Schulz Duggan
AI Supply-Chain Research, Optics/Memory/Macro, Original Asian/US Filings & Pricing
FormFactor's production-ready wafer-level CPO probe gives it a test opportunity at a major foundry, but that business depends on one customer. CEO Mike Slessor says the CPO piece flows through a foundry worth 10% of sales; he did not name it, though an analyst named TSMC. Triton tests photonic wafers before stacking; post-stack test remains difficult. FormFactor expects CPO test revenue to significantly exceed $20m this year and estimates a $400m market by 2030. x.comÂ
Buyer-defined optical failure and link-flap limits could set how much laser burn-in and rack validation test suppliers sell. OCP abstracts preview Lumentum's laser reliability and repair-time targets, Microsoft and Arista's XPO bit-error-rate tests, and a panel on link flaps; they do not yet give pass numbers. Test makers have seven OCP talks, none on optics, but those buyer specifications are where FormFactor, Teradyne, Aehr and Keysight could get paid. x.comÂ
FormFactor's new Pharos optical probe series is important news and potentially a major re-rating enabler. Launched September 23 for silicon photonics and co-packaged optics testing, it combines low-loss coupling, precise alignment, automated calibration and repeatability in a single probe family, per another investor's summary. x.comÂ
FormFactor is rated Buy amid the AI sector crash because it is important for HBM, advanced packaging and CPO, where its testing raises yields. Foundry test intensity is only set to increase as production grows. x.comÂ
FormFactor is expensive against its earnings, trading at about 38x when chip-equipment makers usually get 18x. Fair value sits at $60.06 to $76.44, or 18x next year's $3.79 EPS give or take 12%, so at $145.97 the price is about 91% above fair. The valuation also leans on the forecast, with forward EPS 177% above trailing. This is a levels-only read off reported earnings and revenue estimates, with no fundamental work. x.comÂ
FormFactor is evolving from an HBM probe-card play into a broader AI test platform as Nvidia emerges as a new logic-test market. Per Deutsche Bank, becoming a second source for Nvidia GPU probe cards at TSMC could reach $200M+ revenue by 2028, alongside about $400M of HBM revenue and a roughly $200M custom ASIC opportunity. Micron's print shows HBM demand exceeding supply, and taller, denser stacks make wafer-level testing more valuable. Valuation is the main risk after a 274% one-year rise. … Show more
FormFactor sits in test and packaging, the best corner of semiconductors this year, where much quiet money is being made in the layer that makes compute functional. It makes the probe cards that test chips and ranks first globally in test subsystems. Last quarter set a revenue record, up 32%, with gross margin up 510 basis points to 49% and EPS beating by 33%. DRAM probe card revenue hit a record on HBM, a product sold out through 2030. x.comÂ
FormFactor's 2030 target model implies either a still-high multiple in 2030 or disappointing share-price gains over the next few years. The model, cited via Citi and apparently management's own, targets $1.6B revenue, 55% gross margin and $5 EPS. The modeled TAM may prove higher, but a margin of safety means assuming today's high multiple won't stay as high. x.com x.com x.com x.comÂ
Soitec's SOI wafers remain necessary no matter who builds optical engines if co-packaged optics standards take hold. Around 95% of these photonics wafers come from Soitec, so consolidation among module makers changes the buyer, not the need for wafers. Large buyers such as TSMC or Broadcom could pressure pricing and seek a second source, though none is apparent before 2030. That pricing risk is by far smaller than the module makers' architecture risk. x.comÂ
Optical test suppliers benefit because CPO and NPO both need verified components. CPO needs screening before costly integration and checks after assembly; NPO modules must be known-good before installation. VCSELs change measurements, not the need for reliability checks. Broadcom's OCP slide shows 1,000+ fibers per chip package and automated testing. Avoid panic-selling FormFactor, Aehr, Keysight, Teradyne, Viavi, Advantest and Cohu; upside depends on adoption, volume and throughput. x.com x.com … Show more
Quantum computing's suppliers get paid whoever's machine wins, as steel mills did while most railroads went bankrupt. Chips, test benches, cryogenic freezers, inspection, lasers, vacuum gear and light must be bought regardless. Washington signed nine letters of intent worth about $2.013 billion before any machine was built, half to the one recipient with a working foundry. Only one name is in its buy zone; the rest await lower prices. Two flat quarters of cryogenic and control orders ends it. … Show more
Putting CPO optical engines in the interposer should make TSMC the leader at that packaging task. The OCI-MSA diagram shows an optical engine mounted on a high-density interposer; GlobalFoundries has a modest agreement in the area, but should not be expected to earn the same profit. x.comÂ
