Cohu (NASDAQ:COHU) executives told investors the company closed 2025 with improving demand signals across both its recurring and systems businesses, citing higher bookings, rising test utilization, and expanding design win activity tied to computing, automotive, and high-bandwidth memory (HBM) markets.
Fourth-quarter revenue rose year over year as recurring business stayed resilient
Chief Executive Officer Luis Müller said fourth-quarter revenue totaled $122 million, up 30% year-over-year, and remained split between about 40% systems and 60% recurring revenue. He highlighted recurring business strength as a stabilizer during a period of softer equipment demand, with recurring revenue up 4% sequentially and 25% year-over-year. For full-year 2025, revenue was $453 million, up 13% from the prior year.
Bookings improved; management pointed to a pipeline into the first half of 2026
Müller said systems demand increased 47% quarter-over-quarter, driven by higher equipment orders from major global customers. He attributed the increase to activity from a leading analog and mixed-signal customer, renewed investment from an automotive and industrial semiconductor manufacturer, strength from RF and connectivity device customers, and stepped-up spending from “top-tier fabless computing and mobile companies.” The top ten customers represented about 63% of fourth-quarter bookings, and full-year 2025 orders rose 29% year-over-year.
In response to analyst questions on timing, CFO Jeff Jones said the company entered the first quarter with substantial coverage, noting that about 70% of guided first-quarter revenue was in backlog, with the majority of the remaining system shipments expected in the second quarter. He added that some recurring orders—particularly annual service contract renewals—would be recognized across multiple quarters during 2026.
Utilization ticked higher and customer engagement broadened
Management described higher test utilization trends from September through December, with improvements most pronounced in markets tied to computing and automotive applications. Müller said estimated test utilization rose to 76% at the end of December, with computing at 78% and automotive at 75%.
On the Q&A, Müller provided additional detail on utilization by segment as the company exited the quarter: compute at 78%, industrial at 77%, consumer at 76%, automotive at 75%, mobile at 72%, and OSAT and IDM utilization in the mid-70% range. Looking into the first quarter, he said the company was seeing the biggest momentum in mobile utilization, potentially crossing 75%, with compute expected to continue rising. He also said OSAT utilization could improve faster than IDMs early in the quarter, while emphasizing the company does not typically forecast utilization.
Jones added that recurring revenue had increased sequentially for four straight quarters, which he described as a sign of market recovery when viewed alongside utilization trends.
Design wins highlighted Eclipse handler progress and growing HBM inspection opportunity
Müller outlined multiple design win and order milestones in the quarter, including expansions across automotive ADAS, analog and power devices, compute-related applications, and predictive maintenance. He also said customers continued to emphasize quality, yield, productivity, and cost-of-test efficiency.
- A transition win for Cohu’s test interface products at a leading analog and mixed-signal customer.
- An initial order for a high-performance thermal configuration of the Eclipse handler aligned to a customer’s AI device roadmap.
- A multi-unit order for a new handler still in development, targeting automotive and “physical AI” devices; Müller said an initial qualification system would ship in the summer with follow-on units later in the year.
- An order for HBM inspection at a customer’s engineering lab supporting next-generation memory development; management clarified it was the same customer already using the platform.
- The first mixed-signal tester order at an analog and connectivity business unit of a large semiconductor manufacturer, expanding Diamondx tester penetration beyond earlier wins.
- An order for a Krypton inspection metrology system for production of automotive ADAS processors, including a subscription component for PACE inspection software that uses machine learning to improve yield.
- Bookings for tri-temperature handlers across multiple customer sites to support growing power module test demand.
On Eclipse, Müller said the company booked a high-power thermal-control configuration in the fourth quarter and shipped a production unit in late January following qualification work. While he did not disclose volume expectations for 2026, he said the company has capacity to meet current customer forecasts and expects shipment rates to increase in the second quarter into the third quarter.
On HBM, management said it exited 2025 with $11 million in revenue tied to the HBM market. Jones said Cohu booked one HBM system in the fourth quarter and booked three additional systems in January for the first quarter. The company forecast 2026 HBM revenue of $15 million to $20 million and said it currently expects that revenue to be “fairly linear” through the year. Addressing inspection intensity, Müller said the customer is performing 100% inspection with Cohu’s platform and that newer generations such as HBM4 will increase device size and interconnect counts, which in turn increases inspection time, though he did not provide a quantified impact.
Margins impacted by one-time inventory charges; Q1 outlook calls for normalization
Jones said fourth-quarter revenue of $122.2 million was in line with guidance, but gross margin of 40.8% came in below expectations due to one-time inventory charges related to discontinuing certain product lines and consolidating offerings. He said the actions were intended to better align engineering and support resources with customer needs and to focus on high-performance computing, HBM memory, and AI-related opportunities. In response to a question on magnitude, Jones said roughly 350 basis points of gross margin impact came from the one-time charge, with mix accounting for the remainder.
Operating expenses were $49.8 million, in line with guidance. Net interest income was about $1.9 million for the quarter. Jones also said the tax provision was higher than guidance due to a $5 million increase in tax reserves against tax assets, which he said did not affect expected future use of the assets or cash taxes.
For the first quarter of 2026, Jones guided revenue to be seasonally flat with the fourth quarter at approximately $122 million plus or minus $7 million, with recurring revenue again expected to represent about 60% of total revenue. He projected gross margin would return to about 45%, as the unique inventory charges from the fourth quarter are not expected to continue. Operating expenses are expected to be roughly flat at about $50 million, net interest income around $1.9 million, and a tax provision of about $5.5 million. Diluted share count is expected to be approximately 48.5 million.
Jones also discussed margin leverage as revenue increases, saying gross margin could reach the high-46% range around $130 million in quarterly revenue, approach 48% as quarterly revenue reaches $150 million, and reach about 48% at what the company currently views as a normalized run rate of roughly $160 million per quarter.
On capital spending, Jones said the company is targeting capital expenditures of about 2% of revenue in 2026 and expects “normal maintenance CapEx” each quarter.
Management reiterated that it is modeling another growth year in 2026, pointing to improving utilization, strengthening recurring trends, and increased demand tied to compute and AI-related infrastructure.
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.
