Teradyne (TER) 27 Apr 232023 Q1 Earnings call transcript

Greetings, and welcome to the Teradyne First Quarter 2023 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Andy Blanchard, VP, Corporate Communications. sir. you, Thank

begin. You may

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

the We're of Investor first Following XXXX that performance in issued quarter website outlook the results first provide press page The evening. our for second with was our quarter. helpful our providing along release be we'll the to opening the for following remarks, of slides details on quarter, containing may last our you discussion.

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

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

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

America. conferences ahead now by of KeyBanc, hosted investor in JPMorgan, next Bank and or earnings our technology call, Stifel Looking industrial-focused between participate Teradyne expects to Cowen, and

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

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

perspective, then morning, current and will Andy, everyone. results, on market the high thoughts we on QX, sales on of our a summarize how range, comment I financial the the full-year margins. QX developing. the delivered on gross midpoint outline we environment guidance QX planning. Sanjay financial our guide the quarter above improved From provide details Today, above and will and see our good outlook some for first earnings with Thanks,

flexible our availability measures model their QX current high robotics market to years. additional of demand semiconductor quarter. plan the the to in we how conditions profit, outline and QX market for tester XXXX into like semiconductor and of revenue businesses component are of at convert In in our Stepping our is test in back improving few view and delivered QX, would expect lower channel quarters In and unfold. over end us next results, utilization business on inventory enabled our the the And I XX to persisting. level test, lowest from

end further in in The forecast market decline concentrated to and Mobility in and XX% in After in XXXX weakness an is in reflects this decline drop SoC XXXX. X% erosion a are forecasted Smartphones in test and dropped they PC to are year. XX% additional shipments another demand X% XXXX. Compute XXXX,

chains come supply We balance demand levels we test these as improve, into low to levels at markets expect seen have these weaken the Intel utilization inventory and remain well. clearly levels. in utilization for

in don't result, markets customers XXXX. we a XX% these end any in As expect

cycle There outsized weakness overall and Over represented that the Mobility of cycle in impact industry. years, so SoC past the the XX% shape depth and forecasting of factors are four market, beyond segments make Compute in on recovery. the these the the both of segments however, challenging. likely several inventory factors have These impact the an to are over alone has cycle the this

January. Compute more of than serve which market, Mobility persistent demand that Tester is The the the in other IDM we're here in OSATs, utilization strength automotive The and at first and that higher roughly primarily substantially expected drive seeing the is and this sector test. the XX% industrial at markets. stronger test SoC than customers we is

be sustained In for these our autonomous than digitization customers as segments Strength device Wafer segments. automotive in by demand driven for fact, announced target. demand many these of well expansion capacity in bode and high a has growing plans our by pushed to applications of new such the activity. is wide some tester range of lead our longer and industrial us out EVs, being and driving times industrial for configurations

these the the test not We that depth this depleted SoC deep to has past over working market may replenish been also the decline the of as inventory cycles. as of This three customers suggests cycle see last strength that years. be

no from Another at activities. these levels. or rate slowdown makes In demand factor that tester be XXXX buy substantially current and different than market The not the China-based strong is design-in test very have R&D and vertically broader sustainable we seen very is higher producer greater in chipmakers. may category, this integrated in cycle the

low expect we capacity buys utilizations XXXX. OSAT impact However, significantly to in production

$X.X billion. taken from When it strength than market about factors to that, XX% XXXX full-year we one quarter the had the Having and and have the down We timing recovery. into billion, of three last $X.X in we the roughly estimate challenging to XX% ago. the these said be do billion SoC together, make will year's predict better $X.X between insight

two expect three market will We from or the XX%. of increase share SoC last our points year's

drive that high-speed continuing by the expansion since investments I especially Memory size estimate will flash. past transitions oversupply our we test $XXX technology capacity limiting is and the in market demand, January. LPDDRX we note XXXX In discussed increased million while are segment, to for have the

flat full-year, For view billion $X our year's the This unchanged down is be from we XX% approximately level. to January. market to from in expect the last

in also from last We expect the to year. a our be share or point so up XXs, high

we of growth midterm fundamentals for few In billion testament. been familiar coupled We driven are the $XXX the the our wafer more the think additional we see yet strong. billion When into and know segment, Wireless a an Test not of trends have correction investment converted investment over years, forecast that LitePoint past $XXX of has front-end over global years, next with over four cycle. a that fully

We are so transition big a the Wi-Fi the to leap next also X. from or away connectivity, in year complexity

a XX% result, is level. by both view shipments. and from last early As sales the XX% impacted business LitePoint down demand System year's HDDs portion for our the to Test, In declining smartphone has storage of reduced

revenue the likely As System for down a XX% XX% our to group result, will year. Test be

to XXXX the down turning in revenue Robotics QX compared to Robotics is Now XX% of XXXX. businesses. QX

impact began the the before last The results. quarter first of slowing to Ukraine our was significantly of invasion and strong quarter industrial XXXX growth

prior for As our are the remains external there teams. robotics Universal both and MiR internal and addressing that high priority are discussed calls, And in limiting a Robots our challenges we've business. these factors growth of

same we QX Robots, were a the than and in picture. lower softened last Universal At The mixed external see sales in conditions year. Overall market weak. period remain

PMIs most the is slowing have digested. after shipments strong indicated shipments weakening to in also repays. in are years, in States, manufacturing for very QX also economy to United that manufacturing all QX However, a in weaker strong the see demand we in as almost substantially highest QX. QX their level Europe Demand returned QX In is clear But since slowed by And it as a then. the Asia quarter. softened

resources of large distribution our impacting that put the ongoing on that system. factor potential. shifting more internal realignment growth opportunities long-term OEM and have primary is our to we're partners is higher customers Recall, The focus at growth

preorders are important are strong for resources. in short-term for our headwinds cobot. URXX An from seeing Universal positive We some Robots the new high-payload shift

shipments volume have months expect mid-year. we We deliveries a to backlog over of when of begin six

The we're headwinds, Award. URXX in with MiR, seeing Robots similar record industry-level won including along has seasonal Review where Business slowdown shipments, awards, At coming demand. numerous we're a QX off already QX industry recent Innovation

in unit However, large our over direct strategy QX this latching of XXXX. installed of with increase engagement sector is from to growth accounts XX% with

that persistent large emphasize environment labor growing downward I for weak current to costs. change with like our for group labor collaborative long-term potential be and and unchanged. revenue shortages little by estimate clear the macro driven evidence a in the robotics, from for we've would our Robotics near-term growth last to It to conditions, conditions, million. year's is XX% $XXX the market suggest of full-year and brought our robotics escalating that these market remains a is X% to despite view growth there With

over to distribution is address and as for applications an this our strategy market that strategy The yield all growth of served midterm. drivers expanding an Our Test fundamental focused to them the range ever. of to attractive as a make annual markets, Robotics with robots XX% expect and average XX% of we our

careful the to that fuel on will flexible investments focused are and as future efficiently products discipline business model, our recover. our continuing to begins financial are with profits. our maintain we We strong demand in the for capabilities With operate

the I'll turn Sanjay to over financial things Sanjay? for details.

everyone. of provide financial the chain on our QX assumptions. will Today, cover resiliency our I outlook color full-year also Thank planning the financial our update you, I'll supply you Greg. around Good companies some summary QX, morning, and robotics and and progress. provide

QX. to Now

quarter sales which operational due million, to the Non-GAAP guide $X.XX, above costs deferred margins million $XXX expenses year. our later million, Non-GAAP mix, resiliency fourth $XXX mid-guide with and of our were guidance were above quarter gross were high flat OpEx. until our favorable $X.XX. of XX.X% above was First $XX which with some was about efficiencies EPS non-GAAP product in operating

profit quarter GAAP $XX Semi quarter and revenue operating of items rate the non-GAAP customer $XXX XX.XX% was in tax for quarter. basis. for memory was the XX.X% XX%. million, rate, on Non-GAAP was basis the and XX% $XXX with no excluding had SoC a on We million. contributing revenue discrete million Test The a

strongest low strength applications. test our million auto Test $XX storage ramps was DRAM $XX in devices higher-speed final final end million as with the industry test SoC System was Group in sales QX demand. from SLT were industrial server and in smartphone and markets. and test revenue In noted, Greg and memory, new, by flash HDD concentrated followed As

widely $XX and weak complexity markets impact this of rollout Wi-Fi smartphone market Wireless Recall, SLT driven the high test in in noted, volumes low are and a million QX was in XXXX. has the Test, X as low year. In the on ahead expected to HDD beginning smartphone of PC both exposure and investments revenue

impact lines. million. robotics. have on material quarter the Revenue not contributing million in with on million $XX $XX growth. negative our $XX or to weaker and revenue a Profitability top Now bottom did UR was MiR FX was

a XX% this the operating margins profit Gross our to below toward intended year, trending above average. be objectives. continue to are X% profit We breakeven corporate

market Greg XXXX us have are and we believe where is thoughts with reasons from large goal year. for penetrated our achieving preventing to coupled we UR, share products has still I appreciation business. ecosystem to below is each and would which our of in with this it sub-X% expectations, some like profit growth an noted in this enable conviction very In leadership.

of challenges growth. which our longer-term limited approach, believe is distribution we One our has our

benefit operated of strategy. above XXXX. full has above to initial will an profitability outsized before We XX% XX% to to XX% From we're are operated full are to which has move omnichannel, channel by new in seeing see our UR being the our enhance since year -- the executing traditional market significantly growth exception the XX% an we our UR a impacted perspective, slower XXXX believe a potential. plan with of at sorry, year, profit a In or effect channels this rate we COVID solid --

while In UR which expect served growing our short, XX% be transforming range. increase continue XX% and we to introducing our we to XXXX, invest new channel, profitability profitable products, In in of we in markets ecosystem. are that our industry-leading to

no to is penetrated not upside with be establish less top more the leader AMR life a This MiR's position today. MiR, which serves with MiR. strategy XX% long-term to clear in and than where aligned earlier in share in mid-single-digit profitable at share. players the to our X We're expect is market market market there participants X% market. fragmented potential. a we have MiR's a the than Top less and with leadership Turning its XXXX, cycle yet also of in is

with we're making is pull feature this attractive involvement strong go-to-market In opportunity. needed with heavy a and summary, concentrated large the sales, base, direct our position, approach. product the market leading customers, enables a substantial An realize to which customer our in R&D is the from we're profitable distribution Given investments service evolving requirements. focused relatively UR market and of

have in with above cooperation be our is growth will phase, we in test portfolio it heavy see if greater we growth similar investment enable large and XXXX. to to not the profitable this reduce do than XX% opportunity in MiR OpEx average Gross profits in the and expect businesses. in solutions engineering significant and market operating the and corporate margins creating robotics customers, will are

$XX level, cash the of consume pay $XX typically flow a Shifting our million was reflects the dividends debt. compensation. share cash of in January, shares We million the began our paid purchases. $XX $XX quarter. it so approximately in company At repurchased as financials. we quarter, two million repurchase We million of first variable in and the late outflow back employee of program to quarter Note, an out free months settled in the in

We quarter cash with in ended and the $XXX million securities.

to $X.XX outlook range QX. non-GAAP to on $X.XX $XXX be Now for expected EPS to between and $XXX of sales million, diluted our XXX million shares. with the QX are in million

continues automotive view excludes outpace of demand industrial intangibles. guidance acquired is amortization earlier test our the forecast. as The January ahead outlook This to semiconductor second slightly our of and quarter

margins at with XX%. XX% quarter sales XX% gross to second run is at estimated to Second roughly flat OpEx quarter XX% to of are expected QX.

of Greg profit has at A described. points is of the Non-GAAP the year to the in the you second rest unusual operating few XX%. rate guidance environment midpoint quarter in modeling the given assist our

profile. revenue expected the First,

We and from bit to similar a expect QX improve QX there. to to be QX sales

a As the bit you a second than first. be the should result, expect will half better

gross the deferral by year, accelerated the second gross in to XX% the to We've to margins first of year. of be margins. gross half XX% range. Full-year half driven operating margins and of likely spending efficiencies resiliency will manufacturing the Now improved

full-year. the for OpEx Regarding

XXXX full-year noted in the compared expect be to flat roughly we XXXX. OpEx with January, As

in and GAAP non-GAAP to rates XXXX. tax are XX% Our be forecasted

quick on update supply A our chain.

continue in about Tester our demand and QX some see of in most sorry, devices. impacting While and supply of and we guidance supply to This balance of XX% while analog into back -- outside is coming is range. supply is shortages logic for our revenue chain,

according half while front, spend progressing moves resiliency chain chain some from to supply supply second is the strengthening largely On our half, first to of plan.

manufacturing, tester quarters several in for work component product our continuing after For substantially QX. complete be there be though will will that QX, qualifications

margin delivered changes The supply the our will the midpoint chain services to are Semi of this year Mobility above our incrementally costs Test in in earnings year. on the hardware gross expected our estimates. with improved included chain markets. strengthening continue in business margins. The Summing related we supply sales for high 'XX look our through range and above Compute markets than gross guide stronger the softer guidance and auto we earlier The industrial up, with

we're is flat R&D chain, investments Robotics our supply demand also incrementally softer. long-term In and the doing environment, to making XXXX. maintaining the this test maintaining strategies in OpEx We're and focus robotics. this to our while roughly growth while global go-to-market strengthen support since

and will expect result, deploy repurchases. for As value through solid share cash to we in free maximize a our to M&A, flow 'XX, which dividends shareholders potential repurchases generate -- shareholder

to back call the Andy? turn I'll that, Andy. With

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

Thank you.

conduct now Instructions]. session. [Operator will the question-and-answer We

with Mehdi Our SIG. proceed. comes Please first from question Hosseini

when I Wi-Fi taking follow-ups. for your understand please LitePoint. questions. to follow-up. And Wi-Fi we or late X next materialize? a Is would you expect do from I to this And us? contribution wait that's thanks my area? like It to opportunities want Yes, X you behind seems have in already year? have go to help Can year the till to Two that do

Wi-Fi so there's at Mehdi, X. phases LitePoint, sort multiple of of Hi,

Wi-Fi is in driver XXXX. X there investments to a Wi-Fi primary which that XE, is probably So for the Wi-Fi -- transition is in largely But is place. tooling the of

a going in that and XXXX. and probably is on, lot to chipsets Wi-Fi R&D of going work on there's equipment ramp So development X

XE then in Wi-Fi have this Wi-Fi growing some help? investment investment Does and X through we'll year So we're 'XX. modeling that that

that for question, Yes, X-nanometer a have would delay absolutely. SoC toughened finally the Does 'XX And that year topic that don't then ramp to year. capacity is the big mean given could high-volume second X-nanometer in fact that in be attribute? favorite year? next how X-nanometer have especially customer the ramp manufacturing And this Teradyne, next you

That's question. a great

seen substantial in are of X-nanometer to our which from support to real transition customers to of at like any first, the trying changes they we've to terms terms in X-nanometer, more designs. complex pace no technology So of move

So has that seeing demand we unit that thing that smartphones drumbeat declines PCs created needs are return. going a volume before is continuing. idle to in to amount up is get filled The and of the is in fair tester capacity that

stronger is likely be great. we know XXXX. whether be to is so -- good the significantly At So point that this to XXXX or think in that, we going time, in don't

about on and is and the might are that automotive supply/demand temporary we markets really, demand going I the potential, there The like industrial going but sustainable, often China great are have really that have think they talked been other long-term imbalances. be things in well,

they get softer. might So incrementally

are the see some XXXX in in mute that I all of a up return there demand. So unit sort with think things of expect that us could that you

it, you. Got thank

UBS. comes Arcuri Please Our from next with proceed. question Timothy

Thanks a lot.

your you down X.X So midpoint were a number. relative to TAM prior XX% the at SoC off of forecast like

Now TAM you that X.X took taken out year. I year. that to basically hundred million But know few so a last -- the this of dollars you've

like sounds it's would know you be sounds thinking like like it's were down, it flat better. maybe that $XXX So auto auto at I million that [ph].

of you new now sort X.X, midpoint just have disaggregate number at the of TAM? kind your you for can SoC So that X.X that

Sanjay. Sure. It's

about $XXX Service roughly Compute at then give $XXX and year billion the $XXX million, we Auto, So disaggregating is to flattish. believe Mobility at we you rounded at roughly roughly think and at million. market Auto is dollars, roughly it, And -- million at million. midpoint, and numbers at $XXX I'm the going this Compute Microcontrollers Industrial again, the

that. Sanjay. it. Got it, Thank you Got for

And seems cyclical front-end a X-nanometer. about like can year, debate it's on versus of have going are -- maybe is this there sort we -- on? much of again, structural customer. the the is XX/XX of more sort debate know year there's was with ask year. just I guess, asking so -- this It's be So there structural loaded largest something Greg, I'm I than sort typically, you debate your you question going the to this about a maybe

just tester under to maybe it the year. kind be there has is year And might inform next TAM on, go? going the talk the I Can lot of reuse? could to you that But next share about believe going your what's more on continue surface up something goes of under that surface a SoC and there's sort where where

can give I you little of a color. bit

we've So here that largely there's all are is of amount the coming. no The place now significant of fungible reuse. technology capacity put change nodes or tester in that in across the

talking really reuse we're demand, phones mobile of to product more change peak capacity be structural what's line. really their how one the haven't So seen that about incremental started producers place. have of silicon in parts demand leading lower since in in is much we a The needs put to

of of putting instead a last of in volume. the the year's processor all portion phones, and use a new So they processor

it demand So at will this that point, thing but we decision kind in year We that that has the haven't wash, long-term, peaky. seen come may a make significantly out the believe less since strong happened. of

very much. Thank you

comes C.J. proceed. from next Our Evercore. with Muse question Please

spending and years Yes, at peak. lower $XXX I morning. guess Thank you of the follow-on level Mobility in for a worse XX% good million, five question. taking question. than

kind be test year, if units year, what kind a flat. great content-wise such talked what's what the given to assumption but handset impute Mobility? maybe that of you view increased of might And times, recovery for about were make would of and kind least curious at base know You case you a next that not

Yes.

to you really will it next much. stronger, is have tell into we visibility a for way but to size really I market XXXX enough think don't I Directionally, year? the I call shape up going think be can't how

Or that of curious might and how 'XX? thing QX if URXX. meaningful a you to is degree. starts before to Is talked and And you backlog? your much. so accelerated when DDRX that can for Okay. that given the something driver that speak get that kind about some kind ramp into I'm of impacts pushed Thanks revenues same

had DDRX ramp same while. schedules a the that of so Yes, against we're the we've for kind running

seen significant the we pushout So any haven't technology of shift.

got capacity we've DRAM testers. think I demand a technology the to steady for new support pretty So the

shipments achieve going have For And It's would that year. of be of on we're UR a have growth to this it in year. in half on meaningful URXX, a this growth. going second will impact the say single-digit to we're that starting that I to the substantial substantial impact able

Thank you.

question Chatterjee Please comes Samik from proceed. JPMorgan. next with Our

you -- particularly Thank Thanks I we're you know hi. in do I if of for production how as how well follow-up. I of out risk taking but the demand you've lot my volumes, there your I here. that how thoughts then a out you. China can just auto like about to Yes, with in the there, correlation if as a production trend the the to guess you questions. seeing, particularly seeing start where share you're as called have sustainable piece think call can that think market? market players is, And different

Sure.

capacity in to So reacted online There's fairly supply terms a chain that. come has to how and increase vehicles produce ability sustainable. of that has the large

that lead lead the into that times. levels the to and have are see sort parts, cars of the still starting extremely down but come to go there long devices are linear lot low times of for many electronics are inventory We a starting that of extremely

be that reducing added And so to appears lead capacity is times. being those to where support

they then sales if that if drop would I or that to soften. balance, expect So if vehicle they into catch more remarkably bring up,

in the this with times that situation us and is excess in of tester remind thing weeks. But space are that XX competitors lead is I'll running the we're current for you our

these few are good a So over of the going we need next what to idea customers pretty quarters. have

in likelihood that in I that that the space lot a going time. so of ways is out say to And would we're softening little see probably a

or as just dynamics and thoughts is your memory? Thank at follow-up, of terms your there guess, of And in their looking in as the terms speculation just of memory in terms with news that -- on China your my obviously Any investment of for of sort with sanctions you. some Micron. memory Okay. in on well I Got how impacts side, China revenue customers mix in it.

Yes.

on think our sales on total can that, that to terms sales to speculate two And memory of China there. happen regulations. goes indigenous two-thirds revenues in memories a like will that, indigenous in about size X% major supplier a it that there we I and what's of don't producers really have To between are if going sort that China. those is to say will half probably all portion regulations is I number. and the that of X%, impact China, I Teradyne So our to in in there are memory an of impact the

Okay. taking Thanks it. the you. Got for Thank question.

Our Toshiya next Please question Sachs. comes Hari from proceed. Goldman with

I one first much Hi, on My component question. morning. the shortages. taking to wanted for Thank you so is just good clarify.

and of devices QX shortage think, impacting semi by Sanjay, about I talked you in analog revenue XX%. logic test

revenue the there be shortages, the those should headwinds Am be that I correctly? QX higher. without when interpretation have... So XX% your should And do understanding

outside in I million, memory. $XX SoC remarks, which range of prepared it's roughly our and noted my is its on

$XX million.

$XX million.

Yes.

Robotics And Okay. business. on question, Got your then just it. my second

full-year growth your taking you're the environment. again, down Greg, for year. the macro you about outlook talked So

competitors your so to businesses most or Thank front? you there curious how impact. compare relative you contrast are I'm startups having difficult China, within here. bigger going your the to guys any always and an in doing because they're You to competition, competition either is from particularly and talked of conglomerates, having competition about is if the much. anything curious, It's that transition impact but distribution direct small on

a it's Toshiya, great Yes. question.

terms continuing change invest robotics isn't The that cases, We're of like really our through channels omnichannel traditional OEMs direct quick strategy distribution-to-direct. a correction. in in distributors. establishing to an In the additional adding just first, and, some we're business. It's growth, to distribution

moving is flip, resources it sort So it it's around. a does like not of -- but complete

that market XX% share terms stable. billion to statistics hard XXXX probably to and market. In of was is really relatively you. in be get best about with $X from The a of I we between XXXX, COBOT it agree share, XX% got XXXX, that about It's market. data will the have We've a -- market

year-to-year. Our nearest quarter from to less of third probably competitor two has that a has a that number player than and a third, share shifted

that trend true is and than are doing that you market noted Chinese than and very points competitors the competitors price lower understanding in their that of market coming Chinese about knowledge of market. significantly they are the the China foreign in certainly that is very, And world. The rest The well competitors. are other up, our better the or

international migrate can or with specialized products local with specialized happening our ecosystem they really is in China a adapters that either of get get customers that our to that and can't they software products what's So both are sort tier, In supplier. tending premium customers towards have. that value a the that we

to threat segment, we're suppliers are there's we we with in So that the through we competitive that definitely -- hold can have but deal Chinese trying threat differentiation. really in -- share competitive China from particular that pricing think we a

Thank helpful. you. Very

comes Cowen. with Krish question next proceed. TD Please Our from Sankar

Yes, hi, thanks them. for two I of taking my had question.

gross us let I like follow-up. industry rebounds margin then into know it color one, First Mobility maybe the a Sanjay pretty I want margin don't that change industry but give have auto is because And gross calendar to higher has 'XX, Mobility? auto next much profile than the strong would understand year. a you seems

transitory product manufacturing prepared year, would I XX% well noted to costs I going This call, question. at to tied be my really what as as mix we're resilience. the for we've to in Thanks as got Sure. it's remarks, both XX%, tied these, to and

us, get think of I no back see we reason I XX% XX%. model to materially to why our when gross margin behind that's don't

as And you that SoC the so, breakdown around test-intensive. million test remember that. take, Got or billion. market of been has $X Compute with Thanks give kind then the been on being GPU color some or has $XXX Sanjay I it. for and historically, gave not test If right,

do opportunity is kind of been get all what has could set there. Thank think these GPU you. leader I'm the stuff, historically, into grow. So Advantest as And test curious, there? Because your AI you over you Verigy, like

-- that's No, about it's question a we've Yes. a certainly internally. been talking lot

that So ChatGPT traditional cloud generative here's acceleration for we Compute AI, Right way primary the things additional significant a it. now, The capacity. driver is rise is through is like capacity, especially that delivered way accelerated see GPUs. the of that

higher So be competitor that's that, much our to going for I tailwind has share would expect who with a Compute. traditional

these developing companies aggressive market making that vertically At and the capture the are type primarily investing is ways of the that we accelerate technology are to are producers they market. bring the AI share same that's moves that their where of those are to Compute. try really as to same own also kind energy same customers to time, capture integrated market in And that our

the to long it's players that of the we particular you have -- history that different up, like don't vendor. situation new working locked I a these want a give with because have we're but VIPs any impression don't Compute than suppliers, traditional

our most of we're we fair these share. and winning So are shootouts places, in in more than

hyperscalers, important integrated more this the of as And becomes overall vertically the delivery. part producers a market and value so or evolves AI

internal devices these that is Compute. growth a long-term than higher will traditional have hope Our

for traditional. strong vertically really short-term, So for integrated. better Longer-term,

Is is probably Greg, $X Compute color. billion thanks a market? it GPU of that assume to $XXX very million much the for fair

but would -- number. be I know don't I would that an bigger, XXXX, In it's my exact guess

you Got color. the appreciate it. much, Really Thank Greg. very

with question Bank next Please proceed. from Arya America. of Vivek comes Our

consumer they I model actually had longer-term a seem your on mostly at end Thanks for you're unchanged. when largest quite It look taking markets, the I seems a like keeping and matured bit. your long-term to my have side, sales earnings one. question. But

to underpinning new about is structure change double-digit realize And say reaccelerating not So for if better to cost what the let's profitability? what's double-digit that to growth. growth, your you the confidence model need about will

there's has that happened expected. -- to pace leading terms from that which wall has our I we to the in people Vivek, growth the semiconductor And longer the taken don't And a that, some at growth that change, So think the you in a the of of of technology. market. process is adopt be in see the at in said contributed is like thing primary the fundamental we see new of seen we've transition a driver markets. consumer that looking that things to test than X-nanometer the are chipmakers really X-nanometer maturing this We has

if this technology well. are coming -- the that behind as But from all a you gate there's that, both steadily look, there major is capability foundries number and of nodes around that's a increasing X-nanometer there's coming of

test SoC the Mobility advanced And about, in driver the Compute talked Mobility the so improvements. market. is Compute the of we XX% also as memory memory space the And density the and primary and complexity and is technologies for

around So growth continues, for we that node nodes as technology pace strong. and are the fundamental as then that long fundamentals the think

noted on amount also of equipment it's there It's think space, when because to essentially capacity It's of dark fiber. testers. a that it's we to a is, and going that require test for turned turned been test get And demand long-term in, on I significant gone it is not wafer that yet. going but the driver has in front-end has is that the there.

second if follow-up, Got in down SoC be my of And business could like it. you half, lower XX% your share that suggested the that for I the TAM. take Greg. Seems

we just about business down comment it implications have is down, confirm not should also be and is for node? also? you thinking that that as big a what Mobility SoC I in So if 'XX growth it that. to would the is it test So mentioned, does be wanted on calendar X-nanometer your And

Yes. at half, there. haven't looked second really I

Yes.

you in half. prepared we it to the while industrial bit second main noted expect higher the I is be driver. a is revenue half. my to half, think in asked have second really remarks, in as I second auto And tied And And does that SoC and revenue SoC. the of about So part increment

be in we the expect So SoC half second to stronger.

the repeat to and question, -- could question? so your actually, So half of I'm second of the other your you part sorry,

Of Yes. course. Yes.

the get trying X-nanometer the So given will second what that a that on your demand half. large cycle. was ask in I customer isn't, do better your Mobility it than be then the surprise is, half to you specifically first And to isn't expect if

we about not a is big think demand as implications how So just for your node and on have does X-nanometer that year? Mobility next

Okay. Yes.

The think that reason that the absorb point increase by important complexity increase. XXXX that lower we to demand we've enabled amount communicate modeled are not is it's and sufficient clearly. So driven by unit believe volumes that X-nanometer in capacity seeing before. to to significant I is because track something is of really that We available the complexity it's a what on good increase is

unit higher see believe So we'll effect complexity. volumes we of increase, the as full that that

you. Thank

Chin comes proceed. question with Brian next Stifel. from Please Our

Thanks. I yours I Maybe start few just questions. can to a If outlook. an morning. Good ask advanced with, SoC think

in your of that they wondering out end you worst like think with rarely between kind service, what your discrepancy low your theirs. But the cetera, align than are high just be of year? the do explains sort forecast. range, So things especially far the of of or part I these each think seen of this they've end might year I'm of this the et forecast

Yes.

challenging And I be. same view. business think for predicting be. Brian, or is strong question. how or I is thing that with the depending year, view business from our will them, is a predict a perspective, our Every their end will different us to -- view the strong the it's from you how for of true weak trying And up the how perspective, year thing this weak the So starts sort on their great is

pretty -- the see X.X% adjust kind And range that it things you to set, a through see as that unusual strengthen we the of I see feel those converge. look we'll numbers you take to don't divergence. the -- And last now, And the can comfortable you like as year. year, right By to see a do to the so tend But same quarter-by-quarter, we'll basically with if I that say guess basically, that spread. that And way, thing don't I we X.X%. I'd existed quarter-by-quarter. range

Okay. Fair enough.

guess are molds theirs... than your So I better

want walk thinking away I that. Actually, don't to you

it accurate know are a than molds don't at but year think we their molds this prediction for they year, last you I if at I similar better the our up that did look sure. than ended having time, more

of critical it when the But jokes. of a than Okay. for kind take automation, will probably be well and you omnichannel Yes. -- towards kind that or the investor. rooted few alluded also, sort of But end be when a But established, quarters I those that even well sense about established. like you potentially. for make a you or when will automation have channel you And even think when established? think mass that even do do from to do your more -- love think that of fairly will you then perspective, would not maybe scale of of do lot strategy be you you terms of will pretty portfolio in strategies sort currently of think broader Greg, revamped somewhat the may a have once than of that market you sort

Yes.

So that's sessions. sitting it's in like you're strategy our --

in we way to the steps. So this think that doing is omnichannel are the about

'XX, that XX% are growth we're deliver going growth, to From that new the 'XX channel. grew The established even that expect UR lower. for channel the that first same significantly though, 'XX channel -- be is OEM XX% year-on-year. to like from the And is 'XX OEM to we channel you to significant we've overall,

to of After channel growth we end In that taking and delivering of expect impact more we other year we'll year, additions in to start significantly steps XXXX. this establish large be have accounts, that, we're and coverage making. effective to towards this that the try and

So kind think, multiplicative to a the idea they're growth. And we have add one to effect. capable new XX% channels, delivering of as these we XX% of of is ones, going each is

rate new that new a which So we adding have growth adds each channel then channel growing source. and a at

why So over the we definitely the reason mid-term, XX% confidence per at have even lower though growth about a some starting to much we're the year XX% that's rate.

to have engines. very our Now once omnichannel, other looking Robotics try that powerful to growth you leverage the yes, strength we terms find of And ways will be in second is a this to we going business. question for find to build us broader a to advantage in that it portfolio, be

great a was Greg. Thanks Okay. That color.

comes question with next Stanley. Please from Our Joe Moore Morgan proceed.

understand from little was, put a it more Great. last of I bit you. in of the guys context quarters. I I weren't constraints. And holding and if revenue. as as I Thank you guess really wasn't component the couple thought back that constrained you as wanted was could to you thinking the advanced

the is but impact some are seems it like core. negative constraints Now still component easing, there's

quarters? like standpoint can versus the from does a supply? just And you've put So context affect in you few supply of your share seeing been as you last that that market how what in advanced

Great. Yes.

say that the little We constraint demand. So fundamentally, is last a overall, market things -- really into see well. or bit supply constraint QX. And with that balance, brought off quarter, into we normalizing. revenue million fall coming more of in demand into And and in of had we roughly of component as $XX I'd of kind

very really and still source, just I to would driven where supply started has by unique long suppliers are that's of we we with spring that obviously, that a chain time have that there couple say lead components demand for some up programs.

segments slots. But coming We market up that when end customers supply. outstripping really ends are or several industries available availability in our to have specific in

that it as is key suppliers think in component a an So couple a which couple about higher of expectation, of than uptick seeing we're great. markets in that's the our

working these million and that is going news million good I But with I $XX have down quarter hopefully doing we we're problems, do the very best I see to this that to as 'XX. uptick, this the expect be service $XX will the outside. we're noted, our opportunity it. into Obviously, to hard solve -- customers.

record We have of execution. a track

to So it just of key components. of a think couple tied as

they're Is Okay. that of year the same moving hotspots are a Great. had And like shortage of like moving that constraints are kind areas sort different it a around ago. just -- know those you bit? little Or is of component? I

And first considerably. part I'd it, about going chain 'XX kind a of variety supply back and component was I'd is narrowing the Yes. 'XX, band of wide issues say think to say of the that there occurred.

working with we're showing through that suppliers there, out couple that improvement. a that are are working there's very and our still While closely continuous

And that's you. very Thank helpful.

Please proceed. next Barger from Steve question Our KeyBanc. comes with

morning. for forecast Or the the is It industrial other for digitization you test those your do correlated Thanks. some robotics. that's How degree? be reconcile there semi like comments. test volume? in driving the Greg, Good seems prepared softer thinking of about some aspect digitization to with strength should

Hi, Steve.

So it's a pretty insightful question.

biggest billion robot companies, business one between And the industrial So robot on. whole factories. the results difference a significantly busy more shipping if $XX with they versus about EV us you they running lead really and The that a not at That's rest like help bunch volatile. to two billion industrial that cobots, you'll still, is a to thing us And you year are of core to times. the factories is market see $X about And And of are very market. still industrial of put battery cobot is together the like if space. product robotics that think look our other going them. are and

but parts PMIs I other other like a than indices and on business electronics little that so tracks the the into consumption think is Robotics closely lead -- the our And that that's more stuff. longer one broader of the business, bit of of going significant there's things

your over the benefit? Robotics That can do your your story a more it business. grows? upgrades think over for Like you and accounts -- is the do profit sell volume Is or pure really you about a the you that pools where focus you. driving you to will services value color. about you large installed in changed thinking great hardware game think How past the ecosystem is in is that this you year the the the do and how the time as base think goes see that Thank where that's provide be value longer-term And two? or when on the is or

-- that -- really don't volume see an don't it's happening. This Having sort matters. ecosystem the terms software, and I in is capabilities, that quickly. of people a actually does so a having partners play, help better big better because think that build a of differentiation easier-to-use commoditization, quite as Yes, a really technology we having where makes solutions robot, high-tech space infers of it difference that can of

accounts, on cost grow larger us The focus will primarily account, a more sales, can of sales accounts, our growth like robots think cost growth sales to with in outpace over per of number I sell that smaller by allows we that of of on our and large terms that -- that concentrating our time.

see So I efficiency game. that as an

aspect important hardware providing The in get bought more types with made importantly, will an the retaining allow of our product, an future. both pools profit of I terms out new that about our are more think in terms of software, in versus new of services, providing that that components think service, comment them to you the but product of in engagement future customers that that that that's plans have we there

that our At They the day, end reliable. much. don't break are really robots of the

business, robots model. not more more processes, pay be would service want break-fix uptime critical to these going are volume get and customers a as huge like lucrative and more but that's to expect into So generator, a I for to a

comment? into Would robotics that more over you or service service as a time on based get as cobot a

to get conversation. have want to a beer that might we Well,

depreciates I nutshell, are a that models making a because levels we that service reluctant. as of a in believe worried think model offer interesting robotics at They're service the pay customers an have now the about that we penetration carries who off. that in like depreciation, and people I hardware it's where investments won't as think the around that trying service, to largely right is are in right low

the to a allow deal they're what the to make depreciation for so solving far by robots them problems if that more customers talking those And rent they walk smart basically those investments, to you're more We're robot. focused a about. get paying away easily. service are on better because as enough out figure willing carrying that's And versus

the Thank Appreciate Yes. time. you.

you Hey more sneak operator, if try in would. to to please, just going question, one we're

with Jefferies. The question Vedvati Please Sure. Shrotre is proceed. next

bandwidth intensity advanced side. question. kind on of packages? on test considering Is first put side. for Thanks that my that high is increase memory Does think an positive test of a intensity these guess the DRAM angle about I how Hi. question taking just the on we your my angle it? that the are think Do that you should or

everybody. Hello Yes.

technologies really Memory actually memory technology-related tester of though is High-Bandwidth So capacity some business. that down. the of is one overall driving even small the sales, it's leading-edge sales, part overall is tester some certainly But a

sales. the flash don't significant in technology the as think it's transition So but of generation terms LPDDRX I as to next driving of it's positive, a or nearly

markets, And kind follow-up, for question part Got for my Okay. this. of a on the sir, I have industrial two auto it.

sort Teradyne sort has there between share dominant? So would you XX-XX the where of market pockets market see of been more share and Are any be your always Advantest.

some of that, equipment talking have restrictions you about Has do some impacted or better clarifications that the then expect And and follow-up drive as getting a restriction. you expected? what revenue in any your up of sort front-end to China been China on clarifications sort than Like players sense? you China of restrictions

Yes.

discrete power within when more we like any terms probably where where the that. in we're IGBTs, comes carbide, that auto of parts things is leadership and to gallium industrial, nitride, have dominant, in So that test silicon it a position I'd segment say

part space. huge ago of we over time. that a a grow part position expect establish is us it that Our that that Eagle product but acquisition good to not a pretty that and the made allowed of years Lemsys line to we have a few really market in It's of market,

As capacity that fab producing a for future. are performance are that share locally a There deal And of lookout we're -- is to for are lot with. share that that you getting that we there trailing and a is happen coming are China test is tester of generally makers equipment to high some don't smaller on what's there need that. a the parts getting edge we in also know online restrictions, going There of China don't the that. in something

that, ourselves we're that So we to and losses. we're protect competitive watching trying sure make against

Thank you. helpful. That's

time. Okay, folks. And we're out of

with you ahead. in interest Bye-bye. in Thank So call. this working the to you weeks we forward all your Teradyne, the look and concludes for

teleconference. This you. conclude does Thank today's

participation. You your thank you and time, your may this for at disconnect lines