Compare moats
Up to three covered companies, band by band. Every call is a curated editorial judgment, never a disclosed figure — and every band carries its cited basis.
| TE Connectivity | Cadence Design Systems | Broadcom | |
|---|---|---|---|
| Moat rating | narrow The FY2025 10-K's own Competition section undercuts any claim of insulation: 'The industries in which we operate are highly competitive, and we compete with thousands of companies that range from large multinational corporations to local manufacturers', competition is 'generally based on breadth of product offering, product innovation, price, quality, delivery, and service', and TE has 'experienced, and expect[s] to continue to experience, downward pressure on prices'. The same filing explicitly disclaims IP as the basis of its position: 'we do not believe that our competitive position or our operations are dependent upon or would be materially impacted by any single patent or group of related patents.' What TE does hold is durable rather than absolute — it calls itself 'one of the leading providers of advanced automobile connectivity solutions', its Industrial segment 'a leading supplier', and it converted that position into rising profitability across the same filing's three income statements (gross margin 31.5% of net sales in FY2023, 34.4% in FY2024, 35.2% in FY2025). A position that earns expanding margins into admitted price pressure is an advantage; one held against thousands of competitors and no decisive patent is not a wide one. | wide The FY2025 10-K competition section names only a short list of full-flow rivals — Synopsys, Ansys (acquired by Synopsys) and Siemens EDA — for a toolset it describes as essential to meeting foundry manufacturing sign-off requirements. | wide The FY2025 10-K describes category-leading franchises across a broad semiconductor portfolio plus acquired infrastructure software (VMware, CA, Symantec), with top-five end customers at approximately 40% of net revenue — diversified concentration by AI-supply-chain standards — and the Q3 FY2026 release shows non-GAAP operating margin guided at approximately 66% of revenue while revenue grew 86%. |
| Moat type | switching costs The FY2025 10-K locates the advantage at the customer, not in patents. It describes 'close working relationships with many of our customers' whose 'relationships with them typically date back many years', and co-development as the mechanism: 'By working with our customers in developing new products and technologies, we believe we can identify and act on trends and leverage knowledge about next-generation technology across our products.' Roughly 75% of fiscal 2025 net sales were direct to manufacturers rather than through distribution, and the Transportation segment's products 'must withstand harsh conditions' — parts engineered in with the customer and built to survive the application, so the position sits inside the customer's design rather than in a purchase order. The filing rules the alternative out in its own words on intellectual property, so intangibles_ip is not the source; the 'thousands of companies' in Competition rules out efficient_scale. | switching costs The 10-K states Cadence works with foundry partners to develop process design kits 'to ensure our core EDA products and solutions meet manufacturing sign-off requirements', and licenses software on two-to-three-year time-based terms — so the tools are embedded in a customer's qualified design flow, not bought per project. | switching costs The 10-K describes custom accelerators (XPUs) co-designed for hyperscalers and AI frontier-model companies — multi-year, customer-specific silicon programs — alongside enterprise infrastructure software; both are positions a customer leaves only at high cost. |
| Leadership | co leader The FY2025 10-K claims leadership in qualified form and then names the peers who contest it. Transportation Solutions 'is a leader in connectivity and sensor technologies' and TE is 'one of the leading providers of advanced automobile connectivity solutions' — one of, not the — while the segment's 'major competitors include Yazaki, Aptiv, Sumitomo, Sensata, Honeywell, Molex, and Amphenol'. Industrial Solutions 'is a leading supplier of products that connect and distribute power, data, and signals' and 'competes primarily against Amphenol, Hubbell, Carlisle Companies, Integer Holdings, Molex, Omron, JST, and Korea Electric Terminal (KET)'. Amphenol and Molex appear on both lists, so TE shares the top of the interconnect market rather than owning it. | co leader The 10-K calls Virtuoso 'the industry standard for custom and analog IC design' while naming Synopsys, Ansys and Siemens EDA as key competitors across the same markets. | clear leader The 10-K claims 'category-leading semiconductor and infrastructure software solutions' — the company's own attribution — and the Q3 FY2026 release reports AI semiconductor revenue of $16.7 billion in one quarter, up 221% year over year, a scale no other custom-accelerator design house reports. |
| Pricing power | moderate The FY2025 10-K states both halves plainly: TE has 'experienced, and expect[s] to continue to experience, downward pressure on prices. However, as a result of increased costs and tariffs, certain of our businesses implemented price increases in recent years.' Pass-through, not price-setting. The realised result is margin expansion rather than erosion — gross margin of 31.5% of net sales in FY2023, 34.4% in FY2024 and 35.2% in FY2025 per the same filing's income statements, and 36.5% ($5,319M on $14,573M) for the nine months to 26 June 2026 versus 35.3% a year earlier, with Q3 FY2026 GAAP operating margin of 19%, per the 22 July 2026 results release (https://www.sec.gov/Archives/edgar/data/1385157/000110465926085589/tel-20260722xex99d1.htm). Strong would require pricing that leads rather than follows cost; weak is contradicted by three years of expanding gross margin. | strong Product and maintenance was 91% of fiscal 2025 revenue under time-based licences 'generally two to three years', with $7.8 billion of contracted but unsatisfied performance obligations at December 31, 2025; SEC-reported operating income in the same filing was 28.2% of revenue. | strong Q4 FY2026 non-GAAP operating income is guided at approximately 66% of revenue, flat from a year ago, while consolidated revenue is guided up 93% — margin held through a near-doubling of revenue. |
| Summary | TE Connectivity sells the connectors, terminals, sensors and cable-protection parts that, in its own framing, 'enable the distribution of power, signal, and data' — a component vendor, never a system or compute vendor. The FY2025 10-K puts the two reportable segments, Transportation Solutions (54% of net sales) and Industrial Solutions (46%), against a combined served market it estimates at roughly $200 billion, which tells you immediately that no single share number governs this business: the filing discloses no market share, says 'no single customer accounted for a significant amount of our net sales in fiscal 2025, 2024, or 2023', and states that because TE is 'not organized by product or service, it is not practicable to disclose net sales by product or service'. The defensible part is entrenchment. Parts get designed in with the customer and then qualified to survive automotive, aerospace, subsea and grid conditions; TE sells about 75% of net sales direct into ~130 countries; relationships 'typically date back many years'. That is a switching-cost moat, and the filing is unusually candid that it is not a patent moat — no single patent or group of patents is material to its competitive position. The limit is equally plain in the filing: highly competitive industries, thousands of competitors, and persistent downward price pressure, with Amphenol and Molex named as competitors in BOTH segments and Yazaki, Aptiv and Sumitomo heading the Transportation segment's competitor list. The evidence that the moat is nonetheless working is margin plus mix. Gross margin ran 31.5% / 34.4% / 35.2% of net sales across FY2023-FY2025, and in the nine months to 26 June 2026 gross margin was $5,319M on $14,573M of net sales (36.5%) against $4,419M on $12,513M (35.3%) a year earlier, while Q3 FY2026 GAAP operating margin was 19% and orders hit a record $5.7 billion, up 27% year over year. Growth has also rotated: digital data networks grew 34.2% in Q3 FY2026 (34.0% organic) and 48.8% over nine months, with the CEO naming 'increased momentum in AI in both the data center and across the broader energy infrastructure' — while sensors, an end market for which the 10-K makes no leadership claim at all, shrank 2.8% organically in the quarter. Narrow, not wide: a real toll on other people's platforms, collected under admitted price pressure. | Cadence sells the design and sign-off flow that chips must pass to be manufacturable: the 10-K describes foundry-co-developed PDKs, integrated DRC/LVS/STA sign-off, and multi-year time-based licences that leave $7.8 billion of contracted but unsatisfied performance obligations at December 31, 2025. | Broadcom holds two moats under one roof. In AI silicon it is the design partner for custom accelerators and the merchant supplier of the Ethernet switching, NIC, PHY and optical parts that connect them — 'connectivity at scale, within and across AI server racks and across AI data center sites' in the filing's words. In software it owns acquired enterprise franchises. The 10-K's own competition section flags the counterweight: competition is increasing 'as new companies, including some of our customers, enter the markets.' |
| Chain position | TE is an upstream component supplier to the AI build-out, not a participant in compute. It sells 'connectivity and sensor solutions [that] enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, data centers enabling artificial intelligence', about 75% of it direct to manufacturers across roughly 130 countries. AI exposure runs through one end market: digital data networks was 28% of Industrial Solutions, and Industrial Solutions was 46% of fiscal 2025 net sales — so the datacenter line is a minority of a company still 54% transportation. That minority is where the growth now is: digital data networks net sales rose 34.2% in Q3 FY2026 and 48.8% over the nine months, and energy rose 34.4% in the quarter, the CEO tying both to AI momentum 'in both the data center and across the broader energy infrastructure' (https://www.sec.gov/Archives/edgar/data/1385157/000110465926085589/tel-20260722xex99d1.htm). | Upstream design layer: every chip in the graph is designed and signed off through an EDA flow before a foundry will build it. | Layer-4 chip supplier twice over: custom accelerators for hyperscalers and the Ethernet switching/optical silicon between every AI rack. |
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| Long-horizon vote | +0.13 at weight 0.20 · swarm neutral Editorial prior, not backtested. | +0.35 at weight 0.20 · swarm neutral Editorial prior, not backtested. | +0.42 at weight 0.20 · swarm bullish Editorial prior, not backtested. |