Teradyne (TER) 31 Jan 242023 Q4 Earnings call transcript

Greetings. Welcome to Teradyne's Fourth Quarter 2023 Earnings Call and Webcast. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll now turn the conference over to Andy Blanchard, Vice President, Corporate Communications. Mr. begin. may you Blanchard,

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

we'll our and first quarter along quarter provide Following XXXX. year, remarks, details our XXXX's full for performance outlook our of with of fourth for the opening

results evening. Press The issued was Release containing our last fourth quarter

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

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

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

Susquehanna in Looking ahead Citi, between Stanley. or Morgan Industrial-focused Technology Teradyne participate Conferences now earnings Investor by to next and Research, and our expects hosted Wolfe call,

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

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

our will Sanjay earnings underpinning the these everyone, provide quarter our will XXXX view financial fourth full details thanks updated results, joining I of Today, midterm summarize on model. for our describe market us and and assumptions year comment early all morning. XXXX of on this Hello, and then topics.

sales, line The our the -- from growing were and with quarter doubled delivered more on financial Robotics We execution HBM our in XXXX than highlights for and we record in the in team's strengths and QX tester demand clear address URXX results backlog XX% guidance. where revenue Memory XXXX was DRAM Test, QX were XX% our these from shipments Balancing Cobot Robotics QX to as our Universal ramped in sequentially, test continued of markets. Robots. the other softness at new Memory

with consecutive occurred that Shifting XXXX, portion market SOC an XXXX SOC the XX% that The now and has period. shipments down same has over to year-on-year. second subsegment in has area year the driven contracted been by of decline as for historically Most strength industry the XX% in declined Mobility test. the market in and test the semiconductor and of wireless semiconductor the the the and SOC us test of largest demand XX% the of test size market in full demand. was declined, COVID-related record year, XXXX XXXX XXXX, Mobility from digested

class share. Despite segment a demand, high-performance provides in we This the take continuing. ramp. is opportunity historically where an towards producers trend have Teradyne in customers computing, gain new of weakness had the share to to integrated time will low vertically for customer These

sockets. capturing on focusing are we so And

sockets, and for us, States United targeted capturing On customers key in that majority we was China. XXXX front, where VIP the at a of year great in the

inventories the Although which automotive year, began strong the to they at down for elevated end capacity. add was of for XXXX, slow most at automotive the our customers of rate test

with XXXX Memory is test. million $X.X Test about $X.X SOC Semi the in of in and estimate latest billion for billion, Our market $XXX

market, company $X.XXX combined when results and XX% market marketing billion, -- about test non-GAAP XXXX. earnings the down with $X.XX down tepid Our sales from of reflected and were were weakness XXXX Robotics financial XX% a

at describe inventories In enter create remain in These subcon we're tester we XXs. optimistic. high first headwind me and how in a market. chip XXXX. are limited, let XXXX, utilization tester looking current the Visibility is remains test, we the demand SOC combined half the of As but to to cautiously

pre-COVID inventory our The late less With times levels, which Automotive parts customers XX SOC weeks. This than to back now orders to visibility. enables overhang our testers their lead limiting certain, to legacy softening wait demand is extends of are soften demand, until place for began this QX. market, of now the in to to new generally

planning is leading midyear, in Several indicators will that current a point improvement. -- second view half these for abate stronger headwinds second a SOC to test. are Our a half and we second

we've so example, product in seen our chip For development activity no the at slowdown healthy. remains pipeline customers,

This in Mobile to driver While in beginning broadly now Memory new XXXX. HBM high upwards, which and record vehicle XX% market demand. the the for a drove despite are device below Test, in devices, still which law we test testers complexity increased electronics grow the seasonality, is market flash to levels normal not is test complexity in for Memory the to seeing XX% in by Automotive vast per and phones points demand capabilities AI and required midterm, is positive this CAGR that to In we a slowdown and sales. demand. Despite be expected demand, the premium mobility Therefore, vehicle, was be driven the the Automotive retooling to inventories, content are for will this share accelerate should XXXX, end especially increasing. story for speed higher semi inch utilization are and our adopt the this the short-lived. XXXX compute DRAM expect devices -- key an are more end through DRAM. forecast especially towards improving and tier this XXXX in OSATs,

investments production devices. faster the ramps driven of and in the XXXX, introductions Memory by continued expect even volume revenue continued technology saw we In we for R&D growth XXXX

smartphone conditions test to expected this makers, to improve networking and test. in will in drive test in business weak we due remain SLT excess expect expect modest now and levels in strength test support excess Test, at to in to Board demand may capacity current Aerospace remain capacity is due Test HDD continued for System Shifting and in demand expansion. capacity the we growth demand Defense Storage weakness increased Memory markets in Production markets. demand markets. In equipment the XXXX, to other As and and test, expect XXXX, Wireless test

late up are the important URXX a mobility Robotics. in the in midterm that, and added SLT and setting customers Shifting to in had for strong growth. QX continued, ramp XXXX, us new as new said we very We Having launched quarter. computing high-performance that we URXX our

Looking the full for year at Robotics XXXX.

added the nearly to OEM progress we XX%, our as the new sales with than addition In OEM product on front, good nicely partners. growing channel XX continued our work more transformation

We've to also from XXX. approximately accounts directly XXX expanded the number we of over large manage

of XXXX down QX shipments dip, be normal to expect more seasonal the than are as We QX digested. the extraordinary

half. XXXX year-on-year all expect roughly that of second quarterly in is XX% with the XXXX. the Combining view XX% with the these our in year-on-year be and we're Thereafter, flat points half company and growth into first modeling the limited, proviso through the rest to second half revenue we

the Semiconductor our we of sale Within expect which XXXX, lower year million. full business, revenue $XXX by in revenue that, reflects DIS our reducing Test Test approximately

size flat billion. effects XXXX is the Memory early market our billion. the estimate is $X.XX of sale, Excluding Test flat about estimate $X.X revenue Test combined our that for for midpoint have billion would of In market the SOC roughly for expected market. been billion a in $X.X $X.X to billion, to a $X Semi at Semiconductor of Test, And

XX% grow the expect in in to will range Robotics XX% We XXXX.

nearly our in remain Test and Despite in midterm the of shown the over in longer-than-expected is our the to we in earnings about optimistic deliver now model. businesses. revenue earnings growth potential long-term of the expect XXXX, we and downturn our to XX%. midterm share to This level Robotics Test per the Turning At the XXXX Robotics softness and at a Xx model. the and market, Mobile update midpoint demand,

past X-nanometer, drives that longer all advances track backside calls, and node are we've on they the drivers and key process that X-nanometer, These include in enable all test delivery. accelerating, power even and growth complexity, As or around to gate higher noted higher times. of counts, transistor

which which more Good drive for packaging, X wider Compelling test longer intensity ADAS driving co-pilots more and that EDGE of test wafer smartphone progress future power, at level, a of AI VIP requires of the bandwidth Advanced communications. applications and design-in design space higher emerging memory for are in driving with demand wins the and targets key revenue. processing times. X high technology, at all houses, ASIC chiplet including leading at share the

factors demand. these of All accelerate test

Flash, unlock aggressive of speeds continue will an our in the we in that drive are for Memory potential long-term strategy in Memory still in HBM map market road is at the confident are and Robotics, There that less increases finally, market. interface And we X% than penetration, DRAM, this and technology-driven to retooling growth channel will market.

that market and the to robots our expanding our can of range will customers addition, automate. served of while required tasks serve, decrease effort application new the our AI products In is expand for the

of the XXXX. details have expected to the level, largely Industrial of Robotics growth the our of and for has last The the to that financial we shifted Automation mobile peers we duration our At of Sanjay is in really the model. seen, and expected, been has downturn the our demand softness longer provide will more in growth year, company market unchanged. expectations compared outlook in impacted the but growth right, slope than has

see are that our drivers the As each the business results future to rather in outlook capture than maintaining while investments predict growth XXXX, financial R&D the tight track long-term maintain on To OpEx XXXX discipline, of we of for to and both required Robotics gross looking necessary before short-term we with and Test our financial the that the plans historical be to and operate midterm discipline, to We we at making margins allowing increase. for businesses trying trends line top signs improving materially markets. long-term look will and growth our demand customer-facing in focused potential cycles. and

a that reliable line given for provided trend In will baseline planning. above trend, that below year, has any but or results land

line future the XXXX we and was that, and we're about over but Sanjay? demand. in plans confidence opportunities I'll With executing deep to underlying to capture in place, team's Sanjay. those We're drivers demand ability to our the have opportunities. trend things expected, capture below turn remain As excited ahead, that our

outline and cover morning, planning QX XXXX, our capital full Greg. plan. provide everyone. you, our XXXX, year updated full earnings summary the Good model year outlook, the Today, I'll for QX, our financial Thank some of guidance allocation review

Defense Now memory of down in and in in had Semi million $XXX weakness offset to Greg QX. revenue EPS Board were XX% $XXX group QX with and quarter and his $X.XX, SOC of million, weaker non-GAAP LitePoint Test Storage due Test markets. Growth sales shipments $XX $XXX our in with Aerospace revenue weakness PC revenue 'XX. Test high guidance. of Fourth was Production was System with from million million both Test. continued revenue cellular $XX $XXX and million, noted highlights. of million, as in year-over-year line of to by of

gross $XXX profit margin million QX expenses URXX XX% of non-GAAP $XXX of XX% and in on sequentially shipments. million last and the guidance operating Non-GAAP was seasonally was new our up from high product revenue up from quarter of was up and year were 'XX. operating $X million QX, rate the XX.X%. XX.X% URXX demand the range, in and Non-GAAP fourth of impact Robotics middle

planned Some for non-GAAP other XX% Tax lower in discrete million had mix. was financial and the facts. items. because in of XX% quarter geographic XX.X% We repurchased QX, tax excluding basis on rate GAAP the excluding discrete quarter. than the of items We in quarter. was $XX customer one rate, a shares

We for revenue margin XX.X%. full $X.XXX was billion. year only results. XX.X%. $XXX and was year. OpEx We cash returned of Turning We EPS $XXX for XXXX. profit of securities. Instruments through to share and our or million dividends. We $XXX of ended year free was than the revenue XX% greater of to customer the repurchases the Texas million was free in marketable $X.XX. million our Non-GAAP Gross with operating generated in shareholders year the cash had and $XXX million, XXX% flow the cash flow was

full for and year, Our tax was a rate excluding basis. XX.X% non-GAAP discrete on XX.XX% items, the basis on GAAP a

contributing $X.XX $XXX approximately million. SOC revenue revenue Semi Test $X.X billion the for billion, and year Memory with was

XX% partially In and grew offset and technologies new Memory, in our and Industrial. by in contracted Flash sales X%, about like XXXX, in strength market weakness, Our line LPDDRX SOC mobility driven sales continued HBM DRAM. with Auto the and by and UFSX

in had business were in million Production sales both group Test and and flat of System-level test Defense were revenue and Test our Test, handset Storage million HDD and Wireless total units Board given System the while in and was lower $XXX revenue In weakness nearly down XXXX. XX% Combined in Aerospace of from in networking XXXX. PC $XXX XXXX the decline in year-on-year, markets. continued

to $XXX million. mid-teens the 'XX, The Robotics. X% million an with Robotics in full revenue group million year, in Now profitability had was contributing $XXX had and non-GAAP $XX XXXX but MiR loss. QX UR operating for

XXXX, in we to was and lean continue UR MiR. enhancement While into R&D channel in investments profitable

softened, impacts October SOC Since to million, between be with QX shares. QX. for a $XXX our Test range million expected has which non-GAAP in are $X.XX on sales demand outlook of to our and XXX $X.XX to our EPS diluted $XXX million Now QX outlook. call,

guidance quarter first the amortization The of excludes acquired intangibles.

run rate gross OpEx the are sales. to quarter and to year QX at mix. be quarter to lower guidance flat product profit expected are and midpoint be 'XX XX% is XX.X%, of of the for operating first our the and point at to roughly volume expected is estimated XX.X% XX% due First Non-GAAP with quarter low margins first unfavorable XX%. to at

few points to you assist XXXX. in in model A

improve expect Device operational mix, to XX% and margins spending increase or business, the the First, sale In to XX% the full forecasted gross are gross lower the to driven of margin product Solutions improvements. XXXX, for including Gross improved to profile. year. year the business margins we by resiliency through DIS Interface

purchase the announced connect to components we business with that key strategic will as November This business. provides to for interfaces Teradyne's first, Moving Technoprobe our follows: XXXX. DIS has Technoprobe in several customers' agreement chips advanced partnership test. testers The

equity of shares. make an Second, in investment XX% Technoprobe, acquiring Teradyne will their outstanding

to and Third, of of a work performance performance systems. our on the will customers realize test series to enable Teradyne interfaces, to device together Technoprobe expand full projects the of semiconductor

revenue transactions close $XXX impact accounting plan the a will revenue on the sale XXXX $XXX account It Teradyne's second earnings. method. the million approximately expect by DIS and investment in the to in of QX the had quarter. XXXX We We for material to million, will equity close reduce date. expected using have assuming not our Technoprobe,

grow growth year, expect we to year businesses. X% Regarding in increase driven OpEx be our full by OpEx The full for X%, the XXXX back-half to share strategic will loaded. projects Test to

to is Robotics with to be the similar at second The Robotics revenue as revenue to full profile XX% have enabling expected of group revenue. company will year a expected profitable. grow XXXX, XX% XX% in half

forecasted XXXX, is Our in GAAP be and non-GAAP items. XX% rate tax excluding to discrete

capital to Turning allocation.

aside of for business, reserves a powder a significant set have M&A. the in cash Our run downturn strategy cash enables level take balanced minimum million, of maintain and consistent, remains the dry as which to us a we have to $XXX approach event

XXXX flow. $X.X to we've share of a repurchases which For through over billion this XXXX, announced month, reference, our XX% to Earlier we our free dividend $X.XX is in X% returned dividends, increase to shareholders quarter. and per cash also from

We QX, expect million of will investment our Technoprobe in an which consume our net close cash. divestiture of and to estimated $XXX in DIS

and XXXX in order up buybacks to employee back an million. program a to equity purchase limit offset will share to our $XXX our minimum necessary We from of build dilution in goal compensation to cash amount share

in materially reduce do not share we to count XXXX. the Therefore, expect

midterm to our Moving earnings model.

with markets January, serve, context. insight we investors look of A power and share each and updated our the earnings positioning into growth provide to the ultimately, We for the we this As our at competitive do how company. few we we've model. points

an XXXX First, we've last make as year-end at kept year's comparison can update. so you easy with

Test technology Second, growth, reflect for drivers ATE view horizon. device will the drive the financial revised to we Greg trends, we including complexity unit are key our which which ranges outlined the the over participate. X-year and anticipate down in growth of markets portfolio,

XXXX's a CAGR demand. XX% level recovery Test Test to revenues to by are a in from at XX% of driven XXXX, Mobility primarily grow to expected Our muted

The channel midterm looking range applications, the products For work. a a at over AI-driven including new opportunity. include we're and drivers transformation products labor Robotics, and growing strong of shortages, market our

non-GAAP are Robotics expected updated from to Our model EPS of $X.XX the the The XX% model XXXX. $X.X revenues to midpoint XX% at CAGR will revenue grow drive approximately and at billion to XXXX to range. earnings XXXX to

is Our model competitive highlighting and Gross XX% EPS Robotics year XXXX margin partnership estimated delivered challenging XX% new announced of XX%. of we shareholders. non-GAAP transformation margin growth. Test on this Robotics leverage in profit million operating with in did sales and Test share Test yielding that XX%, to free as XXX% had a strengthened while cash a a our $XXX of and as we Test position invested XXXX channel to XX%, to percentage XX% of at XX%. operating the will CAGR a both Generated in still Interfaces of to We from on operating and OpEx up, to in drive at non-GAAP XX% XX% and midpoint, Robotics Summing strategic at be and the to portfolios. XXXX cash revenue products, Semi and a flow in returned basis. a

beyond, to model. reflected impact Looking the updated is ahead, later the we that to turn Andy? in driven growth favorable back expect call by growth Andy. and Test Robotics I'll this both earnings financial year our With that, trends in a and return and of midterm

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

SIG. of will question from coming first the Our Mehdi Instructions] with line be Hosseini [Operator

Yes.

there's your about a do the one midterm is What app about decline like The for follow-up. guide. mobile should in think have It I TAM a that about I and we XX% processor those for want think SOC and SOC slow How XX% X understand versus Industrial? especially reduction the transistor do start to markets a the in to to better has your XXXX. seems how you impacting TAM with first XXXX density end

Mehdi, is Greg. this

And TAM a part be that going you model, year compute the biggest composition last the is compare I the think of this going up change higher level, year. is the level year, we where So but at be if is at midterm market market we of year. to that that the is we not from that it the mobile did now the last portion think than the we of the to last in think were will modeling to be

model the last believe basically density real end the market than certainly, time. a market new a through cloud bit part last the strengthening the year. impact -- were the and that AI is proceeding at end Edge thought going pace is midterm they difference this that compute proceeding of of out sort of of it we in So is and that was relatively same are in rate And softer is transistor it. the we predictions the factor market The unit

Great. compute great. just 'XX, the you provide And it 'XX correctly, of heard more the I And if Is does would if prepared you any you believe new ramp additional follow-up a to like? customer. like color new a impact? has if that's Okay. have you be look how do true, remarks. would with that your customer could And said I

XXXX, seriously X starting those is both to And the compute in sort a that in my the One in remarks. comments way in definitely much cloud right EDGE And are bit end devices. for towards hitting more there model VIPs. and but little wins wins XXXX. talked are perhaps about of socket socket prepared of So

for XXXX was until that I something for an a going compute to material volume. to that's win build other customer, The to definitely reference SLT and that's made take

what Okay. with Great. But Andy, perhaps I'll follow-up VIP is?

hyperscaler those of We players And that space silicon. their are sorry. -- that -- model. most don't of but own number the there the traditional hyperscalers, are that are -- players there are fit of in big because designing there typically, are -- That's portion a the a

So large own doing or are like that custom or people their integrated a development automaker for customer devices. handsets silicon

the term read that prefer as producer, we So you vertically can hyperscale. integrated but

of from is with UBS. line question next the Timothy Arcuri Our

Mobility in, I'm before wondering numbers, 'XX? Auto $X.X in was million. is little go the if million, segments TAM you think more $XXX breakout I the different than came how I was can the know a through $XXX compute billion,

hundred and those If you for shape -- come the it but a level, imagine through just you probably And Can run would it's a flat Autos can in Compute's you of delta. just as maybe of you about thought then I up couple That's million. couple that? down did 'XX market know can are I segments? hundred for million. at a would high 'XX the

Sanjay. it's Tim, Sure.

And market TAM then the billion at estimate get the billion, the Mobility and you SOC to haven't the $X.X billion, billion, billion. $XXX at $X.X Industrial that of specifics. $X.X in $X.X billion. how the $XXX Industrial our But at Auto $X.X and million, just MCU correct at XXXX, SOC the $XXX Mobility million million. at billion you we $X.X of for to -- Service $XXX XXXX, midpoint. Auto Service $X.X billion really get were changed. $X.X to view at down So Compute is midpoint That's at million, We and numbers, going Service at Compute at

Got it.

Okay.

little It's mix Compute. bit of it So shift. is just a

in Okay. big actually I range customer the numbers back [indiscernible] what midpoint, on -- table? XXXX? And I'm Your can that but is at case largest just outcomes off range you year. where for talk your revenue on of a sort of about range, know percent you your then asking the you how Or your think there be the XXXX. customer not about could talk was big in largest which they customer? a is have they're can as you this not side, that of mobility

Greg. is this So

to going historically XX%. Our we've that largest customer, at they said come under XXXX, in in are like

have of April frame. our again, case, demand than total Looking in half quite now, into the XX% XXXX, Right better of their them And we visibility at less revenue. limited. has usually forward is second picture time a our into that base

time. get happens So it base anything we'll with downside much But better if is there case around that should largest thing you that share our the that any we to at think information about it, customer. our about historically isn't that

is C.J. line Cantor of Fitzgerald. the Muse from question with next Our

you your confidence remarks, about In prepared SOC talked recovery second the in for half test.

I to what's you could hoping recovery that the perhaps needle you for really walk recovery and emerging? OSAT was the and speak see you is drive end customers, you through, So giving versus half the could you confidence you And how that content, second first move whatever to think EDGE going half? guys over AI,

Sure.

leading And OSAT to most rates. now, see indicator around start pick look rates utilization but are the did utilization is really we start tend low, to those utilization to So we at right up. that

we're by this normal but the that quarter they're trigger seasonality, definitely below third buying trend if that the continues. sort improving. would of -- we they're believe So And level point reach year, that still the seeing they could of the

key market real trends unit end PCs. have smartphones The and a in that pit. looking been for PCs in is growth we're

in just see a came tailwind cycle, from that bit IDMs. a thing also fourth bit would utilization recovering so us. The quarter that expecting that was refresh saw for a And to down in the be that and we're we a

so they're is for business most -- Industrial where primarily concentrated that's of and And our Automotive. the

in driven of introductions, to year model a started to rate in higher a weaken relatively that's also -- Semiconductor pretty our in fact good for -- start has a late of the we and XXXX QX second model electronics we driving attach right think The late the weaken. XXXX, market. we half new the of see that's in XXXX. So that has to year for automakers part then that lull short And every Automotive demand. And that's significantly in by the mainly that begin that Automotive Industrial now saw CAGR the

we to fundamentals drive So good Automotive. the think growth are in

short. lull relatively So going we this to that think be is demand

follow the And up helpful. I on SOP could Very side. if

You aggregate, be across timing and that? talked ramp here? will wins the the kind they, the to you of take large HPC. Would years very do of to of customer. I in customer about large or both scale one have could revenues know Mobility curious that And of your very get

the in And and volumes primary volume. that something over that's take customer going context, system-level not plans Compute, won -- the those customer The test that is I as In time. start referring the if So put wins and for SLT for Compute. in Mobility potential our the they remarks, Mobility but large prepared was to customer, drive you a we significant as was to a for while take it hyperscaler a small is into to SLT, relatively basically off. to level that's then device for to Compute at the for devices and going have increase

to of of us. the incremental that largest more for our customer, I any tailwinds those in rise but So historically would level isolation don't additional it's think

are America with the questions Bank next of Arya line from Securities. Our of Vivek

then you to And I the AI you're help largest X.X%, growth data all the now the growth between appreciate And that we to the break X.X% TAM, is Compute compared data that client modest center type more Compute very that giving Could which mentioning, see products. you the rate in center? end market. very versus right and high us rates seems that

more is a why in products? growth Why we then a more of data little you in how just don't And the data-centric modest such with client growth much testing? color, see give correlation us only if could center? versus So,

is Greg. this Vivek,

of versus all, little a me So bit first client data let about talk center.

been in really As in support That Test has far capacity of as we can client the Compute, market adds tell most in were data of the very quiet. XXXX, center. very,

the adds for required into we moderate cloud a capacity forward the are bit. going future, to think Looking that

sort volumes of I are are going higher-end capacity new that to at they're that in part They've and XXXX, watermark to high think of XXXX, added accelerate in market. a side, X a ton The of terms in things. there in be things going felt client productive the is that so of

PCs is we've on in in push is at training The seeing first other right the really right large And low There's nowhere primarily unit the now. now. a AI, up. side go but the the been point volume language models that is that to very in

And looking custom customers, at the EDGE huge part. the road silicon for inference for maps on a training they're our push versus AI putting

think see be XXXX to dominated much this between a it's out get we're shift balanced data a much next going over balanced through to client. years, we to more X more midterm, by whereas I going center, as the and market, So data was center

the watermark -- thing of look back the I if I want context, to back And $X.X in in want it about high a was a Now you $X.X Compute. than that to bit of it to the was the billion SOC in less in provide little billion that try for size, of market. that total market, modest $X.X and terms just XXXX, TAM, billion

year, TAM $X.X Now billion, this down to of representing $X.X that is overall billion to the and is of Compute fast forwarding total.

for for look you The supports And last level production right margin volumes is point significantly thing high if Now are devices. and these have in devices the test now. they I'll high. level it's devices are the big the market relatively these a is intensity. and small, and high increased out a into these at very XXXX, that end that's margin, that unit the that complex, But very

demand the So that than required fulfill the means devices these a the on in lower that pretty great. But it space. is mobile testers it be getting makers of revenue is would revenue little that number bit to are Compute

don't the footprint. Teradyne I question, just of Greg, year actually forecast model that Teradyne the manufacturing from bigger the I of And at If related know was to midterm this out whether X mid-XXs decade, XXXX. there but, see that was and just follow-up, was the 'XX that? But for reports one just and rate have 'XX. above grew kind I market I is, when too pulling like at look was last or the some if and I around in right, look of years, low only that the growing, of had clarification about the wanted ones. not, China media there any of my I small they're kind

such and and kind the for growth that keep those high in confidence of forecast is the a years, of visibility X rates? kind why hitting too So what

just first, locations And that nothing a quick our We've new. to supply moving of chain report news of is have still for is on So an going increase on We some comment involved products. China. the our effort The China. supply had production a multiyear chain. really in resilience extensive that

China. We in have XXX over people

competing where and region, commitment expect in are there's it's that a winning -- And that but business in grow. to or it's new that for good headline, a we our place I think to in China. as story nothing We

of we've look dynamics So on out comes And you longer at the in it with as years. model, the been talking for market if this we've you're midterm look the seen a -- the downturns. XX than you market, if lens about, of

downturn. XXXX, not So coming in see coming out of to growth the It's XXXX. unprecedented years COVID-related and then, the out in XXXX, a demand that again, following of increase in significant

for for market end PCs, the really state see phones, mobile good pretty we expect of the and market the at a end snapback. looking to And

in how I becoming X other is confident factor is devices. complexity impact AI we generative increasingly to The going think of that are

the that and part execute both to need large of complexity the models amount of were and that a is thing to something next they incorporated the Compute, language of is in kind the technology that And we be the compute was So the tailwind is the at appears in positive mobile in going cars handsets the EDGE. it at really -- drove that very in wondering what these market.

look One part going lot of the the part of automotive market to you not a mobile accrue in the reminder in that final market, as the of about when part growth is to EDGE AI, and compute market. of this, think at is, the you the

Our question next line Sankar of is the with Cowen. from TD Krish

just higher either of lower combination? I'm gross wondering, I function of the The half first is follow-up a like is that. or after guidance because investments When our almost then to a analog we for just testers? in kind less compared curious. that IA, margin maybe I'm Greg it rate, at auto a due product QX there And mix is last of of your time look had power run to that. revenue one Sanjay. is earnings Or

Sure.

nothing a and product fundamentally product is really X that. in mix than things more it's lower mix. volume, Say of think I then but driver, So QX. bigger One is product volumes. really It's mix bit little much a

worked. Got a IA. Test out it. it in see the Greg. has you're market because now on years, vertical on need to the then things? And from now Greg, like obviously, you on? of historically shift curious, that something and just away the came there you like big then focus have clearly, to for compute certain kind side, few got your Technoprobe, test like you of last going took of [indiscernible] last never is is the kind seems your kind which to was eye you've a else then and beginning Got it question it. position. and And mobile test off of blue years, philosophical more investment the mobile a the do integration between several good I'm And Or

no Automation our real priorities. I free for on investments when to didn't always most cash for so and think the look to take to strategic there's way. the our investors change -- and Test, about in were priorities has -- been So in We put The our off our accretive opportunities work our talking ball eye we Industrial business. the flow strategic effective

was year IA Automation rough a the that because you're we Industrial matter in end money, the business that over mainly and of XXXX, of were that period had conditions. business making talking And market as time about fact, a accretive of

that by and the that interface that's the the market, thing the is market. thing a strategy. that really the The haven't is in And really in different we driven Test the our motivated and closer drawing Technoprobe the and is tester in together. investment So that's trend performance there changed complexity end

advantage at required devices, all that devices rates at if required data driving want tighter SOC a you are of customers for the look and between a look have value in partnership the customers unlocking And in and we in by in exists that those believe their tester Technoprobe terms achieve to the interfaces be integration at that that technology TPI, memory an number of are you of with you that for we for to those able parallel, going our were interface. RF testers architecture. if if and devices, establishing bandwidths the look So to our has test in

the opportunity monitoring I like we market, Test trends customers investors. great reflects us in discerned wouldn't So been strategy, more have -- our the and in and change that do for something Technoprobe we reflects to the the say it for an the fact that investment a our

Our next question Chin is Stifel. from Brian the line with of

years. maybe or little I numbers going discussion, few my the growth a hyperscaler ask of But you anticipated the incremental believe to are -- $XXX so questions. Greg, companies million And or I what you bit past a off. in in driving the Maybe, representing do and ASIC frame? Compute TAM wins think guess that in be of your traction, ongoing XXXX? could large I incremental by your how do time in see this share coming based you on market customer market this

here phoning a in end I'll what friend terms that we've said with for terms Andy up in think I market. projected So, TAM of of

in 'XX, in $XXX range $XXX We've it's million time. 'XX said million the to

that modest segment said And that of the time. -- Compute growth in period there's has that overall we've -- over the Right.

a space. think to and the is new Compute we're gain way $XXX to and in that win million the part you traditional to share of million hyperscaler opportunity in is this that to the million that But VIP, fight our share $XXX the to really market of we're about Compute $XXX see good So $XXX always sort we decline chunk. going a slight of can in try putting think traditional this up million

in the market. at And we're -- we're what we've a say like traditional seen is, below XX% share

wins, sockets more than we're the for, competing we're definitely and see market, that we of winning terms share. socket In fair in our the

that winning targeting. we're the So majority we're sockets of

inside so we're $XXX hopeful split good $XXX that to end very And million up pretty with we'll a million. that of

Okay. of on TAM. Memory That's helpful. the the And then Test part Test focusing maybe

competitor main optimistic maybe think forecasting I sort does how is this this DRAM. more much of in year. guess, [indiscernible] Test They're do than stronger we represent I to upside your reconcile night you view year-over-year forecast? as off you their potentially largely your And Memory to growth with year? tied think last that can your of

to into I represent chunks. it market, that think that remind Memory typically you upside is break our X But up at look the you thing we Test if the view. I'll could it

then X the Flash of types Memory, the DRAM Final then NAND So Test. and and and sort wafer

that great Memory. What that is Flash is in has buying for and seen how a they're to What have Final in is spaces, to for going from technology-related share our highest into the Our sort. market. share need in we've DRAM and been Test much add don't clear those tailwind our both visibility customers forecast in XXXX wafer to we capacity real at or

needs additional those production we That's customers So that same that's a not into competitor that the drive for our parts. possible long-term something of to they has a space. can of It's in use some view technology-driven than acquisitions. testers And entirely have the where better the they volumes need sort retooling for new do. generations wafer

have that possible it's the part of seen that market. not So and the in we also -- benefit

confident pretty good XXXX. a I'm in view Memory of business our our have we that for So -- in

add an inventories capacity is on much upside the there come how think depending I Memory as down. potential required is

next of from the Chatterjee with Our question line comes JPMorgan. Samik

for I should And to a Maybe as Robotics Robotics? in ask can that think a growth you follow-up. what for long-term of strong the are the have relation first growth. How in towards lot can in you opportunities model, the drive growth, model the see you to one, if model I XXXX for about profitability XXXX outlining you of segment, we sort that invest as of you

we've of we is what our are growth X% profit for are as drive that as fruitful are we is there remain investment prefer not of this if Robotics at we those said is, group it and continue growth the rates, kind terms develop previously back the that market, yielding investments appears is would investments are to What growth XX% profit and in the higher can that will long-term watching model, growth. and try low and penetration as target increase to then make make, long believe that consistent we incremental we to operating that target our feather XX%. Samik, our range. those to goals to our we But to to we in XX% performance still

The key we're margins. focusing maintaining high on that thing group that we're doing really gross in operating is

rate sort achieving. excess of the on we so have we're that of dial intent for are that growth keeping margins option gross So we're that XX% we gross in appropriate to to level at the and the profit group the is now margins those

the That's for And helpful. my question a follow-up, year. for on just margin gross

the you're Am And right I volume get level at of XX% does sort now the in of you with have, I if year XXXX, implying? to the some guiding with itself what you're drivers what calculating during that that sort that point think, I XX%. are math Test the seeing to the that XXXX the to challenges think I imply, Is right? market? the for year that would do point that XX% starting you be to you're XX% full during crossing

Yes.

right. you're So

have mix. then I of And the product our higher some product higher a lines think coming volume. higher various some really with quarters, of stronger than anticipate obviously higher-margin of some product do come do our quarters, lines our model, or back. we In back to we be

are mainly that So driving we're will margins that efficiencies back the add in also in as anticipate that it's help mix there's should working improvement. that volume the the mix that line operational on product product quarters, we but well I half. and

Goldman The Hari the Toshiya are with from next questions line of Sachs.

X as well. had I

in to or be we in rate should couple of big next number? that think the The several -- first customers And percentage business business the Memory retooling years this 'XX should either be we growth how Or with of assume competitive think an as or over market. test XX% expecting deflates of about basis annual code? one HBM growth Number you XX%, your your in Greg, your sort can of years, in that parallel there QX? on calendar should That's number two, your sort HBM. ZIP or could one. we a position that on characterize was --

Okay.

into parts that a you packed lot question. of So

unpacking start me let it. So

test So roughly splitting first, in HBM terms of competitive position. Right are we our market with competitors. the now,

to that's clean multiple of share than share, competitor. In are us think that a HBM between competitors and Memory is our QX, XX% of split shipments. we part overall the you if in look much a more the market But positive So at overall HBM Memory the our pretty our represented space. there

scene. growth, So are potential we new And that terms it that was there the a coming of are huge factor quarter. is the competitors in that think in that growth HBM for on there

So a both there's unit growth. volume

I there think for in capacity that in are also are us now. of back a half think coming, lot But place of of standard potential the driver and for And we going that HBMX Memory. year that, in the are lot that tests. retooling that those a is that -- for changes, the a performance driving HBMXe to is and be

wanted to it. on just my side, Robotics And your follow-up the thoughts as on get then Got 'XX.

guiding XX%. business up You're XX% the to

the makes obviously, which talked proposition, value You sense. long-term about

about the distribution talked perspective. you you're channel doing of initiatives URXX, some the from ramping You're a

close up XX%. XX%, to if growth the weighing So year? XX% sort guiding down curious, why year this I'm on just to the this you're fact term was up that 'XX to of particularly given What's XX% XX% long

so that product. demand some the we Well, fundamental of we strongly. a there's we XX% in fair basically of amount back I at market. And is that from had introduced is blockbuster think, relatively are PMIs a is that with some are there regions QX But relatively entering come quiet. XXXX low end the are -- Industrial that to going going ease predictions to quite that level and weakness that, of the even key revenue product. came thing really we still Underlying because our is our QX that, great a though optimism really QX, had limiting a in that a great QX or

quarter relatively in So we year, QX. both year prior. comparison growth quarter-on-quarter we're have year a with optimism each through through the the But coming low and the to for in continued

bar full the terms in careful for be growth to set wanted we of year. where for we So the

time. we operator, out of And Okay. are

forward in the to I'll ahead. So the everyone, talking are look morning. days this still Bye. weeks queue, thanks, and later for But in you joining, you folks we that get back and to to

will This you. conclude Thank today's conference.

Thank your time. You for participation. at may you lines your disconnect this