Comet (SWX: COTN)
- Jean-Louis Hua
- Sep 11, 2025
- 4 min read
Updated: Dec 10, 2025
Full Investment Analysis
Valuation Materials
September 12, 2025 • Technology • BUY RECOMMENDATION
A Semiconductor Niche Leader Set to Re-rate with the Cycle
Comet Holding is a Swiss small-cap supplying critical components to the semiconductor industry, a niche player combining technological leadership and cyclical leverage. Through its Plasma Control Technologies (PCT) and X-ray divisions, it provides equipment used in the manufacturing and inspection of logic chips, memory, and advanced packaging
The company combines strong cyclical exposure with structural tailwinds
Around 75% of its sales come from semiconductors, including c. 50% from memory, a segment now rebounding as prices recover, inventories normalize, and volumes increase. Yet Comet’s share price has lagged the broader sector, creating an attractive catch-up opportunity
The rise of AI and advanced packaging is driving higher process complexity, requiring higher plasma control, more inspection steps, and greater precision – directly increasing demand for Comet’s technologies
Technological leadership remains a key differentiator. Comet is the only player offering a fully integrated plasma control system, where generator, matchbox, and software communicate seamlessly in real time. This integration enables higher plasma stability and better yields, critical for advanced nodes and complex chip architectures
Comet also benefits from strong operating leverage and a leaner cost base after recent restructuring (US site closure, Malaysian site ramp-up). With Synertia scaling and semi demand recovering, margins are well positioned to rebound next cycle
The timing is attractive: the semiconductor cycle is turning, demand is improving, and margins are set to recover. The recent post-Q2 pullback (-30-40% after guidance cut) looks excessive as fundamentals remain solid. Our DCF suggests c. 26% upside, offering an appealing entry point given Comet’s positioning and margin recovery potential
THE MAIN REASON #1 – Cycle Turning, Valuation Still Lagging
The semiconductor cycle is clearly turning, while Comet’s share price has not re-rated yet. Around 75% of its sales come from semiconductors, including c. 50% from memory. The segment shows clear signs of rebound as prices are increasing, inventories normalizing, and volumes accelerating
However, Comet’s revenues typically lag the memory recovery because it sells its subsystems to OEMs, which themselves sell to fabs. So there is a natural cycle delay, which explains why Comet’s revenues have not yet reflected the recovery
In addition, the guidance cut last quarter (2Q25) triggered a sharp 30-40% share price decrease – which, in my view, reflects cyclical timing rather than any change in fundamentals. Management explained the cut by:
Orders being pushed out to 2026, not cancelled
Geographical mix shift toward Asia weighing on margins: which I see as typical in the semi cycle, as Asian demand usually restarts before Europe and the US. The mix should rebalance within a few months, supporting margins
As the cycle strengthens and short-term distortions fade, Comet should begin to reflect the recovery in its valuation
The semiconductor industry is structurally growing, with global semi sales expected to reach $1tr by 2030 (vs. c. $600bn in 2024), driven by AI, HPC, automotive, and 3D packaging. These drivers significantly increase the complexity of chip architectures, leading to more etching, deposition, and inspection steps – all of which require advanced RF plasma control and X-ray inspection
THE MAIN REASON #2 – Synertia: A True Technological Edge in Advanced Nodes
Comet offers the best-in-class RF plasma control through Synertia, the only fully integrated solution (combining generator, matchbox, and software) critical at sub-5nm nodes and in advanced packaging
Unlike competitors that sell components separately, Synertia enables direct generator-to-matchbox communication, improving process efficiency and yield
This positions Comet to benefit more than peers from the upcoming capex rebound in advanced nodes
On the X-ray side, Comet’s proprietary Dragonfly software enables 3D visualization and AI-powered analysis with submicron precision, optimized for advanced packaging inspection
THE MAIN REASON #3 – Leaner Operations Position Comet for Margin Recovery
Management has shown strong strategic discipline in the past, divesting non-core eBeam activities and refocusing on high-growth semiconductor segments
Recent restructuring measures are improving cost efficiency: the US site has been closed, the Malaysian hub is ramping up, and lean manufacturing initiatives are being implemented
Comet’s business model also offers strong operating leverage, which should materialize as semiconductor volumes recover. In addition, the mix shift toward the higher-margin PCT division further supports margin expansion
With both effects combined, EBIT margins are expected to rebound toward 20-25% over the next cycle (vs. prior peak at 17%)
For a deeper dive into Comet’s market dynamics, competitive advantages, and long-term value drivers, download the full 5-page analysis available below.
This report addresses several fundamental questions, such as:
How does Comet’s fixed cost base amplify margins both up and down the cycle?
Is Synertia a genuine technological advantage or mostly a marketing narrative?
What explains the margin gap between PCT and X-ray divisions?
Why did the stock fall 30-40 % after Q2, and was the market reaction justified?
What needs to happen for EBIT to move from c.9% (2024) toward management’s 20-25% target?
Is semiconductor equipment still a structurally attractive industry over the long run?
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