FormFactor Drifting Lower As Cracks Appear In Leading-Edge Chip Demand Trends

FormFactor (NASDAQ:FORM) has never been an especially easy company to model, as it has relatively few competitors that report detailed information, its customer base is quite concentrated, and short lead-times make for sometimes seemingly countercyclical behavior relative to the semiconductor industry. To that end, while chip companies are still reporting rather healthy growth, FormFactor has warned investors about emerging weakness in leading-edge chip demand from broad verticals like compute and mobile.

FormFactor shares are down about 6% since my last update, with the shares chopping lower throughout 2022 on growing concerns about the imminent end of this unusually strong chip cycle. Relative to the broader SOX index and leading customers like Intel (INTC) and TSMC (TSM), that decline hasn’t been so bad.

I do believe that FormFactor will be fine over the long term, even with increased competition from Italy’s Technoprobe (TPRO.MI), as leading-edge nodes requiring increasingly sophisticated probe cards that will further narrow the market to the top suppliers and support both healthy revenue growth and margins.

 

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FormFactor Drifting Lower As Cracks Appear In Leading-Edge Chip Demand Trends