TER - Earnings call 2 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the Q2 2021 Teradyne Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is not -- this conference call will resume -- I would now like to turn the conference over to your host, Mr. Andy Blanchard.

Andrew Blanchard

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

remarks, available details evening for we'll for opening was release our Following provide quarter second quarter of The results with containing quarter following the via our call XXXX's last be of along helpful may [ our slides on third ] that after outlook [ this page We're same of the issued the you the XXXX. press ]. second website the when the providing will Replays be Investor performance page of our ends. discussion. to call

Matters cause current encourage as you that recent that could Teradyne's statements [ harbor forward-looking to review results SEC most expectations. filings. We the differ today contained release we management's earnings will safe in ] the include from well that involve risk statement our factors to as discuss materially

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

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

now by Rosenblatt Securities, KeyBanc, call, between Teradyne and or hosted conferences expects and earnings ahead our next technology Deutsche Looking investor to participate industrial-focused in Citi. Bank

agenda. the on let's Now with get

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

Mark Jagiela

for Automation, half will year. second thanks on view morning, Industrial financial XXXX, then summarize us. both of comment quarter of details for update first guidance and our the and on Sanjay results half Good the the Test for I'll current and on the for and in our QX. quarter the second conditions and Today, our provide everyone, joining

saw we and demand grew as demand scarcity, in power long-term Test and improvement. unit labor drivers continue past Test, QX it's to our resiliency strong QX In groups productivity for the The the products. Automation demand and in in quarter. for in we've in substantially growth; accelerated Automation, discussed the device our The complexity need both Industrial it's

at and of grow from through EPS rate performance further, XXXX our compounded at the Opening saw XX%, company XX% level sales and a respectively. XXXX non-GAAP

the at of XX%, ahead For per sales vitality and with the at the share serve and our [ of this model. This operating the last demonstrates efficiency earnings first of running half of both that are ] non-GAAP we rate grew year, XX% markets compared year.

but all regions, particularly Significantly, recover Industrial North in demand Automation saw in major QX, in America. we

and result, QX, that our teams in operating is [ operated pace high As QX. production at and ] a ] a [ pace in increasing

For from our the XXXX to about IA XX% from business and about grow on track XXXX. is XX% year,

XXXX grew markets. Semi mobility with level. both Looking in closely and Test, from strength at of QX in SOC end particular segment QX shipments In compute the the XX%

For the XX%. first half, SOC sales grew

relied the segment For [ recent ], mobility where smartphone several in growth unit have the years time shipments are first helping in mostly as complexity years, on growth.

content also test per test exceed to of This about in the continues production will SOC. unit and auto-related strength market. to semi increased compute be seeing impact market test automobile, automobile than complexity is XXXX -- this IA expected is largest is be $XXX in million year, this that highest semi fact strong. level [indiscernible] subsegments A portion the We're XXXX. lower lower of equipment. the driving The and industrial Automotive, X [ despite and analog since ] the the are XXXX. demand

in Our XXXX, X%, shipments from led demand. tester memory of also QX by test grew flash up QX

X-month shipments year growth wafer the and demand both up solid This build-out in on and [ memory flash overall flash SSD smartphone growth for capacity China of For from period, reflects new of demand. last the XX% demand, significant were in the ] systems.

Looking with this at SOC and driver up the now we with in have xXX we our exposure to are those going to of be for market customer to the XXXX year, revising competitors. increasing incremental in strength that lower growth full Recall segments. much the again display of billion in billion markets range $X.X the GPU $X.X

see So our around we'll likely share SOC year. the for XX%

with test that level, the market share to the adoption about are is XXXX. expected our DDRX be I expected be year server this to out billion In into estimates about level. note $X our of at and ramp the broader applications the memory, macro for market will LPDDRX pushing of the XX% unchanged at and

a sales Test in with up Test and the Shifting half group, were XX% driving XXXX, recovery Test unit Production to our growth. Storage in our System Board demand the with strong first compared

For see the System XX% group -- XX% System grow group range. full the to Test the Test in we year,

QX XQ At XXXX. were up XX% LitePoint, over in sales

the While X is continued as Test X early and to is move improving in XG wave growth millimeter we demand through investments. WiFi the due WiFi the lower environment than expected, year Wireless

adoption LitePoint. addition, new for In growth ultra-wideband vector a adding is increasing,

grow in For the XX% year, LitePoint likely full the will range.

expanding bit of growth increase ] drove out pushing have half. pre-pandemic in in a last chain units week. markets XX% year XXXX, to to the little XX% combination group sales to first our range and Compared X up times are the about the half and lead The sales issues served [ on Supply with in first Industrial demand constrained XX%. major MiR QX Universal our up by Automation. of Robots across Moving tests

IA from with America sales in has fastest-growing recovered regions from The QX demand for major slowdown. over year's year. environment the last region XX% last up in most was

is quite see regions. in strong outlook Although year a recent in Asia major in where months, has all of we countries half our COVID second some the did the [indiscernible] spiked

expect XX% unchanged, continue will This Our to long-term range. the IA a XX% and we growth growth invest XX% from to in XXXX, annual XX% about likely to we this will enable growth of growth ] gross a we strategy and have an in customer year, shorten our long-term years. From continues XX% [ perspective, to times, experience. high-growth X% the margin served support are to engineering ] investment these programs increase during of and the deployment expanding margins, get we [ target improve market operating

and We they are capacity plus engage [ also to integrators UR as growing apps partners distributors, development support our customers. ] and MiRGo

expanding We sales integrate to our that products. into their OEMs are robots also our

I'd worldwide the success plug-and-play being into for is of Last long-standing Industrial a applications quarter, XXX,XXX we [ of to in applications of the Automation estimated line hundreds U.S. and deployed. application like welding range for an highlight UR+ Today, qualified the robots alone. the with noted with unfilled UR high-voltage jobs shortage welders of expanding ].There chronic [indiscernible]

and not customers While automated lower products auto traditional like volume served large higher solutions mix are manufacturing, with automation. exist by well for applications

The [ sensor ago. about for ] integration into needed with partners, integrating with this began the And of we serving our force a torque years X UR+ enabled market application. e-Series cobots precision this

our of to on sold During sales XXXX, this than cobots XXXX be applications tripling pace. [indiscernible] ]and our about [ global in time, X,XXX have are more X% welding grown

these applications platform, of we we growth industrial UR As expect vectors to had extend continue our high the traditional applications. to performance

We but call. details for platform, on a I'll save have future those similar market-expanding MiR initiatives in our play

importance, has a more investment, earnings a in and up, sales, the shortages in ROI margins gross enabling of the every productivity pervasiveness broadening all growth more the Longer of of it ] and another labor serve first test. The more term, markets fast application trend. Summing been strong demand and fab challenges robots industry ] is global complexity strong economy. ] we world year [ collaborative future in with showing and half of and driving aspect a growth electronics increasing [indiscernible]. [ and our Likewise, is capability [ are the lives [ ]

positioned ]. ourselves driving we continue in full while with IA plan as to Strategically, returns to our System Test [ potential [indiscernible] world-class [ and and ] make line

company to thrive markets to to as a shareholders. are additional While bring the change accelerating, we is customers our rate well in of and positioned and value

provide I'll now Sanjay ] turn color over the [ to financials. additional things to on

Sanjay Mehta

] morning, [ on our current I'll describe conditions details QX. ] Good QX for Mark. and our outlook results, everyone. business Today, comment you, [ provide Thank on

QX. to Now

planned. Gross operating with to was rate profit the XX%. quarter expenses. Non-GAAP [ were 'XX. was favorable XX.X%. quarter Non-GAAP ] plan was ] nonrecurring with QX respectively, quarter non-GAAP million, margins Second gross but $X.XXX the to and XX% billion EPS XX.X%, our from the sales XX%, compared [ of in tied non-GAAP below $X of in and increase high versus The $X.XX, XX.X% were of were the up $XXX guidance due margin million timing expenses mix our operating product some engineering

noted approximately with cost at our most margins driven by margin For term, we context, of would new test coupled the product April of this test they expected. now come These systems that driven were several volume, these XX.X% take the near which curve of introduction would have gross heightened the [ level XXXX, we quarters year gross and gross ]. introductions, as In several XXXX One shortages, to the key QX costs down XXXX. solutions [ continue by early impacting was in come margin COVID curve. in later, down in ] cost [indiscernible], have

in discrete second second higher of [ margin had which quarter, revenue expect to of year. XX% half of continue [indiscernible] line. margin We A items the XX.X% both one The of GAAP the the ]on yielding gross customer non-GAAP XXXX the basis. result excluding improvement contributed we margins in and component in leverage in quarter higher is over gross the will

XXXX. [ X% segments. XX% $XXX million, Memory revenue a by by prior SOC was revenue the driven at and sort was XX%, test was mobility, strength business from from and in QX automotive. ] driven $XX results up flash strength up perspective. industrial of in Test $XXX year, compute, flash million wafer Semi revenue million, unit up from Looking

$XX group Test Board and revenue Defense Storage & driven million was including in sales, XX% [ Test. System in HDD up of is This both million, and by million Production solutions; ] $XX Test had which Aerospace year-over-year. SLT $XXX

continued In ], densities revenue number LitePoint, [ to SLT ]. at band of HDD and year spokes to market increase Storage At WiFi continue $XX from Test, drive was robust remains ultra-wide the as -- and test XX% strength increases in prior SLT XX% devices [ million due up segments. of demand [indiscernible] was adopting and

to Now Industrial Automation.

U.S. provide million of 'XX you'll was and COVID April, regions XX% impact a market up QX all about North in [ quarter, I'll 'XX. contracting absolute Revenue revenue America did context in year-over-year full last revenue with 'XX tied to metrics represented with ] Industrial over highest growth. contributing results in Automation revenue QX so XX% year. Europe and expanded the we QX $XX with the XX% China the comparing year, and QX last given of in about 'XX, the QX revenue delivering both IA As have of over XX%.

sales QX, automated $XX and XX% and COVID UR $XX IA were had million our from from to longer-term XX% up over its as 'XX. outlook MiR disinfectant [ XX% XXXX. 'XX year-over-year ] robots on million, [indiscernible] MiR 'XX QX Recall, were brighten. up sales widely an in QX continues in were business in applications. The QX XX% deployed

job just mobile labor of and to market up one shortages UR opened and for robots. welders for with our many shortages. applications cobots, and has both fixed is new expect continued labor shortage that Mark long-term of the drive highlighted acute how a short-term but our We categories that new

year provide strategy solve [ shining developers industry-specific to disinfecting example a creative built is is our an of to solve ultraviolet platform filling problems. partner on open platform numerous solutions can labor our leverage to of last that The the shortages. agility ] Our networks

which support continued platforms R&D the investing our our plans. expanding solve of on even challenging solutions problems proliferation of and feedback to upon, customers to customers. to provide will We're high-value build in great marketing range partners an automated engineering, make resources Significantly, these for and development easier enable MiR development

target and our we of range our term, sum XX%. will profit portfolio. above group when the a operate Longer perspective, operating profit We rate we around ]. as end to and XXXX, moderates, the do revenue that IA IA From of profit growth operate similar expect the financial of low in expect operating expect the of over X% XX is IA of have Rule growth a to Test [ XX%

Shifting to supply.

constraints both along manufacturing supply in We continue our to through manage numerous and increased and material, with Test businesses. IA costs logistics

of closely For with ], IA, these some both products the delays. have working and the [ constraints customers in extended minimize Test supply impact we're to lead and our times

But issues we've cost this been able dealing reflected been not our expect impact through other which so has costs the the line-related We on and supply material. do leverage QX operating increase cost-saving in volumes these higher to P&L offset in measures, be are higher with with to year, forecasts. QX and

to balance and cash the flow. sheet Shifting

quarter and Our at X.X cash million cash repurchased shares for the free dividends, end respectively. of and $XXX.XX million totaled ] of million and marketable securities $X.XX quarter, $XXX of billion, share. the on [ buybacks at the million $XXX $XX million flow $XXX we've Year-to-date, an per price average in

value bondholders of was million, convertible already a million converted XXXX, end our ahead $XX million paid convertible Regarding face of maturity. the debt. have of of QX By a $XX.X August total outstanding. bondholders in to leaving will $XXX

points. quick Looking at model, I'd our operating to make X like

has years [ our operating today teens to the than to time. our margin the XX% XXs From low nearly expanded percent from ] today. First, and over mid-XXs from XX% to margin ago, [ our to gross low ] performance greater XX

on Second, model downside fixed where cost ] enables [ ], and business our (sic) is strong. creative to other variable flexible resiliency is which and the means shifts when costs appropriate compensation [ accretive [ manufacturing, ] outsourced business or variable contract through

in leverage our the the Third, evident operating in results. is model QX

Our the XXXX... to $X.XX Test line through through profit revenue in dropping per businesses are dollar over

Operator

Difficulty] [Technical

Sanjay Mehta

Thank you.

Andrew Blanchard

we're gentlemen, to Ladies a going and quick have transition.

Sanjay Mehta

-- to X Sanjay our looking I'll model. make back okay, to go I'll points. go like I'd it's operating at quick back again.

our to from XX% from has today. from to First, today XXs our the teens our XX performance nearly percent expanded and mid-XXs ago, margin greater to margin time low low to operating than years over XX% gross

business means, which and is through business resiliency when flexible our compensation variable strong. manufacturing, is Second, cost appropriate, model variable shifts the to where fixed downside or enables costs, other contract accretive on outsourced and

is results. leverage Third, the evident QX the model in our in operating

-- revenue businesses to our dollar are investments Test the R&D per invest in IA to business. increase to to our strengthen Teradyne and through both in line through and dropping to XXXX, our Our while Test support continue over even $X.XX portfolios. profit we enables This support continue Test

Rule product we and deeper portfolio. are IA, differentiation For achieving a while our XX IA distribution of in ecosystem building the

for our QX. Now outlook to

remains noted, strong. Mark As demand environment the business across the

issues. in $XXX the $XXX between Our positive to availability negative, that guidance assumes changes, non-GAAP are we said, With expected to materials of $X.XX that million of the with additional and $X.XX significant assumes no sales also range or in see QX in pandemic-related and and million be won't XXX EPS shares. million diluted

excludes of noncash on guidance acquired quarter debt. the interest amortization and convertible imputed Third intangibles

to margins third quarter at The to quarter operating are the XX% XX%. between XX% of to XX% of is run expected quarter our and Third at profit is non-GAAP sales. gross estimated be XX%. third guidance OpEx midpoint

Regarding OpEx for year. full the

described about QX, bit a year spent plan than we the planned we with full expect in we will While OpEx be lower the in line in April.

XXXX. on We'll track approximately the in We year. meet billion XX% complete update from cadence midterm our operating a after XXXX this expect detailed January to We on in that our up recognize to total be income this for QX $X model plan is about year. earnings expenses model XXXX regular or we're

In summary, are and drive investments delivering well, success. growth our extremely strong funding while earnings that performing businesses will revenue future the

half first Our grew was grew a XXXX, the record. EPS of which XX% sales above XX%, itself half non-GAAP first and

highest the deliver to QX profits history. expect We in sales and

have systems Our under conditions. employees delivered and the of a partners challenging around world production record number

display pipeline part Our successful. have schedule. powerful I'm It's kept new to been to our our teams of Teradyne moving an And proud on whatever this the be teamwork, teams and needed team. done support make impressive of engineering was have product customers

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

Andrew Blanchard

Thanks, technical questions. now Sanjay. thanks our for would issue we with everybody, there. Instructions] small like to Phyllis, take dealing some And [Operator

Operator

[Operator line Instructions] Stifel. Brian Your of with the first Chin question comes from

Brian Chin

to strong of to kick are half? the times your just but the December sort A the if couple off. in competitor this impacting be your any, second appears into current outlook building environment semiconductor curious to pattern Teradyne of Obviously, questions or quarter. extended what here. just discloses longer in backlog Maybe bookings, in degree, I'm ATE no shipment the things lead

So wondering if better-than-typical September. I backlog beyond have visibility you was

Sanjay Mehta

Yes.

still out. pushed obviously, So industrial our we're dealing based moving definitely have demand times times have very, with. But supply the I'd out, is lead environment been outstripping and auto lead chain supply. very say on tight

XXs to And so say, weeks be, out within the be, cases, has in what used to pushed to where weeks in the lead let's some X, a past time. X quarter to were of we in incremental in

from So to working we're with it. through guess, and we that, them customers, seeing, I have with bookings improved manage been our

Brian Chin

And then Mark. it. maybe for Got

increased how, on But kind more years. bigger market, think touched IDMs degree tailwind complexity could this incremental always been smartphone the hasn't and the are some what think across recent least meaningful maybe year? you in in test foundries a of do think -- to year, at what XXXX, of case you a next which intensity packaging I in be driver units I the

Mark Jagiela

question. of Yes, deployed that's life. into it's years we advanced that And in bundle several but good We a for been now complexity phones, technologies increasing. packaging already -- there's the side

and So trend incrementally putting get to much going beyond what a silicon above a is, multi-die there's it you on of is adder adds not that test a to of an thumb tests. single you drive And integrated of all continue would of trend of it multichip, how die. grow that's good were time but that rule if packaging and

Operator

of Atif with Your Malik Citi. next question the comes from line

Atif Malik

sounds market. improved your ago question mobility has weakness. millimeter have XX days on the a similar outlook versus year I despite the end side for like mobility It wave

for steps the in market the improve can taking into xXX confidence and if about next drivers. in you to your And highlight mobility helping. You share you're the you're talked about like areas staying talk test that elevated compute not strong, year? also display GPU units and you both Can intensity

Mark Jagiela

Yes.

very next positive. being of think which the the In time. manufacturers by adopted newer lithographies portends So transistors, test looking year all the widely into and phones, the complexity trends strong that for case more coming are I the are which mobility, silicon are online even of more portends

the year that, So glimpses point this next get, of like. year, for And at all silicon what look positive. early next in actually we looks into might the looking year,

been related but my lithography standards the the has trend compute little bit as go been -- on of a all only I the of required to is the delayed out in The at DDRX, higher that similarly, not it bandwidths have of pushed mentioned the as we But adoption interface those that LPDDRX remarks, processors coming a the early XXXX. with complexity have nodes, bit. in new and side, lower run to

are positive me X So complexity growth gives year. be that look going next of that those confidence at definitely driver is this things to strong I

penetrating that crack of is GPU or terms some hinge we a In shift PAMX is like interfaces discontinuity that's to said long-term a for endeavor technological like what to traditional xXX that be into. to the of on to share, us shift stalwarts before to DDRX going kind going

that play So over, one is years. episodic X and say, will X let's out to

the they the their grow the with market in the hyperscalers the products automobile people getting term. we're Amazons, the in to other as Googles, These position are on the Microsofts, coming -- the into about launch into the new of emerging that's complex creating manufacturers, front market Facebooks, shorter silicon. is talked we've focused On past, that and hyperscalers are them a the where

Atif Malik

customer XX yesterday. Great, smartphone biggest for indirect largest you, tightness very about your supply gone over impacting days for business? the sales and materials the maker the the your helpful. parts quarter in And Have September U.S. last worse phone constraints and talked Sanjay,

Sanjay Mehta

COVID. about and won't but increases, were are had all, environment. strategies, comment working Well, general any on speak fairly I will inventory through but particular first Last we good, working really year, customer, the through I of the in impact demand we of robust we

these did we of and You of there. go that components have testers, resiliency into improvements a thousands lot

until And the and we tighter, it the frankly, environment, And don't second today's half demand see say, today. accelerating. XXXX. really the environment would to forward has of fast I kept You up letting is

think working But seeing in through growth, of months than Southeast infection goes ago. really is increase with getting rates best in say, COVID, Asia, net can. a the I the I'd now managing I especially, as the say, chains So continued through we semiconductor believe And summation the industry and you're supply X tested. was, it tighter X, we're it's the industry then

Operator

with from SIG. Your next question the comes line Mehdi Hosseini of

Mehdi Hosseini

questions, Two the get I'm design. how trying sense a ASIC ARM-based of see TAM. you one to on

us could an or a for of tests tell perhaps is can how You test ARM-based we maybe app the or time looks like. can a like how compared SOC way sense an mix elaborate ASIC process that either chip as to you of demand give

or can quantitatively, test -- SOC either And great. on follow-up. have elaborate qualitatively can will a I if be So you ARM-based you

Mark Jagiela

Yes.

is our you ARM-based any today, So what's might times transistor our comparatively of map not of high-end product laptop, test kind count X driving most kind I say proportional in most to of the is to xXX have a guess of first different. thing are that those I'd count. that between phones, phones has processor, your computer. which test It's And the that's in equivalent a

at at applications, smartphone highest a time this anywhere from transistor not that or, are to end what's have smartphones. for test proportionately at would them, compute say, The point. on longer count, is market XX% perhaps And ARM above applications, coming new with associated the of processors XX% I the to

clip think side, side that on And and a faster with it so a is on count the traditional architecture the transistor is I generally running helps. bit ARM than scaling little speaking, transistor it's, if count, more the at

Mehdi Hosseini

Sure.

landscape give market? understand scaling SOC for And tester you application? can the rest versus better anything want Actually, we so ARM-based. of how or this specific to more. could some understand is SOC break us point, tracking with Would in number competitive to dig of has two, a I the So the this there bit the ARM-based at better follow-up you, is kind little just to do out

Mark Jagiela

to is compute I I application. there's, then break then to find a about either and they almost processors out Yes. way haven't thought ARM; and most of that what for are dual-use, is, go guess some because ARM; applications ARM mobility there's trying let's and into say,

it's maybe future, compute compute. And now a business can on ARM-based think the have at I perhaps the at way I both good to say revenue in to fair that. that market sort So characterize we for we for is you any number look our that have some and associated But don't Teradyne of that.

And about hyperscalers highly become which in in Those terms of of early the now. applications applications the the to year The points quite all If short But not that with are adder some what those market we confidential. the market. going market about as various these that of latch know for then XXX-plus And coming interesting because next a they'll products one that's are obviously, with coming coming to speculative latches. application, market. are term, to these see we're but I'm market, significant know adopters into unit working teams at most can in in whether to we ARM applications, market a we'll pretty are phone targeting, they're of about the million talk the design compute. are or to

Operator

with America. Your line next of question comes of from Bank Arya Vivek the

Vivek Arya

QX give could for of would in kind assumption is stand your today what us end is your in kind some visibility curious, it terms I of color you and what by the versus very was if how market for you be helpful. is usually? as that second half, QX And of

Sanjay Mehta

Sure.

little here, the way and And little in if that look surprised given So at us backlog, of I on my last a X of I'd we've customers say a the been QX, insight. positive tightness mainly years more more side. supply gives back providing bit it the bit

QX. have obviously, term, stronger QX However, in we in in near than visibility much the

And I'd say, incremental of do a bit little but so we -- have, visibility.

be the little IA down. believe question in components a strength color in see going -- but the Test a a Mark a the our cite strength. see U.S. regards see U.S. growth semiconductor. color that different coming I'll in are Obviously, to portfolio, volatile, very see we Semi really in as within with and Obviously, But in but we're China XXs what strong for to noted, in Europe. And our, PMIs It's we at really, in in industrials the are that seeing we the in trend some we your XXXX, as back. trend our in impact continued as demand, and we the And down. QX, COVID In well we really growth still is Europe in do see U.S.

perspective, growth a IA a expected and continued from in So then, test coming down bit.

Vivek Arya

applications margin Got driving it. Is on Mark, applications it more on these the it UR curious, of business. on evolve? applications you curious, And I gross I'm You So And But number then side, that. in Is this you the range. might what what you've rate maintaining customer? in to giving within And is customers? given can on X maintain is that same very top accretive the I'm are to your confidence do rate business. what's very expect business? today? side, how UR accretive? the be imagine I operating side, is a the strong gross are serving the And side, more growth you're a it the know strong it margin you the margin -- growth

Mark Jagiela

to no It's Yes. interesting as UR. what's because bullet the silver driving at growth there's

X% running talked quarter, nonexistent the Last also I mentioned about high-voltage about XX% that was year. essentially the So application from for XXXX. brand-new this at for going XX% application now ago. is in XXXX, X% script, about power lines up for that's this And for sales our X which years up welding, to sales I service nonexistent driving in be of we're application of revenue from applications around -- a example, servicing that that is

of markets XX% customers attributed years our growth in X with that new have we have to ago. already, didn't new applications So new we

tend to it's applications established growing as a driving be It's combination as chain, this. our applications the of that's like those automotive it's X well supply same. And markets industrial X So examples expanding top machine the applications But a to as be tending top these online. tend it's are that come electronic of at ones sales shrinking are new percentage pack. of the and as the they assembly frankly,

what strong, on to confidence application competitors, just they're And is continuing high-voltage or who ecosystem tending that the prosper. technology seeing. served. it numbers line fuel So as be these of going been maturing successful not growth point forward XX% is welding. all not can And to are platform, takes as gives of the to grow But kind economically me them more more our we've and to partners that and our is that the there of very developing solutions is be looking only and applications the activity

And of you us over set new XX%, confidence rates the growth a AI bring, let's gives features of will talk decade-long can there's at that yet horizon, enable about of, another to kind what these the It's whole expansion say, of look the when what market. XX%, XX%.

Operator

Your question from John the of with Suisse. next comes Pitzer Credit line

John Pitzer

which was it how strong of first half just maybe been the capacity year test run have half you the back over from a X how years, question half half years, tight sort you think is a the such how than first in quarter Did commentary than where greater stronger is? way has looked second fourth second kind first the trend, calendar market of prior the you over is, to X the if Mark, given last top environment ask another line perspective, go has second the half this and on has half. the broken way a business any that

Mark Jagiela

recent in bit of said, driven quarter always how surprised to as years and second And the student than the on bit right, be perfect half first. a strong history. we in have come been, fourth has the You're Sanjay higher a

So is you just today, the no say if thought what that is visibility of little stronger QX. couple the to a -- but in too. than years, kind in visibility last of for second, we'd as lack bit that's different the us than of And asked half we a QX first testament

But longer. that's before a the are As in that though, times not the visibility Sanjay piece because more could all upside lead than said, come visible. bit obviously, the, it's little is little a now

felt better probably it's X than now sort between X or now in we years, of feel what and QX that's happen might any October prior about So we but invisible.

John Pitzer

apologize, some poor was comments. And follow-on, you helpful. your wanted go a my during audio as to the little back prepared commentary to Mark, DDRX adoption. around quality That's I made I the then, of

were Is DDRX an guess, memory think it of can think is more it's I perhaps making relative share you And positioned to you start the for us you bit little importantly, that you when update test? point slower I you're to in does thought. correct? give than ramp how a

Mark Jagiela

the Yes. Yes, server fact, in that sorry has about the with applications. applications themselves similar the mobility audio quality. delayed. chips happened DDRX have a of impact bit as into But server the been testers. yes, things DDRX demand pushed out for LPDDRX We've in for seen going And

and around tailwind of of it's all DDRX XX% this that, the for earlier happen end position the toward despite when LPDDRX originally the as and next to going would estimates was from market, at the a share year. So think, unchanged thought year ramp we our be Teradyne, is

we're think tailwind So a well there, and I year. us that's next positioned for

Operator

next comes Evercore. the C.J. Your of with line from Muse question

Christopher Muse

the question, higher you taken hit were high higher first your Mark, guess, XX%? driver market again. what the range? if guess greater I of the range, share see Or I SOC contribution potentially there? the curious, be from the market And size would And end be what's test you've the still market of would to to we end driving could

Mark Jagiela

end towards to the would the gave I minus a of I market probably threw of number the that. if Certainly, at this our XX% higher? Would that go of X.X up Yes. a guide. is year. probably would revenue in expect share our number grow our high the -- range, size proportional our market much stay I at to midpoint roughly in or plus around point that number, share going market point goes

given comes share as from. prognosticate you to much And where year. multiple of hard one any can customer's sort know, it's in But too swing the points buying of share capacity about

And demand drive that could and customers so now. in see come one of right we our a don't

share could opaque just It's We to I that XX% serve And happened. moment. it. a at yes, guess up the if be capacity at have the little manufacturing we

Christopher Muse

few to you Okay. that follow-on a That's helpful. I question guess of a And questions the earlier. got

year. pushed to spoke tailwind DDRX next a now You to being

you the high-performance next a to spoken particularly for compute, non-xXX world as You've tailwind year. guys

is concern think could that and decline meaningfully year. guys customer for SOC that there the out you large one down I your would cause to be next

you about lead for world are up guess, supply your and you XXXX and into today customers times thinking as SOC how extended, have you're the for Teradyne? I So setting sit for here

Mark Jagiela

concern the of complexity But I our that expand. customer. portfolio, because to in growing specifically portfolio -- to the addition say add chips to not being developed the -- And customers of market, that more that's I'm is see, hyperscaler speak that, of existing customer. it would think continues going the growing bullish growth around top a I portends on let's what our are going by too Very a you to devices

into but sort be So I we're ups and now it a happened. a there's hasn't so think cliff decade just -- downs, of to or going this the and almost, concern, cataclysmic

I the I trend line line, continue. clear, think trend So and pretty is that think, will

Operator

Our next Goldman with line the from Sachs. Toshiya Hari question of comes

Toshiya Hari

I had question. X as guess C.J.'s somewhat I Mark, related to well.

SOC that I auto in is test to year of terms they're expect very mentioned the in curious about sustainability Just remarks, extending the times. market customers, How prepared million think we highest 'XX? kind lead with Near-term $XXX speak mark your you your complaining about that's market, are when demand into clearly since all now XXXX. there the this And thinking strong. exceed and you you of

is the how but guess I thinking the curious market. upside, you're bias about to that So

It seems And Test. SLT follow-up, question Storage and are then very HDD like as trending both a nicely. a on

than Curious the what up year last XXXX. think Xx was in I year full about business more business the thinking XXXX. you're

SLT HDD, that be super you would between If helpful. differentiate and can

Sanjay Mehta

here. Sanjay It's

So take them. a cut I'll at

seen plus about a bit far true $XXX an even or to this back or And last years, And manufacturing. coming weren't from lived I fundamentally, as call, year, fundamentally, auto a has And market XXXX. and for high. we've 'XX, really in minus as XXXX, industry, obviously, think a seen on So picked half just from so we've it's tremendous growth into million of perspective, was market size, and back in there around just-in-time auto commentary sales the has up. the demand yes,

seeing XXXX. replenishment continue. visibility just the see that outstripping a seeing so end until our system. And obviously, that And currently, demand lead supply. of significant good the we we're see, We And you're times. inventory of back is And the into the

we'll XXXX look are have half. interesting in in because take and the market at will what to is inventory XXXX first what levels be a the demand

bigger XXXX relative we're testing, to devices look an fueling will obviously, an And providing and but split from I go enabling it for than from a so storage larger demand. And it's HDD market color is was end-market we of a broadening to on the of If a little even. business kind in the that what growth that little was relatively business bit storage a this SLT HDD in the demand which XXXX. be is when the level business. perspective, continued and, opaque, seen SLT year I into being One segment a say, XXXX, around the other. seeing of perspective, And of little SLT But we've bit depend inventory adopted to I'd perspective, our a which tailwind, end XXXX from XXXX, back believe a and business. HDD

strong; ASICs very the But SLT So end-market increasing, -- is the tested is or HDD the the business is strong. being good SLT sorry, demand, really news. broadening which under of still very

So from it's growing shipments faster storage HDD than the perspective. a little a

Operator

comes line Arcuri Timothy of question UBS. from Your next with the

Timothy Arcuri

of SOC implies a share revenue in what and broadly, sort more QX, your Mark, had QX. and it for commentary, about the for company about what in I question total SOC year your for it implies

sort us So the pieces. different given of you've all

guided the wireless for guided on pieces the for You year and the systems us you you businesses. the gave year, Test

down just million That So in to at will mean big about look But somewhere QX, SOC you're be for it mystery. down $XXX That's QX. low that the goes million, not going in like what if for a QX in do to Xs. the I I year-over-year. number implies SOC implies $XXX roughly

first I question this And all that is my So you bullish have why you're quite the market. like would about that guess visibility? obviously, be given

would QX first SOC. so why be in So much? question my That's down

Mark Jagiela

them. have know not. portfolio those Yes. a numbers so margin it of of plus minus, say, if It's I a will or businesses, much or let's around down and be don't X% of all

probably simulation. probably think I a sure Carlo up So you the And you come -- the right what if math you that's I'm with. you Monte right, did middle, large go that creates down

have I and the as years October that in earlier, we QX more as it's that's where between year the looking we this drive of significant as turns product said come all can in of through end higher. way where stand year, that some a lines, through shipments. QX the typical, in others at now we'll into there's the that's a But book of unknown around past in And There's what business. while extends mentioned, backlog Sanjay point

fourth short on our customers. And sort request general, why on we've to, come the and responsive in the from then these of That's to we years in SOC enabled in to be capitalize the we've in front, quarter, talking back thought exceed what exceed very quarter even and the demand past we positioned July. our when were ourselves to in been guidance prior

don't that as likely than just a are having very It's given at we this point materializes what could second talking QX turn it in out we've just we was about, half larger as see most that the seen couple C.J. last of So customers in at, outcome. year, the the that and end well first. up, that the in years demand again hinting yet

time And a new launches in frame, it product that and for of preparing happens February the things in December the of like What quarter, it's in QX, happens, in episodic, years, phones too. couple lot occur past that.

testers And February, demand a in it that phone see shipments. introductions for don't could now, of rash so we and a support to December driving see again, although -- SOC we with

Timothy Arcuri

asking. be was Yes. expecting No, kind that's -- is revenue below total so I are it's I of why people for sort company implied the QX, what mean of to

$X for I TAM number, Test, $XXX And you So billion. mobility million. $XXX were billion, compute would you update so industrial, Auto, revised think the on before, like is million. I thinking you that Semi $X.X us segment? your think on before, gave talking anyway, just be can would just So be were you about

you compute us mostly revision side, the those on in is So of can sort numbers? the update

Mark Jagiela

about numbers up industrial the The is $XX up million. same. a for Auto million about million. up and compute couple hundred are Yes. $XX is of probably Mobility probably

Operator

next Your with line Cowen. of Sankar Krish the question from comes

Sreekrishnan Sankarnarayanan

earlier on or the the maybe for the thanks the And compute ARM different similar test than way. you in non-xXX a just the TAM had When or test bigger compute Mark, total the be TAM mobility a I then think question want I color market? ask test to do opportunity. And follow-up.

Mark Jagiela

than Bigger test. the mobility

ARM your when test ARM will is than TAM the So mobility TAM? compute be bigger test question the

Sreekrishnan Sankarnarayanan

or get maybe TAM test just you about mobility? compute compute is and think billion, total $X.X $X $X.X TAM bigger said mobility be the is do you or compute TAM When Yes, billion. billion about than the to non-xXX

Mark Jagiela

think X to don't the it's years. I going be X in or next

the think will category I ARM space likely mobility. hyperscalers by in developed of more the being fall of much the into what's

see mobility or the beyond years. in don't compute X growing I next So X

Sreekrishnan Sankarnarayanan

that on too it's cetera. is is auto you of If it. it? some segment more market, think Got hard it. it's that? color Mark, to microcontroller, $XXX the case, And that auto there you over said way test giving any million. Or et I'm then, guessing within Got includes the linear,

Mark Jagiela

most does more outstripped there's auto. -- would it say the that microcontrollers. too, microcontrollers is auto. growth -- Yes, Auto I growing auto in mostly of is is but include it's microcontrollers. course, and And of Microcontrollers auto than

say, say I things and auto like for that. mean when So white auto, microcontrollers, for let's versus microcontrollers goods I

Operator

of line question the comes Stanley. Morgan final Moore Joe from Your with

Joseph Moore

millimeter the primarily ask to expectation was about wanted one wave region. the commentary. in seemed customer It like I one

referring expectations, of are your So when of what to there? was you you say that kind short

Mark Jagiela

ground last probably customer, one pretty millimeter test XXXX. need test millimeter The grew XXXX. in not wave to spread XX% making of in to or proportionately And for incremental say XXXX. that it's related who's So the wave early a that X customers. tester the a Millimeter has region. was would We out across buying significantly. a millimeter for in And telecommunication one much X of wave had wave by us per the chipset ground I was using companies year deployment has halt halt. to Anybody a share Teradyne

Andrew Blanchard

those us so audio days folks, front Thank much the And thanks weeks call. in and directly in at We you. the concludes the today. ahead. the talking of look for the with here. joining back it. difficulties end Okay, We you That queue, apologize to for to you I'll forward get

Operator

concludes conference. for today's day. Ladies participation, Thank and gentlemen, this wonderful you your a and have

may disconnect. all You

Teradyne (TER) 28 Jul 212021 Q2 Earnings call transcript