Cohu (COHU) Stock Analysis & Winston Score

Cohu makes equipment used to test semiconductors — the tiny chips found in cars, phones, and industrial machines. Its main products are chip handlers and testers that semiconductor manufacturers use to check whether chips work correctly before they are shipped. Cohu serves chipmakers and chip packaging companies around the world, competing in the semiconductor test equipment industry alongside larger rivals like Teradyne and Advantest. Cohu earns revenue by selling testing equipment and providing related services and spare parts. It operates globally, with significant exposure to Asia where much of the world's chip manufacturing takes place. The company's competitive position depends on its specialized expertise in handling and contacting chips during testing, particularly for automotive and industrial applications. The main risk Cohu faces is that its business is highly cyclical — when chipmakers cut spending on new equipment during downturns, Cohu's revenue and profits can fall sharply, as reflected in its current negative operating margin.