In the dynamic world of semiconductors, two notable players are ON Semiconductor Corporation and Arm Holdings plc. Both companies operate within the same industry, focusing on innovative technologies that power everything from electric vehicles to consumer electronics. Their distinct approaches to market expansion and product development make them worthy of comparison. As we delve into their strategies and performances, I invite you to join me in determining which company holds the most promise for investors in today’s rapidly evolving landscape.
Table of contents
Company Overview
ON Semiconductor Corporation Overview
ON Semiconductor Corporation specializes in providing intelligent sensing and power solutions globally, playing a pivotal role in the electrification of the automotive sector. Their innovative technologies support the development of lighter, longer-range electric vehicles and advanced fast-charging systems. The company operates through three primary segments: Power Solutions Group, Advanced Solutions Group, and Intelligent Sensing Group, offering a diverse range of semiconductor products including analog, discrete, and integrated solutions. Founded in 1992 and headquartered in Phoenix, Arizona, ON Semiconductor is committed to driving sustainable energy initiatives across various industries.
Arm Holdings plc Overview
Arm Holdings plc is a leading architect and developer of central processing unit (CPU) products and related technologies. Their offerings include microprocessors, graphics processing units, and system intellectual property that facilitate the development of cutting-edge products across automotive, consumer technologies, and Internet of Things (IoT) markets. Established in 1990 and based in Cambridge, UK, Arm operates internationally and serves a wide array of semiconductor companies and original equipment manufacturers. The company’s focus on licensing and collaboration positions it as a key player in the technology landscape.
Key Similarities and Differences
Both ON Semiconductor and Arm Holdings operate within the semiconductor industry, yet their business models diverge significantly. ON focuses on manufacturing and supplying a broad range of semiconductor products, while Arm primarily licenses its CPU architecture and related technologies to other companies, fostering innovation through collaboration. This distinction shapes their market strategies and customer engagement approaches.
Income Statement Comparison
The following table presents a comparison of the most recent income statements for ON Semiconductor Corporation and Arm Holdings plc, highlighting key financial metrics for the fiscal year 2024 and 2025.
| Metric | ON Semiconductor (2024) | Arm Holdings (2025) |
|---|---|---|
| Revenue | 7.08B | 4.01B |
| EBITDA | 2.54B | 902M |
| EBIT | 1.90B | 720M |
| Net Income | 1.57B | 792M |
| EPS | 3.68 | 0.75 |
Interpretation of Income Statement
In analyzing the income statement data, ON Semiconductor shows a decrease in revenue from 8.25B in 2023 to 7.08B in 2024, indicating a trend of declining sales. Its net income also declined, reflecting pressures on profitability with a net income of 1.57B, down from 2.18B the prior year. In contrast, Arm Holdings experienced significant growth, with revenue rising from 3.23B in 2024 to 4.01B in 2025 and a notable increase in net income to 792M. This suggests that Arm is effectively expanding its market share, while ON may need to address operational efficiencies to stabilize its earnings.
Financial Ratios Comparison
The following table presents a comparative analysis of the financial ratios for ON Semiconductor Corporation (ON) and Arm Holdings plc (ARM). This data helps investors assess the relative financial health and performance of these companies as of their most recent fiscal year.
| Metric | ON | ARM |
|---|---|---|
| ROE | 17.88% | 11.58% |
| ROIC | 11.88% | 11.31% |
| P/E | 17.13 | 141.58 |
| P/B | 3.06 | 16.40 |
| Current Ratio | 5.06 | 5.20 |
| Quick Ratio | 3.38 | 5.20 |
| D/E | 0.38 | 0.05 |
| Debt-to-Assets | 0.24 | 0.04 |
| Interest Coverage | 28.37 | N/A |
| Asset Turnover | 0.50 | 0.45 |
| Fixed Asset Turnover | 1.61 | 5.61 |
| Payout ratio | 0% | 0% |
| Dividend yield | 0% | 0% |
Interpretation of Financial Ratios
The financial ratios indicate that ON Semiconductor shows robust profitability and efficient use of equity (ROE of 17.88%) compared to Arm’s 11.58%. However, Arm’s higher asset turnover suggests efficient utilization of fixed assets. Notably, Arm’s P/E ratio is significantly elevated at 141.58, indicating potential overvaluation or high growth expectations. Both companies maintain strong current and quick ratios, reflecting solid liquidity positions. Overall, while ON has stronger profitability, investors should be wary of Arm’s high valuation multiples.
Dividend and Shareholder Returns
ON Semiconductor Corporation (ON) does not pay dividends, reflecting a strategy focused on reinvesting profits for growth, especially during its robust expansion phase. This approach aligns with long-term shareholder value creation, although the absence of dividends may deter income-focused investors. Notably, ON engages in share buybacks, suggesting a commitment to returning capital to shareholders in a sustainable manner.
Conversely, Arm Holdings plc (ARM) also does not distribute dividends, prioritizing reinvestment into R&D and growth initiatives. This aligns with its high-growth trajectory, although it similarly engages in share buybacks to enhance shareholder value. Overall, both companies’ strategies may support sustainable long-term value creation, albeit with varying risk profiles for potential investors.
Strategic Positioning
In the competitive semiconductor market, ON Semiconductor (market cap: 19.1B) focuses on intelligent power solutions, capturing substantial market share in the automotive and industrial sectors. Conversely, Arm Holdings (market cap: 138.9B) dominates in CPU architecture and IP licensing, significantly influencing mobile and embedded systems. Both companies face intense competition and rapid technological disruption, with a pressing need for innovation to maintain their competitive edge.
Stock Comparison
In this section, I will provide an overview of the stock price movements and trading dynamics for ON Semiconductor Corporation (ON) and Arm Holdings plc (ARM) over the past year, highlighting significant trends and fluctuations in their stock prices.
Trend Analysis
ON Semiconductor Corporation (ON) Over the past year, ON’s stock has experienced a significant decline of -44.09%. This bearish trend indicates a downward trajectory, with acceleration observed in the decline. The stock reached a notable high of 83.53 and a low of 33.70. The volatility, as indicated by the standard deviation of 12.74, suggests considerable price fluctuations. Recent data shows a slight decrease of -4.91% from September 7, 2025, to November 23, 2025, with a standard deviation of 1.92, reinforcing the bearish sentiment in the current trend.
Arm Holdings plc (ARM) In contrast, ARM’s stock has demonstrated a robust increase of 75.08% over the past year, reflecting a bullish trend with acceleration. The stock’s price ranged from a low of 67.05 to a high of 181.19. The volatility is notable, with a standard deviation of 24.15. However, more recent data reveals a slight decline of -4.78% from September 7, 2025, to November 23, 2025, accompanied by a standard deviation of 12.37. Despite this recent downturn, the overall bullish trend remains intact.
Analyst Opinions
Recent analyst recommendations for ON Semiconductor Corporation (ON) indicate a “Buy” rating, backed by solid fundamentals such as strong return on assets and a favorable discounted cash flow score. Analysts highlight the company’s robust market position and growth potential. Conversely, Arm Holdings plc (ARM) has received a “Hold” rating, with concerns about its price-to-earnings ratio and overall score. Despite these challenges, ARM maintains a positive outlook due to its return on assets. Overall, the consensus leans towards a “Buy” for ON while ARM is viewed more cautiously.
Stock Grades
Reliable stock grade data has been found for ON Semiconductor Corporation and Arm Holdings plc. Here’s an overview of the latest ratings from notable grading companies.
ON Semiconductor Corporation Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Morgan Stanley | maintain | Equal Weight | 2025-11-04 |
| Rosenblatt | maintain | Neutral | 2025-11-04 |
| Truist Securities | maintain | Hold | 2025-11-04 |
| TD Cowen | maintain | Buy | 2025-11-04 |
| Baird | maintain | Neutral | 2025-11-04 |
| UBS | maintain | Neutral | 2025-10-27 |
| B of A Securities | maintain | Neutral | 2025-09-05 |
| Rosenblatt | maintain | Neutral | 2025-08-05 |
| UBS | maintain | Neutral | 2025-08-05 |
| Benchmark | maintain | Buy | 2025-08-05 |
Arm Holdings plc American Depositary Shares Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Loop Capital | maintain | Buy | 2025-11-12 |
| Needham | maintain | Hold | 2025-11-06 |
| Wells Fargo | maintain | Overweight | 2025-11-06 |
| Keybanc | maintain | Overweight | 2025-11-06 |
| Benchmark | maintain | Hold | 2025-11-06 |
| UBS | maintain | Buy | 2025-11-06 |
| Mizuho | maintain | Outperform | 2025-11-06 |
| Barclays | maintain | Overweight | 2025-11-06 |
| TD Cowen | maintain | Buy | 2025-11-06 |
| Rosenblatt | maintain | Buy | 2025-11-06 |
Overall, both companies show a consistent trend with several maintain ratings, indicating stability in their market positions. Investors may find ON’s mixed grades reflective of caution while Arm Holdings continues to receive positive attention from various analysts, particularly in the “Buy” and “Overweight” categories.
Target Prices
The current consensus target prices for ON Semiconductor Corporation and Arm Holdings plc reflect positive analyst expectations.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| ON Semiconductor Corporation | 64 | 51 | 58.33 |
| Arm Holdings plc | 210 | 190 | 200 |
Analysts expect ON Semiconductor to reach a consensus target price of $58.33, significantly above its current price of $46.7. Meanwhile, Arm Holdings has a strong consensus target of $200, considerably higher than its current price of $131.57, indicating potential growth opportunities.
Strengths and Weaknesses
The following table outlines the strengths and weaknesses of ON Semiconductor Corporation and Arm Holdings plc, key players in the semiconductor industry.
| Criterion | ON Semiconductor (ON) | Arm Holdings (ARM) |
|---|---|---|
| Diversification | Moderate | High |
| Profitability | Strong (26% net margin) | Moderate (20% net margin) |
| Innovation | High | Very High |
| Global presence | Strong | Very Strong |
| Market Share | Moderate | High |
| Debt level | Moderate (24% debt-to-assets) | Very Low (4% debt-to-assets) |
Key takeaways indicate that while both companies demonstrate strong innovation and market presence, ON Semiconductor shows higher profitability, whereas Arm excels in diversification and low debt levels.
Risk Analysis
The following table outlines key risks associated with ON Semiconductor Corporation and Arm Holdings plc, providing a comparative overview.
| Metric | ON Semiconductor Corporation | Arm Holdings plc |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | Moderate | Moderate |
| Operational Risk | Low | Moderate |
| Environmental Risk | Low | Low |
| Geopolitical Risk | Moderate | High |
In summary, ON Semiconductor faces moderate market and geopolitical risks, driven by its industry dynamics and regulatory landscape. Arm, on the other hand, experiences high market and geopolitical risks, particularly due to its significant exposure to global technology trends and regulatory scrutiny.
Which one to choose?
In comparing ON Semiconductor (ON) and Arm Holdings (ARM), ON presents stronger fundamentals, with a notably higher gross profit margin of 45.4% compared to ARM’s 94.9%. However, ARM shows a significantly higher price-to-earnings ratio at 141.6, indicating potential overvaluation. ON’s stock trend is bearish, reflecting a price decrease of 44.1%, while ARM’s price trend is bullish with a 75.1% increase in the same period. Analysts rate ON as a B with an overall score of 3, compared to ARM’s B- and score of 2.
Investors prioritizing growth may prefer ARM due to its bullish trend and higher margins, while those favoring stable returns might lean towards ON, considering its stronger profitability metrics. However, both companies face risks: ON deals with market dependency, while ARM faces competition in the tech industry.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of ON Semiconductor Corporation and Arm Holdings plc American Depositary Shares to enhance your investment decisions:
