| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 48.58 | 70 |
| Intrinsic value (DCF) | 6.87 | -76 |
| Graham-Dodd Method | 5.82 | -80 |
| Graham Formula | 40.29 | 41 |
Cohu, Inc. (NASDAQ: COHU) is a leading provider of semiconductor test and inspection equipment, serving global semiconductor manufacturers and test subcontractors. Headquartered in Poway, California, Cohu specializes in advanced test handlers, MEMS test modules, thermal subsystems, and automated test equipment (ATE) solutions critical for wafer-level and device package testing. The company operates across key semiconductor hubs, including China, the U.S., Taiwan, and Southeast Asia, leveraging a direct sales force and independent representatives. Cohu’s DI-Core software suite enhances equipment performance through real-time analytics, positioning it as a key enabler of semiconductor manufacturing efficiency. With a legacy dating back to 1947, Cohu plays a pivotal role in the semiconductor supply chain, supporting the industry’s demand for precision and scalability in testing. Despite cyclical industry headwinds, its diversified product portfolio and focus on high-growth segments like MEMS and advanced packaging underscore its relevance in the $6 billion semiconductor test equipment market.
Cohu presents a high-risk, high-reward proposition tied to semiconductor industry cycles. While its $788M market cap and negative EPS (-$1.49 in FY2023) reflect near-term challenges, its debt-light balance sheet ($18.7M total debt vs. $206M cash) provides flexibility. The stock’s beta of 1.22 indicates higher volatility than the market, appealing to investors bullish on a 2024 semiconductor recovery. Key risks include customer concentration (top 10 clients contribute ~50% of revenue) and reliance on capex-driven demand from foundries. Positive operating cash flow ($2.8M in FY2023) suggests operational resilience, but margin pressures from pricing competition remain a concern. Cohu’s lack of dividends aligns with its growth-focused reinvestment strategy.
Cohu competes in the fragmented semiconductor test equipment market by differentiating through integrated hardware-software solutions like DI-Core, which reduces downtime for clients—a critical value proposition in high-mix production environments. Its gravity and turret handlers dominate mid-market applications, but it lacks exposure to ultra-high-speed testers where Teradyne excels. Cohu’s MEMS expertise (15% of revenue) is a niche strength, though Advantest leads in system-on-chip (SoC) test scalability. Geographically, 60% of sales are in Asia, giving it proximity advantages over U.S.-centric peers but exposing it to trade tensions. The 2021 acquisition of Xcerra expanded its ATE capabilities, though integration risks persist. While smaller than Teradyne or Advantest, Cohu’s asset-light model (outsourced manufacturing) supports gross margins of ~45%, but R&D spending at 12% of revenue trails larger rivals, potentially limiting innovation in AI-driven test systems.