Cohu (COHU) 2026财年第三季度业绩电话会议：HPC业务储备达到10亿美元

Cohu 2026财年第三季度业绩说明会强调了对高性能计算（HPC）测试系统的需求加速、Eclipse管道业务机会扩大以及经常性收入增长强劲。管理层还上调了2026财年展望，并提出了2027财年扩大产能的计划。

要点速览

• 2026财年第三季度营收同比增长37%至1.73亿美元。Non-GAAP每股收益为0.43美元，调整后EBITDA利润率达到16.6%。
• 总订单量同比增长126%，其中系统订单量增长318%，经常性订单量增长36%。订单出货比大于1。
• Cohu将其年度HPC业务管道扩充了约18%至约10亿美元，并将2026财年HPC营收展望上调至约1.20亿美元。
• 管理层预计，2027年交付的Eclipse分选机数量将约为2026年的三倍。初步预计2027财年营收增长率在30%至40%之间。
• 第四季度营收指引约为1.78亿美元（上下浮动700万美元），相当于预计同比增长46%。
• 第三季度末半导体测试产能利用率提升至82%，环比增长2个百分点，同比增长7.5个百分点。

关键财务数据

一家计算领域的客户占第三季度总销售额的10%以上。

业务与运营表现

高性能计算

Eclipse温控分选机平台仍是Cohu的主要增长动力。年度HPC管道业务机会达到约10亿美元，涵盖13个已排名的客户项目，以及在CPU、GPU、网络设备、定制加速器、硅光子学及相关服务领域的早期合作项目。

根据目前客户的计划，代表每年2.30亿美元潜在收入的项目已通过认证，另有4.40亿美元的项目正在积极认证中。预计在2026年11月下旬至2027财年第一季度之间达到或开始重大认证里程碑的7个项目，代表着约3.40亿美元的潜在年度系统收入。

管理层表示，对客户2027年产能需求可见度的提升（而非客户数量的大幅增加）是管道扩大的主要原因。Cohu正在扩大制造能力并与供应商协调，以支持2027年Eclipse出货量达到2026年约三倍水平。

HBM与先进封装检测

Cohu继续向一家美国客户出货用于HBM3和HBM4的最终检测系统，该客户已将Cohu指定为战略供应商。Neon检测系统的积压订单已延伸至2027财年第一季度深处。

该公司还在推进先进封装检测认证，利用Neon检测可见及次表层微裂纹。管理层预计演示系统将在2027财年第一季度交付给一家美国大型集成器件制造商。Cohu估计其先进封装和HBM检测应用的可寻址市场为3.30亿美元。

接口解决方案与AI电源测试

Cohu从两家领先的超大规模客户处获得了用于处理器测试的初始接口订单，并为一家重要HPC客户交付了首个接口生产解决方案。管理层估算，计算领域的成品测试和系统级测试接口解决方案的年度市场规模为2.00亿美元，但在问答环节表示，目前探讨实质性的系统级测试出货量还为时尚早。

Diamondx在AI电源管理应用领域继续取得进展。一家领先客户正在扩大该平台在服务器板载电源管理IC中的应用，取代了原有的供应商。Cohu计划于2026年12月推出新的大电流和大电压功能，领先于预计在2027年上半年实现的量产爬坡。管理层估算这些应用的可服务可寻址市场为2.90亿美元。

软件与经常性收入

软件分析的年度经常性收入环比增长85%，为该业务带来了创纪录的订单量和营收。增长包括来自一家领先HPC客户的重复订单、基于AI的HBM检测部署的扩展，以及Cohu在较早一代分选机上用于规范性维护软件的首个批量许可。

管理层预计，随着已安装的Eclipse系统针对后续代际器件需要新的器件套件、散热头和散热模块，经常性收入机会将有所扩充。不过，管理层指出，由于Cohu进入该市场仅一年左右，相关的实际证据仍然有限。

核心市场

工业系统订单量环比增长52%，而汽车系统订单量增长23%。管理层表示，工业订单量正在接近汽车订单量，并可能在未来几个季度超越汽车订单量，这部分反映了被归类为工业类的数据中心电源应用。

测试单元利用率在计算领域达到84%，工业领域达到83%，汽车领域达到约80%。

管理层指引

管理层表示，假设市场条件保持强劲，其2027财年营收增长指引区间的高端取决于客户认证及量产爬坡的时间点。Cohu预计，在预期的增长水平下，新增营收中约有50%将转化为运营利润。

风险与关注焦点

• 客户认证和量产爬坡的时间点仍是Cohu 2027财年增长展望达至上限的关键变量。
• HPC需求的快速增长导致某些半导体和特种零部件的交货周期延长、成本上升。Cohu正在确保关键零部件的供应，并评估替代供应商和解决方案。
• 供应商必须与Cohu的制造能力同步扩大，以支持Eclipse产量翻三倍的计划。
• 管理层对2027财年第四季度Eclipse出货量的可见度有限，但预计出货量将从第一季度开始逐步上升，直至年中。
• 单一计算领域客户占第三季度营收的10%以上。

分析师问答环节亮点

管理层表示，Eclipse的出货量应在2027年稳步增加，预计在第二季度和第三季度将达到可观的出货量。Cohu计划在2026年底使周产能达到同年6月底水平的两倍，且产能扩充将持续至2027年6月。

从最初接触到投入量产的典型认证过程大约需要9到12个月。在安装下一代散热头后，认证通常还需要6到8周时间。预计有数个项目将在2026年11月下旬至2027财年第一季度末之间实现转化。

在被问及HPC对2027财年增长的贡献时，管理层表示，在Eclipse产能和产量按计划增加的支撑下，营收可能至少达到此前参考的2亿美元至2.50亿美元区间的高端。

Cohu还表示，迄今为止的经验表明，客户通常会将整个器件产品系列指定给单一平台，而不是将该产品系列拆分给不同的供应商。管理层提醒道，其在HPC市场中的拓展时间仍然相对较短。

业绩说明会完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good day, and thank you for standing by. Welcome to Cohu's Third Quarter 2026 Financial Results Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to your speaker today, Matt Hutton, Vice President, Strategy and Investor Relations. Please go ahead.

Matthew Hutton

Good afternoon, and welcome to our conference call discussing Cohu's third quarter 2026 financial results and our outlook for the fourth quarter of 2026. I'm joined today by Luis Muller, Cohu's President and CEO; and Jeff Jones, Cohu's Senior Vice President of Finance and CFO. If you need a copy of our earnings release, it can be found on our website at cohu.com or by contacting Cohu Investor Relations. A slide presentation accompanying today's call is also available in the Investor Relations section of the website. Replays of this call will be accessible via the same page after the conclusion of the call.

During this call, we will be making forward-looking statements that reflect management's current expectations concerning Cohu's future business. These statements are based on the information available to us at this time, but they are subject to rapid and sometimes abrupt changes. We encourage everyone to review the forward-looking statements section of our slide presentation and the earnings release as well as Cohu's filings with the SEC, including the most recently filed Form 10-K and Form 10-Q. Our comments are current as of today, October 28, 2026, and Cohu does not assume any obligations to update these statements for events occurring after this call. Additionally, we will discuss certain non-GAAP measures during this call. Please refer to our earnings release and slide presentation for reconciliation to the most comparable GAAP measures.

Now I'd like to turn over the call to Luis Muller, Cohu's President and CEO. Luis?

Luis Müller

Good afternoon, and thank you for joining Cohu's Third Quarter 2026 Earnings Call. We delivered solid third quarter progress as high-performance computing adoption accelerated and recurring revenue growth strengthened. Revenue increased 37% year-over-year to $173 million. Book-to-bill was solidly above 1, and total bookings grew 126% year-over-year, driven by a 318% increase in systems bookings and 36% growth in recurring bookings.

Systems represented 59% of third quarter bookings and recurring business represented 41%. These results reflect broad-based portfolio improvement, growing adoption of our Eclipse thermal solutions for high-performance computing and accelerating demand for services, consumables and software that provide a stable foundation for long-term value creation. Our annual high-performance computing opportunity pipeline expanded to approximately $1 billion and continues to mature as more customer programs advance through qualification and into production.

We are raising our fiscal year 2026 high-performance computing revenue outlook to approximately $120 million. To support growing customer interest and an expanding opportunity funnel, we're scaling manufacturing capacity and working closely with supply partners with the goal of delivering approximately 3x as many Eclipse handlers in 2027 as in 2026. Estimated semiconductor test stabilization improved to 82% at the end of the third quarter, up 2 percentage points sequentially and 7.5 points year-over-year.

Computing customers drove system demand with bookings increasing 81% sequentially, driven by rapid adoption of our Eclipse thermal handler for testing processors used in data centers. We also delivered continued improvement in interface solutions, strong momentum in inspection and a record quarter for software analytics bookings and revenue.

Let me now review the quarter by product line. Starting with high-performance computing. This remains one of our most important growth areas for the company. During the quarter, the annual opportunity associated with our Eclipse platform expanded by about 18% to approximately $1 billion. The funnel now includes 13 ranked customer programs, plus additional early-stage engagements spanning server and data center processors, CPUs, GPUs, networking devices, custom accelerators, silicon photonics, HBM inspection and related services. This breadth diversifies the business opportunity across device architectures, customers and revenue streams. The traction is visible in both the scale and the maturity of the funnel.

We now have programs representing $230 million in qualified annual revenue potential and another $440 million in active qualification. Additional systems and application hardware are being shipped for engineering evaluations, production device qualification and capacity planning, while the funnel continues to expand across more programs and strategic accounts. At a major networking customer, the initial device has qualified on Eclipse in the third quarter, and we are preparing to ship a production configuration thermal head for a higher power device validation during the fourth quarter.

Looking at the next wave, 5 additional customer programs are scheduled to reach major qualification milestones between late November and first quarter of next year, with 2 more targeted to start in the same period. Together, these 7 programs represent approximately $340 million of annual systems revenue based on current customer planning. We remain on track with our internal production expansion, and we're working closely with supply partners to ensure they ramp in tandem with our manufacturing capacity. This coordinated execution is important to support customer schedules and expand Cohu's business in 2027 and beyond.

Customers are evaluating Eclipse because it combines precise thermal control of high-power and power density devices during test, scalable automation and an architecture that can support multiple device generations, including future rollout of optical interfaces. These capabilities are increasingly important as AI processors become larger, hotter and more complex and as customers seek standardized platforms that can improve utilization and reduce time to yield.

Now turning to high-bandwidth memory and inspection. We continue to ship final inspection systems for HBM3 and HBM4 to a U.S.-based customer during the third quarter. The customer has designated Cohu as a strategic supplier and is working with us to plan for potentially steeper ramp scenarios. Neon inspection systems also shipped in volume to integrated device manufacturers in the third quarter. Backlog is growing and were booked deep into the first quarter of 2027. We also progressed towards an advanced package inspection qualification with the Neon platform to prove our vision technology's ability to detect both visible and subsurface microcracks.

We expect to soon complete an agreement with a large U.S.-based integrated device manufacturer, supporting shipment of demonstration systems in the first quarter of 2027. We're poised to grow our advanced packaging and HBM inspection business meaningfully in 2027 by pursuing large customers that can benefit from the Neon platform's differentiated vision technology. These applications support expanding AI and high-performance computing ecosystem and represent a $330 million addressable market opportunity for Cohu.

Moving to interface solutions. We delivered another quarter of sequential growth with increasing momentum in computing test interface applications. During the quarter, we secured first interface orders with 2 leading hyperscale customers for processor test. These wins establish new positions in final test and system-level test applications and create pathways to broader production adoption. In co-packaged optics, we won additional interface applications that combine high-speed electrical contact with precise optical alignment for simultaneous electrical and optical testing.

We also delivered our first interface production solution for a major HPC customer and are progressing to follow-on opportunities for devices with substantially higher pin counts and data rates. Together, these design wins position us to participate in an estimated $200 million annual market for computing final test and system-level test interface solutions. Our focus is converting current hyperscaler processor, networking and co-package optics engagements into production revenue.

Turning next to AI power and semiconductor test. AI infrastructure is driving a major transition in power architecture. As rack power moves from traditional levels of 10 to 30 kilowatts to well above 100 kilowatts, data centers are adopting higher voltage distribution and more efficient power conversion to address thermal reliability and operating cost challenges. These technologies are expected to extend beyond hyperscale data centers into industrial automation, automotive electrification, edge AI and physical AI applications. This broadened demand for power devices that operate at higher voltages and currents, increasing the need for scalable and accurate semiconductor test solutions.

In semiconductor test, we continue to advance Diamondx in AI power management applications. A leading customer is ramping production with our platform for testing power management ICs used in server boards. We also remain on track to release new high current and high-voltage capabilities in December ahead of anticipated production ramps in the first half of 2027. These power management applications represent an approximately $290 million serviceable addressable market opportunity for Cohu.

Switching to software analytics. Annual recurring revenue in software analytics increased 85% sequentially, contributing to record bookings and revenue for the business. Growth was led by expanding production deployments, including a large repeat order for a leading high-performance computing customer and an expanded AI-based HBM inspection software deployment at a leading memory manufacturer. We also booked our first volume license for prescriptive maintenance software on earlier generation Cohu handlers, creating a meaningful attach opportunity across our installed base.

Our next release for high-power thermal handlers is designed to reduce troubleshooting from upwards of 5 days to less than 1 hour while keeping customers' data inside the factory through our on-site AI appliance. Beyond Cohu equipment, paid proofs of concept and evaluations are expanding our platform into specialty gas and chemical delivery systems, front-end wafer fabrication equipment, test operations and wire bonding.

Let me conclude with our priorities and outlook. Looking ahead, our priorities are clear: convert the high-performance computing funnel into production revenue and accelerate recurring growth through services, spares and software. We're encouraged not only by the increase in the total value of the HPC pipeline, but also by its improving quality. More programs are advancing through qualification, production monitoring and approval and the opportunity is increasingly diversified across customers and device types.

For 2027, we expect revenue growth of approximately 30% to 40%, driven primarily by conversion of our high-performance computing opportunity funnel. The high end of the range will depend on the timing of customer qualifications and production ramps provided market conditions remain strong. This outlook is supported more by rising power and test intensity than by processor unit volume growth as customers increasingly require the higher-performance thermal solutions Cohu is well positioned to supply. Thank you to our employees around the world for their continued dedication and execution, and thank you to our customers and shareholders for their continued support.

With that, I'll turn the call over to Jeff to review our financial results and outlook in more detail. Jeff?

Jeffrey Jones

Thank you, Luis. Before reviewing the third quarter results and providing fourth quarter guidance, please note that my comments refer to non-GAAP figures. Details about non-GAAP financial measures, including GAAP to non-GAAP reconciliations and other disclosures are included in the earnings release and investor presentation on our website.

Q3 2026 revenue was $173 million, above the midpoint of guidance. Recurring revenue driven primarily by consumables represented 48% of total revenue, providing a meaningful contribution to the quarter. One compute customer accounted for more than 10% of total sales during the quarter. Gross margin was 45.7%, above guidance, reflecting improved cost leverage in the manufacturing of our interface products. Operating expenses were in line with guidance at $53.5 million. Net interest income was approximately $1.5 million after interest expense and a $500,000 foreign currency loss. The Q3 tax provision was $3.7 million, lower than guidance due to improved profitability in the U.S. Non-GAAP EPS for the third quarter was $0.43 and adjusted EBITDA margin was 16.6%.

Moving to the balance sheet. We ended the quarter with increased liquidity and positive cash generation. Cash and investments increased by approximately $10 million during Q3 to $508 million, and cash from operations was approximately $6 million. Total debt is $310 million and includes $288 million from the Q4 2025 convertible debt offering. Capital expenditures were approximately $3 million, mainly for manufacturing machinery and equipment, facility improvements and IT equipment. We continue to target 2026 total capital expenditures of approximately 2% of revenue. This includes capacity expansion of our Malaysia and Philippines manufacturing facilities to support growing customer demand for our Eclipse thermal handler in the high-performance computing market.

Looking ahead, we're expecting Q4 revenue of approximately $178 million, plus or minus $7 million, representing year-over-year growth of 46%. This outlook reflects the ramp of high-performance computing opportunities and continued recovery in our core business segments. We're raising our full year 2026 revenue growth outlook to approximately 38% over 2025. Q4 gross margin is projected to be approximately 44%, and we expect full year 2026 gross margin of approximately 45%.

In the near term, the rapid increase in high-performance computing demand is creating longer lead times and higher input costs for certain semiconductors and specialty components. We're taking proactive steps to secure critical components and minimize the impact on lead times, profitability and customer pricing. We're also working closely with our supply chain partners to expand manufacturing capacity, improve availability and reduce these incremental costs over time.

Operating expenses are expected to be approximately $57 million, reflecting continued investment in resources and product development materials to capitalize on the growing pipeline of high-performance computing opportunities. We believe this is the time to invest behind our differentiated thermal technology, secure customer wins and scale Cohu's business. These targeted investments are expected to support near-term Eclipse system sales and build a growing base of recurring revenue from the consumables and services associated with these highly complex thermal solutions.

Net interest income in Q4 after interest expense and foreign currency impacts is projected to be approximately $1.4 million at current interest rates. The Q4 tax provision is expected to be about $3.3 million and diluted shares are projected to be approximately 55 million, including 5.8 million shares attributable to the convertible debt. And of that amount, 2.4 million shares will be fully offset by the capped call but are required for U.S. GAAP diluted EPS calculations.

In summary, our 2026 priorities remain focused on supporting the R&D investments and production ramp required to secure multiple design wins in the compute market, including AI data center infrastructure, HBM memory and physical AI applications. As we execute on these opportunities, we remain focused on progressively increasing EBITDA margin and free cash flow.

Turning to 2027. Our preliminary view based on our high-performance computing opportunity funnel and the continued recovery of our core business is for revenue growth of 30% to 40% over 2026. At that revenue range, we expect gross margin of 46% to 48%. We expect quarterly operating expenses to remain in the $54 million to $56 million range, similar to 2026 as we realign costs from our core business toward high-performance computing products and customers. This disciplined cost approach, combined with revenue growth is expected to produce significant operating leverage with approximately 50% of incremental revenue falling to operating income.

That concludes our prepared remarks, and now we'll open the call to questions.

Operator

[Operator Instructions] Our first question comes from David Duley with Steelhead Securities.

分析师问答

David Duley

Luis, you mentioned something about a couple of interface wins with hyperscale customers that I guess could lead to a final test and SLT system sales. Could you just elaborate on that particular topic a little bit more?

Luis Müller

Dave, well, I think it's a little too soon to be talking about SLT, to be honest with you. We talk about having hyperscale customers in the funnel, and this is specific to our final test business. We have them qualifying the Eclipse handler, a couple of them actually in late-stage qualification. So we'll describe more of that business when it starts translating into sort of volume revenue here in the coming quarters.

David Duley

Okay. And as far as the Eclipse revenue next year, you talked about shipping several hundred Eclipse systems. And I'm just wondering, when you think about the output for the calendar year, is it going to be second half weighted? Or what does the shape of Eclipse system shipments look like?

Luis Müller

Yes. Good question. Well, I think it's actually going to be a ramping through the year, Dave. We should see a pretty decent volume in the second and the third quarter. There will be volume in Q1 as well. I don't have -- we don't have a good view on the fourth quarter at this point. But I would say sort of increasing from Q1 into the summer months, potentially at peak through Q2, Q3 or possibly even ramping further Q3 to Q4, but we don't know much about Q4. The bottom line is we're looking at putting enough capacity in place to ship 3x more Eclipse systems next year than we're shipping this year in 2026.

David Duley

And so the overall capacity is -- you mentioned, I guess, shipping 3x more. What is the capacity plan for the balance of this year and into next year as far as -- I mean, I imagine you're tripling or quadrupling or something like that. I think you talked about 2xing it a couple of different times. So maybe just elaborate a little bit more on the capacity plan.

Luis Müller

Yes. We're increasing the capacity this year, exiting the year at twice the output per week rate than we exited the end of the first half of the year than we exited June, and that continues to increase through June of next year. So obviously, it's a ramp in totality, if you kind of look at it in totality is that it is to be able to output 3x more test systems next year, but still ramping between January and June next year.

Operator

The next question comes from Quinn Fredrickson with Baird.

Quinn Fredrickson

Can you discuss in that 30% to 40% growth for '27, how much is HPC versus just continued market recovery in the rest of the business? I think you had sized HPC as maybe $200 million to $250 million previously. I'm just wondering if that's changed at all with the incremental qualified revenue and just the overall expanded pipeline.

Jeffrey Jones

No, Quinn, I would say that, that's probably at the higher end of that range would be our estimate at the moment. As Luis said, we're looking to triple our capacity and output on Eclipse systems. And so that would put us at least at the high end of that range.

Quinn Fredrickson

Got it. Okay. And then could you discuss test cell utilization amongst each of your key markets? And just wondering how we should be thinking about that progression over the next several quarters, whether this couple of hundred bps of improvement you saw this quarter is sustainable or whether any markets get a little choppier outside of compute?

Jeffrey Jones

Well, like we said here, we got about 82% test cell utilization at the end of third quarter. Computing -- the compute business is actually leading the pack. We have -- I think it's 84% utilization in the compute sector. We got 83% utilization in industrial, about 80% utilization in automotive. We don't really forecast utilization for the coming quarters, Quinn. Never done that before. We do know that the -- it's more of the core business tends to have a seasonality. I don't think compute necessarily has the seasonality yet for us, but the core business, auto industrial tends to have a bit of a seasonality profile during the year. But that's sort of the number across market segments.

Operator

Our next question comes from Krish Sankar with TD Cowen.

Robert Mertens

This is Robert Mertens on the line for Krish. I guess the first one, just around the new high-performance compute pipeline estimate. It looks like for the year, you raised revenues, maybe like $120 million from $105 million and brought up the full pipeline. Was that more of just giving more clarity from your customers and their ramp plans? Or was it an additional customer qualification or additional engagement that you didn't have last quarter?

Luis Müller

Largely, we're gaining more clarity on the customer forecast for 2027, Robert. So a couple of our customers have come in with specific need dates for systems throughout next year. And generally speaking, they are growing. Their business is growing. So the funnel -- the total opportunity funnel size is getting larger. The customers that we're qualifying or have completed a qualification and now moving to a production device are also giving us a little bit more clarity now on what they need for 2027.

So in aggregate, these numbers are getting a little bigger than what we had before. So the funnel is getting bigger. It's not like we're necessarily adding a lot more customers in the funnel. It's really getting more clarity from those customers on what they need in '27, either from the ones -- both from the ones that we have qualified and the ones that we are in late-stage qualification at the time -- at this time.

Robert Mertens

Great. That's very helpful. And then just, I guess, a broader one in terms of as you're adding capacity and ramping up with customers, we definitely heard a lot of pain points throughout the supply chain in terms of component tightness. Have you seen that crop up anywhere for your own business or for your customers? Or is it more really just around higher component costs more on the memory side?

Luis Müller

No. We see some tightness on specialty components that we use in our systems. We have been working with the suppliers. We have been looking at alternative suppliers and alternative solutions as well to augment what we currently use. I think at this point, we're doing okay. Don't see it as a -- necessarily as a constraint to business today. But obviously, with the intent of tripling the output, the system output next year, we need to be cognizant that so do our suppliers. They need to ramp up their capacity or alternative suppliers have to come in and augment that.

Operator

Our next question comes from Craig Ellis with B. Riley.

Craig Ellis

I apologize. I'm getting into the queue late. So you may have touched on this already. It looks like from the investor presentation, we're doing a nice job of raising our computing pipeline by around 13% to $1 billion. Can you just talk a little bit about what's driving that strength and how you're feeling about the way you're converting from engagement through qualification and then down to what gets qualified?

Luis Müller

Craig, yes, we're just talking a minute ago about this. We have better visibility now from both customers that are in the qualified bucket and the customers that are in late-stage qualification now that are opening up and describing more of their capacity needs in 2027 and the time line of when they need that capacity. So it's just -- the numbers are growing basically. There are elements in the funnel that we don't have any better visibility than we did a couple of months ago. But several of these customers, we have better forecast now into 2027. And the demand is larger than we had originally anticipated. So in aggregate, the funnel is $1 billion, potentially $1 billion plus as we see today for 2027.

Qualification is going well. We have made a comment here during the prepared remarks that we had a network processing customer that qualified the initial device in Q3. We're moving now to ship a new thermal head to those -- to that customer pretty much now, so we can do a final qualification on the actual production device that we should be ramping in 2027. We got a few other customers that have moved down the funnel, a couple of hyperscaler customers that are now providing some visibility and engaging in discussions on needs and volume needs for '27.

Craig Ellis

Got it. And Luis, as you think about the breadth of customers that are in qualified and I take it the ones you mentioned are contributing to revenue this year. Can you just talk a little bit further about how broad our reach is today in terms of the customers that we're engaged with versus those that are revenue generative? And what are you learning about the cycle time from engagement to revenue generation?

Luis Müller

The breadth is pretty much how we described it earlier, Craig. We have customers here that are CPU. There's been a lot of CPU business in 2026. We're seeing quite a bit of custom ASIC business opportunities to augment into 2027, network processors as well into 2027, some GPU business into 2027. So it cuts across a variety of products and a multitude of customers actually pretty broad from hyperscalers to fabless to, I guess, one IDM in the mix. So feeling very happy, very good about the opportunity. This is tremendous actually. So I don't know, what was the second part of your question again?

Craig Ellis

I think it was just about the cycle time that you're...

Luis Müller

Qualification cycle time.

Craig Ellis

Learning from initial engagement to revenue generation.

Luis Müller

Yes. It's about -- as we described before, we have usually a first device to qualify on that is what is currently in production, generally a lower power device. Once that is used to qualify the system, then it comes a second pass for typically a next-generation device thermal head that needs to be delivered on an existing system.

Once that gets to be installed, we're looking at about 6 to 8 weeks to qualify that thermal head and then production follows that. If you put it all together in a time line, approximately 9 to 12 months has been the cycle that we observed for some of these qualifications all the way to being actively in production. So a lot of these things are going to be converting here between kind of late November into the end of Q1, we should be seeing quite a few of these customers converting into business.

Craig Ellis

Good for you. And then if I could just flip to an area that we haven't been talking about as much lately. The mobile business, I think it's showing at about 10% of system revenue in the third quarter. A large entity has changed the way they're releasing products and it's going to a much more balanced 4Q, late 3Q, 4Q, 1Q release. What implication is there for the seasonality of your business based on what's happening with that large smartphone OEM?

Luis Müller

So the mobile business is, like you can see here in the graph, it's the smallest of our business segments at the moment. Orders have increased quarter-on-quarter in the third quarter. But still, if you look forward here, likely to be the smallest or second smallest of our business in terms of revenue over the next 1 to 2 quarters. I don't expect a lot of change necessarily in the mobile business in the near term.

Seasonality-wise, it depends. As usual, we have one major customer in the space here that tends to place orders late in the year, beginning of the year. It's a product line, thermal subsystems that we sell that tend to have a little bit longer lead times. We have another customer that typically comes in second into early part of third quarter. So that is sort of entering a seasonally slow part of the year right now and then picks up again in the second quarter coming up 2027. I don't expect a dramatic change given the size of the business today, a dramatic change to the total portfolio at Cohu.

Operator

Our next question comes from Kevin Garrigan with Jefferies.

Kevin Garrigan

Congrats on the great results. Once Malaysia is operational, how much additional capacity will you have above the 3x Eclipse shipments if customer forecasts were to increase again? And what would be the bottleneck there if you wanted to increase capacity again?

Luis Müller

So just remember, when we talk about the increase in 3x, that's specific to Eclipse, right? So we still have the capacity in Malaysia to do the core business. Same capacity we had back in 2021, 2022. We obviously have flexed direct labor down during the down cycle of the market. We can flex it back up. Supply chain, same story, flex down, flex back up. So -- but that capacity is generally the same subject to flexing the supply chain and the demand power. With that said, if you put it all together, we'll be in a position to I think, ship over 2,000 systems next year if we were to utilize the entire capacity for handlers, right? Eclipse specifically is the one that we've been commenting that is expanding here to 3x of 2026 because that relates to the high-performance computing market.

Kevin Garrigan

Got it. Got it. Okay. That makes sense. And then as a follow-up, on the power management IC program that's ramping for server boards, can you just describe how that opportunity developed? Was Diamondx replacing some of your competition? Or was this a new test requirement?

Luis Müller

No, it's Diamondx is replacing an incumbent supplier. Obviously, there aren't that many options for names here in the market to look into, right? But it is replacing one of those incumbent names that you're familiar with. It's our focus in the analog market, particularly now current high-voltage instrumentation and intercepting the deployment of gallium nitride technology that is being used in power management devices going into server boards.

Operator

Our next question comes from Denis Pyatchanin with Needham & Company.

Denis Pyatchanin

My first question is about your in-qualification system customers. So we saw a $165 million increase in that number versus the last quarter. Can we assume that this is predominantly for Eclipse? And maybe you can perhaps discuss which products or customer groups are driving this growth?

Luis Müller

It is exclusively Eclipse actually, Denis. This is all Eclipse related. I mean, obviously, I'm not going to disclose customer names, but we have -- let me look here specifically, we have a couple of hyperscalers in that bucket. We have a number of fabless companies in that in qualification bucket as well, including fabless that are partnering with and supporting hyperscalers in the process. So there's both the hyperscaler direct business and a hyperscaler through a fabless business in the mix here. So I'm not going to obviously disclose the names, but it's a pretty rich pool of customers on the in-qualification bucket right now.

Denis Pyatchanin

Maybe as a direct follow-up to that. So some of these fabless companies supporting the hyperscalers are -- this is related to networking and data center?

Luis Müller

They are related to data center indeed. They are related to some custom ASIC-type devices as well.

Denis Pyatchanin

Got it. And then for my second question, I think you spoke about some additional business for the Neon system for advanced packaging. Was this for a new customer or a new application at an old customer?

Luis Müller

For Neon, this would be a new customer. Not a new customer for Cohu. It is a computing customer of Cohu today, but we don't sell any inspection systems to this customer. So it will be a new customer using Neon into their product lines, into what they're doing with advanced packaging technology right now. So it would be die level inspection for advanced packaging. And we don't sell any inspection systems today at the moment.

Operator

Our next question comes from Daniela Talio with Stifel.

Daniela Talio

This is Daniela Talio on for Brian Chin at Stifel. My first question is more on the recurring revenue side. As you're having conversations with customers and you're going through the upgrade process, are you seeing a larger opportunity from the actual dollar content being higher per upgrade or more frequent upgrades just due to device complexity?

Luis Müller

So the upgrade cycle, when we talk about computing, in particular, right, the upgrade cycle is about to start to some of the systems we have shipped over a year ago where new devices are getting launched and new thermal heads are being purchased for Eclipse systems that have been installed. We don't know exactly how this is all going to take shape in years to come. What we know today is many of these devices have about 1.5 years life cycle, 2 years life cycle. And at the end of that, there's a new product that comes out.

We typically sell device application kits to those new products. But now on the high-performance computing side, a lot of times, we also have to replace the thermal head. The die size has increased, the power management requirement has increased. So a new thermal head entirely needs to be replaced or a new thermal module has to be replaced going along with device kits. I would expect -- I would hope that we will see an increase in recurring revenue associated with Eclipse because of those thermal heads.

We've seen this in the past when Cohu had a strong business in the computing market, and I expect that to be the case here going forward. But quite honestly, we are new into this market, right? We started getting into this market just about a year ago. So we're now starting to see a little bit of that business coming through as we put more Eclipse out at various customers, I think that's going to pick up some momentum here basically a year, 1.5 years later. So I'm pretty optimistic about the recurring business, but we haven't seen a lot of evidence yet because we're new in the space.

Daniela Talio

Okay. Yes, that makes sense. And then for my follow-up, when you're having conversations with customers, specifically looking into next year, 2027, do you get the sense that they are looking for more than one supplier? Do they prefer to have 2 vendors? What are the conversations that you're having around this type of topic?

Luis Müller

We have seen a mix of both, to be honest with you. We have seen customers putting an entire product line on our system once we break into the device market. We haven't quite seen a lot of split business by device family. So I think the experience here is still early on for us. But as I said, what we see today is, let's say, we get the entirety of a data center device market, while our competitor has the entirety of a different device family, right?

But again, we're coming into the market. So a little early to say when we're still coming up to $120 million revenue this year. I mean it's a good question to reask about a year from now and see how that really has evolved. But up to this point, yes, it seems like when we take a device family, we take the entirety of that device family. That's the limited experience we have, but the experience we have thus far.

Operator

Our next question comes from Christian Schwab with Craig-Hallum.

Benjamin Taxdahl

This is Ben Taxdahl on for Christian here. Great quarter. I just had one question as visibility improved with the customers in the $1 billion pipeline, customers moving from engagement to qualification. Do you guys still think there's a large opportunity to -- for new customers? Or is this -- you're kind of maxed here? I mean I'm just trying to think of as in engagement, is there an opportunity to take that even higher going forward?

Luis Müller

So with final test, Ben, what we're seeing is about $1 billion of opportunity pipeline as we put in our deck here and about $1.5 billion in sort of addressable market. What we're working towards is actually potentially tapping into another vertical in the test space that would create, let's say, another opportunity pipeline on top of final test. We're not there yet, but we're looking more into sort of broadening what we supply, broadening our service and our products so that we can add another SAM or another TAM in total to our business. That will be something we will talk more into -- deeper into 2027. But for now, looking at final test, like I said, opportunity pipeline of $1 billion, SAM of about $1.5 billion.

Benjamin Taxdahl

Great. Really helpful. A lot of my other questions were asked. Great quarter.

Luis Müller

Thank you. Thank you, Ben.

Operator

Our next question comes from the line of Denis Pyatchanin with Needham & Company.

Denis Pyatchanin

Just one question about automotive and industrial since it doesn't seem like anyone is interested in these. Systems are up slightly this quarter. Utilization continues to pick up. What are your key customers in the space telling you about the next several quarters? Are you seeing bookings pick up at all?

Luis Müller

We're seeing bookings -- you asked automotive and industrial. We're seeing bookings pick up in industrial in particular. I mean we've seen a pickup in automotive as well, but predominantly in industrial. I'll give you a sense. Quarter-over-quarter, industrial system orders have increased 52%. Automotive has increased 23%. So sure, a good improvement in auto. But if you look at both side by side, we're now at a point that the industrial market from a booking perspective is almost the same size as automotive.

Historically, automotive being twice the size of industrial. We're approaching parity now. And I would expect in the coming quarters that industrial will surpass automotive. It's just the trend today is much more industrial driven than it is automotive driven. And I think our primary core customers in that segment also have pivoted a lot of their business towards industrial applications, quite a few of those actually towards data center power, which they classify as industrial and so do we at the moment.

Operator

That concludes today's question-and-answer session. I'd like to turn the call back to Matt Hutton for closing remarks.

Matthew Hutton

You will see that we filed a preliminary proxy statement today for a special meeting of stockholders later this year to ratify certain actions previously approved by the Board and our stockholders. The ratification is intended to address a technical issue relating to the record dates for the prior meeting and provide certainty regarding the validity of those actions. Please see the preliminary proxy statement for further information.

Before we sign off, I'd like to note that we will be hosting our Investor Day on November 10 in New York City, where we will provide a deeper look at our strategy, growth opportunities and new midterm financial model. Please visit ir.cohu.com for additional details, including registration information. I'd also like to note, we will be attending the following investor conferences over the next 3 months. Baird's Global Industrial Conference on November 12 in Chicago, the CEO Summit on December 15 in New York City and the Needham Growth Conference on January 14 virtually. Thank you for joining today's call. We look forward to speaking with you soon.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.