PDF Solutions (PDFS): Pioneering Yield Improvement in Semiconductor Manufacturing

Meridian Funds, managed by ArrowMark Partners, released its second-quarter 2026 investor letter for "Meridian Contrarian Fund". The letter can be downloaded here . U.S. equity markets experienced a strong recovery in Q2 2026, driven by improved sentiment following de-escalation of geopolitical tensions and retreating energy prices. S&P 500 companies reported first-quarter profit growth above expectations, bolstering investor confidence. Significant gains in semiconductor and memory chip stocks were fueled by an accelerated AI investment cycle. The Russell 2500 Index saw a 20.26% return, notably propelled by the Information Technology sector, which accounted for nearly 50% of the index's gains. The Meridian Contrarian Fund returned 17.75%, underperforming both the Russell 2500 Index and the Russell 2500 Value Index. Looking ahead, the investment strategy remains focused on finding value in overlooked companies. Also, check the fund's top five holdings to see its best picks in 2026.

In its second-quarter 2026 investor letter, Meridian Contrarian Fund highlighted PDF Solutions, Inc. (NASDAQ: PDFS ) as a leading contributor. PDF Solutions, Inc. (NASDAQ:PDFS) provides proprietary software, physical intellectual property for integrated circuit designs, electrical measurement hardware tools, proven methodologies, and professional services. On September 03, 2026, PDF Solutions, Inc. (NASDAQ:PDFS) closed at $43.46 per share. Over the past month, PDF Solutions, Inc. (NASDAQ:PDFS). declined 7.31%, and its shares gained 126.82% over the past 52 weeks. PDF Solutions, Inc. (NASDAQ:PDFS) has a market capitalization of $1.89 billion.

Meridian Contrarian Fund stated the following regarding PDF Solutions, Inc. (NASDAQ:PDFS) in its Q2 2026 investor letter:

"PDF Solutions, Inc. (NASDAQ:PDFS) is a data analytics company serving the semiconductor industry through a proprietary combination of software, hardware, and services. The company's platforms deliver manufacturing analytics to fabs, fabless designers, equipment makers, and test companies, enabling customers to substantially improve production yields and reduce development costs. PDFS underwent a significant business model transformation around 2019, leveraging AI to convert decades of consulting expertise into scalable, recurring software products — a transition that meaningfully improved the company's long-term economics. A subsequent earnings decline in late 2023 and early 2024, driven by a cyclical end market downturn and investment spending on a new inspection product, created an attractive entry point. We invested based on our view that PDFS's yield improvement tools will become increasingly valuable as semiconductor complexity and development costs continue to rise — a structural tailwind that we believe is still in its early stages. PDFS delivered strong results during the quarter, with positive earnings complemented by broad market enthusiasm for the semiconductor sector. We trimmed our position into strength consistent with our standard risk management discipline but remain investors based on our positive view of the company's long-term growth outlook."