Teradyne (TER) 21 Oct 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you standing by, and welcome to the Third Quarter 2020 Teradyne Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator like Blanchard, conference Relations. Vice now speaker to hand Andy today, President to would over the your I of Investor go ahead, Please sir.

discussion by our Good welcome Mark Jagiela; financial Josh. everyone, CFO, CEO, I'm of Sanjay our our Mehta. results. morning you, recent Teradyne's this Thank joined and most morning to and

our matters involve to discuss along was XXXX. we'll for of most statements. Safe the from outlook that helpful include filings. this contained last call remarks, forward-looking will differ Factors opening our the The our results We following providing Risk the our our will release details encourage of slides we you SEC discussion. results review may you performance as well to after Investor the quarter be with available via The same of today They third the for could current evening. We're as expectations. recent Following materially page page Replay in in to release the provide cause that be management's the Teradyne's XXXX's issued website press earnings containing third quarter statements quarter, ends. on fourth the Harbor that of call

Additionally, no those and call. developments of are them of as result we as obligation today forward-looking statements made take a update this to occurring after

measures. non-GAAP During today's to call, financial make we'll reference

for regulations. Statement the to most page GAAP in Harbor Also, and information posted the changes Investor additional note take website. of pandemic export comparable concerning these reconciliation related non-GAAP deck directly release and have press please to the to COVID-XX including measure, We on our U.S. slide measures where financial financial the risks of the available Safe special the

focused next earnings UBS. Looking ahead to Credit industrial participate by Teradyne call, in Conferences now Suisse, hosted Baird, and or Research, technology and Wolfe Investor expects between our

the with the on agenda. rest get of let's Now,

will outlook. and then on our trade quarter. recent our First, quarterly current market offer our with future fourth results, Mark, will details results, our the conditions, along Sanjay regulations, comment on for more guidance

answer your scheduled will hour. is We And Mark? questions. call this one then for

Thanks, Andy. remarks joining Good three today morning, everyone, thanks My topics. us. prepared will for cover and

of First, quarter the about beyond. markets regulations the XXXX with third, thinking the as I'll second, nine automation of impacts on into months highlights year our you trade year; and how latest closeout Teradyne; and and the next the first the third and of we and look share test we're

reflect strength Our our third quarter and results test guidance above of the continued were businesses.

somewhat XXXX, as Throughout are from level. and in the sales operating the increased short-term demand have non-GAAP XX% Additionally, our at now industrial the At we XXXX EPS ago Semi of across our QX both above been from in than Test QX, and results which were the with better initial no end our ecosystem replaced than semiconductor at guidance, mid-point higher this is clear seen in July. forecasts, and actual we in has markets. XXXX, cautious The were QX and QX America quarterly in demand, QX impact guidance businesses grew upside substantially exception. year Europe Throughout and level forecast XX% trough company the has our tests XX% seen is automation in expected North levels above manufacturing improve. grew XXXX which activities we

per line back our Teradyne allows show operating efforts XX%. partners, employees, our share our the results the and We of the the model. months are and to supply first this up XX% and to run at months new sales us and and respond of nine products that earnings resilience through success related up of designing are non-GAAP nine pipeline manufacturing performance to continue Stepping our a looking to the upside. year,

the a as Semi billion, linear pandemic on XXXX's Our about remain SOC while level XX% reflecting Test, flat be industrial industrial, roughly markets estimate year-to-date, we as basis $X.X XX% impact. businesses collectively revenue In automotive, automation and with grew market contracted test the reported will depressed.

in phones tier mobility However, our test be be about billion. to of XX% cell in excess that's this platform test mobility to is to and new continues test, investments grow shipments each Within increases complexity is and This our demand due of business Yet wins. rate continues Teradyne power to positioned. processing mid especially year-to-date a ramping unit and and principal unit data. and are unit of is XXXX, when high solidly this expected UltraFLEXplus manage high storage at X.X intensity the density multiple to test related where in SOC phone complexity of notable in place to shipment of strong arrays in which the test is to The significant These collective the decline to associated growth the up design is are the to driver silicon. smartphone disproportionate seeing XX% decline. camera smartphones,

complexity high needed XG. is Another fraction phones Less silicon to XXX those will communication. of phones and enable features. of million millimeter extra expected are XG-enabled adopters a only driver wave be the support these are XXXX than tier early these And to in

to The due XE, connectivity of spot. another in shipment from LitePoint, growing million up be are in increasing WiFi, So despite the production million. to up In like double in in months year-to-date flash adoption of storage last to Level in our year-to-date XG we our is sales tests System XG $XXX still we storage bright Recall XXX over Test to markets and XXXX. million XX% in than XX% in adoption. investments. the up expect bump defense-related XXX has advanced demand strength of nearly served from The is HDD test very on win to growth are and ramp Memory LPDDRX our revenues market Magnum EPIC System and with XXXX And stages revenues memory at up in combined XX% driven XXXX. standards more and through XXXX likely nine XXXX, XX% continued about are Test, share sales test. early about year, test product

significant in the we automation demand and gains. uptick demand quarter saw growth North a to growth steady a QX with industrial over basis. earlier expect XX% in forma and in China in as showed second XX% noted continues Europe, AutoGuide on As grew win XX% XXXX trough. America off we UR of accounts in new pro

work Regarding on of Huawei. fleet are the the do market the China last alternative Huawei gap But to that's material reabsorbed we trade, support into restrictions case our their fill end test these China. military tests we the the noted regulations compliance as not sources In costs. expect in increased require restrictions, impact any already user into and sales being of silicon of testers the previously by installed at supply OSAT to to at created device growing quarter,

to For will the to respond on as have basis. and the call in OSAT example, at to customers to we XXXX This a to Shifting needs repurposing on close to increase make fourth continue conservatively unique the future, even up it's difficult meet demand. third quarter. in Customers and quarterly orders continues how it's XXXX difficult will an seen to likely upgrade predict of forecast installed in been shape these the upgrading into reconfigure testers quarter, customers. new

over speeds, speed additional of of LitePoint, test accelerate indicators ultra-wideband mind, fundamental drive traditional automotive by base complexity XXXX, the of newer design will units bid In existing roadmaps driver healthy NVMe in we is should intensity analog increasing so edge along both beyond DRAM key complex also I'll next-generation in With demand semiconductor test higher install test of DDRX itself in in continued transition flash billions We'll resilient interesting AI markets just test device a storage is Longer-term growth a enhance area demand wildcard. flash test, WiFi in growth. will bit few of and A the sustainable growth SOC remain growth. are underway on has our growth out XG watching X, of wins in of However, continued to be standards, for for UFS be is that integration, market test AI XX% plus is comment the XE, for a to quality in the proven driver in WiFi growth and and XXXX, COVID market After chip the growth that the the testers. connectivity which and XG signs annual interface. are interface and and business. the driving continued will drive mid-term. should watching. and The X another test show requirements rate higher connectivity the unit drivers early XXXX, devices and In additional be demand. along photography, the of the the further increase with drivers into expect and Consistent standard require for level Wave, that standards memory memory, high we the underlying increasing higher test, the support performance in key. both In should to recovery exabyte that system we be video Millimeter At complexity watching torrid with will of still smartphone refresh complexity entire performance and complexity the adoption increases tests the HDD intensity. growth. and And place. another

in customers. prone investment are individual However, swings both narrow to markets and levels at

material and to so and do only technical well-aligned are is handling to their Our to quick how confident industrial long-term manufacturing automation question ability we high are economy returns return help. in manufacturing businesses in trends growth. The to economic the

past, and as invest building spend customers double-digit we grow continues be performance stage time. adoption will software and they to products predict the trying drivers lot making AutoGuide semiconductors at Among in across complexity industrial things, continue expansion. not Despite We customers I've logistics, do automation will in trying scale products automation, expanding advanced the demand We We of the investment the chip position. too our long-term positioned noted growth. along to and right to expand R&D other plans. set our time retail, and customers. generally We distribution the various right comments, believe time to universe short-term don't XXXX to our continue much at that affect Similarly, cost of to to global of of attractive by the the right years improve with in growth use our blocks leading predict widen multiple to as with for capability key spend the drivers. of of economically economy in these will a automotive the do mechanical underlying an want the sensor the e-commerce,

operating inevitable ups the and with of deal built strategy model have cycles. efficiently with the on fundamental and our We beliefs built these flexibility downs to our economic

note, optimistic the an what So while predict XXXX, delivered under employees difficult results we lies our finished on company remarkable can't -- very in the across we ahead XXXX circumstances. company,

test to new seen with financial turn Our I'll are well-stocked products our details. growth. With for and are market drive future and strong pipelines that, AI the over acceptance, Sanjay things to products R&D future

my on how comments Thank and you, our Mark, our QX COVID is QX mid-point on business, hello our and review outlook provide comment results, the In guidance, remarks at guidance. everyone. full-year our financial financial of I'll QX impacting

higher of also quarter Our Test which above in just non-GAAP a sales above margin and result than is and XX% of million non-GAAP were Improved a revenue a third enabled tax the high-end high-end Strengthen range, higher rate. the the a $XXX test guidance range. of highlight. of Semi $X.XX operating was forecasted sales, offset the partially which profit were our by storage EPS,

increase dividends, flash enabled million. which $XX an the in our applications $XXX increased test million of and decreased is earnings. the included compute on non-GAAP marketable non-GAAP had the $XXX minimum up In unit with tax QX. XX% $XXX to catch-up our in QX, shipments share year-to-date short-term foreign saw XXXX. debt. and SOC rate as in diluted in mobility cash non-GAAP $X.X memory U.S. were Semi and were non-GAAP to from ended our foreign XX.X% the system. where Test strength Memory, QX a expenses We tax and XXXX million, by to one in cash was $XXX rate and We solution days. $XX quarter. of generated tax the had sales at free Inventory across million count $XXX forecast capital Our our million. customer continued securities $XXX million. of We earnings, driven record DRAM. rate in expenses quarter The decreased higher annual million was resulted and At quarter our approximately which EPIC shipments prior had million Semi XX.X%, from Magnum UltraFLEXplus continued In saw were DSO XX.X%. level, tax increase we operating in estimated flow million, shipments $XXX paid in the test our SOC strength we quarter business billion to XX XX% no and broad in Test ramp in in

continue to SOC tests. products encouraging market both technology We to has expect well-aligned been as to applications gain memory these very they're and to-date, and in acceptance trends new

million, from system X% test very made was level. star QX As the up million. both Energid to and lead production $XX quarter. in Test. $XX $XX the XXXX analog to the strong flat Mark seeing second Defence time deliver Industrial markets $XX softened XX% to AG analog down Sales are quarter, HDD outperformed results, Rounding were test our and analog at in and strong Several sales XX%, in was have we versus low see portfolio, QX delivered unexpected MiR $XXX some million and companies results. the pickup up XXXX we XXXX noted, the QX as LitePoint test System quarter-over-quarter. expected some UR the growth million as short and quarter and microcontroller of Shifting revenue and test aerospace XXXX. historically demand remained result. level QX from million, expectations. remainder. and Storage million after out automotive a the million a from But $XX at markets to in Automation combined the levels $XX in did contributed their board

continued has year-over-year territories and balanced increases pandemic several impacted globe, positive different the we in COVID be sales. in of automation, pace the go-to-market in signs industrial IA some the global the short-term. COVID-XX should to negatively in While seeing a tied of signs across our efforts in improvement These by and are the recovery seeing over predicting uncertainty geographies

recognize through. on Teradyne, during XXXX. and still year the pandemic our customers, months than In prior suppliers, will supply shortages the chains to better going supply our engineering the demand the with skill remarks; we're COVID-XX. of new into to customers, successfully said continue consistent our focus their pandemic: spot overcome our requirements. a the incredible continued wide still pandemic safety variety work employees, our And acknowledge through impact by quarter, of chain must to ago. and other challenges the our At achieve and also products six issues execution Great the our of challenges Turning supporting much of there's I objectives. during line likely in issues employees, introducing call of global spot way. remain want supply our of to late that and I earnings and coronavirus overcoming impact financial significant line forward. work operations a in priorities along my uncertainty our products through families we in delivering how Operationally to quarter. this partners are again, team issues supplier to customer We the In October, while market the going and remainder to That teams the meet and execution encounter expect during a and

range earlier. time uncertainties continues guidance typical potential short-lead impacts business noted to reflect some be than these Our and wider of the to

execute, share grow to continues Our portfolio test and revenues.

we our contract capacity the result, are and diversity supply manufacturers our resilience manufacturing. some and include alongside building larger increase geographic Specific and investing components stocks supply contract a our As actions and in buffer of chain. to increasing

other million Shows, quarter. $X per savings million expenditures we these go-to-market OpEx when spending, During pandemic, to expect Post back to normal, were The returning to activities. P&L. $XX our travel, pandemic, the to Trade to the and come approximately types we reduced our

outlook fourth quarter. the for to the Moving

convertible I interest to margin that happy QX, historical and and XXXX. headwinds plan and We improvement second are QX. of of non-cash is $XXX driven half in XX% XX% expected the year ahead is excludes intangibles, from $X.XX ramps. new supply mid-point expect to in in QX, the on product XXX revenue expenses before EPS acquired The volume, be of million on profit imputed our $XXX chain our sales. expect of increased and in margins be prior up diluted noted to non-GAAP of debt. now This XX%. In margins expected XX% earlier million we're gross million to on In report gross the The of to improved to than XX% execution by to returning to levels guidance $X.XX amortization we operating in QX in guidance, the of I'm operating XX% shares. at mix, a guidance

you by As last positively test both noted, SOC our surprised can demand see we've Mark since memory been and call.

in customers strength also primary in lead driver, Continued was seen unforecasted we've but the demand portfolio. elsewhere expedited several for test mobility with solutions test times our

solutions analog demand utilizing applications Eagle example, for systems up in memory driven systems Magnum our QX. also DRAM EPIC have For test our and

out over have the We pattern this months. play last several seen

perspective, mobility, new slowdown more be than expected growth will Looking our XX%, at be a along high guidance, XXXX be our the test a the businesses. QX down $X.XX. XXXX, margin from impact than XX% with the the billion full-year should approximately reflecting short-term in our IA has by short-term $X.X for semiconductor At and ramps full-year impact of above products. the Gross from of shipments EPS revenues of non-GAAP financial for mid-point faster above been offset in in should of

spend economic we'll $XXX to as And the we from of expect the pandemic operating in depth it million start is $XXX duration of and be full-year. we the At high months, consequences. profit unclear the up XX.X%. and to expected XXXX. Through the CapEx on full-year rate rate the was the Our XXXX million for XX% tax non-GAAP in nine spent XXs, will our be

As we actions a position. cash liquidity took to strengthen our result, and

share with For million XXX on end example, shares. we year April diluted to approximately suspended and expect the buybacks X,

Given for our you XXXX. share part balanced our on that been Plan repurchases a Return our we'll call January of have update in capital allocation historically strategy Capital

above difficult EPS We'll and call. again, than of from the that update at closeout XXXX, prevents environment from efforts. margins gross political and of you environment the at sales OpEx QX perspective, be demand range XXXX grow. ahead, To our macroeconomic summarize, of expect forecast to a our longer QX for in levels strength market Looking at entered our and mid-point the and with return can expected I range a we on perspective, employees partners The to recovery, and inside timing high-level mobility a provide model operational historical earnings the But memory. on of a our and uncertainty. revenue a thank conditions, working model. and we From We environment, of and us higher with term and financial outstanding all their uncertainty add guidance QX modeling pandemic sizes. see will of incredible XXXX in January performance earnings an speculating to model earnings you the

closely. is of For the the full-year share year us market to when to we the The in as continue market than Test enable industrial traction we our automation gains and segment exit showing invest in early increased entered. in monitor progress this signs business improvement Semi we and stronger storage

feel whatever turn XXXX, about our perspective estimate and comes limited, good be too market not product, and a in execution While from back our we'll It's environment. you've July, overall, to macroeconomic With early prepared operation, I'll way. our for we the things XXXX that, as visibility balance in during demand a sheet Andy. to shocks we're since seen to is early challenging immune but

please one a to some Sanjay. we Please. Thanks, And to as now like take would and questions. question limit Josh follow-up. a yourself reminder,

[Operator Instructions].

Vivek Our Bank first of comes America. from comment question Arya or of line the from

Your line is open.

much with already congratulations the of your your all feature XG in has the mobility execution. All results I'm thought year? I strong contribute that question to start already did the large their XXXX calendar right. Thanks at think says you and results and models curious versus what Millimeter for the XG ones taking now and my Mark, on how the Wave. U.S. And context customer your

does growth in you're more going So it what what -- where content on unit are functions? least to than and at you just XG it now rather journey? mean growth is mobility-related the when see you TAM comes dependent So that it forward, as that

Yes.

greater refresh XXX been about the to just million peak as would the we've years. talking or we $XXX And to on $XXX that XX% would that the built-in. level in we run into TAM, three of that million adder So a cell that at market. adder will in and the Millimeter most phones timeframe than expect XXX, for have million expect timeframe, XG that $XXX -- roughly out Wave would capability XXXX/XXXX And we're four

of that's just sort a expected so year, probably higher than certainly, it's year we not that but more. the -- we more baseline. Where phones, this on are So was, cell content this dramatically million than of we XG $XX expected, about

being market thought to be of market at may the have it what a $XXX million we million. instead closer might $XXX So

other maybe market speaking point XG XXX terms million million test about, support any equipment to situation, -- XG of of XXX to units in the make the for is you customer facilitated capability. Now, specific without about

small what so of years. few fraction happen still a will And the it's over next

do next Teradyne's billion the that few a the in But to is years, other that So that XG market to can there, share our think, are I X.XX XX%. market concentration that roughly matter. move phones now, for remains out over the assume you is different space going

position have pretty happened good year, but in very a next we're few. we concentrated over what's happening So what in the this

look tougher I'm curious board -- Thank customer but were the you face market had strong this comparisons or perspective just division into next you know wise. But think there -- that there product a And do XXXX year. as tougher giving, for after those my of was across IA, comparison any of you. follow-up, almost or markets end in year face one-offs, trend not think specific year, outside that what year-on-year every you next from I you either you're very outlook, and

listen what like said of wildcard Yes. but phenomenal no, test beat markets telling -- other us, that's but, we that And have had maybe I a than more where And story. think it of see a of room year in doub All issue of still cop-out, boy, probably customer that's cite script run, growth a a the thing the in the that the I showed a has don't it's to we storage to that their there. this be bit we what year. of customers going with own than that the base. year are to sounds one say, I sort others. one's would If to thin But bit any wildcard seen terms again, I one-off more is piece in a doubling would next a the market in that XXXX tough sales test we've don't. if And

you. Thank

Stifel. or from from question Our the next comes comment Brian of line Chin

open. line Your now is

sustain Hi. at would can conditions unit year? instead just least and think XG X% Good TAM that TAM, letting yours if I but is could up, standpoint say likely a what for but first, and a realize XX% and/or a test for vacuum, stronger give in year. smartphone at to Mark. early mix Yes, a contracting sense test I thanks you from guess, morning, of demand and that growth, utilization market that least questions. those market breadth say on XX% us a provide few confidence the the to are degree is to curious to seeing directional again, next it's And not market a because maybe you next again, of next year you're shoot official continues outlook into you, to there these us grow reason ask any

Yes.

that hard you hard grow. that TAM to cite, would if it would -- in imagine think I wouldn't be scenario the market it

that at we're quarter so, there's next that and the We've And even proven not to predicting to one good variables. current you many out. but the ourselves or so

say. speculation gym. significantly so around gun But are a And for demand we're more cite yet both down still cell automotive, units shy out the that of issues in about you little unit could test jumping suppressed is the I phones, this year, the

two situation year a those So recovery still out is of unit next But areas unknown. economic COVID the bode volume world there, in should well. the is

-- not a going out just we're to too to go here speculate. far on limb try and So we're

enough. improvement? assume second, key That's auto. citing occurring real UR some XQ applications more can have I you're ongoing sounds to like color maybe this absent And on would fair such in the Okay. recovery and any maybe just sizable the sales that recovery XQ. seeing that's begun is and maybe in in into as And markets exhibit you provide markets

Yes. Sanjay. Hi, it's

couple seen online, in really of of U.S., manufacturing the kind we're reasons quarter actually why exceeded back comes bode this IA Europe of actually was year-over-year one So just, strength. both the XX%, And more we growth we've it's and a obviously, the in we've function seeing grew, guidance a we've as our China quarter-over-quarter seen growth a bit of seen growth. quarter. little markets color. we and What those and In UR and

grow. an then and that -- also so And from continues AG perspective to

Thank you.

Goldman comment comes or question next Toshiya from line the Our Sachs. of Hari

Your line is open.

Good morning. test. wanted both to in Mark, Thanks question SOC for and the on and share guidance. the taking quarter market and test you on strong ask congrats I memory

in segments. You're both clearly really executing well

due sustainability seeing into continuity your a more we I've share side, the the up got one-off? memory growth this similarly, the market about primarily year should customer QX. this be On we in the big follow-up. should strong again, or test share SOC you're are then, to a SOC test trajectory I you year, And to picking side the think that on test? when or largest very having in seeing Are support is is, question current within And guess that of quarter How in consider would you quick XXXX? elsewhere

the so do volatile a make good is any out question you whole market It's share very sense how it. Yes. year-to-year because of

Teradyne's this be example, probably somewhere share an SOC it's in last you mid-XXs. to market Just year going XX%, give the was year to around in

Last market So -- closer in would of it's real, real? real what's here's share how So probably it. characterize wasn't to terms it I was year's mid-XXs. probably XX% the

We have market and in share. what real buying we designs patterns of, said, I say, to let's year to But year the had be non-customer of last pick the is six tune real in, share year-over-year points like up due have five done -- probably mid-XXs. or we this that's it'll

-- low year, the last So this today. off on XX share we're that is low I'd that. lot XXs base a been that XX running there's of we're -- normalized the XX in going year say influences at at market to And probably position really

of as some into supplier decade, we've shift buyers that real equipment average share was to designed for systemic participated also into -- us. new share. a that new it exited our point. of have was huge Huawei segments some Teradyne's, some that's were segments past share. the that really The the And other below we we certainly but silicon And It's designed in like customer us. in Teradyne's Some case, a UltraFLEXplus in new that has redistributes, helps that causes not market bit are

would million $XXX growing new $XXX we a million XX, segment in $XXX entering about up looks it's in memory last to from I DRAM TAM what that. mid And let's that's XX EPIC. In XX with we share as of XXs this our where $XXX successful So really million memory, low to is fortunately, year, to under million the market Magnum DRAM point million, of significantly the about $XXX like to from in see covers happen now flash. were gone year is what's in and that gone gain on XXXX, a XXs based say, mathematically say we've

get is with And few memory and said that in to see we way products XXs. level given now next years. to we've legitimately the base, grow really low we've DRAM over our And the are what a as so been has I'd market close And us able year. segment to grown share going to and be that this brings our to true -- in reported customer that market XX% that footprint our say our share that

So give I two longwinded maybe you. that's touch But answer. points can are a those the

wanted as I over your then, past in you business for several investment you've in And on industrial R&D. years, in distribution network, been to color. mode Thank the growing follow-up, profitability. automation a ask investing quick the the I suppose

break-even around business, your how revenue in margin you're about helpful. IA Thank long-term we be given remind the currently, IA you. muted you if through think super what that kind for is would But should us levels. could of think I cycle target profitability and

Sure. Hi, it's Sanjay.

that our question QX, in Q had continue business IA because the year maybe profit. obviously, it we've bit big And In we lost go-to-market we color. higher rated to said or a was the half OpEx; were a we profit of grow about as money. -- We and reduced towards first investment operating year, run to increase you I'll and XXXX, XXXX So QX, one COVID the but an expect profit that around give we a in the in but XX%. slightly to expected of level. we in same of Recall be revenue there, operating lot to in of levels. the little revenues year, a entered hit profitable

We revenue our really from assuming that Shows, then but wavered going of haven't not engineering XXXX expectation with standpoint. plan, travel, cetera. that the concluded But obviously the to continues, some my investment has go-to-market, increase obviously, on Trade we're et

And so we to in heavily invest to industrial expect automation. continue

company in expect years, sorry, between the XX% it's over wouldn't we or is said So revenues we expect you grow. a the investment -- we what that over as XX%. then grow that to be mid-term, is average horizon And to that our of still the next several over the profitability kind would because at mode

you. Thank

or comes C.J. Our next from from of the question line Muse comment Evercore.

Your line is open.

guess, remember. as I issue look morning. Good you in. you some go XXXX, buying Thank because AP, your fully that back and question. I memory kind around, other Yes. Apple, guess, in XXXX, wanted I period, and constant XXXX, time I the continue if mobility of use in you came of for to, see But the guess, XXXX, strength players in to taking to testers, businesses Mark, back can't your despite, XXXX all

you does two, that could make of years look coming on as how RF look as XXXX? strength you're the around required, test of as one, particular Millimeter XG XG, like, you content, ramp, in what some you trajectory then capabilities the three silicon processing terms feel that what in forward and around the side and think back the of mobility well the look in to over the So seeing in to time, relative seeing you're here curious, Wave

Good question. Yes.

bit little a perspective. just So put in

market volumes. or close lower year, of was for go be TAM, mobility. equipment we in data the X.X estimate light will unit if And the mobility, billion This point. XXXX let's XXXX, back say, one timeframe and it a that's roughly billion that's for of test you to, So test to dollars

I'll not market XG data high-end XG and -- few we're phone XX% the test say, cameras about just into phone Another ago, apps of give does it talking about silicon processor. test is getting time the talking all phone phone all a much are if that long RF just and say, how I'm and in up content add question, look about from ask and stuff. is basis, take content XG and a And the other let's at now silicon a years you then all up all you typical to a to management point XG I'm coming unit today per the how all on the how a and the that It's that and the power does you that on it silicon? phones. take take, in that

stay growth tailwinds on there long and keeps should of lot that mobility the see as continued a as TAM. rolling around units cell XG be the can of reasonable you out So phones

It's share very here you a XX's about follow-up guess, question mid I talked helpful. as XXXX. in

XX linear could as well that So points, XXXX. On and the around anything to there bridge can to that you. of XX%. as last I I XX% you probably wins guess down can you a target call, talked bridge with around kind auto are those fact earnings the say say UltraFLEXplus you this particularly Thank can about And speak year? simply year in five what you right would of last versus

Yes.

So just on the shift.

around to I earlier, XX now, mentioned I'd as XX I'm of or right somewhere -- going share First our as use not say plus normalized minus. all, it's

get my XX there more points, this to the about do way So think how right in a probably clear mind. is we it. path And there's

share. of and back have to secured of that than as a in bit this normal ramp is the already component will The place UltraFLEXplus cited, So market one year. you in we key to when just inflator though of piece we've long that and a linear our that's strategy. where some segments a participated automotive We've a not time; share they're be higher it is, comes beginning

those segments bring get designing or that least us points So at platform to that you to need halfway should there. into XX XX to alone extra

pull edge So I position points UltraFLEXplus I couple that to establishes us rest it if that's But XX% AI this has maybe of a this journey, the at maybe in talking it's up is there the around analog of way, share piece my corner. growing, that script with of talking see devices can years, the in think. alluded encouraging. to UltraFLEXplus segment that growth another wins is that brings can we talking five another story, we're And kind and year we're brings that there's But five, are ramp now this if early of of the our design the itself, I of the we're way. last not is kind the us then that -- is something sort get And range. level and six by we're -- us devices that seven-ish

Operator? next the have we Can question, please?

Yes, sir.

SIG. from from the line question comes Our or comment next of Mehdi Hosseini

Your line open. is

question. for of regarding follow-ups your the QX. Couple Thanks taking sir. Yes,

some would Huawei helped what on testers adverse of So To on system SOC to I year second tests how the detailed with follow-up, the color that help were SOC separate upgrades strength its would useful, the you. elaborate advanced packaging last the extent the have mix new And what months looking HDD forward Thank and level and think on be about demand? an great. as services, any system six that if chiplets extent a from past semi can HDD you of upgrading would question or install test of impacted, system impact us tester. impact like a should have in

the It's one. first Yes. I'll Sanjay. Hi, Mehdi. take

OSATs We or silicon. new was of continue to through some expect business reconfigured being that are really did silicon the I demand we to testers it did have testers OSATs of upgrade from services was on at we in our high tied kind of get And perspective, perspective. drop other So increases -- very services a yes, a quarter existing the from some existing testers surprise once at in test see that customers. of or But [ph] well. it as would to repurposing we the quarter the migration of kind for say and providers, at other some

normal over a that So the expect short-term the up little we back be bit in to get to mid-term. very to

And then the HDD and SLT?

Yes.

fluctuates, So is, XX-XX, revenue roughly almost on split it it so about today HDD and way is the think the there but to SLT, roughly XX-XX.

actually a sides there's both of there's forward, -- lot upside Going on this.

terabyte have, is been rates. this historically plus -- more that what growth has driving to been So require -- a we operations intensity. sophisticated But on drives plus These to intensity. giga being really rather side, have the produced the test that story error-free the electronics XX high exabyte HDD has business are read-write and for roadmaps allow that density, that test similar

getting of top a we're multiplicative So side growth. HDD the a bit effect on on exabyte

that hardest -- test to is SLT optimistic our leg the that storage can continue stool to are we grow. of more a little in So of

here, noise Operator, by the some we're getting way.

level on go be -- they a side, that, to SLT and the module, premium. certainly, value-added that side system going tests, to into things sub-assembly chiplets testing the of so a like And an it, more higher other before for complexity speak, the the opportunity is presents so

sense mobility units of So theory. a to billions trials sense customers those that's And but see made various economically class in are remember parts, around it for if add we're test apart good to various year. insertion. a -- makes It's for those some

we SLT -- didn't ourselves yet a make haven't out can volume answered the really how that to on go and for really sense. we far question the down unit limb gone So is equation

one say of it's a a So still I'd wildcard. that bit

you. Thank

from Atif question Malik line comment Our and next from Citi. the of comes

open. is line Your

Thank you questions. for my Hi. taking

The you year? a us side. buy for your the the year, on opportunity could talk one is next customer that CPUs first can just for for next about the compute opportunity us than Mark, notebooks year about to American side for tablets. discussion compute in times There's Teradyne Mark. you if remind -- what's five this larger three Can talk be used North the

back again, an is in designed Teradyne specifically The that roughly 'XXs. break to hasn't segment. opportunity as give numbers, compute give participated was devices. of that's year us Well, you that right There's supply that And to in suppliers you compute the of just expect a think UltraFLEXplus since into the area the to a really that to because diversity disaggregation I chain devices bit million $XXX growing. for of TAM somewhere of the of compute a going now. in grow is market can total compute

there. mission will So in and that we the targeted UltraFLEXplus expect continue. that had It's some already success is

in area but year that's put average it it's for around million maybe grow to us, a market on to do now about the $XXX $XXX perspective, in or I think So million could rich it's two. a next

about. talk material the no from and like was of domestic military China's then, sales? about China's from expected demand QX, can restrictions QX your in logic percentage there both was impact and But as the is than what big Great. talked semiconductors end-use Sanjay, semiconductors And domestic if memory China total you to higher sales how and you you

Yes.

start So end. with I'll the maybe

sales of in our base. So to QX XX% trying roughly we're

are regulations there's it regulations to to end-use. internal it's perspective, or tied military and end-use compliance work the discussions military of SMIC has tremendous we doing compliant amount Really from or either with so about a true a we're with And the Huawei ensure that that on the earlier on feel providers are and not -- had front. made the end-market solution our market, position And the for we've silicon same providing a different that I end impact that think we in good silicon the material about that revenue our as remained stream. remarks, that is

we're are a we're be at servicing other OSATs there redeployed we being solutions. short-term going to for are solutions -- disruptions, it's talked service some about servicing now testers high the So that and that silicon upgrades

short-term. our long-term, So seeing we that's a shift feel positioned we the see as the type the in where you. about position of But we're good stuff in share Thank we're well. because it Operator

the from Sankar Company. or Our Cowen and next comment line of from question Krish comes

Your line is open.

calendar years because LPDDRX could an memory follow-up. Yes. more is had lot where you for time. taking it's XXXX. Hi, for two grown of look thanks Mark thanks five strength of it of be kind everything of memory on as see Do at cyclical understand at And for up down. SOC might the the SOC? for them. along prolonged like But market, in that I think increased And comes in a is hard complexity, and market I my qualitative last if four you but have to this or color the been four question. it's I the you very last then and a quantify years, a you test inflection at the has it memory else test

Yes.

of that. high-level lot years. of and compel and Certainly memory sustained investment the you're pretty And our believes are memory, right. the that's it Absolutely, cyclical transitions more it's on eminent, two a been past the that good are going could on investments over be LPDDRX few. for side. So less arguments There to DRAM that DDRX volatile team compelling because next

typical just don't past the nearly in in the see as decade. we've seen as memory I So downside

the going memory is alone pretty healthy. to DRAM the think keep market story I

tester question flash. phones camera the to demand is and a in lot flash out of flash. only interface generate phones encouraging and I'd read. and cell fleet there the flash an systems of needs moved And that's The So around innovation is the a of thing the one say obsolescence the then drives the relentless that cell in speeds be incredible is amount just quickly are drives tougher this pretty roadmaps to of of data These robust. and

say, years four four the of kind in it's or I'm next won't last optimistic as volatile that So the been, let's memory as in be five.

then Thanks how much of small And a as vertical industrial the much and it. coming It's Mark. side follow-up, medium how businesses? automation auto on Got the revenues from helpful. and are IA from are your

XX%.

Yes, here. so from Sanjay an --

So the from of in perspective, the auto neighbourhood XX%. it's

sorry, second question? And your

How much from SMB?

Small and medium sized businesses.

years, vast still a range, our We'd have don't past one to a XX% in the The have enterprises But that's the to majority been larger rough over of say, sales. percentage three that number. I'd sort been so but it's I out. that know. four of, dig growing running it's

Thank you.

question of Suisse. comment comes from or Credit Pitzer line next from the John Our

is line open. Your now

letting Yes. question. a on follow-up Good earlier morning, just guys. Mehdi's question the Thanks ask for to Mark, Huawei. me

and Now customers of installed curious the fact of you that or new you move a insight is base and be have of that to quarters? I something sitting and testers kind to the its kind of they customers? putting those guess, ability I'm much repurposed, need or large that customer in historically additional these into do at future despite can are lot extent up we about to OSATs worry you to -- And, results, that kind just here were a that how of

there's for there into a billion XXX we're visibility year. let's the is, Huawei utilization decent but picture have give of that the a we testers, say testers those So I parts high-level testing you out

go -- user unable they that this. reaction billion that's to that else the parts up is, matter to ends supply demand is But those supply much idle Huawei the got changing isn't somebody of jerk fact As somewhere. those first the the because testers, the has parts billion to oh, because of end XXX

by -- China to do of that gap the analogy. at typically and the outside So suppliers suppliers unit are this in filling moment are that billion those way

-- and parts of just similar silicon other parts they're sort nature. that shift testing the testing to then very idle, So suppliers' on high them had on that are that Huawei stamp them, brands these brand from those we testers that in but have

of upgrades over in in QX. earnest fleet started of sources to to supply the the So those shift facilitate that new

there's entire we're We not is good to seeing out QX. fleet up the pretty kind numbers repurposed that's we in numbers testers, end next When will that a somewhere clip repurposing the put second continue hard flushed at expect in already question that the despite the so tell. of in and of will we're putting and fact happening we're may guiding up those ending and last up guiding, quarter of year. the that, And that we until fully get that

strategy credible my then, at And guys follow-up, place in helpful. the to in created really Greg new Mark, as guy That's in a there bit you kind about IA in quarter, of time us we little and Smith. you how very if a the could overall the I'm of division and spend the form the what put of rationale role means efforts helping Greg's think sort and just there. wondering IA understand this should a it of

there past is business opportunities software here them bit as to of gave for semiconductor which a growth. is little -- strategy, both leverage, the businesses. of future now because sort a the will enhance those exceptional us leader of Greg on bear proven bring for for testament Most company more their since IA believes a through to us portfolio that are company phase resources and in who and further very can are look hardware differentiation years. be the where for a get handcuffs earn-out behind areas were have little bit those we great the resource investments But more test going think our how you at Greg And we give figure Yes. in us. has that's is for Thank that about that look we asking out there that looking personally in mission we common to Greg's driven and operating really a could of on and that our both And degrees of five we have freedom to us, businesses. a now for significant what Greg is lot it's to of M&A

you. Thank

from from comes comment Sidney of question line Deutsche next or Ho Bank. the Our

line is Your open.

test SOC today. taking for my two. mobility question is roughly on TAM have the My of question. first SOC Thanks the is half the I Great. market,

Maybe Mark, X.X us how still I think, mentioned of test help markets the run some below segments much decide the Can rate? the the us in normal be? within and of you this buckets are the X.X main are those you which remind billion markets other levels SOC what normal below year.

Okay. I'll rough the give you the numbers. -- sort of

some say compute actually of rough that half $XXX a are FPGAs, and $XXX a the There's It's roughly I So and that and That's its reasons rate. million stuff. we roughly but bit segment estimates, and another these talked normal earlier. good too. is spoke CPUs there's that million And year run automotive around about that little this for linear segment it's about. again, to million I'd growth AI and microcontrollers than its market. running. a less of XXX That's hot all it's just

million. be for a business normal Now, would that rate run XXX-ish

So that from as and is one certainly it's well. year last down

volatile, is like the normal and down that to track also -- high it's XXX industrial. probably Industrial but trending we the be it's up down not half. million. then it's as and in closer might is XXX one it's last to somewhere it's rate from So around run a And Xs

is XQ Great. lead businesses assume [indiscernible]? you any That's kind from -- any an in for supply in that demand of talked super does guidance kind My follow-up your increase short-term question -- QX. of Does lead the time headwinds time about of any helpful. constraints in

Right Sanjay now it's -- here.

not those that to us spot that solve are. components we're hurdles arise. what has replenishing believe feel are now, shown be got those there we things But a that last -- could we've And the there But right clearly perfect. months is our in -- we very come we're problems. we're six that and we So some some manufacturing. Nothing in good overcome if that capability issues up, can

point no at supply on. there's constraint So this

-- sneak one we're operator, in, one please. And to more going

our from of from comes final Sir, Okay. Timothy the Arcuri comment line or UBS. question

open. Your line is

Thanks. me Thanks Andy. in, for fitting

So I have two.

to you out your on not SOC start to trying year. at thing, that at from SharePoint. still Mark, And lot the -- would what first go to The I'm XX% be different whole roughly X.X, of the roughly mid you thought share it of figure TAM time mid-XXs. the thought would a it's The than

this are we kind of we're Here year. mid-XXs

really share to incremental it So sounds I customer you your where thousand basis click guess a more? Was you something I'm follow-up this trying XX million came biggest of whole can ordering I else? that double XG; said points that XG only is understand from. had Was the this like it's little not a And because swing on factor bit? the like market. for If

figure still where I'm trying your out versus from that So came to share expectations.

Yes.

the in And other that highest that, to underneath fill market was, thing out positioned has it's other that earlier more as and that? further why void shifted the year started of have didn't test. were semiconductor to a was come in place and customers. since occurred, at the regulations that Huawei see -- had on bit at market the described what So I highest, them Well, drive is we step the favorably for of our the would the just better to happened one suppliers happening level supply side when market and suppliers. those silicon and But

upside. an is that So

customers, our particular situation Our buying forecast. independent customers, that traditional than of are also had more we

is better that the on market has has on probably been our has side are fact and as but piece ramp I SOC company the think we those a is so most that that isn't the that side, another one, third is So of And high upside. two the ones. absolutely been expected, say memory which the than the an helped thing, well. I'd LPDDRX significant then total thing,

question. second the -- Got just I my for And then it. --

the on Just about point Huawei.

this some the much and upgrades from saw you you the required the seeing you? from sort are to that So how giving related capacity fleet Huawei upgrades I original for non-Huawei now the how upgrade revenue OSATs boost SOC fleet. of So you're OEMs? a XXX to quantify of Can bump boost the in much guess is for of these of

XX%, more but than It's less Yes. than X%.

are we again individually that us with this Again, in much folks are queue. for Folks, so And I'll much. Okay. follow-up care. Thanks quarter. thanks time. joining Take of out still the so

the and in This today's participating Ladies gentlemen, thank conference. you concludes program. for

have Everyone, wonderful disconnect. You a day. now may