Cohu, Inc. (COHU) Message Board

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Technology Stocks : Cohu, Inc. (COHU)

COHU 23.55

+1.0%

3:59 PM EST

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To: bearshark who wrote (6390)	7/19/2017 10:24:38 AM
From: robert b furman	Read Replies (1) of 7827

They have two vertical growth areas. One is the wafer level packaging - which they have been ahead of with a beta handler called Panther - it is now being sold and has recently had some follow on orders. That market is new and growing. 20% of all chips go thru wafer level packaging. The panther tests the chip right after singulation (after it is cut out of the wafer). The real area where spending money will immediately pay off is the prober contactor market. The best example of this is the last December purchase of Kita. They make spring contactors which are utilized in probers. They use a needle like contactor to touch a very small contact point to complete an electrical test. The contactor market is very fragmented. Ats of last year no one had more than 10% of the total market. No one has a worldwide global footprint (which Cohu does). In the past Cohu bought contactors from other sources and put them on the test handlers. Cohu has developed some of their own contactors i.e. cantilever contactor. These are utilized when the temperature cooling is required to safeguard the chip being tested; Other contactors needed in gravity and turret handlers have been licensed for Cohu to make and sell on their handler equipment. Last year Formfacter merged with Cascade Micro tech and are now big players in the prober / contactor sector. It seems from my observation the the intricate machining required to make probers and contactors has morphed out of the sewing machine textile equipment makers. Ismeca, the turret maker that Cohu bought came out of the sewing machine/textile industry - as so too did Kita. contactors wear out and are considered consumables = regular consistent revenue. They have historical high margins (in the mid 60's). If Cohu has an industrial cycle of growth for the next 12 -18 months in their three handler sectors (pick and place gravity and turret) - they will print money. If those funds are applied to roll up the global contactor market - they will achieve a break even, almost annuity like minimum revenue model that will assure an ability of paying out a larger dividend. I have thought for decades that Cohu will ultimately be bought out by AMAT of TER. Amat if the recurring consumable business becomes enough to assure consistent profitability. Ter if Ter wants to compete with ATE from Japan - as they have a business model that builds both handlers and testers. Who ever controls the cost of test - must be bought by all chip makers - it is a non sexy - lower level of glamour - that is absolutely necessary for any one who produces chips - of any type. If Cohu 500 can be attained it will surely involve a two for one split and a stock price minimum of 40-50 afte a split. YUP - it is a huge wealth creation opportunity that few have a vision for. That's been my story for decades. It has been brilliantly put together by James Donahue and aggressively being built out by Louis Mueller and Jeffrey Jones. I can't prove it but I'm definitely sticking to it! <smile> Chart update: screencast.com Bob

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