHP Scores
- Altman Z-Score: 3.999, indicating a safe zone for bankruptcy risk.
- Piotroski Score: 3, classified as very weak financial strength.
SWKS Scores
- Altman Z-Score: 4.443, indicating a safe zone for bankruptcy risk.
- Piotroski Score: 7, indicating strong financial strength.
Which company has the best scores?
Based strictly on the provided data, SWKS has higher scores in both Altman Z-Score and Piotroski Score, suggesting stronger financial stability and health compared to MCHP.
Grades Comparison
Here is the comparison of recent grades and ratings from reputable grading companies for both companies:
Microchip Technology Incorporated Grades
The following table shows the recent grades assigned by well-known 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 |
The overall trend shows predominantly buy and overweight ratings, indicating positive analyst sentiment with some holding positions.
Skyworks Solutions, Inc. Grades
The table below presents recent grades from established grading companies for Skyworks Solutions, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Mizuho | Upgrade | Neutral | 2025-11-11 |
| JP Morgan | Maintain | Neutral | 2025-11-05 |
| UBS | Maintain | Neutral | 2025-11-05 |
| Citigroup | Upgrade | Neutral | 2025-10-29 |
| Benchmark | Maintain | Hold | 2025-10-29 |
| Piper Sandler | Upgrade | Overweight | 2025-10-29 |
| Barclays | Upgrade | Equal Weight | 2025-10-29 |
| Keybanc | Upgrade | Overweight | 2025-10-29 |
| UBS | Maintain | Neutral | 2025-10-29 |
| Citigroup | Maintain | Sell | 2025-08-06 |
Skyworks has a more mixed grade profile with several neutral and hold ratings along with a few upgrades to overweight; there is some divergence among analysts.
Which company has the best grades?
Microchip Technology Incorporated displays a stronger consensus with multiple buy and overweight ratings, reflecting more bullish analyst sentiment compared to Skyworks Solutions, which has a higher proportion of neutral and hold grades. This difference may influence investor perception of growth potential and risk for each company.
Strengths and Weaknesses
Below is a comparative overview of key strengths and weaknesses for Microchip Technology Incorporated (MCHP) and Skyworks Solutions, Inc. (SWKS), based on the most recent financial and strategic data available.
| Criterion | Microchip Technology (MCHP) | Skyworks Solutions (SWKS) |
|---|---|---|
| Diversification | Moderate diversification: mainly semiconductor products with a small technology licensing segment | Focused on semiconductor solutions with strong presence in RF and analog chips |
| Profitability | Negative net margin and ROIC; company shedding value, declining profitability | Positive net margin (11.67%), moderate ROIC (6.35%), slightly favorable profitability |
| Innovation | Limited recent innovation impact; declining ROIC suggests challenges in sustaining competitive advantage | Moderate innovation with stable ROIC, supported by favorable interest coverage and operational efficiency |
| Global presence | Significant global operations but profitability issues limit competitive strength | Strong global footprint with prudent financial management and solid liquidity ratios |
| Market Share | Large semiconductor segment revenue but declining returns signal potential market pressure | Steady market share in RF components with favorable financial ratios and dividend yield |
Key takeaways: Skyworks Solutions demonstrates stronger financial health and profitability with favorable liquidity and dividend yield, indicating better value creation. Microchip Technology faces profitability challenges with declining returns, which warrants cautious risk management for investors.
Risk Analysis
Below is a comparison table summarizing key risks for Microchip Technology Incorporated (MCHP) and Skyworks Solutions, Inc. (SWKS) based on the most recent data from 2025.
| Metric | Microchip Technology Incorporated (MCHP) | Skyworks Solutions, Inc. (SWKS) |
|---|---|---|
| Market Risk | High beta (1.445) indicates elevated volatility relative to the market | Moderate beta (1.297) suggests somewhat lower volatility |
| Debt Level | Moderate debt-to-assets at 36.85%, interest coverage low at 1.15x (unfavorable) | Low debt-to-assets at 15.2%, strong interest coverage at 20.44x (favorable) |
| Regulatory Risk | Exposure to global semiconductor regulations, with possible impacts on supply chains | Similar exposure but with diversified international operations |
| Operational Risk | Lower asset turnover (0.29) and weak ROIC (-3%) reflect operational inefficiencies | Better asset turnover (0.52) and neutral ROIC (6.35%) indicate more efficient operations |
| Environmental Risk | Industry pressures on sustainable manufacturing and energy use | Same industry pressures, but fewer employees and streamlined operations may reduce risk |
| Geopolitical Risk | Significant exposure to Asia and global supply chains | Global exposure including Asia-Pacific, with moderate geopolitical sensitivity |
In synthesis, Microchip Technology faces higher market volatility and financial risk due to its significant debt and weak profitability metrics, including negative net margin and return on equity. Its interest coverage ratio signals vulnerability to rising interest costs. Skyworks Solutions, with a stronger balance sheet, better profitability, and higher financial stability scores, presents lower operational and financial risks. Market and geopolitical risks remain for both, given their semiconductor industry exposure, but Microchip’s financial fragility makes its risks more impactful. Investors should weigh these factors carefully, prioritizing risk management.
Which Stock to Choose?
Microchip Technology Incorporated (MCHP) shows a declining income trend with a -42% revenue drop in one year and unfavorable net margin and profitability ratios. Its debt levels are moderate, but overall financial ratios and income statement evaluations are slightly unfavorable, despite a very favorable rating.
Skyworks Solutions, Inc. (SWKS) also faces income declines but less severe (-2.18% revenue growth one year). It presents mostly favorable financial ratios, including strong liquidity and low debt, and a slightly favorable global ratios opinion. Its rating is very favorable, reflecting better financial health than MCHP.
Investors seeking growth might see potential risks in MCHP’s deteriorating profitability and value destruction signals, while those favoring financial stability and quality metrics could find SWKS more appealing, given its stronger rating and more favorable financial profile. Both companies display value destruction in MOAT analysis, suggesting caution.
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 Microchip Technology Incorporated and Skyworks Solutions, Inc. to enhance your investment decisions:
