Arm Revenue Hits $4.9B, TSMC Leads with $121.3B in 2025
Arm posted 22.8% growth while TSMC delivered 33% revenue gains. The Motley Fool compares their distinct chip industry models.
Key points
- Arm reported fiscal 2026 revenue of nearly $4.9 billion with a net margin of 18.4%.
- TSMC generated $121.3 billion in revenue for fiscal 2025 with a 45.1% net margin.
- TSMC produced $34.6 billion in free cash flow, while Arm's cash flow was inflated by stock-based compensation.
Arm and TSMC reported strong financial results for their latest fiscal years. Arm ended its fiscal year in March 2026 with nearly $4.9 billion in revenue. TSMC closed its fiscal year in December 2025 with approximately $121.3 billion in sales.
The two companies occupy different positions in the chip supply chain. Arm licenses the intellectual property used to design processors. TSMC operates the factories that physically manufacture these silicon wafers for other firms.
Divergent financial performance metrics
Arm’s revenue grew by 22.8% to reach nearly $4.9 billion. The company reported net income of roughly $904 million. This resulted in a net margin of close to 18.4% for the period.
TSMC saw a 33% year-over-year increase in revenue to hit $121.3 billion. Its net income stood at roughly $54.7 billion. The company achieved a significantly higher net margin of approximately 45.1%.
Capital structure and cash flow
Arm maintained a debt-to-equity ratio of approximately 0.1x. However, stock-based compensation accounted for roughly 69% of its operating cash flow. This non-cash expense inflates the reported cash generation figures.
TSMC reported a debt-to-equity ratio of nearly 0.2x. Its current ratio stood at approximately 2.5x, indicating strong short-term liquidity. Free cash flow for the year was close to $34.6 billion.
Distinct risk and valuation profiles
Arm faces competition from open-source architectures like RISC-V. Major technology firms are also developing custom silicon to reduce licensing reliance. TSMC deals with geopolitical risks due to its facility concentration in Taiwan.
TSMC must invest heavily in capital to compete with rivals like Samsung. Arm carries a higher forward P/E ratio based on future earnings. TSMC appears cheaper relative to its price-to-sales ratio and revenue base.
