Teradyne (TER) 25 Jul 242024 Q2 Earnings call transcript

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

Following our opening remarks, we'll provide details of our performance for the second quarter of 2024 and our outlook for the third quarter of 2024.

The press release containing our second quarter results was issued last evening.

following as the a Teradyne Investor may helpful slides earnings of website providing be on script page in are well copy as this that We discussion. the of the the call this via page be Replays call of will ends. the available same after that from The factors management's today current involve discuss results Teradyne's we include forward-looking expectations. cause matters that to statements will risk could differ materially presentation. on listeners any undue forward-looking not in included caution We reliance this to statements place harbor statement risk encourage in to our you the safe as filed the We accompanying slides as annual XX-K presentation factors contained this the Form review the in SEC. with report well on described

forward-looking Additionally, are as only statements of today. these made

we non-GAAP refer to call, financial today's will During measures.

reconciliation were directly GAAP We concerning additional on have available posted information of the including financial comparable to our measures, these Investor measures, the page financial website. most non-GAAP

earnings Goldman now in Citigroup by between and our technology and industrial-focused ahead KeyBanc, investor and participate Looking Teradyne hosted Sachs. conferences next expects to Jefferies, Evercore, call,

Following comments this for open This for we'll Greg and call call scheduled Greg? hour. X Sanjay's up questions. is the morning,

quarter. in quarter and is and AI SOC identified call markets. market April our morning, forward-looking across and Tracy. then will the results trends Cloud we results demand everyone, and go are more the thanks the us. second that Today, for Good earnings industries, second our continued guidance. At I second will test discuss the you, a Thank we in depth about level, seeing quarter driving dynamics high memory advanced joining robotics the summarize have semiconductor our and strong into Sanjay through

to quarter this Outside growth share investments market macro soft. sustainable other Robotics delivered weak incremental long-term our sales and results increase expect test Memory, mobile, and year. to on-plan has continue ability of and Compute continue engineering deliver continue to each a drive including our accelerated markets, and to major in of environment be all to we position, have improve We growth.

Compute Focusing in AI-enabled first have of Memory considerable margin above delivered quarter ranges. network quarter, quarter, the performance segment is revenue plan second changing in very networking the by points Continuing results with models, training networking in we this SOC more devices. the applications. AI drove high to financial revenue, above and strong our data our we in a on large guidance noted strength in which demand AI connection centers to showed driven mix support the primarily gross cloud include earnings delivered language QX, number and silicon. trend and

networking producer, that expect revenue on DRAM of be support strong. with in combined all In Mobile in demand half vertically Teradyne's from of year. first remains will exceeding compute Memory, revenue AI-driven our SOC to end strength shipments a resulted market XXXX, the integrated in with revenue XXXX. We Compute Compute historic in Our this or par revenue VIP, the currently HBM

We NAND are broader across now seeing SSD including flash. memory, AI-driven demand servers range a enterprise of pulling

memory are DDR support for technologies. latest protocol-based with continuing and also memory the market flash seeing retooling mobile to LP mobile strength We the demand in

of result, has to business first the a first As the nearly our of half XXXX Memory in XX% XXXX. grown half compared

towards billion forecast. the changing is $X.X for to end Memory market While expectation billion estimated the expect $X.X that are year, we our the our we TAM of trending not upper

third on Moving is Test into on to positive to The AI quarter. the expected QX. continue impact of

not including uptick XXXX markets, the a other in until frame. may and end legacy However, industrial, meaningful time auto occur

the continue for year, full result, the we growth expect single-digit company level low to XXXX. at revenue from As a

our of revenue have XXXX higher. As been DIS a reminder, sale the couple would excluding a of of impact points Technoprobe, percentage the growth to

QX. macro grew sequentially Now from weak Robotics Advanced our a to to environment, turning Robotics. QX business Despite

first the half of X% first the in the range actually to We estimate the of the in half automation period. to XX% we compared over sales have traditional at decline space Looking seen XXXX. of X% that players XXXX, same grew

transformation We the are Advanced we executing made a second X-pronged and channel SAM and expansion, X Robotics progress quarter, In software. services recurring for strategy growth have areas. our in business: all

pallet First, in the shipments Pallet been well QX with and AI-powered begin The last QX QX of NVIDIA our of for was collaboration includes and expansion; first quarter late in represented Jack XXXX, customers, year. by detection product resulting began in market-leading year. URXX, SAM in shipping received new target In developed UR will cobots, this sales. and backlog high-payload of This XX% significant products these the announced new URXX and shipment. over logistics a has solution manufacturing MiRXXXX

the in channel priority transformation is solutions highest an for development our robotics OEM go-to-market of UR. Our

to have seen into customers strategy. their are these channel than own from that purchasing solutions fewer more solutions and We or partners cobot-based the upon quickly get OEM aspects customers production problems build that integration There an partner. X have rely

OEM of number up first is by we The total new OEM XXXX, the X%. partners. signing partners increased solutions solution have the first half In of

these an level we rate had to million. in $X Midway above have Second, revenue define XXXX. scale, through the annual OEM solution all partners of as partners that to reached nearly that we get many we run we them with as year, which work revenue as have having

growth UR's an of XX% half in first One the of XX% XXXX. our half OEM our OEM XXXX first In first the the channel Overall, of over solutions half the shown cobots in of revenue represented logistics solution. uses revenue. quarter, from OEM AI-based the second of XXXX, to over has partners largest the channel

balance, demand XX% the and range. vectors growth challenging expecting of we criticality this to to the the launched In MiR, of we opportunity strong the a of the of first half used customer year's offerings target to an Service UR because XXXX, build saw XX% On positive being at we service low are of the to beginning growth effect uptake. are are automate, business. robotics Managed and see and our environment, these processes towards end that Finally,

AI-driven XXXX, idea but networking begins shared is edge a the Last saw we I be and businesses. driver and a we quarter, half think permeate Integrated ramps as the is transformational AI that the mobile the growth would secular where ahead to traditionally AI Vertically Producers, beginning. We inference industrial of in the memory, believe growth markets. of applications first across considerable opportunity larger Teradyne's just In Teradyne strong. that this Markets lies and that end

positioned seeing the the Jack. of AI-enabled and We of for We solutions a development platform leading on our Pallet with Robotics for AI-powered logistics. well solutions are we that manufacturing AI-based and UR AI already our also strong believe backlog for OEM business impact for a as are

to in We now growth Robotics. Test and we in are expect to and come seeing AI-driven AI overarching for growth years driver an be

With call the I'll Sanjay. that, to Sanjay? over turn

for QX, Thank summary outlook assumptions you, Greg. Good our and the cover everyone. planning of provide full morning, QX financial Today, year. the I'll

XX%. sales Non-GAAP end to Now were second Non-GAAP guidance operating approximately above of due $XXX guidance to $X.XX, profit which of our product was non-GAAP mix. This our QX, which volumes high-end million, above with quarter above our was margins higher and the gross was guide $X.XX. was EPS were XX.X%. high $X million of

Test driven our $XXX Mobile. in new by and with revenue the million. both shipments to quarter $XXX Memory million, were million for contributing technology Semi SOC SOC by revenue was $XXX Compute breakdown mobility. Strength Turning tooling Test and X.X UFS in driven was Memory for QX. in standard

Memory, with broader continue auto impact industry the to the the While purchase VIP segment, on we reflecting mix. we sluggish, from AI's benefited In in market. auto remains a DRAM a this dominate expect to large edge memory

enabling in driven HBM, significant the AI. by market, strength have backlog for memory We

our We ramp on X. consistent high revenue on and revenue storage the million System our closed revenue Wi-Fi improving $XX smartphone in contributed demand. million to SLT the quarter, in $XX May initial low the HDD business Interface with of with expectations. the as DIS In in million tester to was $XX Technoprobe to sale million Recall, gaming due recover, group, has $XX Device Solutions even Wireless utilization or to of Test DIS tests begin In low. QX market, our was and and Test, as end SLT markets remains to QX, HDD expected, exposure XX.

Robotics. to Now

a Robotics. our UR increased contributed year-over-year. million. million, was $XX fourth Revenue quarter, $XX the contributed million and up and the to row, XX% in in executed we plan quarter In $XX revenue sequentially For MiR

the multinational This the China. indigenous half shipments were the changes environment our to consistent revenue indigenous includes our company China, to of potential is of of and it X% helpful was the full to region. regulatory total XXXX. in in XX% less Total customers. thought year than be insight sales involving some Given Year-to-date, that customers to approximately This shipped first XXXX. would exposure with we sales into provide in

in customers our all service complying to market continues team with Our this regulations. while

flow completion in quarter the quarter resulted level, quarter. We $XXX of cash and a ended primarily in cash some a At million metrics. Technoprobe in We equity with capital Strong million in the shares million repurchased the a in cash in to was in $XXX and company Shifting stake improvements. quarter of securities. XX% the free the marketable and outlay flow paid free in million million earnings $X cash our $XXX net of $XX by dividends. net working driven and resulted The transactions Technoprobe. was cash

on customers tax discrete in items the Some in a The other was two information and XX.XX% basis. excluding for had GAAP a basis financial XX% quarter on QX. XX% non-GAAP We the rate, quarter.

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

our noted QX our QX be was for flattish. In million. call, April $XXX guide And third the our on color we Some expectation. would mid that quarter revenue

business. Our heels quarter forecasted revenue in on came demand we the than Test Semi of in higher second our strong

$XXX the XX ago. higher Our third than it million of revenue forecast midpoint days now was is quarter at

quarter OpEx Third quarter XX% at third and XX.X% from to to estimated at up margins to XX.X%, XX% of QX. is are gross expected sales, run

on share that non-GAAP midpoint we XX%. rate at operating opportunities to discussed, the The believe and profit sustainable drive long-term guidance are our accelerate Greg is investments third of growth. we As quarter acting will

ATE our total April. estimates TAM from semiconductor Our remain view unchanged in

segments. some However, the adjustments within we slight made

We million a our at The range. each Mobile, a million auto/MCU appendix up $X.X of is We billion. million a this have $X.X with $XXX our midpoint comprised we now our the with at in Services and by $X.X our million. Industrial offset billion, in prior earnings Compute This for estimate increase down of to $XXX in SOC which $XXX to be our $XXX estimate at of billion estimate of range at $XXX midpoint estimate. is is billion from TAM is to million reduction slide $X.X million, information. Recall, the $XXX included Compute, deck which

Memory estimated range the tracking Our to towards to be billion billion high $X.X appears TAM of end. $X.X

Back year, be With and to in first revenue less now April. is for currently half. outperformance the in the our revenue. distribution We the in second to of half in than our XX% our expectation year back-half expect revenue view weighted first the of half the XX% around the company's full for

We our expectation full year to the Note single-digit the in X excluding expect to the nearly grow year impact revenue low compared growth be XXXX. divestiture, that full of would points revenue higher. range DIS

our model be be margins. range will fourth to gross year XX% course the expected margins Full outlook. likely quarter. year from to margin target XX% the improved gross in our to Gross through full unchanged at the and of margins Now have gross are prior the by

Regarding the year. OpEx for full

above full to prior strengthen our of we year OpEx expect as X% opportunities investment X% which position is and grow our to and We approximately to X% to guidance XXXX share. continue gain accelerate

profitability. Robotics Turning to

revenue we range. the of grow Greg expect towards low our to noted, As XX% to XX% end

We expect breakeven Robotics will in XXXX. be roughly

million. allocation, and non-GAAP regard in forecasted XX%, be program back to an share necessary With purchase buybacks tax target in to will compensation share respectively, and discrete and our cash to our Our up items, capital continue in excluding employee to amount equity to we to GAAP offset XX.XX% build dilution XXXX XXXX. order $XXX are rate, to from

soft. earnings as above of the our mobile, Compute and Memory up, industrial delivered in Semi auto legacy sales we high and exceeded The Summing range plan Test. remain our guidance markets and end revenue

team strategies. Robotics and sequential continue to growth go-to-market execute year-over-year product new and Our we as development delivered our

confidence are performance Our company's on for that half us the track we year. gives first

and we remain opportunities capture to XXXX. beyond fundamentals strong, midterm the are Our investing

open to call With I'll the up questions. Operator? the that, for turn back operator to the line

[Operator from Cantor question C.J. of Muse Instructions] comes Our Fitzgerald. first

a hear I your the I with visibility well recovery maybe was could second you're in hoping to securing as customer XXXX, you Semi potential into and side thoughts that to particularly in how speak mobility HBM? outlook seeing on love around Test. would around memory progress And as

XXXX. Test for we're Compute a are people market underutilized Basically, seeing bullish Greg. converting we're of use were in The on we is XXXX, also business and in where pretty this testers amount seeing and that CJ, upgrade in applications. to VIP computing, are strength Semi mobile fair

soaking up some in the market. that's So excess that of

We to grow XXXX. sort won't really as to into. expect business It that mobile accelerate capacity that in returns of have

pre-stacked continue memory be think primarily performance going to going I gaining our share in HBM, that And HBM. of stacked. X test that been been On share we expect after wafer it's believe HBM. directions One we are of in that make on to to the progress has HBM we test is we're in

additional in within that more of then into market our participating And thing. a so for that XXXX HBM, be HBM, the we hoping account and we're both where break expand are accounts also and would can we share

think what in into in talked our for about overall, XXXX with I January. line So and XXXX outlook we is

guess you or about follow-up, terms in the a I Can can trajectory year? additional of us And for you next see this us you that how could think for what the you that one in industry markets, as that to think color customers growing are you about whatever customer VIP? of year? kind talked And with auto June. where business Do kind of XXXX? large I update size into give of end you

Sure.

number being that for that and There a because been to are up. of these has call amount that numbers actually we -- And now, probably at that of customers. is and happening at capacity trying VIP, expect it soak hundreds I think -- time fair of guess OSATs a VIPs VIP now multiple being to used are when we way of the we there significant currently we're are right growth used of are keep loading for that VIP right hundreds looking So should -- testers. to a I in the testers. that testers testers customers We're we have of it's track

they've on are into play-put plan our be We parts parts decisions of and additional have where in VIPs year to record XXXX. and their testers released to going this made later those

as these right now. So integrated many we think being that used with we for we'll producers testers year probably than exit twice have vertically this

UBS. Our next question comes from Tim Arcuri of

can us I the $XX Sanjay, that a the June. on September adjust know rate the sort probably we for handicap that sale? guidance run effectively you rate of out, that you the run $XX $XX it for. DIS contributed correct million I guidance said help million in million mean basis? Is number if to it's should I

the sale $XX million, to go is XXXX, of this business it was end $XXX million on number. second month the roughly $XX Yes. it back about $XX with and And quarter the If was million million. XX, kind I May of occurring

reasonable. low is my digits. remarks, of a growth year-over-year prepared it, single as to the we you'd expect without you be that I think expect estimate that's DIS, shortfall X or have roughly in points. So And in But I noted

increase if would you there was from DIS perspective. X and by no growth that in points 'XX, 'XX a So

clear more evidence driver Okay. always Got going And big that mean NX talked then, a year, seeing about everywhere about you a Greg, we're TAM, to being mean, upside pretty it. SOC NX I be the talking seeing have for guys I from. there's much lot next we're

the NX year of For next demand the ramp. speed wafer and

-- kind driver, is. sure about as I that specifically there's of would year about pretty -- you've you're to talked always optimistic the I it the but Can because pretty I here piece, next about optimistic of you a would and So speak NX? big you're mobility mean, think think

So can that? you talk about

Sure. Yes.

not process So as we as -- perspective, tend as the an to from nodes but enabler. a not think of our driver, business

major whether our and companies is the gate-all-around, that they for be for at get business between complexity. really So complexity. for really be we're But rate that NX. Edge drives going a optimistic faster is thing driver into is a got in to to And as like higher going X-nanometer especially to or pulling they're into that, for enablers market that cloud device than end that AI AI mobile even the

that think a capacity in think the we we that being NX that place it's thing good it's to put So because be needed. is for going

the addition, of market. part on the going In deployment processors. of to going pulling to memory It's the the of AI, really it's also harder increase Edge complexity mobile application

that So capacity the sort on market the enabled place, capacity other we market then that use features of by pull end are in virtuous demand terms into of there's going being of that and parts circle that's the products. a think to put these going the effect in the

we the midterm, really through this 'XX. So think 'XX, basically, a to be demand driver rest good of going 'XX, this is

The next question comes from SIG. Mehdi Hosseini of

to follow want will mobile I customers your weak understand to comparable I impacted also the commentary data of a But assumption Mobile Compute. additional and in center. SOC that up on be is your diversification 'XX market. by revenue

So smartphone you rate. the help the the will at year? other mobile SOC. would grow next a it words, sustain also we assuming and assume into In would Should this Compute refresh equilibrium that 'XX same also in NX with that

bit there salty question, Mehdi, -- good ] little a because are there's a this. of that's So [ to

second half my first well. than prepared we of for in is of weak. of and for good Compute as in the and one this going are So reasons XXXX, in revenue this But I mobile year to other all about the talked half is, you're that the right for the our revenue is see Compute bigger because and revenue is Mobile comparable be remarks, our that that reason XXXX the Compute our revenue Compute our market strength

going great Compute. are like So in things

strong, think going should remain they Compute same really a TAM that Compute maybe the where mobile but we little back are to be is market year, in the come stronger likely were. The to bit strongly. sizes than for pretty range, Next

revenue so Mobile come And back will with our that.

possible next good So that very strength we will year we'll recovery. that it's Mobile outweigh anticipate it Compute of in revenue but growth have that the because of

to then your the Sanjay. breakeven profitable Or year, Robotics to follow-up be And If Robotics acceleration the baked be in 'XX is one see for assumption is 'XX, your could there fit profitability. business into Okay. an I just target? then breakeven target? want for how 'XX into going underlying 'XX in of next

Sure.

XXXX, a with year we'd the So we low-single-digits. started that above bit thinking in be just breakeven, little

-- As we is as and come of coming XX% growth. number the to we in we had see of think in year And to to range. we lower see model, end breakeven. year XX% and that look our more the to the the We we that growth, of earnings XX% range this about XX%

in So build still a And did trajectory outer with the that, incremental into future. that the going to is profitability level years. we that scale, as move occur of we in believe we

of The next of America. Arya question from Bank comes Vivek

you mobile Teradyne. year, the of for to catalyst as for next the biggest in Greg, kind seems suggested, be turnaround

question, at mobile net you is that complexity? look like? for for least TAM some in XX%, there from neutral looks unit this your modem How the what comes a broad year, then think a suppliers talking of small much range is -- some comes we XX%? business? of SKUs, change nuance positive, to faster give customer XX%, have And Just more help when your us much their can could at a large XX%, So negative, range? could also Are of some about with kind a for industry And testing you of have growth? from how we us you help this $XXX million this recovery

modem and actually, going So question the of the our then of to with in let associated the of also work I'm on me we sort is -- whoever I in lesson supplying but history part for mobile second with first. likely of your tag the is customer. ancillary the that bracket for largest that XXXX, historically team want supplier what because TAM to to is remember terms a thing devices the all perspective first of see supplying would -- to part take modem try And The Sanjay the modem. that

power So there's there's modem, RF. management, a there's

And The business. there's if to -- that the of you the change, pluses relatively will a that minuses. thing relatively lot magnitude and that of tell AP all overall relative was they're they're small to is I all

was if I So that it kind be a slight a don't changer to but change, to thing. a it's think positive of expect would us, game I for

you the the past the mobile And TAM, of give sort few of so could history on TAM us Sanjay, mobile just the like so over years?

Sure.

peaked last noted, this approximately view midpoint, roughly we've And year, the our So $X year, at $XXX $X.X million. 'XX, noted in $XXX approximately it we billion. million. -- billion. as And we in XXXX was at It

Okay.

planning going are saw I'm tell say during XXXX, thing the to as significantly completed as updated view that you the haven't because likely grain what we unlikely into in is high and take 'XX. of I TAMs with a peak, and salt they entering of So but 'XX we're we process than strategic stronger but what an that will be are seeing to our of to COVID are the mobile go sort

bad pretty going big that range. be in So the a range idea, a of might not it's -- but I middle

Vivek, does that help at all?

my Yes, helpful. on for Robotics question follow-up extremely business. the And

this the lower the growth year to taken end of the rate towards XX%. XX% You've

every some terms in that you disappoint If look year think continues growth its factors. historical macro I rate. segment I really It's view, profitable. to a mentioned of not at, again,

to achieve at a that So for that actually anticipate you it growth anticipation, business? what the of actually rate matter for matter Is will I'm the it a What it it scale? take of you realizes think curious, channel? Is point right? it promise and do

really in is really you terms The of weak. actually macro of really that nail now, -- that on about the optimistic head, it part think channel. are that part a question. Robotics And business of is are you're we it's So environment hitting right hypothesis, -- your is great the our so thing it we're the I -- scale,

with aspects are that to peers that the automation Our the thing us specific that, sales, gain back the And we half. is first gain posted of struggling an declining XX% XX% is our over sales adding options on is accounting are expand encouraging we're We executing. and for of Robots, a XX% SAM for the the strategy to our in quarter. were robots of high-payload that by Universal trying those

are grew We our channels, for first OEM trying year-on-year to half. additional channel build by XX% and the

We growth expansion. yet have additional in the drive irons primarily that and have they're to off, not paid fire additional market other aspects of

So are our Pallet to business, for as AMR UR Jack the for coming products market additional that well.

building. way that And for but working yet. that that, processes, We very -- has years pipeline additional then service recurring in every and a software. revenue Robotics. finally, channel, significant growth machinery have have that channels business large a needs on the significant opportunity have building we keep stuff in it been are are have we But for see part critical we vanishingly significant revenue there's we think our We've of to Right a that we a last definitely revenue and X.X in to from that's small don't accounts running. out now, to

have service we're but in represents overall revenue, our a a revenue of Semiconductor significant in are we plans good trying where apply of And to Robotics. model that service example managed yet. not And we uptake, portion of customer actually business seeing our and an same lot

growth XXXX still things we're are kicking the to XXXX in to engines X be XXXX. and of from get going going think top that in, that we've we that those done on in So

end what pretty strategy. that we're is in we were terms of market So terrible, optimistic the actually but going said doing we're the to we do

Cowen. Krish of comes Our next Sankar question TD from

clarification. of first have I them. X on Greg, just

of digits. of But single your remember you guide last compared I revenue maintained kind You quarter, Test to year modestly. up full the low revenue increased

of kind just within a over there? happening is the curious, of error or little is I'm bit this just margin else anything nuance that of So

and we stronger it's Krish, the At Semi level, little half with other than and in storage, HDD way had some little global are underutilized of to returns, Test they're the our year slowdown. production still -- what's top as happening market covers is guide our full is but tied a in aerospace out automotive the the did first we defense and is in had right, -- you're board Test down SLT the bit business, we anticipated. the under to the And Sanjay. that bit business, up, projects capacity consistently a it's market businesses and tied a push our we

overall, and Test other the And so our is Robotics And end Semi lower. the Test stronger did lower is to move range. we of then

a Semi but Tests little at and same year, end Test we're other the level, top the are calling range. So is of stronger, weaker low the Robotics at

Got Sanjay. And helpful, it. follow-up. quick Very a then just

You strength Networking Test. in kind of mentioned

share gains networking Or the GPU the clearly, makers? manifests into If test is strong itself on you to of some this think ] at semi think AI to more not the side? GPU the [ some look where providers, Advantus that has do very opportunity a you you opportunity device position. VIPs, Do

glad I'm that you question. -- asked really, really That's

on cloud large capabilities large going large So topic of do this language there are to around and -- compute of training a couple in of space AI models. building things the

why there server, for traditional much. an is a at is obviously this. you server have for for engine high-speed than is So huge a of a the run people first demand They -- up if rack within of server. GPUs. an seen is AI-enabled much data number NVIDIA look But That as incredibly there links are larger that's all providing valuable

that's a more specific towards we XX% in like computing, we a -- GPUs, within seeing XX% more XX% trending of -- accelerated or account, were so And even traditional be ratio networking, it higher. might

beneficial. tailwind is a that there's So there a definitely

these each advantage as the is, differentiate this other we're trying that's gain The space and driving design are seeing. architecture, players trend they're that and to between to more trying these models, language in large models become sophisticated this through VIP an

these or large So we the demand end AI for silicon VIP server faster to enough GPU-based that also there's farms. think is for market traditional even and models growth into being homegrown of drive growth that built drive both sort

next of Our Toshiya Goldman comes from Sachs. Hari question

about strength when as industrial the talk but a it's Compute think across space. purchases IDM the rates of test testers? Mobile customers where in where point today? well, customers know you've you some are the to extent got And utilization and Greg, across rates your curious capacity XXXX, generally hard OSATs to you for resume predict, recovery I what soaking point auto I'm utilization of get up And at utilization about talked in to and you a mobile where idle in some visibility. then rates do are

So to I little typical The point going to soaking of driving are of balance uptick, up the answer to I test it's we're seasonality. we're part trends a is from away question very think bit -- third-party new where first, showing back good data that system tip your around capacity to the utilization sales. a seeing the above last close think sort

trend would been Our own But upgrades is showing we have a there. also right mixed be utilization see we data both clear don't used that a conversion now, that systems and amount as of already have converted do kits. fair

is now. underutilized going essentially of hundreds to And occupy so that are testers that

the that the year utilization up real to half second expecting So into where tip this of to we demand. point and it to in strongly turns system over are for pretty tick

customers, of -- that relatively aggressive to persisting is space But the that are thing are IDM interesting the down to EVs lot continue of customers when? that the same in other auto in year-over-year car They the significantly power to to That a crossover something of been an about we've in fluctuations, if. to of industrial, get but the and there expansion amount you are 'XX. and hybrids to cars chips capacity in going it's from in and automotive going question plans. talking and be rate 'XX When shipped. especially them see compute the Not happen to those there's cars is going short-term like attach of more a electronics is increase per many

important. long-term plans be capacity think to have that drive plans our for long-term So they to equipment going is we they purchasing have and

long-term the automotive, ton and potential ADAS So current are of customer but have we in and discrete more importantly, that we're about seeing great management, good we relationships confident and especially where and we're really stuff. space, share really of battery -- parts it that about a we're cautious in like more power downturn the

that But So to down. industrial think customers utilization right is auto that now, -- I the the those relatively hearing they short-lived. expect that in we're is I signals from what think be

and Got I point hard sort about it. sort your AI about MiR a That's that really to in. intuitive of the sense business on side, helpful. the UR a the helping and magnitude And time the as business just me. your Robotics kicking of timing of thinking makes have follow-up

numbers? kind product You into what applications being for there. sort AI contribution pretty side, what the as significant benefits And really of of the on to your should in at But maybe pertains mentioned it be backlog MiR for out start of new that again, helping show QX. UR we AI point, up see to looking start And we does business? to

Okay.

a lot unpack to there. So there's

it. to down get let's So

Pallet is add MiR than AI robot the you solutions. rate and that for robot, a story a basic is behind capability the have we're pretty going our have Jack better. that competing simple, be picking works a suddenly, That's to Pallets able to that hypothesis success So higher take

merit. reception that claims customer the far, so some And they those have that think is

that of So a we going in this strong a pretty shipping year. backlog have QX to for product we're start

pretty So simple. that's

like our solution of -- actually a X the AI-based a chunks other is give bottom, that AI-based have top For solutions what complex At can come come on And because the you providers more robot. story UR. primitives build there's creating solve of really the capabilities allow on can use UR, to solution people toolkits is the that NVIDIA from from we're of providers problems. there's on. our platform for an then the doing or AI software lot that that, our really And that in to controls AI robot to

picking robot there then and take market Then of and inspection toolkit, do solution it will Bin do and their they will so or customers. is heterogeneous to a that builder And to like solution or builder, welding. solution they on will is a take and that our top that solution that, build usually end they'll something they vision-based what will

UR that it's from key platform robots thing features is other the the platform. So a as differentiates

what they features once need a Is around it's that these tough our So us the off. build use, a and the to that's builds solution specific sticky. in that to that people APIs makes for, can and robot, a order move provider solutions solution toolkit for them

providers The not solution, thing AI our -- it's an drives about that solution burn model for UR AI building business our the is we're that because that it's are. indirect a indirectly slower

have you are are single AI-based market. now. tell applications into in I'll the right in that solutions UR that that our is Right estimate high market of digits AI-based going the now, So we sales

can solution excess our from we they grow inflection, while of begin it when sort to building intend take year. a see These and that's their of there. that's So when commercial in from a baseline, solution providers, to they often a and

revenue to have build are pipeline deliver XXXX. would right to that we not a in solutions, of great try So AI in partners now and and expect material using we that XXXX, but

nerve. you for a kind but So sorry of hit going deep,

next comes The Moore Morgan Joe question of Stanley. from

going I wonder HBM particular, be as pre-use you upgrade curious In HBMX you to later ] how move as there's I'm then Test. talk we much can [ to talk versus to HBMX, from about and just requirements? could if HBMXE about the

Okay.

test in of at for it place HBMX. the data testing all the is capacity of a is HBMX the incapable and final from So now that's in perspective the And HBM as go HBMX, are on X, HBM, from difference rates rates for to XE it required data that primary of to performance the of required product. test most essentially HBMXE you the right

are HBMXE. be building seeking So the test retooling the capacity. to to HBMXE are additional They're that able people essentially

in Now areas us is share be one HBMXE will we that to both we an for that believe tester the HBM advantage HBMX. going a to effective gain and this have where is have that allow of performance we test,

if solution competing customers to that solution. adopt And essentially a adopt give were life that they so that than longer asset will

pretty And multiple to we're in that. are opportunity about we on working test. customers our to essentially benchmark hopeful So to gain prove share in try competitions HBM performance

The Co. comes of next from & JPMorgan Samik question Chase Chatterjee

we but back first levels. comparing comments just the to wondering, the TAM for year this at I'm I go think, Compute when you billion one guess be $X.X I remain versus year? next We've from, that if billion these Compute $X.X of for one, in And to implying -- of robust, said or Compute that seen level sort outlook the about portion next of in And the the are strong you of about you increase what you're you year? market that can billion associated for made you Mobility your of to growth Are this should to for billion. were I the on year. expectations similar implying incorporated that's Compute go and TAM what's them Greg, with in you that number? VIPs sort of seeing $X.X sort that we the $X.X billion for sort think $X.X hold and a this XXXX

think good it in history would Compute lesson idea TAM our So probably I well. do be to a as

set don't we'll couple do back why a bracket this of think years and go that we we'll really of context, and So XXXX. then year, in we what strong kind as

do So that? could you Sanjay,

Sure.

context. more some give me let So

the million. nearly went billion 'XX, $X.X went billion. XXXX, and Fast our was $X.X this billion. view year, $X.X double Compute to billion. to in approximately $XXX in about was forward, $X.X noted, And we as midpoint, TAM, And that million. it at $X.X you So between And XXXX view at our then the 'XX

you chain into really off So is time. all we high we as increases sure, but base. of people and TAM. production going between It add that mammoth see to Xx at Xx in to for larger are And a think compute XXXX the than would coming the in it XXXX, was don't through point this capacity look it's

at into versus we I looking in a compute are So a much or the looking of where minus of be would lot -- year, kind plus next probably year, something this increase space. forward

VIPs compute VIPs. million out spend. asked about range, year. about to are the of you end by the million towards XXXX, kind end high this be $XXX could it we of overall VIPs time of that trend the the We now, Right $XXX towards that in end low get of the -- Now will by are $XXX of million the think to

-- X/X a So that's driven compute that's X/X TAM the There pretty a could could exciting I to VIPs. by of be think be a chunk.

that to that, XX% revenue? XX% half underutilization how is I'm maintaining reiterating in I a that the mean, of your I of terms -- you this And couple -- CAGR the in sort XX% I mobility to Even back it. the my you XX% me next this trying bridge CAGR plan think XXXX back range. for exit implies And growth. to know for that XX% Technoprobe have your it add from compare XX%, how today, XX% do the of the a in -- follow-up, in just with years. sort run the of whether you help of impact about just rate you're Got think still next for is XX%, which of that year sort what when Can and of Just think having to impact about the years? couple the to gap to on

are there that we point our larger at time, things point than the say at to thing going guess I of is plan. amount we our that is So are was set since best that built One the in plan. X thought the the underutilized we that on capacity

XXXX, thing forecasting. underlying were our we That the market The built demand happened the by strengthened couple that sort that's of is in stronger are than other we hundred in since million Compute even a drivers has of plan dollars.

market deeper hypothesis the I balance than the end demand when our holds. So of hole utilization think for you XXXX and stronger

as the just Mobility it well. back what comes management you doesn't said, our But kind I'll look there as to XX% silicon back, XX% peak level. systems Greg a comes a more And trends take in levels, business back. regular in going our conversion to Compute. in remind EV and me engines, had Robotics that also add automotive bit. a and When he another to noted comes at a the coupled Mobility Maybe back we industrial the combustible earlier, little model, let with growth with back, come to is battery But the comes I'll of tailwind remind

that's how there. got So kind you of

comes question Brian of from Chin next The Stifel.

lot just there and XQ? Compute curious, in any that which drove Was from sequential of a in obviously half maybe pull strength. QX second of Greg, in Memory, shipment

answer let that one. actually I'll Sanjay

view is Test QX there. is the kind are acceleration terms. see We I QX. as of Semi see and we with did customers -- we bit And pulling. Brian, kind while QX a that's little from pulling And are into -- customers we demand Yes, and -- backlog stronger, full low strong into have my we've view, earlier, year noted of a fairly going in a

did a So and a think perspective, some we Compute in -- see Memory yes, from I we're acceleration.

then small Okay. by software be Great. That's base and as how XXXX? sort thinking active robots mobile the big but the what could field? Service in of the is is? in of helpful can up just color. a size And today, installed Robotics maybe of Software And opportunity typical curious, UR service and you revenue just about life And their useful it percent and

Yes.

asset is Robots depreciate over probably rough of out of the or life useful were that period. on before So Teradyne order of of the are our Universal a bought order But XX,XXX delivered cobots AMRs. The X-year XX,XXX on have the in have more UR that -- we still will field. being them here. cobots numbers used. the we And most about But customers

base it's at trying bad it's a So to installed maybe I sort -- you're X- idea life. look of model to a if X-year think decay, not to

that think this this doing our agreements. market same not large we the with our in alignment just new And for we're also entire service thinking build-out at base, I of equipment you're way channel. So going exactly it, as build available the sales that -- we're service total about look installed and account agreement the at

fleets have the advantage see to service likely large are So a from large accounts are most ones are likely most and plan. managed to that

So to that out. that's of the strategy sort building another we're aspect

The of next question Malik Citi. comes from Atif

The Thank lesson side? is A quick the on TAM XX. that Android Slide assume mobility for the weakness, to history one. you on on the fair providing

mobility The and Android both weakness iOS. really is

all silicon, for suppliers major the across look for pretty you weak. generally of If those it's ecosystems,

areas mobile of that a if than peel little better there downturn bit back others. this it done under the the Now you space are covers, during have some

of one that and put in in on they've transition suppliers image like the in XX iOS Android it that aspect pressure image the to is both sensors, some space, really megapixel added sensor capacity lens. So and

their even other as in now on seeing is linear, improvements and demand The charge want seen want wireless other people that still the aspects phones in significant weakness them faster incremental wireless we've charge when charging charging and some power charging. always faster. we're to to They

content there. silicon increased seeing we're So

So little within that been it's market. a of bit a bright spot

broad-based we've relatively see I and weakness we in XXXX, seen expect -- XXXX and it in to broad-based are think So to continuing we recovery XXXX.

Great. And then Sanjay. my follow-up for

Compute all were customer for And larger that profile that margin being your talked year, next XX% assume -- will year? auto, impact next gross industrial, and full like the the about year to as large if margin, you else XX%. how gross Mobility You've to equal, becomes

Yes.

obviously, in we're first year's margin little way year, think the kind to out though color more continuous better we grow. with with improvement. a regarding next as -- expect that revenues to do we bit of bit happy January. is But performance, say XX% we'll in expected, would playing So little XX% this a provide half, the And I I'd but it gross about

volume. a customer instruments. specifically And of as segments bit tailwind depends it on you It of really those ordering. to a referred the we'll the have in configurations is depends So what to tied the

we're so giving our what And of a model, it update help think, as more an would I think view, at leave in that to forward you tailwind. that's XXXX. But higher exiting expect. year the you in with we level, I I look should volume And January the for my

KeyBanc of Our Capital next question comes from Steve Barger Markets.

about supporting 'XX. that OpEx Greg, wanted you spend talked there and that back And and today? opportunities the for everything talked are new on that Is the you're investments. both lineup? planning growth about existing to I products tie also to accelerated increased Or Robotics for we've the all Test 'XX add to

that that, both are and will you with that thing that R&D that key we're are -- so infer we're I and very So direction. once working new very, products means the customers trying our on to you relationships sales in and that expenses marketing it working then our make is a semiconductors difficult to capture -- customers their acceleration in from can we is decision, and on becomes building -- in platform OpEx new change tell

platform and opportunity new fleeting a see the VIPs decision. initial all that of in we with to door so And get the influence

we is to So The really trying that confident available Robotics move confident to to strategy we're cement business we're to our need capture We're in those make our the Robotics, in that in saw that going is see share will in after it take We and say the have OpEx investments opportunities, that plan for that set. is business. Test that together. execute going to of and more put thing while sets. to we we're to -- our we acceleration plan OpEx try them our one on I focus no versus going the the we par the we're

long accelerating business, our opportunity spend our especially business, System-level test we by and the to an term. drive business, the better in be Semiconductor in in outcome would when saw we Test able a Test that But

is where that's So going. money that

just one one. last And Understood.

yet. of revenue services, that taking offer? good uptake? are Is not there's revenue uptake new because customer customers but Or not Industrials tracking why a said all what for is You not the of you lot in

So we before is service trying to these of that sure can to those make because programs. comes run walk it -- when the programs we mainly rollout we're it

we're infrastructure So not small we piloted have in the we essentially region results to that to and but relatively we the build have region, have out in program because it. the a good worldwide support programs deployed seeing

I So this material globally at that that's it haven't point. uptake we say isn't because seen a why is deployed just

global... the half or back more year in this of in happen that Does 'XX or

'XX. Definitely

long, because half to couple establish you year, it's we're for it's So quarters probably but the of in this business -- the time have for back is plan. value service of the and going cycle the managed also service a to be sales not terribly the

interest. have a lot of we So

lot a haven't We to of are be deals it customers, talking that that to needs closed the XXXX it is into budgets. incorporated yet because, think we of their but I some

'XX. revenue we'll think inflection of in So an in I'm see revenue very hopeful terms service we'll much I don't see XXXX. in that in

comes Richard question Gus next from The Capital. Northland of

curious, where Yes. terms do integrated much the you're I'm you picking is win balls with guys jump the your How rate? in up? just producers, vertically business think of that of

to So make said started sure kind were sort playing our the And -- it's our of sockets, in getting of sort on that's how out even that right wins. share an now, in our win we're rate fair split that of XXXX, VIPs, sockets. at we when we of least got describing we plans of we trying that

of that the other terms of at way terms looking -- is loaded. in testers In we're this

how of many customers being because being testers of customers. of terms in versus competition's testers for And loaded but we we kind by we're are loaded So it to underutilization, Teradyne terms say our right are tester favor in our VIP testers not in that looking by the loaded count are I XX-XX would now, customers. at of of purchases in terms those of trying

about jump That's your your is, effort it. is helping to market your share Got And then balls? helpful. Technoprobe. the in in that these follow-on thinking investment expand How

significant we had us unless that a thing hard take having risk effect. have trying to is we joint development are to required speculation. unwilling on key collaboration projects to that with and relatively not take it's problems partnership, firm now, Technoprobe Technoprobe do in on we the be that a between that that The right So we'd -- like

initiated sides. technology on have projects, they do require but We those development both

have still announced We at now, thought time the we test share that those low true, track So and think in semi we in deal is the right think when point market effect that that's said we on to this would that, we're achieve gains. what on space. a we long-term the single-digit

have that are Do And in it penetration where think your the already losses made. these areas just to increase decisions or be can have existing VIPs and the been already you clear, happened. wins Yes.

publicly haven't segments what the we So of sort market. announced of

will think Technoprobe we projects power these working projects things with because have have and that We to are are are doing until that that have development that parallelism. around high the we also we're relatively that the devices that high by enabled demonstrated say very requirements I very on that need success. we we But keep joint believe proprietary key the devices

by in TPI high-end both probe sort our the of of to opening So technology memory, result Teradyne that, the that's gain competition. we a sort platforms in where test of and both from TPI their unlocking SoC think place going scalability is and up and are share differentiated

we and Thank gentlemen, you. will have reached to the Ladies closing remarks. now question-and-answer I the of over Traci end Tsuchiguchi hand session. for

Have for the all great many you to of of We quarter. joining Thank this course seeing morning. us you forward Bye. morning. through look the a

you and you. may that Thank disconnect attending, and lines. today's now event. for Ladies your Thank concludes gentlemen, you