COHU

Every semiconductor chip must be tested before it ships. For AI chips costing thousands of dollars each, the test step is critical — one defective GPU in a $50M server cluster can bring down an entire training run. Cohu makes the equipment that performs these tests.

The company operates across three product areas. Test handlers (~40% of revenue) physically position chips for electrical testing — inserting them into test sockets, controlling temperature, and cycling through test patterns. The Eclipse platform is the flagship, designed for large, high-power AI devices that require precise thermal control during testing. Inspection and metrology (~25%) uses cameras, sensors, and algorithms to check semiconductor packages for visual defects, dimensional accuracy, and assembly quality — including HBM stack inspection. Interface products (~35% recurring) provides contactors, sockets, and probe cards that wear out with use and generate recurring replacement revenue.

Cohu competes with Teradyne (TER) in handlers, Advantest in test systems, and KLA (KLAC) in inspection/metrology. Cohu is smaller than all three but differentiated in specific niches: Eclipse's high-power thermal capability for AI devices and HBM inspection where few alternatives exist at production scale.

FY2025 revenue was $453M with the company recovering from the 2023–2024 semiconductor downturn. The 60/40 split between recurring revenue and systems provides stability through cycles — recurring revenue increased sequentially for four consecutive quarters through Q4, a reliable market recovery signal. Test utilization rates rose to 76% in December (up 1pt in a typically slow seasonal quarter), with compute the strongest segment at 78%. Management is streamlining product lines — discontinuing certain offerings to focus engineering and support resources on HPC, HBM, and AI-related opportunities. The company raised $287.5M via convertible notes (1.5% rate, 5-year term) in Q4, leaving it with $484M cash and $305M total debt, well-capitalized for the recovery ramp. Full-year 2025 orders were up 29% YoY, and management expects another growth year in 2026 driven by Eclipse handler ramp, HBM inspection, and recovering auto/industrial demand.