Teradyne (TER) 26 Oct 222022 Q3 Earnings call transcript

Hello and thank you for standing by. Welcome to the Teradyne Q3 2022 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] It is now my pleasure to introduce Vice President of Investor Relations, Andy Blanchard.

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

our remarks, was evening. provide along opening issued our the press last XXXX. for quarter outlook XXXX’s third release our Following containing with details of our third performance we’ll quarter of The fourth for quarter results

of discussion. the you providing of website you we statements may The differ recent Investor safe harbor slides to We’re be Teradyne’s involve that earnings to the that on factors statement results contained matters forward-looking will be same in the will materially could in as most current call page following the page Replays to the this helpful management’s our the well as that via cause encourage call today review include from release that available SEC discuss after the risk We filings. expectations. ends.

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

comparable available During reconciliation concerning of additional the financial measures, these financial non-GAAP we’ll including reference our on were GAAP the directly measures. Investor information We’ve website. non-GAAP most measure make today’s financial call, posted to to page

industrial-focused between Looking or by our conferences investor expects and technology next now in hosted UBS. and Credit to ahead earnings call, participate Teradyne Baird, Suisse

agenda. rest the the with on of get let’s Now

answer hour. results is and new our questions market call more Sanjay scheduled for offer Mark along as First, will comment will the quarterly We’ll this for fourth our quarter. guidance on and and Greg quarter. with our one then the details conditions results Mark? your on we enter recent the then

term will Greg? and everyone, longer results our XQ then and Greg the financial the XQ review Andy. this quarter. Sanjay Thanks, of call, details describe provide thanks outlook. for the I’ll view, will In and us today’s morning. joining Hello,

morning, as with Teradyne’s guidance and earnings allowed test profits good At profit the level, above of and which everyone. quarter. and the of share. per third ship the $X.XX non-GAAP sales company but more sales million were Thanks, us Mark, bottlenecks, and our midpoint $XXX we revenue unfolded quarter in at than operating to some cleared planned, planned in supply semiconductor quarter the products the level, generally in

demand and in ADAS the Test guidance. increase in drive processors, million held continued battery year, by The subsequent July. half was declines On July, weaker demand realized in quarter demand the SOC in half tester of and in hand, seeing in than and to Putting forecast incremental associated three $XX reduced slowing offset compute reduced second million confirmed million. is wireless that About demand. products automation for about about we QX in end than test as in not on July. and expected the has industrial related the context. million unfold. million step market in $XXX as and the estimate that we other and shipment was charging and judgment about When were we decline our IA one-third noted into amount shipments how third up the partially been This our the in spoke highlight we infrastructure. half size was the plan and approximately silicon a the strength In management second With $XXX This June the was for SOC of was two-thirds, that market devices. ICs our second would $XXX carbide weaker overall already reflected Semi test $XXX we’re test backdrop, additional better of we automotive our smartphones, shipments months, strength

X% sales transistor constant rates constant multibillion platform both for terms. silicon from UltraFLEX are is in aligned will required currency, dollars hundreds Our revenue is and and often unique these suited and been exchange amps Automation dollar ago. XXXX, results SOC significant the in XX% carbide Group now transacted of and In Because in there changes have currency It’s QX in describe well our grew insignificant compared and of the growth well of is three year. XXXX the dollar incremental and that nine the for thousands Eagle platform first up volts revenue ADAS five for of our devices. in requirements were for processors first $XXX months of terms, XX% collectively In device notable months. automation. they Shifting with quarter types nine million to to will and QX is industrial add the years only XXXX XX% in TAM over about year’s QX X% the however, contracted last of

currency at grow will Looking from at below additional full in expect guidance. the constant two growth to X% we about be reflects currency the XXXX this the plan IA terms, terms, will in from growth factors. QX Even mid-XXs, about using IA is at year, XXXX constant in the come In midpoint XXXX of and our terms our XX%. dollar level

Europe industrial Europe, especially market for this have is and in is headwind our to in activity, and where slowing XX-point remained in contraction PMIs XX that First, zone automation largest growth. below dropped July a since. end

about channel, distribution expect continues reduce points. which five to our growth by Second, in labor scarcity we

and The channel from a when begins channel continued sales national and OEM we’ve welding supporting the have I While higher tending for XXXX. meaningful for introduction payload, markets. expands end Universal demand OEM coverage. partner us. international including number than expect XXXX contributor it Also, a be our powerful below palletizing, URXX of At customer machine growth shipping URXX The it spots just expansion growth to our longer-reach a few. is since will in stronger has grow highlight our its Robots, and results bright mid-year, IA, to we is UR capability to our plan, in been a to expected we driver in at

by customers that over sales first compared last the MiR, welding robots vertical. well At And we our with payload months to software expect to nine in this ship QX over example, marketing global year. our in to to is and network for distributors, prepare XX% related of the leverage. into sizes year, from of fleet our same channel same the by X,XXX management an backed For MiR grew customers while continue of team than of increasing these in back-office a increasingly significant more – engineering, with merged sizes having differentiator is same fleets kilograms thousands distribution our as a than greater as management number increased same grow. fleet fleet XXXX. XX large to This fleet customers end global AutoGuide sold with hundreds using XX% the On as important large XX the note, robots. we software has at broad range all offer expand The customers we

spares multiple offering. support Finally, through global the our are distribution about the to compared more growth doubled high than Industrial Across as investments of MiR products with to we first revenue and we’re the customer begin channels. months nine service us to foundation through X% differentiated to giving has continuing customers make expand Automation, support revenue with XXXX to

confident our back to growth pass rate While remain growing satisfied and With in these we that, I’ll strategy have Mark. to long-term it with not XXXX’s markets. we of taken improve, actions are now

our environment. in the Greg. markets and on I’ll longer-term regulatory the of of the view Thanks, impact changes comment

Although demand markets better across our as slowed than has our we July QX. in estimated call, the enter test

corrections, at three in noted duration has growth I each last X to of depth after the As challenging, is the of predicting XX months the but time, and these months. corrections returned

three last months view. anything We to the haven’t change seen in that

too next that and XXXX market markets in remain half it’s combined year’s will the likely be patterns first weak conditions, quarter industrial revenue than to full first macro while demand So on estimates to XX% expect offer historical early weak. environment QX. on QX the size, we market current our about softer relatively suggest and That, year with based

Looking I’ll and thinking at out for quantitative the how the year point too make ahead. about early full we’re year but it’s predictions the balloons anchors XXXX, to

First, the balloons.

more to and XX% expect largest year. technology X-nanometer to to than customer our semiconductor to to We XX% company industry from grow XXXX than the transition less in of sales next begin

a at will these a XXXX. conditions. to macro In expect are due Semiconductor and not are revenue inventory Balancing digestion in volumes Automation, full until we additional and In grow year-over-year anchors. them by manufacturing a be slowdown Industrial X-nanometer balloons amount past anchors. expect European stride than headwinds. Industrial pronounced historical in few decline However, hit level industrial peak unit worldwide expected growth XXXX to macro Automation, also slowing with are governed lower exact and as to we to the

January. should we view view year next better we’re So in full and a balanced of of keeping have the a year,

a in we’re XX% in growth In for case intact is line growth market and remains of growth trend businesses our Test, test the Test unit longer-term, on Semi Growth XXXX. compelling. IA and by complexity. Looking driven both and operating since

We such to in new over grow to ADAS Industrial chiplets applications AI, next on the few applications place we building all as X-nanometer, blocks new expect Automation, These technologies the continue architectures. compute those years. ramp future. as semiconductor in enable like In and remain drivers around emerging and bullish gate to complexity, remain technology including

ensures of and an While drivers growing we Cobot the economics many tasks for we’re capitalize strategy to favorable for demographics and years not enables underlying AMR Labor macro expanding market Cobots are the opportunity, conditions, can our us opportunity demand our that of on immune range perform to to recognize automation. come. and and

of their business. a This the significant focus restrictions, new likely as recent dynamic, situation Chinese XXXX. equipment combined and rather headwind indigenous a million have business. fab the with reduction to changes now, $XX been regulations regulations, $XXX is regulations our will in memory tighter while we memory test, in than volume million of about Regarding And mainly growing part but trade on see impact our makers wafer going as potential into these

manufacturing supply to in local On in support customers. footprint equation, trade team large operation and the services professional a we and a global China, our side the global place has support of have

global our these of activities. been part enabling we have As resiliency additional for planning, sites

current growth full environment, the Sanjay in of Given to our positioned deliver improve. details Sanjay? Despite now we in we you more balanced year. the plans. history. be Stepping back sites. growth as investments at drop and through accelerating you IA take capacity will our highest of for financial second with look in the on track these the the details. through to We’ve high Teradyne and will we’re the test other demand take our half, will Sanjay those core discipline growth financial revenue markets second

morning, trade our describe and update QX on the outlook. of impact you, regulations Thank provide details new I’ll our on everyone. Mark. you QX results, Good Today, the

Now to QX.

for operating expenses $XXX flat rate, Non-GAAP were $XXX had gross We XX% Non-GAAP for sales quarter quarter. rate. to now items, were XX.X% The Third spending due non-GAAP million. in one, a non-GAAP and customer EPS non-GAAP excluding tax the XX.XX% basis. Please About were OpEx non-GAAP on year was note, $X.XX. quarter quarter implemented of you was million, our second XX.X%. margins profit XX.X% use with controls. full the operating tax the should with discrete

to and $XX and and $XXX of delivering revenue industrial results semi and revenue million LitePoint, and infotainment $XXX million Looking with million contributed $XXX to autos, memory of flash at results. was unit shipments drove cleared of content the $XX smartphone System from the $XXX in contributing Wireless test In We the strength demand and DRAM, Storage Test increasing Test end continued group in and with Defense from lower in level analog new quarter, Semi two million. supply transitions In aerospace declining SOC, the down enabled perspective. strong the years. memory, year-over-year, the customers production million. Test primarily both business driving revenue with along in the memory constraints, autonomous which board highest of a memory some Test tied SOC WiFi $XX revenue million demand. the million China markets. standards indigenous XX% along EVs, at with in revenue had PC for past was to In because

Now was contributing guidance. with and million $XX MiR UR Industrial Automation. million. million to results include $XX IA MiR $XX auto revenue

As IA a Greg large outside portion sales noted, of U.S. are the

for XX% rest in And the perspective in the group we breakeven operating of in months, for For financial in range above slightly on XX% the quarter. a Below in about non-GAAP be a the to U.S. the basis was and From nine X% breakeven. the and third XX% XX% expect year, the full profit China were Europe, the the to group. planned sales the in of IA, remainder IA world. first

year, supply. this slowed has we’ve also Shifting to growth slowed As OpEx. in the growth

million supply to supply we in moved and deliver the noted in continues QX, months These to bottlenecks China QX at face the improve $XX the each end at guidance about a These amounts in global We issue. Looking continue quarter. of to to supply of million strategic from quarter but beginning the certain outside have products our are ago. range. high certain three relative trend our $XX fourth for manufacture services customers. to engineering issues, Switching

government take U.S. these the in to recent to concerns other the most to service has manufacturing, future been quarters. [Technical work to have and In next years Engineering in engineering several balance due flow. cash Shifting While the likely actions we’re immediate countries. XXXX impact sheet impacts, Difficulty] of and transition Services, work several underway for accelerating our expand we the potential will capabilities no complete to In accelerating expansion and achieve. about our our are operations, manufacturing strategy to strategy this

please gentlemen, by. and stand Ladies

conference momentarily. Your by. resume stand will Please

where John say lost it? Did we

Ladies by. and stand gentlemen, please

Your conference will resume momentarily.

Hey, Andrew.

go please Yes, ahead.

right. All

We’re go. ready to

Yes, go ahead. we live Please audience. are the with

Back Sanjay. to you

back and sheet flow. balance cash the to Shifting shifting go balance I’ll to the sheet. to

share in Our opportunistic the dividend to for quarter of about million our buybacks end days. million our schedule. the repurchase the of $XXX from the $XXX and through of million cash quarter approximately XX free came XX XXXX of and flat months quarter We original DSO had cash with the we Due million. totaled marketable $XX plan of down in at in QX. and included cash of Uses flow securities $XX full ahead finished retirement million debt share $XXX year, three million, payments the to buying $XXX

continued at repurchases began million opportunistic we’ve Since average has our Board of shares QX. $XX.XX. price an program share XXXX, repurchased authorized in Our in XX

$XXX million early to bonds debt, converted. date, convertible Regarding have of

to revolver. our Now

partners During and the QX, increased million. banking the of have revolver $XXX we worked $XXX from with to our capacity million

December XXXX. is Our facility until in credit place

Now to our outlook for QX.

run outlook million As rate product are QX of guidance three in spending $X.XX – delivery On acquired mix from the ahead $X.XX down diluted our on due is EPS operating non-GAAP to estimated to Semi manufacturing of the our at noted, Sales expected be fourth to a intangibles. sales. Greg the XX%. accelerating we operating OpEx at XX% of to million on midpoint expected QX XX% quarter $XXX with what quarter guidance driven lower is shares. to are by XX% ago, service gross volume, resiliency. our excludes mainly of XX% accelerated XXX fourth and in amortization $XXX profit and on – quarter at is to of months and expected between Fourth a million range non-GAAP Test. Fourth non-GAAP margins quarter

XX%. XXXX. $X.XX. be be At Looking year our year of of at revenue the the will EPS full XXXX should for an approximately of full the billion Gross midpoint guidance, with margin $X.X

year, we QX full and tests a IA in both planned businesses. for in spent than Regarding the OpEx bit lower

be will so full billion forecasted OpEx be We the margin similar couple A our with of gross X% resiliency midpoint at the at will OpEx growth trended of about points level. additional about model year. the from QX gross to down supply XXXX, expect on will ahead Recall, operating $X looking year we through up guidance. our flexes is spending QX note mix, XXXX because expect that of product QX’s margins. the first, I naturally revenue,

test our operating profit the forecasted Summing it our up, Second, prior XXXX revenue by all IA July. of less second portfolio in offset weaker midterm forecasted, driven be higher than We’ll in continued expecting and channel. Declines call. business tax by in the were at to model XX%. in half our in in rate, year Europe FX, challenges in the economic and January labor update we’re than is scarcity update

we as declined changes, January. of will we’re For the to the if XX% environment, ahead. have regardless supply the beginning a whatever approximately lies at strategy, scarcity driver and a spending whatever through downturn, from forecasts operating is model our in come great to the In X% lead XXXX, OpEx way, confident increase economic year anticipated may challenging view year-over-year XX% regulatory us versus or have our experience labor shortages, revenue team,

customers the to We that, With focus opportunities and markets. turn will tests automation continue over industrial on things and long-term our in I’ll to Andy.

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

line with [Sankar], me, question button. our comes Cowen. mute Pardon [Operator the from Krish, first check Instructions] please Krish your And

me? Hi. hear Can you

we Yes, can.

them. – for of I Yes. two Hey for thanks taking my that question. had thanks

curious, flow, draw? and resilient of you flow, next be the then automation First auto. that and drivers one, I mobile Or and tests for into seen I’m to demand just industrial the kind shoe that do is compute seen it industrial worry you Do you’ve Mark, auto – you’ve understand XXXX? ADAS think could

Yes.

probably we’re no is a automotive that. that think in strong. I the soften of is looking at little there’s bit and sign XXXX industrial just, moment It’s very to something

a at moment certainly time see very it that it and we not the has is the be We’re is year for at a automotive a flattening, that through But don’t all market the and but softening, well ADAS next size rise semiconductors year peak. EV QX. could on where dramatic such content

China exposure of had over million exposure or part memory. to $XX too, high the about headwind? $XXX you through What was is kind million there lot this that And OSATs? Got million a impact China follow-up, then the think of in was you curious, you it. headwind that Got $XXX million it. I’m helpful. $XX That’s probably very to mentioned quick mentioned the pretty the of I thought I XXXX.

a memory. lot related China to have for incremental us. that so we really of not restrictions headwind a There’s really that’s not OSAT, that headwind of is Most

much. it. very Thank it. you Got Got

our line comes And question CJ you. from with Evercore Muse ISI. Thank next of the

Yes, bit gross get detail question. good little taking on you guess, good to or afternoon more for I margins. hoping morning. the Thank a was

you little of margins bit to overall the more think and investments QX. guess, I engineering, a talked about how color resiliency give can XXXX? negatively I plans think impact And kind calendar about impacting into on and we outside should of manufacturing, China the there you

Sure. Hi, CJ, it’s Sanjay.

margins to plans. So I’ll get gross and the resiliency addressing

lot to a from QX Getting volume the working to, mix, years the grown third product into think years resiliency third, QX. And I So QX. what as approach. and the a to resiliency obviously over decline a several multi-country roughly QX continues on of of that third, we’ve couple and then been had into for of a past spending a bridge manufacturing plans, We’ve the of call we increase capacity. last

So took And capacity we and that a next of approach but the the in quarters. geographies, we’ve fundamentally from different chain to redundant couple supply from to from over just both perspective. manufacturing, have not accelerate chosen

accelerated an again is of seeing into perspective, that’ll spend you’re the second on XXXX. take in then manufacturing. little to create half the a from longer bit what So an services capacity engineering locations And different

Very helpful.

a when kind higher, your accelerating visibility in highlighted up, of and growth what of and/or not but top the might I As color magnitude there peak. you’ll guess, terms have like? customer of you business the of the clear follow to bit my to of any look outlook kind the about XXXX talked diversification getting prior back

Yes.

which We believe next going comes we As on April do customer, be will because the XXXX XX%. year. back have not sort greater to that our introduced. of the of of will as for above nanometer But prior it primarily we’ve in commentary fraction this X is signs with going a don’t back as pretty visibility for be peaks, the largest go it’s than where why the phone the XX% year, time them. models that of usual, early get We late, seen to move

to we non-traditional semiconductor as a will So for about calls be continue engine Outside design expand talked business into integrated in as that would and grow, we’ve of bit we look beyond we XXXX emerging XXXX. another that us should go these it expect therefore, companies. that, wins vertically in piece. That growth to

a I balloon, specific So that there sits well as top. on that didn’t as but call out

Thanks so much.

from with Thank UBS. comes our you. line next And Timothy question the Arcuri of

Hi. Thanks.

So QX you bridge help I’m supply, on Semi gap QX because wondering you as being thought better this between then particularly because aren’t worse. mostly but if is can Test things when side, bad of sounds you the guided as Mark, like maybe

down assume than QX have worse get pretty to would to you a normal I assume So from significantly come QX, mostly Test. XX%, which Semi

sort of Thanks. help that you So gap? bridge can us

Well, significant. automation, in first down that industrial it’s factor And a of from is here. our is QX always QX, reasonably all, so

about QX is Test, thing. Semi weakening The in impact as about. But we case some one will So start spoke which incremental we to do that headwinds talked China we industrial, us of the memory in well. see in around

the kind So into us for QX. of what combination are that of estimate leads those two

Got it.

assume talk it’s then next about And also year – for Okay. can that you any bit of TAM? about, down you talk the WFE is sense early to a I year the know for talk full memory. TAM year. you will be for that down But what outlook plus front clearly, the XX% can I you end kind of memory next about SOC the have directionality

is next that foundry year not it’s assume But XX%. test down down. I down TAM would and TAM X%, logic maybe front much WFE the memory end that be So probably

the have perspective? could of you a any next go least SOC where directional sense do Thanks. So TAM year, at from terms in

Well, interesting. it’s

first So on memory.

happen in requires for memory, especially shift DDRX DRAM a Although brand of you’re new is finally platform. year, server what’s That right lot the a to going next on test the estimates, WFE to applications.

could, It on the next actually come little of SOC the DDRX will expect optimistic that customers view, TAM would I our from it In given for point think the transition. could be bit, be little of weaker NAND from a pretty bit but memory to a in PC on lull say, markets, precipitate course, the of And markets, will in adds capacity to the a will But compute growth offset, growth falloff I declines may that we’re because weakens in hearing test be, more automotive say, the mobility side late related into overall on what a down because mobility might maybe a be early because on next good. we’re side than – impact actually with the XXXX falloff relatively side some remains pretty X-nanometer. year bit. say, PC the think year. we It let’s pronounced side. flattish Industrial the a the get let’s year, So strong. levels. the the the TAM of by let’s PC the And

see year, So down so. being it half much I could marginally next the more first

I going of where see test the around for such digestion we’re PC think to that’s and capacity to come sort fruition.

Thank awesome. much. Great, you so

Thank of our with the And Samik Chatterjee question comes from JPMorgan. you. line next

question. for thanks morning, Good Hi. taking my

For that the XQ. as to outlining, primary – headwinds for the next just supply thinking growth implications improvement. the lot give there’s – particularly us have and the of a could demand of And color gave come as obviously across I IA. also on some the us margin, I you which your But you the gross if the bit board was seems you’re the year will is of I on first customer you from guess, memory a more start there’s that well color one, growth outlined. slowdown from drivers if for some can trajectory year,

And have I look of how follow-up. the sort given the a growth we as drivers? So think margin about trajectory should puts of we and takes, the gross at

Sure.

to said There’s the in plan operating prepared let at on my we approximately ground come year, model our to and as in remarks, this you first, we’re XX% me model. to So XX% change – no XX%. business managing that I’ve are

accelerations. well mix that product headwinds in to I some expect think outlined I we resiliency spending as on tied as QX

right XXXX the more happening we what’s and of fundamentally kind product for We’re be at the to little phase XX% mix quarter, manage provide tied And oscillate business able environment. we’ll to going January just and bit gross in going a the in those to through to are but given call, the in margins. any XX% now planning color

about through For just I your next I a correctly terms sure more you’re is you’re slowdown industrial that investment not automation curious I that my of heard sort labor the you say sort from driving slowdown slowdown you I’m that what follow-up, step because Thank in I’m level outlined? of heard think if But you. if you that’s shortages. seeing, of for is of of come customers some labor of there. you’re more right hearing right capital shortages that plans the now, seeing a now? more pullback Or of it’s that

do and add some out their There spend labor the two pointed I other factor. And they’re see the What through conditions. primary projects of due the there to is to and business. investments. is Europe backlogs project trying to factors capacity channel In were limiting in a to so in that they’re a support at our higher work there, are primarily slowdown or economic with in involved. the implementing we partners those is that freezes same of their sort that able you see they actually scarcity customers time, maintaining very level are capital high regions,

than it’s a a constraint capacity much – Europe, traditional So regions our other in in constraint more distributor a we seen haven’t pullback channel.

Thank you clarification. Thank the for you.

with next comes And question our Mehdi from Thank line the you. SIG. of Hosseini

Yes, thanks for taking my question.

The first up scenario Would where flattish. in I’m And one you scenario for not In follow-up. have a be guide, Sanjay. this for would OpEx expect XXXX down? revenues or asking I your a and a flat,

Mehdi. Good Yes. question,

XX% our we’ll an this plans said We’re say, But OpEx provide XXXX, will grow we preparing the year, currently XX%. in I to – and January, as in update. of Q&A, I for was we’re thought earlier going to

then half very model, with our for operating the controls. also macro down has environment back OpEx projections model coming spending obviously, the operating implemented Our we year, compensation little our the declining XXXX for full and and of and a

that and view. you’ve year. going if change, integrated to ties we’ll this seen do a guide and can And us revenue conditions to So correct that’s a is market plan as what we’re course I have then the environmental

Okay.

differently. back come Let to me question the

– you investors months analog. forward some morning, proactive being nine, And to your were this capacity XX guys be out nine utilized. ago not and about X-nanometer been I’m recent expectation and referring significant ago, helping you months fully looking to You help of now very with again, added were the pushed X-nanometer may and better for front-end have strengthen equipment first MCUs being one, in added those talk us

why take not opportunity and conservative. more So be

helping giving QX in you’re just not understand overview more of an conservative? aggressive but I Now us why being be by

QX. We optimistic Well, or I being just don’t conservative in of beyond terms don’t think visibility. we’re have

suggest being maybe. little know just But of could what the we we should I starting And And in prudent it’s in But be speculative speculate. versus next so bit the already supply is semiconductor of a the many line just we of that’s days by through works summer needed. think we chain know. markets. don’t be inventory And what its bottom digestion as something that way perhaps these and

so to we out don’t And want speculation. far too on our go

asking production. is customers amount being a problematic. back [Technical at months considerable XX But of are the really but speculating, investments not for to Difficulty] your of, front-end go I’m have high we’re inventory and if we ago, come situation I back looking on now thinking added. to nine finally yes, that

front added So for even are if end, equipment investment going those utilized. fully to not be they have

in into weak be SOC customers your compute inventories? none wouldn’t aggressive more as down So midyear become working

offsets other I – hand, that’s likely case. Sure. it’s the But that there’s that, on It’s to very mentioned. the

stronger. is probably to customer going largest be Our

of offset was to year our digestion markets. in That’s our next offsets our to is, a what around and woods product you’re some to the of growth there’s woods. be neck say, neck of so in against factors around migration that to. those little the bit unprecedentedly But what the XXXX let’s work referring complexity going some in likely of because to worked weak mobility, favor of And

you. it, Got thank

Thank you. Vivek the next with And comes our from question of line Bank America. of Arya

Thank you my for taking question.

XG should smartphone their curious reuse customer be that you that, First kind large if one pushed large that that’s tested? there well. the of modems, on to incremental growth aware test. out And for for incremental of? was in-source Is but provide I X-nanometer I’m of how repurposed next to for that would one be the the we that thought related capacity areas element of year can your X-nanometer a be seems much possibility existing as would opportunity, that

to modem, have impact thinking retaining XG wanted the how year? insights does the customer on on aspect get just that reuse next you’re So the about your what large and

Yes.

So do XXX%. first been the reuse, in This has obsolete AP The all, side. testers the on yes, themselves. of not XX-plus often years. obsolescence true SoC testers There’s for test no short-term

happen, but in point or that the the short-term. five at come will begin four years that We point some years not to next to where will in

specific processor bit. to On built new look demand get and count. was models any understand on at on nanometer processor processor want that our new XXXX, phones to customer went just that I’m being growth X% don’t the high-end last introduced we the the XXXX test only speculate than phone modem because our we a drivers the largest plans for introduction it’s for going was of that A, it or customers’ now a little to in and general, subject in device. little transistor I at But the in broader only X-ish a that, bit into public answer when

our and from muted them So complexity that largest that’s really XX%, customer very all year. the kind demand of below growth, Drove this modest clear.

described, if of pipe. be that when silicon forward, going look of a of when, bump. obviously introduction it’s to in a combination but new we not that’s if the the Now I’m happens line the And what will you say

If, apps the significant pretty in probably XXXX for processor it but complexity occurs, fact, X%, that X-nanometer for back it’s not phones. likely in is a node. the be the bump, though bump Another will it’s XX% seen go new only still muted little because a likely gets it a that to bit will That we’ve complexity into top models. XX% with phone historically growth that end

this the down models. to While complex waterfalls X% year’s incremental part other

to the another significant XXXX likely product bump, the at And is waterfall bump being than down then kind to will. they models in greater high to aren’t gives full would in other see that to but of back Then to that phone this was what app the XX, view line processor see see XXXX. less end could forward complexity. historical in in look but significant XXXX complexity the other introduced in We likely the models. going a that jump phone let’s much So high-end XXXX than go of peaks. a That’s us

the there’s computing. this There’s sort So of of And out. then also that, top is plays silicon. how movie high-performance on new

an moving to of that be more that’s partially sorry probably I answer. All to X-nanometer. fully I’m XXXX. if But just XXXX it’s going too think in in long and

it’s these roughly though the QX Like which at gut that. of Mark year? be you, Mark, what some bottom to XXXX to keeping you your helpful. kind follow-up when looking XXXX plan? QX, headwinds. $X, from very making are calendar level that interesting the seems XXXX this XXXX ambitious is earnings Or no, of is, plan doubling right? what’s you is point? My your a recovery Is No, your even model question facing XXXX Thanks, of is the do next start macro cycle of the on for the it for

XXXX you Well, a described understanding the I usual, But gives strong In are probably what as you is just we’ll year. January. think we our why lumpy. quarters pretty in update XXXX, XXXX on of plan some

customer tool So to QX in largest tends QX. and our

out. we But think and here say semiconductors can’t juncture channel we very did cycle I ability of expect going some recessionary in So if But through. going to IA the one bit at both and though conditions world environment predict suss there. of macroeconomic those is go things, or the that is – kind on would a is is to digestion model. a a the a of about to What inventory occur. are bump to The well to little this we in harder us is of the that have thing XX a normal a for effect be bit months that and

third past. So next start a suggest to recovery, in that should if anything year, see it’s we quarter broader the would like come

Thank you.

question with you. Moore Morgan Stanley. line the Thank of our Joe from And comes next

you but the DDRX. year? test the mean, you right volume and maybe that you of inventory flip on above that NAND like a of beyond deceleration memory do talk side about that as next test are of and picks Why their little now. untested kind then next vendors you. in that, think a you. see is does Thank a you – building in do year Great. Is recovery do bit Thank from up, the volume sense DRAM WFE the perspective talked any lot supply And might of helps the have of you about what I and what memory

Yes.

is market than spot weak The is the year, only of first other inventory year. think would tenuous. fab expect DDRX are with rest bright next to balance I half end pretty DDRX next people as And very see of trying to I kind the going capacity, demand demand. we’re

don’t – will year maybe might DDRX think test memory I earlier, hold up as market a the because an that said next – I there’s I possible. for So memory argument that’s of transition,

fall I more stronger. happen, see think it’s though that we likely off but NAND bit a

XX%. with test China, it’s to And of of China, overall in have been be our in so prohibited balloon from a And in this probably around next been negative market in DDRX. share be of net selling anchor issue memory one our of XXXX. memory the is somewhere on may kind issue And we we customers China, revenue a a of where Teradyne because XX%. little a the then for around going which to north more than is we’ve bit market test year But specific memory for for

has builds Bank that on already that the that those yet that to be balance sheets, think But on Or large has test on tested? some you is Die is inventory? producer occurred Okay. inventory there

running test finishing as area, economic until But product the something doesn’t makes sort that of but keeping demand Bank that’s sense. in lot a some the of make is materializes. sense of kind Die occurred, is There it that the fabs

Great. very you Thank much.

Thank comes of from next line question you. our [indiscernible] Sachs. the Goldman And

Hi. Can me okay? hear you

Yes, we can.

Great. Okay.

question. one had I So clarification and one

my In just clarification, export the on terms of China control.

You million. headwind in the XXXX million talked being to $XX $XXX about

China should zero I you memory to Just And can QX? customers? memory in speak of curious thinking significant assume profitability Am And in of QX. I how be correctly? China about some test that these that was the number

or QX next zero not in it’s year. Well, Yes.

The So margin. global that’s not one than different comment. – profitability maybe than our is distinctively any

multinationals there’s set the this there. that is difference will continue company’s regulations. subject is XX%, – of So are really I to that China a of around no there’s XX% of market Sanjay portion revenue. think in Half to XX% roughly But not serve. overall, restrictions mentioned the China of any

of a is then indigenous And our customer. of fraction companies. headwind X% Chinese are that two be let’s about memory. of this then roughly sales, And might half of that one So annual this say,

just quick a Mark, Okay. follow-up.

So correct? serve. be zero multinationals The should zero I you’ll That or meant local China near memory. forward, going

multinationals, Well, can of serve regulation the a portion current under memory we the still the indigenous that but there’s regime. China serve market

Okay.

get like, is Okay. hoping for Got it. to I to there. on hard could IA And question side, preliminary maybe then your Greg. predict views look one the what but XXXX my realize it’s

outside about talked scarcity point X being of You Europe a headwind. percentage labor

the to payload, talk sort of you. Thank bit XXXX? growth you to channel. accelerate You Or little longer-reach impactful that be of about talked higher OEM terms idiosyncratic it the premature those talked new your product, the some little enough things? about of a is those a the stuff product, on you’re working Could about in in for

it is premature. So little a

of have haven’t out some worked We that major I hit fully factors plans, are go complete going the into our but that you think to equation.

constant thing that we XX-point saw because in where headwind are we environment significantly to like the that alone we And to we one expect that in was our about XXXX. XXXX is are. growth add a the that that more So that in reason stable currency results do would is a talking FX

our expect we base. significant what in UR XXXX. larger from from Beyond OEM And but we from grow a complementary similar saw MiR off and channels like new that, in do going products, to XXXX, impact to continue also rates both we to of are at

in have going to they So XXXX. greater overall, in they’re growth on impact XXXX had a than

XXXX. labor we new in words, other to them going out things believe help are we we on these in So our it expecting completely solve but are to partners scarcity, with are counting not that to distribution work growth, on

you. Thank

Malik of our And the next from question you. comes Thank Citi. with line Atif

make for I that the memory customer. mobile is from industrial year auto you next sense, $XXX coming my Thank year’s struggled taking stable they TAM million. historically Mark, on only this large your around million comments DDRX, down, on on markets, the one auto Hi. end $XXX The all improving side, question. on

new of see that million is if recession? there’s about management. $XXX opportunities from Now carbide silicon correction a like like won’t next opportunities outside the said, coming What areas power you that, a in those ADAS, year

Yes.

likely. think I that’s

right. You’re

core have we that things the the technologies. a to of piece some of that underneath frenzy would think as I are soften a parts. these TAM this But replenish of of those get level of market out legacy of $XXX sort chain that, lot there’s to contributed would I new technologies expect million up getting the auto kind supply to trying of the on

automotive that underlying, I to what let’s something baked we in don’t So But saying likely is see technology not come coming down. say, into piece that is we for XXXX, of QX. was kind It’s of QX. legacy

resiliency Got it. chain your Sanjay, at the out then, looking improving of supply other about And talk can geographies you’re China? moving in what you are

think manufacturing think about you from think of the should Malaysia, supply from other Southeast like also countries it an chain, globe but but Asia, parts both standpoint, Europe. Thailand, about in engineering then Southeast in and manufacturing a about and about resiliency, services From Sure. other think Asia,

you. Thank

more have we for just please. time operator, question, And one

Certainly.

question please please the of line your KeyBanc. with Pardon Pardon check Our Steve, Barger me, mute from Steve, check button. Steve comes button. next mute your me,

call Okay. for Relations, any I remarks. the now closing Vice President turn Investor will over of to Andy back Blanchard

joining for in and the We you along and the there. ahead. so everyone, much. questions, forward talking pause Thanks to technical way reach out if the And weeks have apologies you me to directly. you, certainly, Thank today, to follow-up look days for us

now you and Ladies gentlemen, concludes conference you call. disconnect. may participating, this today’s Thank and for