Teradyne (TER) 24 Oct 242024 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Q3 2024 Teradyne, Inc. Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to the Vice President of Investor Relations, Traci Tsuchiguchi. Please go ahead, ma'am.

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

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

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

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

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

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

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

in of XX, analyst are a we XXXX. in the that afternoon host note March financial please Massachusetts meeting headquarters at our Reading, to North Additionally, planning

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

have industry. trends more that then for the our robotics thanks we identified call color and and semiconductor Test demand third memory SOC quarter everyone, our and our in Sanjay the advanced The third discuss is forward-looking revenue quarter. markets our Test, will expectations. Within summarize provide guidance. Generally, quarter I in morning, will on Semi strength performing third in high AI quarter us. earnings the July the dynamics Semi joining demand. and above are business Good market delivered of continued memory Traci. seeing is and Cloud business results through and we strong our third HBM Today, test driving results Thanks, both ongoing record the in on the the

or who was and Our applications. their VIPs, SOC networking own for by business use silicon are by in designing driven Producers Integrated cloud Vertically and AI edge

Beyond of compute beginning Semi modest in see levels Test and improvement cases, in to memory, some segments. and stabilization our other we're

to continue tick AI to being are XXXX, devices. By beginning higher Cloud We quarter of not are normal, while seeing the to rates test initially as our and which mobile years. X progress for had channel do outpace and SAM in a persisted its more market industrial XXXX. Robotics, difficult through limits visibility, that expect broader continues our group powered has now upgraded increasingly customers forecasts a for beyond a operates by we or lead our expansion, recovery generally providing two, than times it purchased utilization to transformation peer environment as testers are we compute macro as returned

networking AI mainly end and margin guidance strength at on quarter plan, high of the of devices. QX. gross our came driven notable SOC Cloud AI earnings QX, high and results financial In our with revenue delivered by the range and drove in third above ranges. Memory guidance above compute applications. in Focusing end We in revenue, our

mix. This a much past, XXXX. it with our in expect Xx networking our considerable shipments in to our has data in nearly centers combined to from the be As what revenue denser we VIPs and compute require have resulted revenue we position networks incumbent was year, shift AI-enabled in in discussed leadership

is growing XXXX the very by demand SOC segment servers the to approximately of forecast TAM VIP fast, XXXX, AI-driven this is XX% in NAND enterprise approximately we The We $XXX our current TAM are $X.X TAM and increasing billion flash. compute and for This $XXX billion our compute XX% SSD of million, for HBM billion market estimate million are in XXXX. year-over-year compares market to AI demand DRAM which memory, portion roughly growth. driving from have $X.X remains for share. In of $X.X strong,

stacked wafer business memory test. DRAM Our at and volume HBM die for shipments sort record is by levels, driven

or higher are $X.X our at XXXX slug prior than TAM XXXX. in in memory we XXXX, note last estimate billion initial to big for for TAM The to TAM tester HBM multiple XXXX memory over that is memory reduce It's range a $X.X of our tooling to in TAM expected flatten memory billion. expectation peak the We the the approximately year of be likely now HBM that includes estimated XX% revising billion, above will the suppliers. $X.X

to on quarter. the QX. Moving Cloud is into demand AI continue to expected fourth

the However, memory moderate revenue expect the the will memory in surge our in of shipments fourth. that given we third quarter,

softer While our Semi our outperformed year, expectations Test to has other test consistently have see businesses demand. continued this

in WiFi the PCs business, has in of by slower-than-expected laptops. points, ramp and X, wireless particular, Our access impacted been

primary our Production Tier from capacity, Our our for X automotive work business and Test low wait be business Board continues customer through demand due mainly OEMs. weak, to continues to to HDD to

with Industrial Robotics Despite averaging to our despite Automation backdrop. Robotics. year-to-date business X% XX%. year-over-year more turning revenue, growth Now a has declines see macro quarter-on-quarter delivered worsening industrial than peers flat roughly We our

good the robotics have that capital of the industrial demand fewer and factory Low workers consider the demographics metric cut advanced peer rather aging is group absolute a believe complete population, an one progress short relative young adverse and work, the over rate, more inherently a seeing performance basic back business willing cyclical, cycle. Even to growth, our investment the environment, look ROI, do its business growth absolute plans. in needs to is drivers to penetration To appropriate we indicator strategy. the customers an this significantly executing growth compellingly progress serve of on consider robotics in remain: the business. for is We While short-term market than to team for

the develop UR of partners up have the in the valuable priority transformation the that solutions This purchasing highest conditions. channel solutions. began shipping is go-to-market expansion first heavy last payload than production cobot-based of budget-constrained highly account robots into over Innovation-driven the channel fewer customers XXXX. X in group to to robotics units customers market. Our year revenue compared new market UR new XX% and is SAM these quarters is The because and in lasted OEM product for development is quickly shipped market well year, OEM at Robotics revenue In growth peer late essentially XX% for have more Teradyne outperforming UR solutions UR. from channel OEM year-to-date. The problems represents of that outgrowing custom and get central our the

growth physical to expect Jack a Pallet that innovation-driven to the solve brings NVIDIA-powered MiRXXXX world. problem QX. continue The in AI tough in industrial We is a product breakthrough

hardware by robotic softer software launched expect of revenue Semi for outside solutions successfully, begin Test, Semi late its and beta trials ready-to-use to and company to up up, that we UR from our on market XXXX. business the Test from partially UR's year-to-date quarter. Earlier toolkit of based is growth and outperformance reduce environment sum revenue shipments of commercial of approximately total a our single-digit prior partners. To growth expectation this will X%, offset week, this AI Our AI-based have accelerator, we workcell time which expect customer completed for low

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

and have demand is secular a reinforced Teradyne's across both It AI that our is results Robotics. Robotics. belief Semi transformational Test growth in in powering innovative powering quarter in third driver products and in businesses, Test Our

that We only the in accelerate the this years I'll call will Sanjay. turn ahead. With to that, Sanjay? over expect

Today, XXXX. provide provide outlook, Thank financial QX, our the color of I'll summary morning, everyone. Greg. you, around QX cover and some Good

Now to QX.

at primarily Non-GAAP end margins above Third our XX.X%. high our the which $X.XX, of above $XXX guidance gross was This of with was quarter were which to consistent with our million, high-end opportunities operating guidance guide invest was profit sequentially our as in XX%. EPS non-GAAP year-over-year, growth. $X.XX. sales we was $XXX expenses of approximately were and were million, Non-GAAP targeted due up mix. guidance high operating Non-GAAP to product drive long-term

Memory we test X.X the WiFi capacity. In $XXX tooling weakness SOC breakdown end continued $XXX revenue the SOC demand while in year-on-year QX. the XXXX. In at industrial level $XX weakness continue standard revenue on PC with sequentially driven X by our group, underutilized revenue in revenue with was lower was weakness to DRAM slower-than-expected of business million. was continued Test while ramp DRAM by satisfied TAM Semi sort. mobile to consistent driven weakness end was a new end and Production In expect $XX wafer million the market. with million being million Turning XX% in $XXX revenue Strength quarter market memory, System and QX, QX. by the end the and of is continued in Wireless in Test ship contributing memory in and to for decline at compute, HDD for recovering, the mobility, driven a was across with Test Test, tied Storage market, QX DRAM Test million, UFS in Board mobile shipments, the Test is and Memory in was businesses. memory to SLT mix over dominate flash HBM to automotive the was market.

million, quarter, MiR $XX Revenue Robotics. was In to Now million year-over-year. up the million. sequentially $XX flattish contributed contributed and X% approximately and UR $XX

are overall experiencing channel expansion down, growth market although strategies. to is noted, SAM As and our we tied the year-over-year

information Some other in financial QX.

$XXX improvements dividends. a basis. million, in basis. Shifting a cash in metrics. with quarter and profit flow cash non-GAAP in third reflect be at quarter for net impact and a in The some Technoprobe XX.X% GAAP the XX% basis, free XX% quarter in XX.X% XX% as a the year We million the statement, our excluding paid securities. below basis Clarity, was recognized is rate, investment. level, the closed of we $XXX XX.X% transaction in quarter results marketable quarter. quarter. end items income TPI $XX non-GAAP million of is shares to ended repurchased on TPI's of We and three had our At discrete arrears. month equity customers the driven and May, company primarily the quarter GAAP Our on a on in where capital Full to the investment rate cash the line tax earnings working reflected the $XX of by the on million in We the expected X X

are expected million margins and at be are sales XX.X% QX to improve estimated a had model Now QX. to between XXXX. XX.X%. half our Gross in margins we to for Recall, outlook to plan $XXX gross of the million. second $XXX January in back to

on The color to on first anticipate be back of the is are million run our the more to In to to had in model $X.XX few expected With revenues OpEx guidance operating our of to half is roughly be QX QX, of diluted to to of XX%. A Semiconductor quarter X% to is the margin $X.XX half model. Back XX% margin QX this XXXX comments revenue we gross non-GAAP shares. GAAP expected expected sales. little seasonality. seasonally to below a $X.XX quarter-over-quarter. $X.XX. A and XXX on XX.X% we low profit EPS of of our midpoint The gross the XX.X% In non-GAAP operational be to market. of to EPS XXXX, slightly range margins to fourth target lower down be to second expected Test with at resiliency volume, XX% rate range fourth in XXXX, XX% spend. our gross tied quarter subscale at the is

ATE up for are our semiconductor estimates We XXXX. total revising TAM

$X.X expect have a range to this from from this which billion. now $X.X we $X.X prior estimate of the billion. with up be of of $XXX We end estimate has $XXX prior our be to of high a billion, million TAM TAM range Recall, billion This the midpoint is We provided slide $XXX at and million, to information. been our with now around SOC million appendix $X.X be industrial comprised $X.X our estimate. our compute, up in earnings deck the SOC midpoint around to billion,

around We continue to estimate mobile $XXX million be to $XXX Auto million. million. $XXX around and to be services at MCU

noted, $X.X our billion. Within We relative to expectations we are of $X.X the as are up of growth an TAM group. also billion peer raising in our to of expectations, memory estimated calibrating $X.X growth Greg around XXXX range from billion, estimate the Robotics our

We Industrial business outside be Automation above control. contemplates of XX% growth which peer to are XX% our in to are group, factors Robotics targeting that our macroeconomic the

growth We to are business a continue spending. confident in of to and the long-term have disciplined will this approach

Given end XXXX our be to we regard offset from to equity share we XXXX to growth to in and in buybacks to target weak dilution robotics compensation an will the XX%. With purchase market, now between expect our necessary and continue capital amount X% program. employee share allocation,

ahead XXXX, market increase expenses. expectation uptick investments with making that Looking improvement, an an be will to our end we utilization and will in operating of

with However, plan leverage. we expect to have operating a

and and compute for muted is from of broader-based recovery XXXX growth AI timing our to revenue magnitude most is but a across expect accelerate not said, improving, We markets, That outside the remains of of to levels demand related and end memory businesses. known. all

business scalable our expenses variable variable outsourced component. operating with model resilient having and and is a manufacturing Our

During free shed profitability flow a cyclical OpEx enabling downturn, cash greater we and generation.

variable expected in in year-over-year line upturn tied planning low XX% the XX% we variable given expected Also, model. In to an to year-over-year. Summing compensation drive of mainly in market, to and our OpEx growth to helped memory sales due high increase our Test growth, our Semi us XXXX, top the OpEx in initiatives, XX% approximately and strong we fund end as we QX During compute are earnings OpEx, delivered the accelerated expect growth we see go-to-market. primarily engineering is the of OpEx teens and increase quarter to revenue up, an range. a our is in third will the grow XXXX, to model.

remain market that, long-term difficult Our our auto the accelerate a development questions. business robotics industrial line to fundamentals growth and team for as and operator turn delivered and open trajectory. With to strong, our execute midterm Overall, Operator? end product continues investing up year-over-year strategy. the are back we despite go-to-market to its the growth the I'll new call to

[Operator Hosseini Instructions] Our question from Mehdi comes first SIG. of

to with the one do overall -- opportunities Yes, you the has Test, compute. highlighted Level just first have in System

System Test Test your of both extension and think compute System an Level as Semi Level. impacting of I

where the the that your diversified, was under how you the me, do could TAM remind and want what and the from? Teradyne And 'XX. I'm is context, SLT So mostly I for see positioned. are opportunities hear for 'XX projection that opportunities Teradyne have And and in smartphone, benefit market a in to impression And end I follow-up.

as Mehdi, lot because of so the space unlike the semiconductor ATE burn-in. market, measures there between accurate are a methodologies. are different of edges aren't TAM and There there SLT fuzzy in SLT

more we segment major a So a at perspective look customer this from perspective. and

Over to be SLT over mix. our that that's meaningful smartphones. And part the thing XXXX, or to a years, XXXX. been customers has processors the compute for XXXX. maybe I last there The right. you're us, we a happened primary go added So that -- for like X be to is And important test so, into revenue hit the more past of in to have the only we're years like think an business. strategy the -- becoming once driver that's to SLT that There's bit get we little going in XXXX, more will in contributor really going few

additional customer on, the mobile in an have adding space. been also We -- mobile this downturn going has we while been -- the

extent XXXX, a we when mobile more recovers hopefully additional an there. So customer an that because to the in market bit to robustly little grow have expect we

SLT. that but answer have to So I certainly at stronger you, significantly XXXX believe we're XXXX looking firm in a a don't we than give

overall is time, than part prior accelerate just door and come customers, it potentially would of when test And that open you've AI fact test had your the could the given this an a SLT the for wondering generation where the just like time escalating AI limited enabler? the Teradyne seems by the next versus test to I market, in asked increases the reduce time Blackwell exposure And XX% and the become more for of to follow-up, Sure. as I'm generation.

tracked test well is time the firmly optimized to that's as the I a time primarily there. with And specific significant complexity down. are limit huge keeping Blackwell. about talking that the up growth. The go SLT higher to times test the a really for with more transistor of backstop a trend AI of part its accelerators, see Blackwell -- the have there is to die, we than us -- tied significant in And opportunities device. complexity the complexity would that test see is The a way quite increase, the you're to sort SLT in is If that's it by a I opportunity lot gain don't growth like share but XX%.

is the future producers. Our vertically integrated to tied more much strongly

begin the be as going the space. improved hyperscalers their that's compute in power own deploy to of So compute on greater to amounts results driving silicon, the thing our that's

The is along that of at nodes trying the increased do the of faster model is complexity and when than for increasing number other increasing, is training with the to actually the the networking a that nodes. of devices of -- amount each in model in are thing about coming you're increasing pace number and AI

So driving the that like -- mix.

the devices, they'll because for of seconds of simply links. fast a single is least AI as within networking devices up test networking at devices and company, have core test accelerators number look they're required the you If going the the amount as for more compute seconds

primary our ATE a testers. at is We're think growth be expansion VIPs more test that I this the broad the message is the time of through going think, and of to key opportunity networking. looking that is the And TAMs, kind I larger So tailwind industry. for

Arya Securities. Vivek from of comes of Bank question next America Our

but QX this to hundred target with and growth, taken sales. QX for line XXXX? not forward, is how are you XX% as sales do several that's your And in dollars, up I'm sales realistic QX million kind which look the is being CAGR, that your Greg, be below TAM sure midterm the XX%, model think going we of

So parts. let in this two me take

competitors, of and the and One are TAM as expansion, measuring to significantly on. related factors stronger memory. terms AI in there's factors we three in seeing So going compute -- is our that that ourselves are there's things two business really HBM that we're

we into local is tester the of visibility The as other serving the better in size are that is the Chinese on, China, TAM of that and success Chinese getting factor going year companies the TAM. the

from much served China being And on. a So there's that, much demand that clearer but picture we're that's how companies of that's going in not China. of it's companies by getting in is so strengthening,

of in XXXX. something low because TAM factor is the but So Teradyne's our as exposure a our TAM that of of isn't is it estimate relatively share that growth, our in big certainly accelerating or China, -- around the

Now you we our us question like for in are think our part specifically be our XX% of -- second to January of We'll the towards model be our to ingredients growth in like the would for call. stay are a I your believe is XXXX there plan. XX% picture what estimates around complete But on of what XXXX. XXXX able to model suggest giving

at Teradyne does long-term to the grow that against look X% do CAGR, or shows XX%, growth? a handful software Robotics a follow-up, from what business, compare the for And this XX% next X-year my your XX% XX% And How so model to if what a years? right, forecast if for it of your happen industry? is automation needs that to trend for explains the I back

we time. of below looking or the trying is was in this, a we fair Industrial industry been in negative low into factors. spent and years, and were of contraction then really flattened a coincides about that rewind of environment up during some that the grow we really years, abysmal period general, and through Automation, time period number that going it's including there. But has look that's happened very a to that XX look a a tape, XX%, we've been now, was industry half is and year out, XXXX. for at results ourselves. Industrial That XXXX in that about X indicating Automation, it the was the X-year you we've XXXX, years. last time sort a really recovery up, There Industrial a soft One for capital quickly for critical is rates of if from a soul-searching very not strong now, has the I'm very, were Industrial saw the very good PMI XXXX. that making with when our indicator industrial growth And In we recovered COVID that the when different general to that difficult market. The thing period for has the our growth something end So And been semiconductor very -- XXXX question. the actually, that, Automation after because longest of that in also of had doing the at expansion. -- contraction back. interest through from to was at a it time said that sure pandemic the try were XX And XXXX sales. second post-COVID for a you amount long an really, started strong tighter

going We while haven't of on. that's sort around been sitting

our to looking our for We was hardware in that that at own in and serve market huge and software. needed own order thing objectives that key have inadequate saw that And business. distribution performance issues the offerings we business actually we our in was this both and had, growth to the been broaden that we unserved in our that that

been doing. we've what And so that's

these XX% in solutions for MiR double material year-over-year high now that an a their market. and roughly robots served a accounting we've had market. of a OEM to that's We're added sales line. introduce established to conditions, will While for our terrible payload out growing market UR And effective part we've for we've end weak channel our product UR,

maintain see Robotics outgrow little faster to of percentage can typically GDP, need X% conditions bit of the than So we growth traditional Automation us in think market able XX Industrial and that points we per for we year. XX% And grows a right, Sanjay XX What is sort better by said, right now to be a growth. suppliers market think to I than to that XX% end definitely rate. we sort

that would we but the just XX% So conviction looking with put XX% us "normal things a the ourselves consistently So to pretty think in that right adjusting. done to set market." I we've have growth strong and growth, it we're up at for

question from comes of Arcuri next The Tim UBS.

low next talked leverage you show guided going want you you but said OpEx Semi in to about Sanjay, be year and up to next you also teens, how that's year. Test, focused

So that Street you going up right that. it you're think The has something statement, grow now revenue to higher than XXs. low implicit in

you even reasonable number think teens. can a Or projection that up you do than reasonable you're a that number? grow low of growing is since Is XXs. So low faster OpEx Is Street up the that?

believe things. couple we're is -- a Tim, we do my remarks, noted across as in see I says the Yes. we it an think prepared in of to conviction business, going I that improvement. One have

up are be fluctuate in we end dynamic set and industrial. an for will demand will that And of we downturn a auto exactly XXXX. muted in a or where when However, turns mobility, interesting that

with hey, our And culminates And leverage. was, is process put of that then do of planning January we a in to going dynamic in But call. we now going an that the to that We we will look through make We're this a there. we're to strategic out environment. review that earnings do. a that we update other at provide the is wanted our implicit provide view principles the January still with Board. our always how wanted But as through operating point one have we We model XXXX process.

term. we Now the to to chip segment significantly, years that decisions, several and strong. very, noted feel with XXXX, engineering ago, -- do strategy we've making we changing VIP believe. pivoted that to see And obviously, the we're right in pretty as compute, market's go if very as And you we very back we is, tactically, see hyperscaler mobility go-to-market the now as believe or short we're successful being we being you

we of is while tactically, operating be. have where investments expect we at tactically, to carefully. this these So we are driving looking very But principle leverage, this

we of profile well as So principle set we sure operating wanted our as to the with came leverage. a expectation from right out make investment

that add most one The area we concerned revenue less We If was impressions growth. comment that less we were looking the about I that at trajectory sure about having that that implication chance we of we concerned in that our useful can existed, there our that like the XXXX. just and plans had earnings XXXX. to model going complete can people information OpEx would our as were make XXXX, much sort as of the misunderstand in for were earnings was without -- a of into concerns know trying were XXXX useful model as XXXX providing thing on we

things as know, Automation you I guys I And good obviously, Great. business often. about Okay. mean, the say Industrial don't

of green look a cobots do for niche for a automated shoot this like where it have at you I'll warehouse So I kind with has be that white paper, guess and that. things white maybe question. they're if to And robots. mean, question this I obviously fill could guided looks a like Kiva But looking ask new they Amazon paper fulfillment,

that should a really is start that business? done -- shoot has green But much. mean, hasn't to maybe grown is that obviously a green maybe, not that that So AI catalyze I shoot

thing deal for to the that the -- yes, thousands applying paper So be don't me it's to of The to sort to on on thing deal comment white react need of that that exciting really I've technology. same we you've cobots basis. the is SKUs exciting that to seen. seen specific customer engagements, they're And they hundreds with to with allow day-to-day -- of a AI like able that's

of We online systems logistics applications. way, those similar cube a are customers and very using the kinds in in cobots have for grocery like that AI storage space other picking,

to of broader green shoot before. is one AI much serve applied retailing product, believe that that cobots can to online I of areas the And used it's how to possibly So to our a be to is in problems that range be mind certainly allow able for the grow. richest been

of comes next Chatterjee from question Our JPMorgan. Samik

you So back the trying upside but XXXX, in you to that it growth see curious remarks you've mobility comments just or TAM that to you just of where trying probably significantly that still to the others. I lot as as about XXXX. the one, sort just on into that's prepared for remember today is flattening parts outlined to I'm being I'm well the out in previously, XXXX, the in well. HBM memory by really a as mean of and be look to like complete go terms the because more that forward TAM more the outlined first cyclical think TAM segments compared higher you view not I about of outlined. outlined your TAM you the your XXXX, might of And if

I the on in your memory it by about the very accelerated cyclical when is still in quick significantly TAM? to year next the have start really think view relation parts changing So a And driven that? we compute is or aggregate of it much Or to growth? follow-up. Is

Yes.

this is usual bit is give little I'll detail more we quarter, update, my an do modify So tell But what January. we've last to talked what I'll you our view you in in about give view. what seen of -- since I'll a that 'XX we'll

can't to we quarter, saying last like man, I is hot. like compute -- So I get going imagine is hotter. quarter last what it's much was

grow probably and we probably content. is industrial It's the from We car recovery is space. going internal end now. though to it's delayed, is expecting of get There's in certainly lower even bit to levels are crossover increasing a in model to automotive single EV, on it's come. The XXXX in what, a from lot a combustion semiconductor a where from hotter. going demand it the know market year every bit to You that going it's see of going the that

the in auto and much still market this like us that that honestly, And more we balanced growth going was market it's than XX% DRAM industrial. In the parts moderate, long-term usually that. So it that the do help but memory, we of -- of year other are The quite think are see weak. HBM memory there are is TAM. will drivers to

So memory definitely flash we there's of for the improved think room the part in strength that market.

underneath So I very story rest the be the seems sole premise AI next the your the to think improves growth incrementally market. strong that year, AI being it the -- guess is I think driver of question -- kind real is of like is, a market I that of like

the those you also That's rest Or cyclical seasonality related by the XQ? it. the a the business? are down XQ. seasonality my to to more are typical aspects and to you stand of take you through in AI just mentioned part, that at pieces that for the more business seeing out And into versus driven it's look second one, Sanjay, AI into as Got cyclical I helpful. go on If your going step

Yes.

is you'll strength you strong QXs Historically, thing more forecast wafer and to to they in have demand. tied is look positioned drivers have see future perspective, where been QX down to ago. history, right some outs QX. the from several lead in that well of strength if really back our the years because come the seeing to And interesting that unforecasted significantly that and come now, come test to AI requirements. and one to one robotics that. There in in we've what And we're meet customers a of we're specifically. seeing in down be more, will seen current then service I seasonality think down was at I QX. were test And And tie from times and want it our our then we're see pulling

I execution say a to is QX starting into from the a tactical little kind So lower out looking visibility of would that bit get perspective.

we historically are bit well robotics customers large a by service of driven bit seeing a in it. little we Now little a and is positioned are we part But if but in that test. test, can in seasonality, come even and

comes question Chin of next Brian Our Stifel. from

that just for Is there? would you China explain TAM a Maybe higher you another Or there was the connection industrial in why this discuss first test to way? Can revised year? question.

Yes.

of this existed size It's into the -- served a better by of that's getting case that TAM us China isn't you So industrial a head on that strengthening the from nail the hit of the the being visibility case quarter-to-quarter. the TAM in indigenous suppliers.

That's percent has OSAT you Okay. referenced quantify assume can for and the think to I help And reduced, markets roughly helpful. calls, repurposed as AI installed but maybe tester clear accelerator Greg, other this and on well, base? rationalized very and can that I of such been also ASICs. or what mobile and you chips this you -- principally as prior GPUs

repurposed, what's Yes, testers isn't compute, the thing the converted since We trust measurement markets. upgrade done can a by we today, meaningful we the that all but on uptick testers you absolute look now, tighter at have not into so is end have idea like been year, to Most these looser. the other shipments with use. get numbers, that repurposed expect right will of we we've over based capacity better but of and utilization to testers getting XXX as of that the whether it. And see consistent, other in been seen we've keep XXX that as over utilization. to happening of a And methodology been have and directionally don't put or is of our

capacity quarter the when there be So now of less get than they'll believe the a idle less we there's year. ago, we end that and definitely even was

helpful. That's

size maybe the supply higher last Maybe things revised in at I for you that to year. that are understand considerations? talk give or XXXX opportunity push HBM moment one cobot But like maybe understand for demand the this VIP ultimately floating number the least that for and of And will constraints capacity it of question. view quick year. can Maybe You what year? next has it And for considerations compute key you about those side But been. of you're the terms your drive higher that the again what of maybe next a the TAM. is at XXXX supply one of reluctance

Okay.

about what believe be about -- that by TAM we about first, a the is we'll we it. that number that $XXX that that said the think VIP right, will TAM look going upward will for I in you we've pressure frankly, we that terms for year, was like XXXX, update before XXXX be about market an million. is we hard XXXX. believe on revised be TAM a of Because size terms to This be VIPs, of there's positive whether January the we And taking compute So needs in and believe that that surprise $XXX are $XXX of at in give million that, is upward. feel that, currently for whether to million. certainly

that the about thing we've few that other The said producers types, it's VIP so because part the TAM really and is so lumpy. is TAM few

strike you winner, period used. big get one in and in place if time. orders a So amount a And it's capacity that you of gets of then

be this where to But years and a level So middle in definitely going this in in maturity between later. that straight strengthening. to halfway market has say, it's it's of draw year, Therefore, can reached is trend breadth the the it's X you the year. sort this of not line

constraints, in are talk of of probably kinds VIP to Those can advanced customers in order the the the terms that of be HBM constrained we assemble they parts. get, memory, they to these packaging is the they're to of that two in seeing we constraints. things are terms important in constrained most able Now when of amount amount are the

try is these The part X are I huge are a these going a But sure adequate to reticle an think die, to that in die parts not is designing amount and the make get they they slam that has first dunk that to yields. are time this other to of space thing around. it's work, work factor redundancy the constrained into sizes them fair

testers for demand these shift time. around the can So in

So is it's than challenging the we to it's trend space definitely a kind -- faster predict. But a thought it would. of moving

next Fitzgerald. C.J. comes Our Muse from Cantor of question

that I Analyst XXXX is for transition telling me want save But everything question, is I'm in Day hearing I the thunder a call your guess in this realize first you to year. that March.

are OpEx Your while XX% below at prior QX in is the peak. your new highs, revenues

you understand in can a leverage us there's in real 'XX. help give bit the here to actually that So of model little

Yes. C.J.

customers and So what seeing our But through going noted, Greg strategic early indicators that are to hearing look, their we're take we're about are -- is plans. when we we our as planning process. talking

planning noted, assessments. a Greg base, We in early incremental well. from as And off higher, industrial. And have that's gone through percentage-wise, compute is really of doing we that mobility, low so hey, our and look, incremental are or would a size coming are be seeing growth we kind market auto, of

expect days. 'XX. in business to point, and XX we'll our facts So leverage do complete to we at with to all that planning our feel process, in an expect And in did update. at we we that leverage a this OpEx. But grow And operating feel comfortable that note got way we changes teens of in we the we lot provide comfortable this while we have, the point, see see do low we've the operating

Yes.

it that. we was Teradyne's Like like can bit I hit serving mobile, of little in strength. that add our mobile if played huge the in are upturn prior So demand. we to just it was into a When boom peak, add was on and great a precisely

Teradyne's And significant to at clear OpEx order revenue. in so believe efficiency. naturally to years. is difference we of growth of -- doesn't robust to that from relatively it's our that, earnings Coming that historic we strength for The couple were out did TAM of play over peak need set not level that serve operating and up the was. in TAM where next We that model like we layer are growth pretty

reap to and sure benefit in that the in so And needed to to the change we the make invest of order we to needed were able we pivot, market.

much, and so the of to try are versus in we stacked and our align We traditional progress order made XX% much in making and and made VIPs. to investments engineering year to significant sales terms marketing success in And in compute like die lower VIPs the to this test. is share in compute. performance our significant we HBM investments significant exposure our align market, and And share in

still thing in changes to decision in control this investments we increase operating sure need industry. market maintain weren't we moderately to a are to is react is try So the this And to conscious part we able position is be that while our that the good the thing that but we and understand the that you a need it. maintaining to make do margins able leadership to to very, on our very to able

That's helpful. very

in As that? think will you my kind through you're cycle, there. walk to of looks what MiR to it business hear by product that sequentially that's XX% like primarily question like follow-up, business look there but I of color drivers love how more the and guiding Can robotics, on the grow would December. a to near-term after believe driven

Yes.

seasonality that we Robotics the expect that and business, There's very, So is has historically very pattern. in QX. sort this the large had no exception, normal a business of lot seasonality year of

a seeing there's of it's that a the going revenue amount contribute. I that We coming into businesses. those service factor, more note, the that's growth heavy also but now channel meaningful OEM also expect is payload to like in lesser we're to continue with and

Pallet -- not happen at Jack of of quarter, new our the material QX a story be XXXX but is going the much it's the story to going need into more is MiR to to We a customers. That of XXXX the end like this So get hands than MiR growth. a story. contributor to

from more of QX, business any strong now like contribution have our MiR really pipeline we pipeline a product. have, what for from a view going be how than new it's we that the So expect to we like that lead

of Sachs. Toshiya Hari from comes question next Our Goldman

questions well. as two had I

Greg, know But TAM. mobile on about 'XX. I'm the for I guidance to SOC long how the not you're opportunity First, thinking curious medium- test you're set giving term.

several a billion of ago. years the think ago, around couple years peaked I market $X

would think you I $X.X million at rates think of the $XXX intel. per mobile? there of that, talked cycle mobile sort opportunity long are up You some utilization you state. steady be do market how reasons and the through super are cycle? You year to But term, through test billion, But do sort about about thinking coming helpful. today, medium- no you know of how for the billion behind that for about $X.X is

Yes.

in capacity, having I a think once XXXX. up shoot think that in state to like of excess and So terms the we steady get I happens

to it. enough, in -- require the whether that customers closer on average more that's I AI-enabled from if much think been that to billion features which because feature badly up longer ever on want going is of smartphones The phones it's value age customer AI-enabled compelling that that thing depend that because than a been now the than people would like to you really the it holding a terms new like compelling $XXX is expect their kind mobile the I hasn't of older upgrade. people much be to going there floor now. is that that $X smartphones been drives have to of that really in smartphones means is it -- has comes right refresh cycle phone that are not, out like twofer a now, the or whether do that the and testers test time, market. deliver processor, offers that that's If a has need more then to down. And more to going complex drives And million

level in up like phones to rate on a upside volume goes goes mobile unit whether So depend phone refresh is I up. the think going and to that in really $X billion

you HBM Test few got on Semi going right the bluntly, feel the guys you the you're set. those as do the around I how a a separating think Semi the Got overall But opportunity perceived the It's a it you're years I you're business? like of that portfolio. I something in think think lot then, and And the company. business acquired business? today, the Robotics guess or of X the opportunity sort ask lower like I I business on internally think question like about quite you've about predates a then of be thinking since on think I know things, perhaps how still becoming market growth play. When as think, the VIP of this owner been, you set diversification was I follow-up, And two at and about it. than to touched CEO whether you businesses? you're value UR the the since acquisition time, you And Test Do question guys my the expectation you debate running ever do just fair thinking of feel for you today? getting

And blunt in that way looked remarkably Yes. UR fair. in out No, the the was that decade a share the right we same in initial question, when you're world also is motivation of we Semiconductor bought were market. that shrinking over decade, like of Test in market. doubled to coming that our but Teradyne terms TAMs it's of the a And Semiconductor Test XXXX the us

So that essentially strategy. long-term see We've look, growth That's didn't goes double can Like in that satisfying. you position, particularly environment, up away. to become end we managed not market a but profitable. our to as great more that up we managed share a owning

and Industrial in the with products you Teradyne high thing with unique very the very, if a very original we comfortable reliability that hunt ensure -- presents players, at of us a of really advanced on that skill complexity pivoting they're terms That world, well level advanced robotics being robotics -- advantage Automation them they value logistics killer spending the of spares the distribution not beyond to robotics delivering testers Industrial high-tech motivation. The as allows in astonishing. gives space, is that look requirements. What very high charts. the kind from and Automation, the the scale, growth these under our are to level typically us of our essentially reliability that or it undersized, do robotics very, businesses robotics The And mindset enterprise. And a the also people definitely that proposition folks is set is for the we in coming way industrial able that bring and long-term were a big our compete pure-play robots to that since we folks with the can robotics that that really they're honestly was network. a they're of discovered advanced compete the they're tech the because are of we IA against They kind off spending to bought loss. companies the against businesses folks have and have So traditional typically reputation are space. to don't into to international

to right And industrial an kind so bring that we of are advanced we scale. player think the robotics to

So robotics the like some Teradyne advanced lead is space. value like point Maybe. that there having the that and we unlock have the we a the now, is allow future us two shareholder right Teradyne separate? businesses may But in be by debate in significant think where differentiator we these actually is attaching name to is, to will that

question next Sankar Our from comes TD Krish Cowen. of

them. of two had I Greg,

just understand this platforms come either want are engage on to just Semi With this cyclical customer OpEx to I Semi VIPs OpEx Greg is thing to Test to was level and to trying the with for structurally Semi or networking side. compete. to share? was new the if test increase, side I'm build you trying back get to new market trying for Test is this the the I Test into it basically all, to the business? Or First side thought a of strategy get GPU OpEx Sanjay. on earlier

it's up end to the then technical is help not given. sure, So is VIP market get team, of right? to customers, money these to that the drives significant applications to we're and get more that a them it with seeing So amount support that's with But and It's for extremely would it and you they're that complex part amount I market consider more -- significant, that invest and a we're building of devices be cyclical. share, of kind a worth business. required if always you that thing trying that

than we ROI But phase those make the the definitely making of we're where in reaping are right there them. investments. those the investments is investments results to more now, So we're

revenue term, would cyclical it we're effect think that a reduce I to that be would like So that the in way. OpEx OpEx -- be by taking that think networking I proportionately against and lower OpEx revenue. I into grow VIP expect we these increasing spaces able going we view on, without long will That's we is not able sort to the of place we're to whole have in getting hold the and grow that

bit it. quick about follow-up and And Got HBM. and talk Can helpful, on it. Got share little also Very the then a Greg. opportunity in market post-stack die you your wafer a test sort?

Okay.

on was major Teradyne post-stack year. that's in not were until qualified in by a market die able to supplier this the a So that test, of participate middle we

one And so the of test performance half this suppliers. die stack from for the second second half we significant have HBM major business in year of

expect to supplier we the are on something success depending that's share. call that drive XXXX, We get that at supplier, an particular HBM to additional and revenue in in would of some

of wafer that's sort, sort breakdown aligned Now space. when to the market to comes it sort share more wafer the really in traditional

at important So if -- there's few players. look memory you the a

doing have wafer are China. share share of We DRAM great And manufacturers much we're the don't biggest. majors. at the in the sort well at have in one sort that We memory wafer

well grow, do they will as as we well. So

is die. to about to but wafer we're going So the in I probably sort stay is in think share gaining be going wafer the stack same, sort space share

from Our Capital. final Northland of Gus Richard question comes

what about year, any expectations on inclusion thoughts Do growth integration I in to of or AI mobile processors for modem. more of perhaps in look just have your 'XX? thoughts complexity ask like capability, next-generation you might want in that next any

Yes.

we begin interesting play expect that manufacturers additional The that increases do of they iOS modem now, chip ramp sources increase opportunity a Android year to we complexity there's in at Modems that we the towards that test now. modest an different And with is for it's at are is associated see both don't trend than devices complexity space. AI. may So take. a for see phase modems get next lot different to a the going and changes chain get story that but the integration, handset and supply different like modem are from in the that's and

shifts So see integration, we don't do but modems. of see providing sort those we who's modem in of terms

helpful. capacity on utilization. super touching And That's Great. then just

QX, you What it indicated SOC is and trended? in QX in I it think up was And You utilization was a Can could QX? it sequentially. more. just What you was that bit quantify if do wondering how QX, you quantify that?

I but I could, can't. wish I

in internally, I not that them So say so in externally of enough that can audited they well of have in use testers and my will -- that them quarter, this that both normal up and for I But it's to is you fair I really us whether The fourth increases continued feel QX, because seasonality, going use another. Like numbers someplace to we And is from absolute because utilized mid- way. we to we the numbers number it of single-digits hard don't and high don't significant one upgrade else. sort range. that we also give underutilized the to thing the of want continues can go have expectation tell amount see are in to utilization do that a that we because quarter-on-quarter, kits to a to audit. upgrade use upgrade tester. to an tester They're is to market going to someone it's

bunch testers into going utilized of unutilized probably column slide the that's the a column. to So from

there's in a think be can't I to I utilization improvement but So in give hard you additional going QX, number.

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

the many you morning. us this again. of Thanks forward speaking course so through joining We this of for to much quarter. Thanks look with

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