A maker of machines and software that test and inspect semiconductor chips before they ship, serving computer, automotive, and consumer-electronics companies. It began in 1947 as Kalbfell Laboratories, founded by Dr. David Kalbfell, and took the Cohu name in 1972 after a name used for its electronics division — a nod to Lamott T. Cohu, whose investment group bought the firm in the 1950s. The company once made television cameras and metal detectors before focusing solely on chip testing.
Cohu revenue rose 38% to $149M in Q2 FY2026, the highest since Q3 2023, as AI, industrial, and automotive demand drove growth.
Cohu returned to operating profitability for the first time in nine quarters. rose 38.4% to $149.0 million and improved 1.6 points to 45.4%, driven by stronger demand in AI-based computing, industrial, and automotive semiconductor markets. The recovery is taking hold, but $285 million in convertible debt now sits on the balance sheet.
Key takeaways
rose 38.4% to $149.0 million, the highest quarterly level since Q3 2023, driven by stronger demand in AI-based computing, industrial, and automotive semiconductor markets.
improved 1.6 points to 45.4%, as a more favorable product mix and higher business volume enabled better absorption of fixed manufacturing costs.
reached $0.3 million, the first positive result after nine consecutive quarters of operating losses, as the increase and improvement offset higher R&D and SG&A spending.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales rose 38.4% to $149.0M driven by AI, industrial, and automotive demand, with gross margin improving to 45.4%.
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Consolidated increased 38.4% to $149.0 million, primarily driven by stronger demand in AI-based computing, industrial, and automotive semiconductor markets.
R&D expense rose to $24.9 million, or 16.8% of , on higher new product development material costs, while SG&A increased to $34.4 million, or 23.1% of revenue, on higher business activity.
Restructuring charges fell to $0.6 million from $1.2 million a year ago, as the global cost-optimization program neared completion.
Cash and short-term investments totaled $498.2 million at quarter-end, and was $20.8 million for the first six months, supported by a $21.3 million increase in .
What changed
The recovery flagged as a watch item in Q2 FY2025 — whether the 2.8% growth that quarter was a single-quarter inflection — has been sustained and accelerated: revenue rose 29.3% in Q1 FY2026 and 38.4% in Q2 FY2026, the third consecutive quarter of growth.
, which fell to 40.0% in Q4 FY2025 and was flagged as a key concern, rebounded to 46.3% in Q1 FY2026 and held at 45.4% in Q2 FY2026, as the manufacturing transition to Asia neared completion and product mix improved.
The restructuring program that began in Q1 FY2025 with a $6.6 million charge and a target of $2 million in quarterly cost savings is now nearly complete, with charges falling to $0.6 million in Q2 FY2026.
The $287.5 million convertible notes issued after Q3 FY2025 have reshaped the balance sheet: rose to $285.0 million from $7.3 million a year ago, while cash and short-term investments reached $498.2 million, up from $209.4 million a year earlier.
The Interface Solutions reporting unit's limited headroom, flagged in FY2025, remains a risk, though no was recorded in the quarter.
What to watch
Whether the AI, industrial, and automotive demand that drove the 38.4% increase is sustained into Q3 FY2026, or whether the recovery proves uneven across end markets.
Whether can hold near 45.4% as product mix evolves, or whether the 40.0% Q4 FY2025 level was an anomaly and margins remain structurally lower than the 47.6% peak in FY2023.
Whether the Interface Solutions reporting unit, which had limited headroom in the annual test, triggers a charge if its performance weakens.
The pace of share repurchases under the remaining authorization, given that the company now carries $285.0 million in convertible debt and , while positive, remains modest at $20.8 million for the first six months.
improved to 45.4% from 43.7% due to a more favorable product mix and higher business volume enabling better manufacturing cost absorption.
R&D expense rose to $24.9 million (16.8% of sales) on higher new product development material costs, while SG&A increased to $34.4 million (23.1% of sales) on higher business activity.
fell to $0.6 million from $1.2 million as the global cost-optimization program neared completion.
Interest income rose to $3.9 million on higher investment balances from convertible note proceeds, partially offset by $1.6 million in on those notes.
Cash and short-term investments totaled $498.2 million; was $20.8 million for the first six months, supported by a $21.3 million increase in .
Quantitative and Qualitative Disclosures About Market Risk
The company faces modest interest rate risk on its $278.6M short-term portfolio and manages foreign exchange risk on operations and net investments via forward contracts.
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A 10% change in interest rates would have no material impact due to the short duration of the $278.6M fixed-income portfolio.
As of June 27, 2026, investments with unrealized loss positions had a cost of $216.1M and a fair value of $215.7M, with no credit losses recognized.
Currency fluctuations in the Swiss Franc, Euro, Malaysian Ringgit, Chinese Yuan, Philippine Peso, and Japanese Yen can impact reported earnings.
The company uses foreign currency forward contracts to hedge U.S. Dollar-denominated assets and liabilities at subsidiaries with local functional currencies.
Since Q3 fiscal 2024, the company has also used forward contracts designated as net investment hedges to protect the U.S. Dollar value of foreign subsidiaries.
A hypothetical 10% shift in the U.S. Dollar against foreign currencies would cause an approximate $33.4M translation adjustment in .
The information set forth above under Note 12 contained in the “Notes to Unaudited Condensed Consolidated Financial Statements” of this Form 10-Q is incorporated herein by reference.
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The information set forth above under Note 12 contained in the “Notes to Unaudited Condensed Consolidated Financial Statements” of this Form 10-Q is incorporated herein by reference.
Our business, financial condition and results of operations are affected by a number of factors, whether currently known or unknown, including risks specific to us or our industry, as well as risks that affect businesses in general. You should carefully consider the risk factors…
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Our business, financial condition and results of operations are affected by a number of factors, whether currently known or unknown, including risks specific to us or our industry, as well as risks that affect businesses in general. You should carefully consider the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 27, 2025 (the “Annual Report”), as supplemented by the risk factors described in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 28, 2026, filed with the SEC on May 1, 2026 (the “Q1 Quarterly Report”). We believe there have been no material changes from the risk factors disclosed in the Annual Report and the Q1 Quarterly Report. However, additional risks and uncertainties not currently known or which we currently deem to be immaterial may also materially adversely affect our business, financial condition, or results of operations.