TER - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen thank you for standing by. And welcome to the Teradyne Q4 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please Instructions]. [Operator

hand over Please to I ahead. would speaker, conference to like Blanchard. now your the Mr. go Andrew

Andrew Blanchard

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

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

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

on discussion. We’re of be website this slides page page providing the you the same will that Investor to after helpful when call ends. the available the may Replays be via following call the of

cause expectations. will from we matters today Teradyne’s forward-looking discuss to could The include management’s differ materially that involve current statements that results risk that factors

encourage review to earnings as well contained Safe SEC our statements release Harbor filings. you We recent most as in the the

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

reference we’ll measures. During today’s financial non-GAAP to the call, make

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

of associated in US the special deck for slide risks take please regulations. Also, to note in changes potential release export

earnings Looking Citi, Sachs, Barclays, in next between focused ahead now be hosted and by Goldman and call, participating investor will Teradyne our technology conferences or industrial Susquehanna.

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

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

Mark Jagiela

allocation our QX our as update everyone. financial for I capital Thanks, And outlook plans. details. the model and And and XXXX. we on comment today's earnings our January, you do call Andy full on will Sanjay provide your and then highlight XXXX and note will hello each

We up non-GAAP very fourth strong for about year That a sales XXXX. XXXX. up ended And per to the EPS earnings of full with up non-GAAP the XX%. from sales versus of XX% billion our $X.X XX% share year X% and on $X.XX, quarter brought

businesses plan. showed Fourth but on above manufacturing quarter primarily Test performed the results in Industrial headwinds well In US came areas. automation test below from solid came and our Semi our XXXX sector growth in plan the above [ph] three Europe. plan

XG First build infrastructure China. out in

complexity share smartphone Second growth. test gains. significant memory And third

SOC build in spending. estimate contributed a TAM XG sizable about captured $XXX the We portion we infrastructure XXXX. of And $X.X the out million that billion to

As stated intensity in strong prior calls has smartphones, this therefore growth very complexity tester test concentrated for the China. In mostly and demand. was build out moment in driving

largely the four as in is features demand. drove insignificant like demand photo test cameras, and growth increase image wide strong, unrelated was video enhanced and there sensor XG of volume backside multiple to steady adoption XXXX. this handset In was was XG The Rather broad and cameras in as very processing, three features a to new variety. connectivity particular

memory. was driver third The

Epic but the DRAM emerging significant into a memory. difficulty] DRAM declined X% from XXXX and devices, market forward break higher expected down [technical successful Less in LPDDRX our was were test XX% sales investments as by by from in revenue, as Magnum about for speed impact suppliers buoyed the memory the tester. was about While difficulty] [technical spending significant by going NAND XXXX, new

Magnum test serve Teradyne's expands platform. four with This to our TAM market all of sectors now the

full strong test for all point delivered growth plan light Our delivered and the businesses year. test system In also system production results. board test, tested test defense aerospace, very above and storage

of growing business complex a increased drivers semiconductor intensity drives for level full test XX% test the difficulty] of difficulty] early XG with connectivity the and from the year. of the Storage market buying handset terabyte special HDD test [technical [technical for the standards test were devices. coming principal point a new performance system is along XX% in growth

above but growing businesses XX% business below grew While a performance our performance the plan, Individually, pro basis. year solid X% MiR for was grew was plan IA on basis. forma forma and pro XX% our on test UR a

we've economic global sector, faced high chain had headwinds discussed European As the throughout which supply general manufacturing at the to strong of UR exposure we've both automotive year. and

of products, Teradyne profitably serve core new and XXXX robots on positions we a up year. markets These AI product in platform the hand, big solid introduced year the other big targeting also data new On us range the for set the showed and and end more MiRs future. our UltraFLEXplus the mobile In diverse was Semi Test, growth both front. markets. to strengthened in grow the a

and The handsets IQxel XG for millimeter Magnum XG difficulty] families device with testers we for epic production DRAM WiFi test the final IQgig wave our of platform and introduced of respectively. At for and instrument MXXX new members LPDDRX [technical test. LitePoint,

In system the electronic delivery in production high introduced began of [indiscernible] solution site our In automation complex cobot tester multiple for industrial payload systems. ramped QX. the defense beta spectrum for and test we URXXe customers we of speed for higher

improve and pipeline to AI our utilizes industrial busy robots, that the traffic mobile future we the AI all engineering products in for In of camera introduced MiR full MRXXXX robot flow across And groups. payloads is settings. increased system

capital approach market. serving acquisition autonomous AutoGuide up Rounding forklift nascent to XXXX mobile strategic of allocation the our in resulted the balanced

We share $XX $XXX also return in capital million and with program buybacks dividends. continued million our in

with AI design win mobility space, improvement test businesses new Looking a forward major make. an XXXX, products in are the see Magnum significant in competitive LPDDR tester the test, we to UltraFLEXplus at memory during QX on Epic in continued Early momentum winning positive our in strong our final and a winning returns [ph] growth. our and

looking early into I'd we're strong how XXXX. for outlook like contribute our to first context Semi in Tests some you wins These on the give to quarter.

to XXXX and levels in saw what smartphone strong to XXXX. First, we demand be expect our back we test and to similar

we then our revenue first year. half XXXX weighted will the be in expect As

both Second, we strong applications. expect and to half level first HDD for system be the test storage test especially in

For the year from XX% grow about expected it's XXXX. to

Epic contribute ramp we Third, the in to design represents customers for segments that revenue this to new expect the Magnum growth over QX and UltraFLEXplus and the new mid-term. will wins and begin the

out in out past various networks. as still outlined infrastructure cycle smartphones, at XG calls. Balancing demand innings test in sales. will their build the XG test this demand level, strength, we geographies are early from global is we're our we seeing a expect power seeing infrastructure in expected the infrastructure XXXX and various XG high we the pause that The the build find to as geographies evolved At

or XG sub-XX test related wave XXXX, be rolling smartphone as somewhat low still will in but demand are investments will to mostly Millimeter over out. it's technology come the it begin modest mid-term. band

significant Additionally, in in any analog XXXX. we do see or to automotive recovery expect markets not

will we increasing advantage describe, expect OpEx in will some faster test design Sanjay to products these we As be and over be of XXXX a now take to expand accelerate what growing our midterm. the market new wins, test

million range to the outlook in market $XXX billion is our is for in $X.X together, all XXXX to SOC memory the range. and test $XXX billion million the $X.X Test Taken

Of environment. course, global trade this the regulatory assumes no in current change

outlook you on we will the this through We year. move as update

For million $XXX XXXX. in to memory test SOC compares market a reference, about this about billion and $X.X

of call of the this gives technology warehouse safer. We more us strategy to AutoGuide industrial and democratize as make use to confident addition advanced productive We execute our applications the And growth automation, the opportunities. automation. even is broader strategy. and opportunity of remain to power an Turning industrial access set to of we

higher and automotive manufacturing this is has sector the Europe and likely. we combined confidence picking manufacturing industrial in other the expect growth IA general profile that U.S. have XXXX This our expansion with automation in the remained consumer headwind goods electronics and us gives forklift in the the we While market do markets weak, into think manufacturing dissipated. a

UR in and XX% Additionally, start about robots XXXX plug in in XXX available, our mobile XXXX. the we ended to and Overall, expand to we above play growth XXXX our to XX% XXX for A solutions launched similar up and MiRGo continues IA in at XXXX. year of increase ecosystem will from the expect certified autonomous Plus with program XXXX. grow

In summary, very optimistic. we enter XXXX

policies in that global and are economic remain fuel strong. economies, the trade trends our overall technological and business uncertainties While

strong new strategy. opening that and new commitment are we XG. of capital products strong are is is and innings in slowdown. returns headwind plus a this a early we Our a environment in pipeline and expect and still And remained markets the is growth dissipating. the U.S. gaining solid customers European manufacturing Test to M&A of growth our This market new IA

modeling will Sanjay? take through financial now Sanjay and details. you the

Sanjay Mehta

details financial financial Today I everyone. Thank of you, review Mark. will XXXX. Good QX highlights and the the cover morning, for

will Looking around for and QX include allocation our forward, plans. capital outlook model, update which provide I'll color an midterm XXXX

million revenues DRAM high infrastructure XG the our of demand led QX, and higher test growth were enabling the which to quarter by SOC Now revenue devices. million $XXX of were guidance flash $XXX quarter above over Test range. and driven Semi $XX memory million, speed and end

million, quarter revenue or a significant industry test enabling Industrial year-over-year in our had exist. auto system environment solutions storage in grew for group QX test System level test SOCs. had quarter which an revenue seasonal IA of million of automation $XX grew revenue $XX and over over by driven increase where headwinds

WiFi standard quarter and grew quarter our over revenue XG and X product Non-GAAP quarter margins down slightly driving and LitePoint quarter year-over-year plan gross cellular a million due to were mix. new connectivity of revenue. with bit above XX.X% $XX over

up $XX was spending operating non-GAAP an higher a quarter to on design non-GAAP You'll and third operating increased XX% to due profit wins from profit, expenses support see Non-GAAP $XXX variable investment. to and the million was IA EPS our ongoing were compensation, $X.XX. million test higher

The the We XX.X% back basis. million $XX.XX price in X.X quarter. GAAP quarter $XXX non-GAAP the discrete at the on shares for an items XX.X% excluding year on was of and basis, a tax for average bought a million rate, and

Since full of returns XX.X the cash $XX.XX, an $XX.XX. at average we marketable billion of significant the of XX.X approximately with XXXX, balances We which price that repurchase spent year year, For security $X.XX average to period. $X of million the ended shareholder have an and billion. price shares five over delivered we with start bought the year million shares

is from results be full two had X%. $X.XXX customers the Teradyne of revenues XXXX XX% in our grew and from test who the $XX our million greater billion year will growth to million We XXXX. or IA. $XXX disclosed portfolio in or with Turning filing. revenues million XX-K $XXX of of

operating Gross the revenues. were or which XXXX components consistent growth and year-over-year. of XX% margins profit $X.XX, was with XX% is XXXX. EPS XX%, Breaking was down

million revenues outlined, on or devices, complexity in increased infrastructure, SOC sub-X and X% Mark XG development test As grew in the demand. mobile wave $XX strength millimeter

higher DRAM for for DRAM Demand were $XXX existing Magnum demand NAND also received revenues entrants speed X% in year memory the market. highlighted combined In in down the package our wafer new Epic Late revenue year. LPDDRX initial with and system. testers million test test from down we customers the

In third system on million up XXXX. row. $XX growth and from Revenue for test, $XXX million $XX HDD $XXX sales test test for or year in XX% grew year-over-year, which level storage in and of primarily system test sales million a both grew of had million

saw well. above in defense row million, Revenue test in aerospace of for XX% a as annual We sales board and components also LitePoint growth level. At $XXX third that and our year grew was STG. XXXX production a

New saw surge XG cellular of also we driver connectivity biggest the in demand. demand were in But QX. standards

as grew million basis. was reported pro X% an XX% revenue of million plan. on original IA basis of or $XXX $XXX or Robots a forma below XX% from growth year-over-year our revenue Universal on XXXX

exposure by industry. plus XX% Both which UR has manufacturing in discussed face Mark, automotive to Europe As the XXXX. in significant and market of headwinds demand

modeling of a the on had on data full grew we XX% acquired reported that Recent similar. Recall MiR IA suggests of pro basis, million Eurozone as revenues XX% an the non-GAAP XXXX. year in we're XXXX for no as in auto basis. indication of trend, rate PMI of improvement for April well. a MiR outlook total operating or forma profit but near-term. The a $XX moderating is in XX%

EPS history outlook, latest updated non-GAAP our to $X.XX Shifting in $X to high the in model. our our both mid-term of and recent XXXX. target earnings earnings Factoring to end we've of $X.XX

millimeter growing subsets performance phones have such IoT market and Semi for needs and devices. the infrastructure, capacity in Test driving as complexity We end confidence XG and broader wave drivers

baseline some X% XXXX a devices. We rates the revenue. to specific unit expect our trends growing from and share give device and gains Semi performance growth of X% X%; memory memory Test X% to along continuation growth, with also from confidence the and This to to us raise revenue mobility

noted. At range off reduced rate XX% growth to industry our as Mark the conditions same time baseline to of reflect a revenue IA's of XXXX been XX% near-term model to has

We In noted significant slowdown XXXX. expect above growth to a tied experienced macro conditions XX% in XXXX, growth in we sales earlier.

remains However, our in business. continue to long-term positive. scaling we'll invest the outlook And

Specifically increasing our our and to major sharpening needed portfolio. expand on generation focus continuing and investing accounts, to marketing our closure, our software distributor efforts invest capacity, in for reach scale lead to to solutions

The result assumptions as updated a portfolio revenue prior in net model. from contribution of greater these test growth our versus XXXX the

XX% Our target X%, the rate, of operating the our that increasing top top gross has XX% EPS to end increased range end roughly of at our margin drops to down which and profit, $X.XX. EPS to to increasing

million of EPS QX. shares. for XXX to Sales expected our $XXX to on were range to Non-GAAP and Now be diluted $X.XX between million million. $XXX $X.XX outlook

acquired first The the debt. interest imputed and on the intangibles, of guidance non-cash amortization quarter convertible excludes

to gross margins and mix. to down from estimated be quarter fourth XX%, the between quarter XX% are First due slightly

XX% OpEx test to is of quarter the AutoGuide, distribution, product XX%. incremental discuss quarter addition further with The non-GAAP I'll operating The up IA first investments midpoint the quarter and shortly. is running profit the XX% and first $X at of of investments, quarter fourth guidance including first due from sales the at development along million about

the outlook to your Now some model. around turning year full color to help

Key ramp we handset and XX% LPDDRX first of revenue system the XXXX, storage DRAM and capacity. include demand, sales product to second, level similar key half and test sold half our enable As test expect XX% noted, Mark first the the and to were revenues being full ramping strong year first respectively. when of XXXX testers early test memory half drivers of

very based estimates, expect and early as sales levels QX. in XXXX 'XX, Unlike roughly our in we on QX similar

OpEx plans for XXXX. our Regarding

reinforce XX% million. across noted the expect competitive as grow In to investments is earlier. from XX% driven we to to the a $XXX This our business. will position We continue across IA to to XXXX by OpEx invest sector

Semi market our test we opportunity of plan sales position, in that memory SOC and us to The efforts as investments portfolio areas engineering, maintain our engineering the Test. in as there's in we to for invest leadership primarily At well our increase spending will to include grow. and marketing believe

then customers Increased marketing and and share require support. Teradyne's products investments provide gains, driven ongoing sales are convert on by ramp which effort and to

expenditures to model in flat Beyond test XXXX, have we OpEx to XXXX. GDP growth. Capital

above We will run our normal rate. increase

was $XX million In where demonstration or years. we've several the In grow primarily used customer $XXX over XXXX, in next operations to investments equipment, estate we CapEx our million for for and XXXX, engineering. earmarked locations plan incremental real an significantly so

efficient buying eliminate more are developing long and spend enable the term. land profile costs to lease We it cost and over

the The will spending take to projects majority with year. years of this complete two the

capital non-GAAP and estimated is tax XX%. allocation. Shifting for GAAP Our rate XXXX to at

operating dividends repurchases. We support returns will share our position M&A shareholder investments direct with strong and continue to to through balance and cash potential

matures value million $XXX a base have in convertible we Recall XXXX. bond that

$X.XX in growing quarter, Regarding increasing our which serve. we and level we be our operating our to will reflects confidence XX% per returns, by dividend direct markets

component. the replace past, the date program does With the plan we repurchases, a minimum have program. end XXXX. regards share billion in and programmatic in a there's opportunistic with a to unused share of it cancel as of share program program prior The fixed $XXX portion repurchase of and repurchase a million not $X We and

and buybacks, Recall XXXX enabled reform, XXXX, to billion cash in in repatriated XXXX efficiently. $X.X offshore share be which approximately by tax driven we spent

test a good enter strong by represents closed our with XXXX In getting we normal momentum and repurchases. share powered more portfolio. target on our XXXX out to XXXX level Our strong very summary, back

plan test allocation confidence the capital in reflects and automation, updated the earnings short term and industrial impacts model of acknowledging spending. industrial our global while in Our slowdown

continue to position R&D will internal our profitable and across to business. invest capabilities We the growth in distribution and competitive improve drive

a the proven and predict demand that the New the While time we team, during the scale products, model can't efficiently a and for fluctuating have we year, ahead, Year. the thrive to what strategy in lies flexible can period, business full

Andy. to turn I'll that, things With back

Andrew Blanchard

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

Operator

Thank you. [Operator Instructions].

of comes question Vivek from Bank first America. Our Arya with

Vivek Arya

my for Thanks question. taking

one, other or effects number release significant for HiSilicon customers. they of XXXX in I'm as as first XXXX and the or wondering were is called the in So and due for a that indirectly trade sense how big Huawei how you issues? out utilized related well, and have you press do directly any you tariff have extraneous much a versus of capacity being to if

Sanjay Mehta

is a But was get I is strong going to year. numbers utilization demand say demand, that paradigms XXX% customer. the for what any through are and customer specific There's Utilization certainly Yeah, we're all will not high. they plus. significant specific there

a the now that running point demand half in situation this XG of infrastructure, than exception of subset which was the weaker continues with year. At last of represents being the second it

Vivek Arya

right. All

follow-up so $XXX size the million you the mentioned I in market $XXX you $XXX out million had contribution million stronger last your How or you And you or versus think which you year, playing see think share Thank the competitor? you. my your for to past maintain so opportunity. side, XG on areas that are and do the

Mark Jagiela

question. good Yeah,

number So infrastructure share our related. was think that predominantly for was And I probably there $XXX XXXX XX% million plus.

be our that a XX% XXXX, there'll be XX% a probably that and shift entered consequence a to as XX% As bit. infrastructure somewhere handsets -- a And mix. will XX% of in we that kind of between to toward I'd say, come share down will range,

$XXXish that test. about LitePoint, there's Semi of millimeter talking XXXX, million And adder range probably comes the more been top we've that's million on talking $XXXish handset XG that when for Again, with post grow probably market then as we're term longer Test. should in online. But total wave for

we way that the it's be it see bit higher. a But likely could now

Now that at or around may peak so. $XXX million

progresses how the out that's So through it few years. next

Vivek Arya

Thank you.

Operator

Thank you.

Suisse. John from comes question Credit with next Our Pitzer

John Pitzer

solid on half of versus having I'm that down? Yeah. Congratulations Mark. your visibility XX-XX. half extent of guys. going second the view Good just results. and to is of what To is half curious, visibility actually into the lack morning, being on just calendar half conservatism year second kind XXXX, that the be

pause currently, year guess, we're is And year to in right help 'XX. for the back? analogy XG that understand question, answer through infrastructure, as calendar compare the if XX-XX I expectation me And a why to come you what's your going

Mark Jagiela

good a that's question. Yeah,

out the just to little point half. very that we I like So have visibility into second

XX-XX a on the the purely XXXX So in And assume and is first pattern. mobility based split XXXX, equal, we that we in else add where that and follows test handset the model simply looked at historical precedent being everything let's half. said, during or significant year

the But in say build ran need It year. are plenty out we infrastructure then geographies most out. because of points there's we any no I that have would strong that. to hot, don't last in very But that a now. concentrated China right in of pause was on data infrastructure, still And build with expect it's

come point. has at to that back So, some

it's think of year in the could year. half in the we or be don't first it early visibility, you next If do the half year but have of the where second

John Pitzer

Vivek's that question. role the Or concerns some of just should might you from my But I XX add think impact XX. to for for understand Would kind maybe it, follow in community? how specific the business minimis to your a relative change de I'm Then be of we as to about investors Huawei? customer. change that helpful. kind curious, levels in of investment the to about a understand not have absolute That’s talk first to the desire on on the that

Sanjay Mehta

Yeah, hi. is It Sanjay.

could there say give little compliant rules Teradyne is of the some lot hard regulations to just color revenue that And that be thing a to to are. going bit the be. So I'll conjecture a with is call. could the whatever be say what then about there. around the I'd impact -- going Depending first is on I'm you

consider reason, And have Huawei -- whatever other the end you a there's believe our that end for market consider would to whatever there are, be be ship they the that to providers. we to if to market, I to shift think that you if in inability

a place. have that gap Now as that takes process would time

over going I end But actually be. kind I to the this of but hard. we short think we regulations don't in very itself there midterm the And what the would are fluctuation term. understand, work market it's b, then out, A, be impact think the

John Pitzer

Thanks, guys. Appreciate it.

Operator

you. Thank

question comes next Our from UBS. with Timothy Arcuri

Timothy Arcuri

Thanks. guys. Hi,

Mark, XX%. this comment actually XG if about But TAM question, going I million $X.X total XXX like share first I the year, year from basis back that share, to for this The $XXX your SOC of that SOC lost extra market worth was you am came just take a the billion share year. your points

you be that portion XG? captured incremental of if sort would of why Thanks. an high that So abnormally

Mark Jagiela

Yeah, so the lots covers under SOC going on in tests. there's

it. high and where So low another very were automotive we have the of level which is bump very analog, XG was one But component share. place at a

share So -- other terms low might of almost to in sort gain. you negated share of net say, each

Then other is It only segment SOC going $XXX there's serve kind much all in about the -- driver effect of grown And added the that pretty That of think calculations. -- probably has market. segment test. LCD don't display market. a million is is the which on It driver. quite It's we test the of dramatically advanced [indiscernible]. a $XXX difference market I million the makes

Timothy Arcuri

then topic And guess a it. export got on Okay, around just the control. question I follow up

you're which going the flat at if and implying June, half X.X to I a out around is year half the year. And XX, sort take plays then you're to sort sort for the is I of the if be back XX. going be first of of says is that flat. that That So that assume

Does will terms if able you. Does Thank they rule changes? be still that some ship sensitive impact? remove requirement. content the to that XX%, or threshold and be that does what control there does Because to assume -- assume Huawei to you'll in that that export assume that goes guidance that of

Mark Jagiela

still is of not daily with at what significant the the and this Defense moment. being plans for in would it and a the in contemplated Commerce believe is I again, Department that obviously, else Yeah, have impact And our Department discussions to XXXX. we think everything

[indiscernible] what change that The demand draconian for true other assume that happens well said suppliers. expect to. something the that a the in that shift the let's But won't supply so will other more will market restrictions. shift is minute we suppliers likely is positioned with to that We're

So it's simply of another. to place a movement one

Timothy Arcuri

much. awesome. Okay, so Thanks

Operator

Thank you.

next comes Goldman Our Sachs. with from Hari question Toshiya

Toshiya Hari

Hi, guys, congrats on and the to remains XX%. from environment XX% strong results. pretty Mark, you around appreciate guys near lowered XX% standpoint your change? IA Europe the in why to from I long the to But the weak. term growth demand business assumptions an term automotive end XX%

Have of of adoption you changed landscape the how what's about competitive sensed cobots any the Thank there? or economics you think or change you. the around

Mark Jagiela

terms We to and Yes, think we've is It's get term it's no XXXX there. but 'XX XX% better years got would to growth, not to competitive make to going We've math, no XX% meaning long simply that three that year. ticket be in viable. change. range XXXX of that got another in that than

changed. three to we XX average for think we're be over years, will out we subsequent we term, think beyond year, that's north the kind rates range going group. And that. of with on the would But north years the So growth move nothing's it to improve of again, will it. back Longer be expect this

Toshiya Hari

XXish% to Can share in TAM follow your then XXXX market memory kind then for what XXXX? a you. seeing terms XXXX, that confirm of And if had you in was will? or I conservative That guys are you question And market. I it. down, Thank NAND as year-over-year and on growth the of for the in a on you up, seems memory thinking, think DRAM a Got What's test. basis. little relative pulling

Mark Jagiela

see. Well, let's

and So think all, share we're will roughly XXish% around share in we XXXX, share first be XX%. last year of XX%

surprised it market, $XXX be said million, we're wouldn't million. would if roughly market. long should thinking I about was $XXX term a Looking be bit be average the We've the to XXXX higher.

this to again it's at point But hard forecast.

year, terms that DRAM of came had XXXX. final market, in cracking wedge to The our this we participate in test the final that we of finally that Now a last yearlong about success test share in of fruition target talked in. was And the project in memory December. we didn't all

So market. going the XXXX serve into that sets to all four us up segments of

will to China be pretty continue aggressive.

share, think playing balloon what think I said, we snaps shares into our stay range XXs, back to a in that's the I to to that think call, expect XXXX. net the up XXXX. range But So share back last in and going we're as our that market, fall I in high DRAM XX% in now XX% XX% the

Toshiya Hari

Thank you.

Operator

Thank you.

Our question next comes Malik from Citi. with Atif

Atif Malik

us also Thanks win questions and strong results remind design taking and congratulations job industrial Korean to the Hi. for make winning LPDDRX the in on that my down auto you this at peak? prior is memory recovering to and my the Can test the as guide expectations good not makers. Mark is how year. first on demand much your a respect question from demand

on Semiconductor memory the follow your test my as profitability up, comment Then Sanjay, business? can Test business overall relative to of you your

Mark Jagiela

first question. please? it Can your get again, ask didn't I Atif. just sorry, you I'm

Atif Malik

far the I'm from prior is Mark, tech And Yes, peak? is, industrial your what asking how business and down then.. auto

Mark Jagiela

Got it. Thank you. Yes.

was and analog, range, Last by to year, in $XXX so $XXX million. So somewhere tends at about automotive it peak the million of $XXX million that expect million the to million $XXX down $XXX to we or $XXX it's market, around so million.

Sanjay Mehta

in profitability market. the similar the memory see And from SOC to margins we profitability the standpoint the

Atif Malik

Thank you.

Operator

Thank you.

CJ with from comes Evercore. question next Our Muse

CJ Muse

is outlook for much higher midpoint view prior versus DDRX X%. test overall Curious a seeing in complexity, that share on thanks based games of etcetera? the versus morning, test How you're 'XX. the just good on question. of And of and your new in gaming outlook that's console base on the some Yes, what your at off the taking of growth X% of

Sanjay Mehta

that's -- think here. CJ, I Yes, Sanjay

millimeter as I end devices, X the by as complexity midterm think sub you well said that and as in driven you both can we view share wave XG as that see gains. over growth really

XX% like tied [indiscernible] roughly more So, tied to I'd market the over to mid-term. it's say XX%

CJ Muse

And helpful. programmatic side, I on of the sequentially what that on opposed manufacturing IAA recovery help sends on signal as early to XX% how grew the much but own. mean, was of are its cyclical you Very to side? you, Curious, clearly then perhaps an indication that

Sanjay Mehta

QX think I you back generally UR as MiR seasonally over time. look a well high as if is on the quarter Well, front,

it than was So our of that's higher And encouraging. one guidance the of us drivers actually range. being

really call that in innings to an half, look standpoint. we as pattern a from those down first point IA recovery seeing in from seasonal into However, automotive industrials come the this perspective. early think our are it's I and we at And

CJ Muse

growing So, that MiR when what's in for you about of UR? the you're XX% plus the really business or that indication for is see an of underlying that assumption kind programs XXXX thinking

Sanjay Mehta

Yeah.

So UR I And and contributing obviously see both MiR in distribution. we are articulated. Mark said, as plus XX% growing growth to that the and we investing

little later growth. As both coming smaller plus quite But you XX% from in contributing know, see from to years bit we that a is MiR base. significantly is coming -- as a

Mark Jagiela

we seeing that the But see of sort UR general strong CJ, add to issues just, bit And performance a exposure higher you in has manufacturing did that The of just the that that fact to, see the would alluded gain. we on market. did sequential we're I I the bit. year-over-year automotive little and

in just rolling picking just payload And North America. a version April solution in last with product to actually new introduced the now ramp. that's going to bin XX out year starting We we're the kilogram be

North the the bottoming manufacturing products, America in indicators headwinds us. are new sector So strong, and Europe for strong in

so XX% good terms is performance think absent. headwinds it thing in in those that other We last China or last -- growth. was where the year I year, we of really grew And saw China, were in

that very So competitive it's a kind still showing in region UR of lens.

with products confident really we're of So this in the diminishing headwinds. sort new

CJ Muse

helpful. Very Thank you.

Operator

Thank you.

Our comes next Hosseini with question SIG. Mehdi from

Mehdi Hosseini

your Yes. Thanks mix, question. more look earning me side, outlook. take a a to But SOC. term want be at I the XXXX that's for And you longer on seems a it impression tam I most taking big for catalyst. broader above my would to I commentary the of of the target. wave could or slightly your XX-XX XXXX, that that just in also a likely at come for millimeter under If midpoint

a thought of you trying to this is think of the given term I'm about the XXX? to going on fluctuation longer of some the with different and So the change in see maybe especially parts kind out. as understand company, SOC market And best process, could outlook a earning, dynamics we just of annualized how case of play IA

Mark Jagiela

been nonvolatile we've stable years. some for blessed pretty test of with here Yeah, quite market number a

And certainly so could to our way down. a and see drop beyond, on XXX it's possible we

that. We haven't seen

here growing time. monotonically some been has quite for EPS Our

likely seem So there's still it doesn't eminent. volatility,

over as the going can changes be their into going and X as take device and a fundamentals bring So, of the here, the and are correction XX% like world. for in pretty few around these especially X test the been time, complexity something they're long no balloons. in XG to big antennas to occur. being I nanometer, with around and drivers are are us That going phones XG same to we've you know next such this where the both But, nanometers at what to years way going the industry, transceivers

that's we to don't you know trend as a we try projection, line So, what or plan we're believe. and -- on

Mehdi Hosseini

Thank you. being for And sincere. thanks

impact that like of millimeter test of the a networking. changes is that networking happen XXX to upgrade be the and a have follow-up, for on will I'm given as just out? basis versus cycle. AP see do wave, before XXX. the to cam would that laid phone there station the I base be wave And How picture Just SOC just there millimeter thinking itself will to the kind an is And station for the some you

Mark Jagiela

Yes.

test that point view, handsets more. of I matter a intensity will So from think

thing terms made the last So in year infrastructure period time. of in concentration incredible very of that was the short a

to year out out in to low of band a capacity sub-XG was built make one the tremendous So, to that, do or amount roll to China infrastructure happen. put that in

it's that it's that to have the sort be million, many the year. spread think it'll into more I not test at station wave's -- sub-XG. don't than level to million we base going pumped TAM last than marginally $XXX saw going But intensive going be Millimeter of over same $XXX years.

going shift, handsets millimeter sooner of on the optimistic And we coming reach supply it's be be capable. wave It money both let's domestic on U.S. think say, wave. to base point wave in need still stations to more little the XXXX. millimeter that side half this those XXXX or to the the that's specifically for that we're probably hand, may other And millimeter a -- Semi real a handset where deployment of Test. to of and is the LitePoint On tipping will we

the But bump if million to to we that market. back go $XXX SOC

going about thinking that handset be $XXX you're to plus is XXXX, If related. probably million of it's

Mehdi Hosseini

Thank and details. Got thanks much the so all for you it.

Operator

Thank you.

Krish from comes Cowen question next Co. Our with Sankar and

Krish Sankar

Hi, thanks question. taking have for them. of my X I

look on that thanks happen tandem AT lag as a millimeter Do on wave. test [ph] LitePoint Mark Do now think follow you think And millimeter the you side, that and had for opportunity LitePoint both at on First does well up color or lead dual as cobots. the have or the then I when SOC they wave you in side. you business?

Sanjay Mehta

Sanjay. is It Yes.

I think in they come opportunities. out similar

for I now right the millimeter is tester millimeter devices perspective, you're engineering you that. with in the lot and parallel SOC associated seeing there. do a LitePoint then device work think are wave what And of in testers test that on wave and out have what

And XXXX said we've it then say, XXXX. it we in and arguably comes when, as we comes before, believe waves and as

they'll on come the chip test guys them you'll see SOC mainly think similarly. be I of think but ahead, come Obviously, I the slightly will up. both

Mark Jagiela

LitePoint next going about the in more the there's to LitePoint's on we has us. few And And a encouraging years WiFi traditional test. haven't that's really thing that mentioned WiFi in connectivity lot I've one that been strength

That's been well now WiFi business. or rebranded what's So to X finally our going on as XXX.XXax connectivity propel phones.

X going -- XXX the retool X is XXX.XXbe install working this frequency to the XXxXX new standard that that tester gigahertz, for Then the and for MIMO, bandwidth. to on And to open That's then base band. is another up WiFi. new we're we're industry X band need gigahertz megahertz channel a

new requiring again, Once capacity. test

past the dormant years X see connectivity's been is years So when kind look going unlike shift. also the X retooling next of we connectivity significant to over where

Krish Sankar

I just for And on follow on Two a but you Where are do weeks, cobots? reduce part And Thank also question. the six time installation the helpful. And side cobot we up had you. you trying the very it. cobots? side. That's are reduction on partnership have it. to these redeem I update any think guys four to for three, on vision the Got

Sanjay Mehta

invest. an have follow where And investing. on as that, the deployments metrics but continue on to don't customer. as and specific at Yeah, alluded existing time. to the I around we're initial we to the I deployment, as continue think improvement deployment in I see earlier we improvement well

Mark Jagiela

vision. And

Sanjay Mehta

And question -- was to the second tied

Krish Sankar

Vision partnership.

Mark Jagiela

Vision partnerships.

Sanjay Mehta

we have are a partners UR that think yes, suppliers. We plus

Mark Jagiela

fielding kind Yeah, plus a system in in operating a think, embedded a a are of be we're partners of it variety reseller has embedded solution I vision we in that picking that system UR echo wide for. But bin our that already will system. there's our immediately

all of there. that usual. No as sort is business of trends So new real

Krish Sankar

you Thank appreciate it. guys. you, very much Thank it. Got

Operator

you. Thank

with Richard Baird. question comes next Eastman Our from

Richard Eastman

Good morning. Yes.

then -- there the margin think, XX%. going business Just a think the P&L or year? does well. I contribution of referenced in also, as that a their how gross 'XX nonprofit quick and industrial into how margin question I finished general. you the expectation was that does contribution, And automation forward around And And

line gross a XX% So there of there. gross curious there kind is I'm margin investment line as the a below margin held around kicked up

Sanjay Mehta

Yeah. It's Sanjay.

been think did next There's margin I expect that all. degradation expect And operating the to at I year. is comment is profit in our it that general in gross as should be. roughly no IA So We XX%. you'd

We -- plan we competitive to our towards improve investing about have as I position. our industrial the when it, I automation on fundamentally think and think business strategy significant growth.

the Mark said nascent in in market is this earlier as term, outlook and long believe unchanged. our We

you thinking profit single I tends say expect you about as it when kind let's our to at you'd in or growth we to us think or profit expect -- when expect model when plus, of slow. operating when That's start above growth XX% you should be digits. or

invest we we as double to that significant going to we're table into market digits. to to continue the you'd growth improve. profit then operating our expect and see as And the going to line. drive top off, But we the believe when see And the future, we're grow

Richard Eastman

where XX? on that you of do contribution do I of when there. go to still kicked XX%, pull Or So margin that that's been Is distribution or Because base? XX%? is and the to this to market the the side R&D -- XX% expansion costs have OpEx drop the XX kind writing up support where out you

Sanjay Mehta

say. Yeah, it's both I'd a of combination

I'd also our in Really, really of partners, But both. capability guidance. add we're in things XXXX that lead other investments But putting customers. our -- software management, is and The that go put scalability software point I there closure it's drive and our generation help where auto forward includes market. forecast system distribution fleet to and the the like to then to different solutions

Richard Eastman

just second And my Okay. as question. then

the I Semi business Test. Just the to we in about return want infrastructure XG Mark, something to talked

You China here. trying my referenced to bit the around little there a that the in market. is arms the the pausing I'm market and timetable get demand there there

Asian see of the the Just general. in numbers China continue fairly in deployment standpoint and around to some market base from station in production you aggressive

test ahead into to chip the reference content base demand production of that the were some place of is your them is the inventory just so And in the some stations? that of

Or the commentary do we and stations reconcile your deployment production around now? how the of base forecasts aggressive with pausing market about

Mark Jagiela

Yeah, said. that's exactly what you

of in stations, capacity the place. advance So, test silicon of goes base a deployments in of actual lot

So of is equipment out the utilization now those mad very test of why factories, like base out stations is high. which are churning

to of drive of in deployment require So bump it rate stations base test the will round an equipment. next additional

to to So need has for where China world. well, totally there's the in XXXX facilitate China do but probably of U.S., get Europe, not it is And, really rest the they enough as what China to sufficient. capacity to,

Richard Eastman

understand. I

Okay, great. you. Thank

Operator

you. Thank

with comes Sidney Ho Bank. Our Deutsche from next question

Sidney Ho

Great. Thanks.

was are years? different it be about than a make to more talk two factors quarter-over-quarter flat of that’s little second from XXXX QX. that the some quarter how years different XXXX. And you and You in revenue those add Can few it a color, ago what

Sanjay Mehta

Sanjay. it's Hi, Yeah.

SOC have and we'll significant had, drivers we've inside. some QX outside then in think, I So test of

significant one in decline first in in revenue storage HDD, is QX, The have system which level will QX. we'll for where a test, test

require I'd in you initial we in The leave got point QX. will some stages we've that Test, is QX still tooling moderating comment I'd share it's that last within gains of second that with The make Semi early is that some be QX.

So roughly up. it's we're end where going to we think

Sidney Ho

terms parts the Okay, in flat follow-up think do about in roughly guided is the that’s end tend called be different XXXX. to that moving the related of you And helpful. How that My SOC market? you driving year helpful? expect SOC this end XX%. color year? Any share Thanks. mix last your will think in do around test customer mix, that's shares market be product you these was to do it I how

Mark Jagiela

Yeah.

mid our that I year this in expectation likely share the to little our this year is the wins, customers would say we a UltraFLEXplus some remarks up plus is So design platform, of alluded into I bit a mix the bring the the combination in around year my will expect. what shift our of toward of four

Sidney Ho

thanks. Okay,

Operator

you. Thank

Mark Jagiela

Sherry, we have time for more just one question.

Operator

sounds Okay, great.

will Our A. from come Davidson. final Tom Diffely D. with question

Tom Diffely

components in little in semi, you how going that playing and more was about a I bit hoping particular talk the out? forward hi. see could Yes, you service

Mark Jagiela

where it's the service revenue. revenue up a will that vary as years And, for roughly million But that's for we much. us range, the XX% it been the strong semi very don't $XXX roughly around a percentage of has semi part portfolio, So expect its it runs into of of is.

Tom Diffely

the Okay, model. few view market you so increasing over your target a not get is years this that as into next to

Mark Jagiela

it'll Yeah, with system think revenue. scale I

growing area than those when businesses rate I automation industrial these in business. will think the no We're where that's companies having at an service a from we faster service acquire on side, line. service now the go top essentially

that a in be evolves years, but the over stay here consistent. few So should story it that next will semi

Tom Diffely

Okay, that's it. Thank you.

Mark Jagiela

apologize of for much look us forward and talking the And at ahead. Bye-bye. static for in front Alright, the you. I you we the joining weeks to you today. thank Thank days everybody, so the call. to end

Operator

you concludes Thank gentlemen, participation. this Ladies call. for and conference today's your

You may disconnect. now

Teradyne (TER) 23 Jan 202019 Q4 Earnings call transcript