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Start with the business model and reporting period
Before comparing financial metrics, establish what the company does and how it earns revenue. A fabless chip designer, an integrated manufacturer and a contract foundry face different manufacturing costs and capital needs. Gross-margin differences between them are not, by themselves, evidence that one is the stronger business.
Use each issuer’s own filings to identify its business model, end markets, reporting periods and definitions. Compare the same fiscal quarter across years when seasonality may matter, and avoid treating metrics with different definitions as interchangeable.
How to evaluate semiconductor revenue growth
Review revenue over several quarters and years rather than relying on one strong or weak quarter. Semiconductor sales respond to customer demand, orders, end-market conditions and industry cycles; a single period may not reveal the underlying trend.
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Separate the possible growth drivers
For each change in reported sales, look for the company’s explanation in its filings. Relevant drivers can include shipment volume, average selling price, product or technology mix, new product acceptance, design wins, customer orders and end-market demand. Growth driven by greater volume may have different implications from growth driven by pricing or a shift toward higher-priced products.
Diodes Incorporated’s 2025 Form 10-K describes its business as highly cyclical and identifies economic and industry conditions, customer order levels, pricing and new product acceptance as factors affecting net sales. These are useful questions to investigate, not a checklist that applies identically to every issuer. Read the filing at Diodes Incorporated’s 2025 Form 10-K.
Look for inventory effects and uneven recoveries
Customer inventory changes can interrupt or amplify orders, and the effects can vary by end market. GlobalFoundries said in its 2025 Form 20-F that customers reduced some excess inventory built up in prior years, while inventory dynamics differed by customer and end market. Management also described gradual demand normalization across most major end markets in 2025. That is the company’s account of its own conditions—not evidence that all semiconductor segments recovered at the same pace. See GlobalFoundries’ 2025 Form 20-F.
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Explain gross- and operating-margin changes
Gross margin is gross profit as a share of revenue. Operating margin also reflects operating expenses. For either measure, identify what changed before deciding whether a rise or fall signals a lasting shift in profitability.
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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitches- Price and product mix: Determine whether selling prices changed or sales shifted among products, technologies or customers with different economics.
- Manufacturing yields: For businesses that manufacture chips, yield changes can affect the cost of saleable output.
- Utilization and fixed costs: In a capital-intensive operation, output may change faster than costs such as depreciation, staffing, electricity, infrastructure and maintenance.
- Operating expenses: For operating margin, check research and development, selling, general and administrative spending, and any other material expense changes disclosed by the company.
Use the metrics that fit the manufacturer
Foundry utilization is especially relevant when assessing a capital-intensive manufacturer, but definitions matter and utilization is not a universal measure for every chip company. GlobalFoundries defines average shipment utilization as wafer shipments divided by estimated manufacturing capacity. It reported 86% for 2025 and 77% for 2024. The company also explains that staffing, electricity, infrastructure, depreciation and maintenance costs remain significant regardless of wafer output. These are GlobalFoundries figures under its definition, not industry benchmarks; consult its 2025 Form 20-F for the context.
Product mix can complicate the interpretation of both revenue and margins. GlobalFoundries states: “Product mix is among the most important factors affecting revenue and margins, as our wafer price varies significantly across technology platforms.” A margin movement should therefore be read alongside the issuer’s explanation of which products or platforms contributed to it.
Check customer concentration and operating indicators
A broad revenue trend can depend heavily on a small number of buyers. Review the customer-concentration disclosures in each company’s filings and consider how a loss, delay or reduced order from a major customer could affect results.
For example, GlobalFoundries reported that Customer A accounted for 16.4% of total wafer revenue in 2025, Customer C for 13.9%, and Customer B for less than 10%. These are company-specific figures for that year, not industry-wide estimates. They illustrate why concentration should be checked issuer by issuer. See the company’s 2025 Form 20-F.
Other operating metrics may help explain the financial statements, but choose them according to the company’s business and disclosures. In its 2025 Form 10-K, onsemi lists net revenues, gross profit margin, segment operating income, end-period backlog, book-to-bill ratio, inventory turnover, average selling prices, net cash and free cash generation among its performance metrics. Treat these as potential analytical questions rather than a required scorecard for all semiconductor companies. The filing is available as onsemi’s 2025 Form 10-K.
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Compare companies on like-for-like axes
A useful comparison starts by grouping companies with reasonably similar business models and cycle exposures. Then compare the same reporting periods and note differences in definitions. A practical checklist is:
- Business model and manufacturing exposure
- End markets and sensitivity to customer or industry cycles
- Revenue growth drivers, orders, inventory and backlog
- Gross- and operating-margin trends, with explanations for changes
- Product mix, pricing and, where relevant, utilization and capacity needs
- Customer concentration
- Cash generation and the investment required to support future growth
- Valuation assumptions and the time period used
These dimensions help explain why two companies reporting growth may have different durability, cost structures or risks. Their metrics are not automatically comparable just because both companies make semiconductors.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Evaluate valuation through its assumptions
No single valuation multiple establishes whether a semiconductor stock is attractive. If using a multiple, state which measure it uses, the period covered, the company’s cycle position and the peer group. A comparison across companies with different business models or cycle exposures can be misleading.
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A discounted cash flow valuation is also conditional, not a fact about what a stock is worth. Make the assumptions visible: revenue growth, margins, reinvestment or capital needs, expected cash flows and discount rate. GlobalFoundries’ 2025 filing identifies future cash flows, expected revenue growth rates, royalty rates, technology migration and the discount rate among assumptions used in a valuation method. This illustrates how inputs shape an output; it does not establish a fair value or recommended multiple for its stock. See GlobalFoundries’ 2025 Form 20-F.
Keep historical results separate from management expectations and your own forecasts. The cited filings do not establish current share prices, market capitalizations, forward estimates or peer valuation multiples, so they cannot support a current conclusion that a named semiconductor stock is cheap or expensive.
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