Cohu Q3 Revenue Rises 37% as HPC Adoption Expands

Cohu Inc. reported third-quarter 2026 revenue of $173.0 million, up 37% from $126.2 million a year earlier, as demand improved across its business and more customers adopted its Eclipse thermal solutions. The semiconductor test equipment and services company also raised its full-year high-performance computing revenue outlook to $120 million while expanding manufacturing capacity to support anticipated customer ramps.

Bookings increased 126% year over year, and the book-to-bill ratio was solidly above 1, indicating that orders exceeded quarterly revenue. Estimated test-cell utilization reached 82%, improving 2 percentage points sequentially and 7.5 points from the prior-year period.

Margins benefit from higher volume and manufacturing leverage

Third-quarter revenue exceeded the midpoint of Cohu’s previous guidance range of $170 million, plus or minus $7 million, supported by higher interface and recurring revenue.

Non-GAAP gross margin was 45.7%, compared with 45.5% in the second quarter and 44.1% a year earlier. The result was 70 basis points above the company’s guidance, which Cohu attributed to improved manufacturing cost leverage in its interface business.

Non-GAAP operating expenses were $53.5 million, below the approximately $54 million previously projected. Non-GAAP earnings were $0.43 per diluted share. Adjusted EBITDA margin rose to 16.6% from 12.3% in the second quarter and 9.2% a year earlier, reflecting stronger operating leverage. The margin was 60 basis points above guidance due to the combination of stronger gross margin and lower operating expenses.

HPC demand supports systems and recurring businesses

Systems represented 52% of third-quarter revenue, or approximately $91 million, while recurring products and services accounted for 48%, or about $82 million.

Within systems revenue, computing was the largest end market at 45%. Automotive accounted for 19%, industrial 13%, consumer 13% and mobile 10%.

Cohu said adoption of its Eclipse HPC test handler continued to grow, with additional high-performance computing programs progressing through customer qualification. Demand for Neon vision inspection products was also strong, with bookings extending into the first quarter of 2027.

In the recurring business, Cohu received initial HPC interface orders from two leading hyperscale customers. Software posted record bookings and revenue, while software annual recurring revenue increased 85% sequentially.

The company estimated its HPC opportunity pipeline at approximately $1 billion in potential annual customer sales. That total included about $230 million of qualified opportunities and $440 million in qualification, with the remainder in earlier engagement stages. Cohu cautioned that the pipeline represents estimated opportunities rather than committed orders and that the timing and amount of any resulting revenue could differ from current estimates.

Fourth-quarter revenue forecast at $178 million

For the fourth quarter, Cohu expects revenue of $178 million, plus or minus $7 million, representing projected year-over-year growth of 46%. The company forecasts a non-GAAP gross margin of approximately 44%, non-GAAP operating expenses of about $57 million and an adjusted EBITDA margin near 14%.

The sequential margin decline expected in the fourth quarter reflects product mix and higher HPC demand, which is extending lead times and increasing the cost of certain specialty components. Operating expenses include continued investment in HPC opportunities and product-development materials.

Cohu projects full-year 2026 revenue growth of approximately 38% and a non-GAAP gross margin near 45%. Capital expenditures are targeted at about 2% of annual revenue, including spending to expand manufacturing capacity. The company is also coordinating supplier readiness to support anticipated HPC customer ramps.

Cash and investments increased to $508 million at the end of the third quarter from $498 million in the second quarter, supported by $5.6 million of operating cash flow. Accounts receivable rose to $145 million from $123 million, while total debt increased to $310 million from $304 million. Debt included $288 million of convertible notes carrying a 1.5% interest rate.

Cohu identified customer qualification timing, pipeline conversion, hyperscale customer spending and its ability to secure manufacturing capacity and components as important uncertainties. Other risks include supply-chain disruptions, higher input costs, semiconductor-industry volatility, rapid technological change, competitive pressure, trade restrictions and geopolitical instability.