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Cohu (COHU) Q2 Earnings call transcript Jul 31, 2024

AInvestThursday, Aug 1, 2024 4:23 pm ET
2min read

In the recent earnings call, Cohu Inc., a leading semiconductor equipment manufacturer, presented its financial results for the second quarter of 2024, providing insights into the company's strategic focus, operational efficiency, and market trends. Despite the ongoing semiconductor cycle trough, Cohu's management displayed optimism and a proactive approach to navigating market challenges and driving growth.

Navigating the Semiconductor Cycle Trough

Cohu's second quarter revenue of nearly $105 million was split evenly between recurring and systems, with a focus on expanding its customer and addressable markets. The company's revenue from systems increased sequentially in consumer, optoelectronic, and computing markets, despite declines in automotive, industrial, and mobile sectors. This mixed performance reflects the complexities of the semiconductor market and Cohu's strategic efforts to diversify its customer base and product offerings.

Strategic Wins and Market Expansion

Cohu's strategic focus on new product developments and design wins has yielded significant results, with a notable benchmark award of an estimated $100 million business over 5 years for test automation and inspection systems. This award includes Cohu's Krypton platform, a new inspection metrology platform targeting larger semiconductor devices. Krypton's ability to deliver higher yield and productivity while enabling automation of back-end manufacturing is a testament to Cohu's innovative approach to addressing the evolving needs of its customers.

Operational Efficiency and Cost Management

Cohu's operational efficiency has been a key driver of its financial performance, with a focus on lowering expenses and effectively delivering strong gross margins while preserving critical R&D investments. The company's estimated test cell utilization has improved sequentially to 74%, indicating a positive trend in demand for its products and services. Despite the soft market conditions, Cohu has been diligent in navigating the trough of the semiconductor cycle, with a goal of expanding its served markets and technology portfolio in line with its growth strategy.

Looking Ahead

Cohu's outlook for the third quarter reflects continued weakness across end markets, with revenue projected to be in the range of $95 million, plus or minus $5 million. However, the company remains optimistic about the potential for recovery, particularly in the computing and mobile markets, which are showing signs of improvement. Cohu is also investing in new product developments, such as its Diamondx tester, and expanding its engineering design center in Penang to support these initiatives.

Investor Insights

The earnings call also provided valuable insights into the concerns and priorities of key shareholders and investors. Questions from analysts focused on revenue trends, market segmentation, and test cell utilization, highlighting the importance of these factors in assessing Cohu's financial health and growth prospects. By addressing these queries, Cohu's management demonstrated a clear understanding of the market dynamics and its position within the semiconductor industry.

In conclusion, Cohu's second quarter 2024 financial results and third quarter outlook reflect a company in transition, navigating the challenges of the semiconductor cycle while positioning itself for future growth. With a focus on strategic wins, operational efficiency, and market expansion, Cohu is well-positioned to weather the current market conditions and emerge stronger in the long term. As the company continues to execute its growth strategy and invest in innovative product developments, it will be interesting to monitor its progress in the coming quarters.

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