In today’s rapidly evolving semiconductor industry, two prominent players, Texas Instruments Incorporated (TXN) and Microchip Technology Incorporated (MCHP), are vying for investor attention. Both companies share a focus on innovation and serve overlapping markets, yet they differentiate themselves through unique product offerings and strategic approaches. As I delve into their financial performance, growth prospects, and risk profiles, I invite you to join me in determining which of these companies presents the most intriguing investment opportunity.
Table of contents
Company Overview
Texas Instruments Incorporated Overview
Texas Instruments (TXN) is a leading designer and manufacturer of semiconductors, primarily focusing on analog and embedded processing solutions. Established in 1930, the company has carved a significant niche in the semiconductor industry, offering a broad range of products that cater to diverse markets such as automotive, industrial, and personal electronics. With a market capitalization of approximately $147B and a commitment to innovation, Texas Instruments strives to provide efficient power management solutions and high-performance processing capabilities. The company’s extensive portfolio includes microcontrollers, digital signal processors, and signal chain products, which are pivotal in enabling advanced technological applications. Headquartered in Dallas, Texas, Texas Instruments continues to uphold its mission of empowering electronics designers and manufacturers worldwide.
Microchip Technology Incorporated Overview
Microchip Technology (MCHP) specializes in developing smart, connected, and secure embedded control solutions. Founded in 1989, the company has expanded its offerings to include a wide array of microcontrollers, microprocessors, and development tools for various applications, ranging from automotive to industrial sectors. With a market capitalization of roughly $28B, Microchip focuses on delivering high-quality products that ensure reliability and performance. The company also provides licensing for its proprietary technologies and offers engineering services, positioning itself as a versatile player in the semiconductor landscape. Based in Chandler, Arizona, Microchip Technology remains dedicated to advancing embedded solutions globally.
Key Similarities and Differences
Both Texas Instruments and Microchip Technology operate within the semiconductor industry, focusing on analog and embedded processing solutions. While Texas Instruments emphasizes power management and signal processing, Microchip Technology is more concentrated on microcontroller and microprocessor development. This distinction reflects their differing strategies in addressing market needs and customer applications.
Income Statement Comparison
The following table compares the income statements of Texas Instruments Incorporated (TXN) and Microchip Technology Incorporated (MCHP) for their most recent fiscal years, showcasing key financial metrics.
| Metric | TXN | MCHP |
|---|---|---|
| Revenue | 15.64B | 4.40B |
| EBITDA | 7.54B | 1.04B |
| EBIT | 5.96B | 0.29B |
| Net Income | 4.80B | -0.0005M |
| EPS | 5.24 | -0.005 |
Interpretation of Income Statement
In the most recent fiscal year, Texas Instruments experienced a decline in revenue to 15.64B, down from 17.52B the previous year, while net income also fell to 4.80B from 6.51B. This downward trend reflects tightening margins due to increased operating expenses. Conversely, Microchip Technology reported a revenue drop from 8.44B to 4.40B, resulting in a net loss in 2025. The significant decline in MCHP’s revenues and profitability indicates challenges in maintaining operational efficiency and market demand. This analysis suggests that TXN, despite its decline, maintains stronger financial health compared to MCHP, which is currently facing significant headwinds.
Financial Ratios Comparison
The following table compares key financial metrics between Texas Instruments Incorporated (TXN) and Microchip Technology Incorporated (MCHP) based on the most recent data available.
| Metric | TXN | MCHP |
|---|---|---|
| ROE | 28.39% | -0.0071% |
| ROIC | 14.75% | -0.0267% |
| P/E | 35.63 | -52021.39 |
| P/B | 10.12 | 3.67 |
| Current Ratio | 4.12 | 2.59 |
| Quick Ratio | 2.88 | 1.47 |
| D/E | 0.80 | 0.80 |
| Debt-to-Assets | 38.29% | 36.85% |
| Interest Coverage | 10.76 | 1.18 |
| Asset Turnover | 0.44 | 0.29 |
| Fixed Asset Turnover | 1.38 | 3.72 |
| Payout Ratio | 99.92% | -1951.4% |
| Dividend Yield | 2.80% | 3.75% |
Interpretation of Financial Ratios
Texas Instruments shows strong financial health with high ROE and ROIC, indicating effective management of equity and investment. However, MCHP presents concerning figures, particularly a negative ROE and P/E ratio, reflecting potential operational issues. The high payout ratio for TXN suggests a commitment to returning value to shareholders, while MCHP’s negative figures raise red flags about its profitability and cash management. Investors should approach MCHP with caution.
Dividend and Shareholder Returns
Texas Instruments (TXN) maintains a solid dividend strategy with a payout ratio of approximately 70% and an annual dividend yield around 2.9%. The company has consistently increased its dividend per share, supported by strong free cash flow, though the high payout ratio poses risks if earnings decline. In contrast, Microchip Technology (MCHP) does not currently pay a dividend, opting instead to reinvest profits for growth. It has initiated share buybacks as a means to enhance shareholder value. Both strategies reflect differing approaches to long-term value creation, with TXN’s dividends providing immediate returns while MCHP focuses on growth potential.
Strategic Positioning
Texas Instruments (TXN) holds a significant market share in the semiconductor industry, particularly in analog and embedded processing segments. Its strong product lineup and established reputation allow it to withstand competitive pressure from companies like Microchip Technology (MCHP), which focuses on embedded control solutions. Both companies face technological disruption in the rapidly evolving semiconductor landscape, yet TXN’s diversified offerings and robust market capitalization of $147B give it an edge in navigating these challenges effectively.
Stock Comparison
Over the past year, the stock performance of Texas Instruments Incorporated (TXN) and Microchip Technology Incorporated (MCHP) has exhibited significant price fluctuations and trading dynamics, reflective of broader market conditions.
Trend Analysis
Texas Instruments (TXN) has seen a percentage change of -2.02% over the past year, indicating a bearish trend. The stock has experienced notable highs at 221.25 and lows at 147.6, with a standard deviation of 16.96, suggesting a moderate level of volatility. Recently, from September 14, 2025, to November 30, 2025, the stock further declined by -11.41%, with a standard deviation of 9.42, emphasizing a deceleration in the current downward trend.
Microchip Technology (MCHP), on the other hand, has experienced a more pronounced bearish trend, with a percentage change of -38.29% over the last year. The stock’s highest price was recorded at 98.23, while the lowest was 36.22, with a standard deviation of 14.89, indicating a notable level of volatility. In the recent trend from September 14, 2025, to November 30, 2025, MCHP’s price fell by -19.89%, with a standard deviation of 5.46, which also reflects a deceleration in the downtrend.
Both companies exhibit bearish trends, with TXN and MCHP showing deceleration in their respective price declines.
Analyst Opinions
Recent analyst evaluations reflect a mixed sentiment for Texas Instruments (TXN) and Microchip Technology (MCHP). TXN has received a ‘B’ rating, with analysts highlighting strong return on equity and assets, suggesting it is a buy. In contrast, MCHP holds a ‘C-‘ rating, indicating concerns over its profitability metrics, which leads analysts to recommend a hold or sell position. The consensus for TXN is a buy, while MCHP leans toward sell for the current year.
Stock Grades
In this section, I will present the latest stock grades from reliable grading companies for Texas Instruments Incorporated (TXN) and Microchip Technology Incorporated (MCHP).
Texas Instruments Incorporated Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Susquehanna | maintain | Positive | 2025-10-22 |
| Rosenblatt | maintain | Buy | 2025-10-22 |
| Truist Securities | maintain | Hold | 2025-10-22 |
| Wells Fargo | maintain | Equal Weight | 2025-10-22 |
| Goldman Sachs | maintain | Buy | 2025-10-22 |
| JP Morgan | maintain | Overweight | 2025-10-22 |
| Cantor Fitzgerald | maintain | Neutral | 2025-10-22 |
| Stifel | maintain | Hold | 2025-10-22 |
| TD Cowen | maintain | Buy | 2025-10-22 |
| Mizuho | downgrade | Underperform | 2025-10-20 |
Microchip Technology Incorporated Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Susquehanna | maintain | Positive | 2025-11-07 |
| Truist Securities | maintain | Hold | 2025-11-07 |
| Citigroup | maintain | Buy | 2025-11-07 |
| Needham | maintain | Buy | 2025-11-07 |
| Stifel | maintain | Buy | 2025-11-07 |
| Cantor Fitzgerald | maintain | Neutral | 2025-11-07 |
| Wells Fargo | maintain | Equal Weight | 2025-11-07 |
| Morgan Stanley | maintain | Equal Weight | 2025-11-04 |
| Needham | maintain | Buy | 2025-08-08 |
| Piper Sandler | maintain | Overweight | 2025-08-08 |
Overall, both TXN and MCHP have been receiving consistent grades, with multiple “Buy” ratings and positive sentiments from several grading firms. This suggests a generally favorable outlook for both companies in the current market climate, although the recent downgrade for TXN by Mizuho indicates a need for cautious observation.
Target Prices
The consensus target prices from analysts indicate potential upside for both Texas Instruments and Microchip Technology.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Texas Instruments | 245 | 145 | 190.45 |
| Microchip Technology | 83 | 60 | 71.33 |
Texas Instruments shows a target consensus of 190.45, suggesting a potential upside from its current price of 161.77. Microchip Technology has a consensus of 71.33, which also indicates a positive outlook compared to its current price of 51.83.
Strengths and Weaknesses
Below is a summary of the strengths and weaknesses of Texas Instruments (TXN) and Microchip Technology (MCHP) based on the most recent data.
| Criterion | Texas Instruments (TXN) | Microchip Technology (MCHP) |
|---|---|---|
| Diversification | High, with a broad range of semiconductor products | Moderate, focused on embedded solutions |
| Profitability | Strong, with a net profit margin of 30.68% | Weak, currently showing a negative net profit margin |
| Innovation | High, consistent investment in R&D | Moderate, with ongoing enhancements to product line |
| Global presence | Extensive, operates in numerous markets worldwide | Significant, but less diversified compared to TXN |
| Market Share | Dominant in analog semiconductor space | Growing, but smaller than TXN |
| Debt level | Moderate, debt-to-equity ratio of 0.80 | High, debt-to-equity ratio of 0.80 |
Key takeaways indicate that Texas Instruments shows robust profitability and diversification, making it a strong contender for investors. In contrast, Microchip Technology is facing challenges with profitability but has a solid presence in embedded solutions.
Risk Analysis
The following table outlines key risks associated with Texas Instruments (TXN) and Microchip Technology (MCHP) based on the most recent data.
| Metric | Texas Instruments (TXN) | Microchip Technology (MCHP) |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | Low | Moderate |
| Operational Risk | Low | High |
| Environmental Risk | Moderate | Moderate |
| Geopolitical Risk | Moderate | High |
In summary, Texas Instruments faces moderate market and geopolitical risks, while Microchip Technology is exposed to higher market and operational risks. The semiconductor industry is susceptible to supply chain disruptions and geopolitical tensions, making risk management critical.
Which one to choose?
When comparing Texas Instruments (TXN) and Microchip Technology (MCHP), the fundamental indicators show that TXN is currently the stronger contender. TXN boasts a solid net profit margin of 30.68% and an impressive return on equity of 38.53%, compared to MCHP’s negative margins and lower returns. Furthermore, TXN’s price-to-earnings ratio is more favorable at 23.78 versus MCHP’s significantly high negative P/E ratio. Analysts have rated TXN with a “B”, reflecting its overall financial health, while MCHP has a lower rating of “C-“.
Investors focused on growth may prefer Texas Instruments for its robust performance metrics, while those looking for potential recovery opportunities might consider Microchip, albeit with higher associated risks due to its current financial instability and competition in the semiconductor sector.
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 Texas Instruments Incorporated and Microchip Technology Incorporated to enhance your investment decisions:
