Cohu, Inc. (NASDAQ:COHU)

Huge tailwinds from electrification, 5G and more. Remarkably attractive valuation relative to it's opportunity.

The risk of a semiconductor shortage isn’t new.

Only 12% of semiconductors are produced domestically, which is just a third of the market share America held in the ’90s. Now, 75% of all chip production happens in East Asian manufacturing plants.¹

When the coronavirus broke down supply chains, the already-fragile American semiconductor market had a particularly difficult time sourcing chips.

The issue didn’t show itself as clearly in 2020… demand from big chip customers like Ford and other automakers was down since no one was driving.

But now, demand has spiked quickly and semiconductor companies can’t keep up.

The government has a plan, however.

A proposed $52 billion in funding for domestic chipmakers already passed through the Senate and is garnering support from both Republicans and Democrats alike.

The bill is expected to become law sooner rather than later… which means this industry is about to get an influx of cash.

The entire chip industry has been experiencing a drastic reshuffling — with 2020 setting M&A records thanks to huge deals from Nvidia, AMD and Analog Devices (just to name a few).

Big firms used the last year to swallow up smaller players… and I expect this trend to only accelerate with the incoming funding.