Cohu (NASDAQ:COHU) reported first-quarter 2026 results that management said reflected strengthening semiconductor market conditions and growing demand tied to AI and high-performance computing (HPC) applications. On the company’s earnings call, President and CEO Luis Müller highlighted a 57% year-over-year increase in orders and pointed to rising device complexity and power density as key drivers of demand for Cohu’s thermal handling, inspection, and test solutions.
AI and HPC demand drives thermal handling opportunity
Müller said expanding AI workloads are increasing computing power density and heat generation, elevating the importance of precise temperature control during test. He emphasized Cohu’s “proprietary and industry-leading thermal capabilities,” describing temperature accuracy as critical to yield and reliability.
In Q&A, Müller clarified that the company’s $750 million figure is not intended as a broad total addressable market, but rather a targeted “SAM” built from a defined list of roughly 15 customers and specific device classes based on expected spending patterns.
First-quarter customer wins and product momentum
Müller said test handler orders increased 54% year-over-year and highlighted two “major Eclipse orders.” The first, for AI data center applications at a U.S. fabless customer, paired Cohu’s Eclipse platform with its T-Core active thermal control and included adoption of the company’s PAICe prescriptive analytics software. Müller said closed-loop junction temperature control was a key differentiator and described the win as positioning Cohu as a “platform of record,” representing what he called an estimated $100 million incremental revenue opportunity over the next three years at that account.
The second Eclipse order supported data center computing, mobile, and automotive processors at another U.S.-based fabless customer, with deployment also extending to the customer’s OSAT partners, according to Müller. He added that Cohu expanded Eclipse engagements with five additional customers in various stages of qualification, representing “an incremental $200 million of revenue opportunity starting late this year and into next year.”
In inspection and metrology, Müller said orders rose 64% year-over-year and pointed to momentum in final inspection for HBM3 and HBM4, as well as investment to support next-generation HBM5. He said Cohu is forecasting Neon HBM revenue growth of about 80% year-over-year to approximately $20 million and noted a “significant volume repeat order” for Neon from both a U.S.-headquartered and a Korean customer. Overall, he estimated inspection revenue at approximately $70 million for the year.
Müller also said semiconductor test orders increased 163% year-over-year, citing power delivery as an increasingly important element of AI infrastructure. He said Cohu’s Diamondx precision instrumentation tester was qualified for testing power devices, and discussed customer adoption of gallium nitride (GaN) technology to improve efficiency as power density rises.
Within Interface Solutions, Müller noted increased adoption of high-current contactors for AI power applications at existing customers, as well as a multi-unit order tied to a new silicon photonics solution. In response to an analyst question, he described silicon photonics as a “beachhead business” focused initially on interface products, with efforts underway to broaden into solutions that combine handlers with contactors. He said the opportunity is not currently included in the $750 million computing segment pipeline.
Software subscriptions: early stage but growing
Müller said the company’s software platform gained traction as deployments moved from pilots into broader production. He provided an example in which a $20 million system order came with $330,000 per year in software subscription, which he said could translate to roughly $5 million in recurring revenue over the life of the systems.
In Q&A, he said annual recurring revenue from software subscriptions is about $1.2 million based on bookings, with an attachment rate of about 1.3% of systems. He added that the company expects software revenue to be “close to $3 million” in 2026, which he characterized as more than 200% growth year-over-year.
Q1 financial results and balance sheet
Chief Financial Officer Jeff Jones said his remarks were on a non-GAAP basis. He reported Q1 revenue of $125.1 million, above the midpoint of guidance. Jones said recurring revenue—driven primarily by consumables—was 60% of total revenue, and that no customer represented more than 10% of sales.
Non-GAAP gross margin was 46.5%, above guidance, which Jones attributed primarily to a favorable mix as recurring revenue exceeded the company’s forecast. Operating expenses were $55 million, higher than guidance, reflecting increased investment to support HPC opportunities, including design materials and incremental engineering and field support.
On the balance sheet, Jones said cash and investments increased by about $5 million sequentially to $489 million, with $10 million of cash from operations. He said no stock repurchases were completed during the quarter. Total debt was $305 million, including $288 million from a Q4 2025 convertible debt offering. Capital expenditures were about $2 million, and Jones said the company is targeting total 2026 capex of about 2% of revenue.
Outlook: Q2 growth led by HPC and improving industrial/auto
For the second quarter, Jones guided to revenue of approximately $144 million, plus or minus $7 million, representing a 15% sequential increase and 34% year-over-year growth. He said the increase is driven by ramping HPC demand and continued recovery in automotive and industrial segments, and raised the full-year 2026 revenue outlook to growth of 20% to 25% over last year.
Jones guided to Q2 gross margin of approximately 44% and said full-year gross margin is expected in the “mid-40%” range as the company ramps supply chain and production capacity. In Q&A, Jones cited higher initial costs to ramp the Eclipse supply chain and production, along with smaller impacts from energy, freight, and memory IC costs, as factors affecting margin as volumes rise. He also guided Q2 operating expenses to about $53 million and said quarterly operating expenses are expected to remain in the low $50 million range through the balance of the year.
Müller provided additional detail on the Q2 revenue ramp in response to an analyst question, saying the sequential increase in HPC systems revenue was about $10 million, “just under half” of the quarter-over-quarter increase. He said that puts first-half 2026 HPC systems revenue at “roughly about $30 million.”
On operational capacity, Müller said the company is operating at about a 14-week cycle time on its thermal handlers, while noting that fulfillment timing depends on backlog size and order magnitude. He said Cohu is working with suppliers to identify choke points—particularly for thermal heads—and is hiring and making facility changes in Malaysia to expand manufacturing capacity.
Regarding the cadence of revenue, Jones told analysts the company expects Q3 revenue to be similar to Q2, with potential seasonality resulting in a “slightly weaker” Q4, down “single mid single digit” quarter-over-quarter.
On corporate development, VP of Strategy and Investor Relations Matt Hutton said the company continues to look for M&A opportunities, particularly in areas tied to recurring revenue and growth, but noted that valuations remain elevated and said the company intends to remain disciplined.
About Cohu (NASDAQ:COHU)
Cohu, Inc is a global provider of semiconductor test and inspection solutions, offering a broad portfolio of products designed to support chip manufacturers, outsourced semiconductor assembly and test (OSAT) providers, and electronics original equipment manufacturers (OEMs). The company’s product lineup includes automatic test handlers, wafer probers, test sockets, thermal subassembly systems and burn-in boards, all engineered to optimize throughput, accuracy and reliability in semiconductor production and final test.
Founded in 1947 and headquartered in Poway, California, Cohu has grown through both organic development and targeted acquisitions to become a recognized leader in test handling and interconnect technologies.
