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COHU

To provide innovative semiconductor test solutions by being the global leader in test equipment technology



Sub organizations:
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SWOT Analysis

Updated: September 16, 2025 • 2025-Q3 Analysis

This SWOT analysis reveals Cohu's strong technical foundation built on thermal expertise and customer relationships, positioning them well for emerging AI and automotive semiconductor trends. However, cyclical market exposure and intense competition from larger players like Teradyne require strategic focus on differentiated solutions and market diversification. The company must leverage its handler innovation and global service network to capture growth in AI chip testing while building defensive moats against well-funded competitors. Success depends on balancing R&D investments with margin discipline during market cycles, particularly in expanding automotive and edge computing segments where their thermal expertise provides competitive advantage.

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To provide innovative semiconductor test solutions by being the global leader in test equipment technology

Strengths

  • THERMAL: Leading thermal test technology with 200+ patents expertise
  • HANDLERS: Market-leading automated test handlers for efficiency gains
  • RELATIONSHIPS: 90%+ customer retention with tier-1 semiconductor
  • GLOBAL: Worldwide service network supporting 24/7 operations
  • PORTFOLIO: Comprehensive test solutions from contactors to software

Weaknesses

  • CYCLICAL: Revenue highly dependent on semiconductor market cycles
  • COMPETITION: Intense pressure from Teradyne and Advantest giants
  • MARGINS: Pricing pressure impacting gross margins below 40%
  • CAPEX: High R&D requirements straining cash flow generation
  • EXPOSURE: Heavy dependence on Asian market concentration risk

Opportunities

  • AI: Growing AI chip testing demand requiring advanced solutions
  • AUTOMOTIVE: Electric vehicle semiconductor content driving test needs
  • 5G: Network infrastructure creating new test requirements
  • EDGE: IoT and edge computing expanding addressable markets
  • PACKAGING: Advanced packaging technologies needing new tools

Threats

  • CONSOLIDATION: Customer consolidation reducing negotiating power
  • TRADE: US-China trade tensions affecting supply chains
  • CYCLES: Semiconductor downturns severely impacting demand
  • TECHNOLOGY: Rapid technology changes requiring constant investment
  • COMPETITORS: Well-funded rivals with deeper resources

Key Priorities

  • Leverage thermal expertise for AI chip testing opportunities
  • Expand automotive semiconductor test solutions portfolio
  • Strengthen competitive position against larger rivals
  • Diversify geographic exposure to reduce market concentration

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Strategic OKR Plan

Updated: September 16, 2025 • 2025-Q3 Analysis

This OKR plan strategically addresses Cohu's SWOT priorities by leveraging thermal expertise for AI growth while expanding automotive presence. The focus on competitive positioning through innovation and operational efficiency directly counters threats from larger rivals. These objectives balance growth investments with margin discipline, essential for navigating semiconductor cycles while building long-term market leadership in emerging segments.

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To provide innovative semiconductor test solutions by being the global leader in test equipment technology

CAPTURE AI GROWTH

Lead AI chip testing market with innovative solutions

  • AI-PLATFORM: Launch AI-optimized test platform by Q2, securing 3 tier-1 customers
  • THERMAL: Deploy advanced thermal solutions for AI chips, achieving 25% revenue mix
  • PARTNERSHIPS: Establish 2 strategic AI chip partnerships for co-development
  • TALENT: Hire 15 AI/ML engineers, building dedicated AI solutions team
EXPAND AUTOMOTIVE

Dominate automotive semiconductor test market

  • AUTO-REVENUE: Grow automotive segment to 35% of total revenue from 28%
  • EV-SOLUTIONS: Launch 3 EV-specific test solutions, targeting battery mgmt chips
  • CUSTOMERS: Win 5 new automotive tier-1 customers in power semiconductors
  • CERTIFICATION: Achieve automotive quality certifications for all platforms
STRENGTHEN POSITION

Build competitive moats against larger rivals

  • INNOVATION: File 25 new patents in thermal and handler technologies
  • MARGINS: Improve gross margins to 42% through value-based pricing
  • RETENTION: Maintain 92%+ customer retention with expanded service offerings
  • MARKET-SHARE: Gain 2% market share in handlers and contactors segments
OPTIMIZE OPERATIONS

Drive operational excellence and efficiency

  • COSTS: Reduce operating expenses by $15M through automation initiatives
  • INVENTORY: Decrease inventory levels by 20% while maintaining service levels
  • CAPACITY: Right-size manufacturing capacity for market demand cycles
  • CASH-FLOW: Generate $50M+ positive free cash flow annually
METRICS
  • Revenue Growth Rate: 15%
  • Gross Margin: 42%
  • Customer Retention: 92%
VALUES
  • Innovation
  • Quality
  • Customer Focus
  • Integrity
  • Excellence

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COHU Retrospective

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To provide innovative semiconductor test solutions by being the global leader in test equipment technology

What Went Well

  • REVENUE: Q3 revenue exceeded guidance at $185M
  • MARGINS: Improved gross margins to 38.5% from cost actions
  • AUTOMOTIVE: Strong growth in automotive test solutions
  • SERVICE: Service revenue maintained at 25% of total revenue
  • CASH: Positive free cash flow generation

Not So Well

  • DEMAND: Overall market demand remained soft
  • ASIA: Continued weakness in Asian markets
  • INVENTORY: Higher inventory levels impacting cash flow
  • BOOKINGS: Order bookings below expectations
  • UTILIZATION: Manufacturing capacity underutilized

Learnings

  • DIVERSIFICATION: Need for market diversification strategy
  • FLEXIBILITY: Importance of cost structure flexibility
  • TIMING: Market recovery timing remains uncertain
  • INNOVATION: Continued R&D investment during downturns
  • SERVICE: Service business provides stability

Action Items

  • COSTS: Implement additional cost reduction measures
  • MARKETS: Accelerate automotive and AI market penetration
  • INVENTORY: Optimize inventory management processes
  • BOOKINGS: Enhance sales and marketing effectiveness
  • CAPACITY: Right-size manufacturing capacity

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COHU Market

Competitors
Teradyne logo
Teradyne
Advantest logo
Advantest
Chroma ATE logo
Chroma ATE
LTX-Credence logo
LTX-Credence
Xcerra logo
Xcerra
Products & Services
No products or services data available
Distribution Channels

COHU Product Market Fit Analysis

Updated: September 16, 2025

Cohu enables semiconductor manufacturers to bring quality chips to market faster and more cost-effectively through innovative test and inspection equipment. Our thermal expertise, handler innovation, and integrated software solutions help customers reduce test costs, improve yields, and accelerate product launches in the rapidly growing semiconductor market.

1

Faster time-to-market through innovative test

2

Lower total cost with integrated solutions

3

Higher quality with advanced inspection tech



Before State

  • Manual testing processes
  • Long test cycles
  • Higher defect rates
  • Limited data analytics
  • Isolated test systems

After State

  • Automated test flows
  • Faster test cycles
  • Improved quality
  • Real-time analytics
  • Integrated solutions

Negative Impacts

  • Higher production costs
  • Slower time to market
  • Quality issues
  • Limited scalability
  • Inefficient operations

Positive Outcomes

  • Reduced test costs
  • Faster market entry
  • Higher yields
  • Better decision making
  • Scalable operations

Key Metrics

Market share growth 8-10%
Customer retention 90%+
NPS score 65+
Revenue per customer $2M+
Service attach rate 85%

Requirements

  • Advanced test equipment
  • Software integration
  • Thermal management
  • Data connectivity
  • Technical support

Why COHU

  • Innovative hardware
  • Software platforms
  • Global service
  • Customer partnerships
  • Continuous R&D

COHU Competitive Advantage

  • Thermal expertise
  • Handler innovation
  • Software integration
  • Global support
  • Customer relationships

Proof Points

  • 90%+ customer retention
  • 200+ patents
  • 50+ year track record
  • Global service network
  • Leading market position
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COHU Market Positioning

What You Do

  • Semiconductor test and inspection equipment

Target Market

  • Chip manufacturers and assembly houses

Differentiation

  • Thermal expertise
  • Handler innovation
  • Software integration

Revenue Streams

  • Equipment sales
  • Service contracts
  • Spare parts
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COHU Operations and Technology

Company Operations
  • Organizational Structure: Global matrix with regional operations
  • Supply Chain: Asian manufacturing with US/EU design
  • Tech Patents: 200+ patents in test technology
  • Website: https://www.cohu.com
Top Clients

COHU Competitive Forces

Threat of New Entry

MEDIUM: High capital requirements and technical expertise barriers, but AI/software companies entering market

Supplier Power

MEDIUM: Limited supplier options for specialized components, but Cohu's scale provides some negotiating leverage

Buyer Power

HIGH: Large semiconductor customers like TSMC have significant bargaining power, price-sensitive purchasing decisions

Threat of Substitution

LOW: Limited alternatives to specialized test equipment, high switching costs for established processes

Competitive Rivalry

HIGH: Intense rivalry with Teradyne, Advantest controlling 60%+ market share, pricing pressure from established players

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Analysis of AI Strategy

Updated: September 16, 2025 • 2025-Q3 Analysis

Cohu's AI positioning leverages existing thermal and data capabilities but requires significant investment in talent and platform development. The company's relationships with semiconductor manufacturers provide access to AI chip testing opportunities, yet they face competitive threats from AI-native startups and well-funded incumbents. Strategic partnerships and targeted acquisitions could accelerate AI capabilities while their thermal expertise remains differentiating for high-performance AI chip testing requirements.

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To provide innovative semiconductor test solutions by being the global leader in test equipment technology

Strengths

  • DATA: Test data analytics capabilities for AI-driven insights
  • THERMAL: Advanced thermal solutions critical for AI chip testing
  • SOFTWARE: Test software platforms enabling AI integration
  • CUSTOMERS: Relationships with AI chip manufacturers and foundries
  • EXPERTISE: Deep semiconductor knowledge applicable to AI chips

Weaknesses

  • AI-TALENT: Limited AI/ML expertise in engineering teams
  • PLATFORM: Test platforms not fully optimized for AI workloads
  • SPEED: Slow adoption of AI in internal operations
  • INVESTMENT: Insufficient AI R&D investment versus competitors
  • INTEGRATION: Limited AI-driven automation in test processes

Opportunities

  • AI-CHIPS: Exploding demand for AI chip test solutions
  • EDGE-AI: Edge AI devices requiring specialized test equipment
  • AUTO-AI: AI automotive chips needing advanced testing
  • ANALYTICS: AI-powered test data analytics services
  • AUTOMATION: AI-driven test automation and optimization

Threats

  • AI-COMPETITORS: Competitors with stronger AI capabilities
  • DISRUPTION: AI startups disrupting traditional test methods
  • COMPLEXITY: AI chip complexity outpacing test capabilities
  • STANDARDS: Evolving AI test standards and requirements
  • TALENT-WAR: Competition for scarce AI engineering talent

Key Priorities

  • Develop AI-optimized test platforms for chip testing
  • Invest in AI talent acquisition and training programs
  • Create AI-powered test analytics and automation solutions
  • Partner with AI chip companies for co-development

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COHU Financial Performance

Profit: $31.2M net income (2023)
Market Cap: $1.1B
Annual Report: Available on SEC EDGAR database
Debt: $156M total debt
ROI Impact: 15.2% ROE, impacted by market cycles
AI Disclosure

This report was created using the Alignment Method—our proprietary process for guiding AI to reveal how it interprets your business and industry. These insights are for informational purposes only and do not constitute financial, legal, tax, or investment advice.

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