Equipment tool makers swing harder than [[OSATs - Outsourced Semiconductor Assembly and Test]] because orders are lumpy and tied directly to customer capex cycles. When demand is strong, bookings surge and lead times extend. When customers pause, orders can drop 50-70% in a quarter. This creates brutal volatility in revenue and profitability. **Why it's hard to time:** Tool orders lead actual capacity ramps by 12-18 months. The market extrapolates current order weakness forward, often right when the next upcycle is forming. **Where value shows up:** Net cash balance sheets plus technology leadership. Companies like [[Kulicke & Soffa - KLIC]] and [[BESI - Hybrid Bonding Leader]] can survive downturns and capture upside when adoption inflects. **What to watch:** Bookings momentum, not just revenue. Tools turn before OSATs. If bookings recover while revenue stays weak, that's your early signal. **The trap:** Buying on a strong quarter when orders have already peaked. Equipment names often hit valuation extremes at cycle highs. Wait for weakness. **Balance sheet check:** Prefer net cash or minimal leverage. Cyclicals with debt can face forced selling in downturns, creating permanent capital impairment. Apply this to [[Advanced Packaging Equipment]] companies. They offer torque but require smaller position sizing than OSATs due to volatility. Links: [[Advanced Packaging MOC]], [[OSAT Value Investing Framework]], [[Packaging Capacity Bottleneck]] --- #investing #semiconductors