MW These chip stocks could be winners in a prolonged Iran conflict

By Emily Bary

The stock market isn't reflecting it, but analog-semiconductor stocks are prime 'defensive' beneficiaries, according to an analyst

Microchip Technology gets an estimated 21% of sales from aerospace and defense customers.

The conflict in Iran could give a boost to makers of analog semiconductors, according to one analyst.

Analog-chip companies broadly have two things working in their favor in a wartime economy, Evercore ISI analyst Mark Lipacis wrote in a Friday note to clients. For one, several have relatively high exposure to the aerospace and defense sectors when looking at their revenue makeups.

And within the semiconductor industry, analog-chip stocks tend to be more "defensive" plays, in the sense of fundamentals. Many offer strong free-cash-flow yields and quality earnings profiles that could prove attractive in a volatile market.

"During times of military conflict, we often get asked which stocks are the best defense plays, and which are the best defensive plays," Lipacis wrote, noting that analog and microcontroller stocks "are typically the answer to both."

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That said, recent market action suggests that investors haven't entirely come around to that view. Shares of Macom Technology Solutions Holdings $(MTSI)$, for instance, are up for the second day in a row, but not before shedding nearly 20% across a four-session losing stretch last week. Microchip Technology's stock (MCHP) is also up for the second straight day, but it fell for 11 consecutive sessions heading into this week.

Yet from a revenue perspective, Lipacis noted that Macom is perhaps the most levered to aerospace and defense, with those categories accounting for an estimated 30% of its sales. That's compared with an estimated 21% for Microchip Technology (MCHP) and 10% for Analog Devices $(ADI)$, he added.

Macom is also attractive when looking at net leverage, according to Lipacis. He flagged that the company, along with GlobalFoundries $(GFS)$, sports a positive net cash position. That's one "defensive" characteristic investors might like.

Another metric is free-cash-flow yield. "FCF generation remains a key support for the group's defensive profile," Lipacis wrote of the analog category. On this measure, On Semiconductor $(ON)$ stands out, boasting a 8% FCF yield based on 2026 estimates, he said.

Investors seeking to take a more defensive positioning may also focus on earnings quality, according to Lipacis. To that end, he noted that On Semiconductor again screens positively: Its free cash flow could be 60% above net income this year, Lipacis estimates, while Texas Instruments' could be almost 10% higher than net income.

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Finally, he looked at dividends, noting that Texas Instruments and Microchip both offer yields near 3%.

Analog- and industrial-chip stocks have been in the midst of a recovery after sustaining years of pressure. While they've lost ground in the past week alongside a broader selloff in semiconductor stocks and cyclical investments, some of the most prominent analog stocks have outperformed the chip sector and the broader market so far this year.

Texas Instruments shares are up 15% so far this year, while Macom Technology shares are up 31%. That compares with essentially flat performance for the S&P 500 SPX and a 13% gain for the PHLX Semiconductor Index SOX over the same span.

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-Emily Bary

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March 10, 2026 14:19 ET (18:19 GMT)

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