Quantification of the silicon photonics opportunity for this year and next, and which insertion it targets.

Cohu is currently shipping interface solutions for insertion 3 (optical engine test), with a $0.5 million order in Q2. A qualification unit for insertion 3 with a handler is planned by year-end, and an insertion 4 configuration is being demonstrated. The CPO revenue is embedded in the $850 million HPC pipeline. “Today, we are shipping interface solutions, not handlers, not full handlers yet. We're shipping interface solutions for insertion 3, which is the optical engine test. And that's what we commented here in prepared remarks that we booked in the second quarter. I think it was a $0.5 million order for interface.”

Breakdown of the $100 million increase in the HPC pipeline from $750 million to $850 million, and clarification on what constitutes 'recurring' revenue within this context.

The $100 million increase is due to better visibility and larger forecasts from qualified customers, plus adding new customers in the engagement phase. Recurring revenue includes device application kits, thermal heads (upgrades/replacements), equipment maintenance (spares/consumables), and software subscriptions. “On the totality of the pipeline increase to $100 million -- by $100 million, it's really getting better visibility in the forecast. And I think we added a couple of customers on the engagement phase as well.”

What capacity Cohu is targeting in 12 months with the Malaysia expansion, given the HPC demand.

Cohu plans to increase HPC handler output by 50% over the next 6 months (by year-end 2026) and more than double it by mid-2027. They see a path to triple output by end of 2027 if market demand supports it, expanding their Malaysia factory. “The plan is to increase output by about 50% over the next 6 months, and that's for the HPC handlers specifically. Between now and the middle of next year, the intent is to increase output by a little more than 100%.”

COHU

Cohu (COHU) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Jul 30, 2026

Source: earnings call transcript

Executive summary

Cohu Q2 FY26 — Strong HPC Momentum and Core Business Recovery Drive Revenue Growth

Cohu delivered a robust Q2 FY26, driven by significant traction in high-performance computing and a recovering core business, with test utilization reaching 80%. The company raised its full-year HPC revenue outlook and is actively expanding manufacturing capacity to meet growing demand, particularly for AI processors and HBM inspection. While the automotive segment remains soft, Cohu is focused on leveraging its thermal technology differentiation and expanding software analytics to capitalize on durable AI infrastructure and edge computing trends.

Highlights

Q2 revenue of $149 million, up 38% year-over-year, exceeding midpoint of guidance.
High-performance computing (HPC) revenue estimate raised to $100 million-$110 million for FY26.
Semiconductor test utilization improved sequentially to 80% at quarter-end, with computing and industrial in the low 80s.
Computing segment orders increased 150% year-over-year, driven by high-performance computing.
Software analytics delivered its first $1 million revenue quarter, with orders up 140% year-over-year.

Concerns

Automotive segment orders were down 24% year-over-year, continuing to struggle in the recovery cycle.
Higher input costs and longer lead times for certain semiconductors and specialty components, particularly memory.
HPC output capacity is maxed out in Q4 FY26, limiting further growth in the short term despite strong demand.

Guidance & targets

Category	Target	Timeline	Confidence
Q3 Revenue	$170 million, plus or minus $7 million high materiality	Q3 · FY26	High
Full-year 2026 Revenue Growth	approximately 35% high materiality	FY26	High
Q3 Gross Margin	approximately 45% medium materiality	Q3 · FY26	High
Full-year 2026 Gross Margin	mid-40% range medium materiality	FY26	High
Q3 Operating Expenses	about $54 million medium materiality	Q3 · FY26	High
Quarterly Operating Expenses (balance of year)	low $50 million range medium materiality	H2 FY26	High
Operating Profit Conversion	approximately 40% medium materiality	Q3 · FY26	High
Q3 Net Interest Income	approximately $1.6 million low materiality	Q3 · FY26	High
Q3 Tax Provision	about $5.2 million low materiality	Q3 · FY26	High
Diluted Shares	approximately 55 million low materiality	Q3 · FY26	High
Fiscal 2026 High-Performance Computing Revenue	between $100 million and $110 million high materiality	FY26	High
Malaysia Manufacturing Capacity Expansion	double output by year-end high materiality	end of 2026 · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Computing Orders driven by eclipse growth in high-performance computing. Test utilization: low 80sShare of total system orders: 46%	—	150%	—	—
Industrial Next largest growth area after computing, with orders up significantly. Test utilization: low 80s	—	87%	—	—
Consumer Orders up year-over-year.	—	29%	—	—
Mobile Orders essentially flat year-over-year. Test utilization: high 70s	—	flat	—	—
Automotive Orders down year-over-year in a segment that continues to struggle in this recovery cycle. Test utilization: high 70s	—	-24%	—	—

Orderbook & backlog

Single customer order for Eclipse systems $26 million early Q3 FY26

Largely going to ship in Q4 FY26.

Product announcements

Product	Type	Timeline	Details
New vision inspection sensor with short-wave infrared capability	launch	Q2 FY26
Agentic AI appliance	launch	Q2 FY26

Capital programs

Malaysia test handler manufacturing facility expansion underway

Benefit:double output by year-end [2026] and support another step-up in capacity by mid-2027; path to triple output by end of 2027

Expanding internal manufacturing in Malaysia to support HPC demand. Plan to increase output by about 50% over the next 6 months and more than 100% between now and mid-2027. Also doing a small expansion in the Philippines for thermal heads.

Risks & headwinds

Automotive Segment Weakness until late Q1 or Q2 FY27

Orders down 24% YoY in Q2 FY26

Supply Chain Constraints & Cost Increases

Higher input costs and longer lead times for certain semiconductors and specialty components, particularly memory.

Mitigation:Taking proactive steps to secure critical components through advanced purchases and exploring passing on costs to customers.

HPC Capacity Limitations Q4 FY26

HPC output capacity maxed out in Q4 FY26

Mitigation:Actively expanding manufacturing capacity in Malaysia and the Philippines to double output by mid-2027 and potentially triple by end of 2027.

Customer Concentration Q2 FY26

One industrial customer accounted for more than 10% of total sales during Q2 FY26.

What to watch in Q3 FY26

HPC customer qualification

Within a month (for one customer), mid-Q1 FY27 (for another)

Current 5 customers in active qualification, one 'right on the edge' of qualification.

Target Qualification of at least one additional customer.

Why it matters

Conversion of qualified customers directly impacts future HPC revenue growth and validates the pipeline.

We have one customer that is right on the edge of giving us the green light of being qualified... we should get a qualification pretty soon within a month, I would say. And then I think the fifth one on the list, we're looking at early next year, systems that we're shipping late August and I think accounting for about a 6-month qualification process, I think would put us sort of mid-Q1 for the last one on this bucket of in qualification.

Find out whether COHU delivers this. Inve re-checks your case every morning.

Q&A highlights

Clarification on the 4 qualified customers (HPC vs HBM) and the 5 in-qualification customers, and when they might convert to revenue.

Luis confirmed 3 HPC and 1 HBM customer are qualified, representing about $190 million annual opportunity. For the 5 in-qualification customers, one is expected to qualify within a month, and another by mid-Q1 next year, with shipments for production configurations already planned.

“We have 3 HPC, 1 HBM on the qualified, which we view about $190 million annual opportunity for revenue. And then we have close to $200 million in the near-term qualification here.”

asked by Sreekrishnan Sankarnarayanan · answered by Luis Müller

2 min read 5 chapters

Detailed narrative

High-Performance Computing (HPC) Momentum

Cohu is seeing strong adoption of its Eclipse handler and Jet MAX devices for high-performance computing, driven by advanced active thermal control for extreme power and next-generation data center devices. The company's high-power thermal control technology is a key differentiator, improving test quality and first-pass yield.

This momentum has led to an expanding HPC customer pipeline, now estimated at approximately $850 million annually, with specific qualified and in-qualification opportunities.

Inspection and Metrology Advancements

In Q2, Cohu shipped additional final inspection systems for HBM 3, HBM 4, and HBM 4E devices to a U.S.-based IDM, with strong forecasts into H2 2026. The company qualified its Neon platform at a Taiwan-based OSAT for advanced package, mobile, and AI-adjacent inspection. A new vision inspection sensor with short-wave infrared capability was released, enhancing detection of inner cracks in complex silicon devices.

Semiconductor Test for AI-Enabling Requirements

Demand in semiconductor test is increasingly tied to efficient power delivery and high-speed connectivity for edge devices, vehicles, industrial equipment, and connected infrastructure. Cohu is engaging with customers on Diamondx configurations for GaN power devices and advanced connectivity applications, addressing an estimated $340 million annual addressable market opportunity over the midterm.

Software Analytics Growth and AI Appliance

The software analytics business achieved its first $1 million revenue quarter, with orders up 140% YoY, demonstrating a successful "land and expand" strategy. Cohu is deploying Agentic AI on-site with an AI appliance that runs models entirely within customer networks, addressing data sovereignty concerns and converting the installed base into recurring software revenue opportunities by improving uptime, yield learning, and factory productivity.

Interface Solutions and Optical Engine Test

Interface solutions, representing 19% of consolidated revenue, are gaining traction in silicon photonics test, with $500,000 in bookings for optical engine test. Cohu is pursuing additional engagements for co-packaged optical devices and aims to increase its share within its core semiconductor customer base through new applications and technology replacements.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.