TER - Earnings call transcript Q4 2021

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Operator

Good day, and thank you for standing by. Welcome to the Fourth Quarter and Full Year Teradyne Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. now today, hand of Andy would to conference Investor I host your Blanchard, Instructions] like the to over Relations. [Operator Vice President ahead. go Please,

Andy Blanchard

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

the containing for fourth full helpful year, release along Following our details fourth following provide will matters we The management's encourage and could materially statement we'll our earnings this release, quarter the of our XXXX. our review call will discussion. SEC page current in as forward-looking may be was quarter evening. recent include cause in outlook the the results opening differ the remarks, performance We first of the Safe be for available on website risk after ends. that you discuss issued XXXX's providing as Teradyne's We're that quarter with of most the call via factors our press today from of that Replays well expectations. to last page the involve Investor statements slides to that contained to results The filings. you Harbor same

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

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

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

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

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

Mark Jagiela

Good summarize plans. and and Sanjay call quarter updated allocation and and thanks today, I'll early full morning On comment the then will year view details XXXX. us. financial then our fourth our model [ph] earnings the XXXX's our review capital on for provide joining and of

XXXX largest growth UltraFLEX contributing and XX% to the with of broad-based analog sales sectors, to X-nanometer year the another of in the grew to production pushed our we performance first IA in growth We XX%, XX%, we Teradyne, growth businesses. Test family sorry, Recapping believe in compute the serving SemiTest -- growing half, that XXXX's earnings minute. non-GAAP the full growth strong, overall finished market, likely While jump test More be modest XXXX. earnings to be and year a will into XX% and was is solid growth to sales sales impacted expansion bringing a respectively. growth year as on XXXX. XX%. complexity our and for the our Eagle sector SOC forecast sales will GAAP decline automotive by sales, as result sales product industrial nearly and lines across about to the to

The For in XXXX XX% which with at XXXX, flat XXXX, up was we SOC $X.X about about our market $X market share the estimate at billion, from $X.X puts for the was year. approximately XXXX billion billion. market about in memory

our shine as DDRX and and ramps segment, the we're in reinforcing in the to LPDDRX NAND continues position family the beyond. in industry and for prepares DRAM Magnum XXXX Our segment,

nearly about is with this and test a to about LitePoint's at insatiable. for that trend people everything, materials and well XX%. XX% LitePoint connecting great year, demand wireless remains is Our business XXXX. The share just products from growing had global tracking, machines, X, standards. with unabated, which in Whether the with continues rate of range ultra change and testing XG technology our or is XE wideband wireless for the other and of location of numerous networking tracking standards, WiFi great simplify expanding business. in cellular with aligned

Moving up XXXX. from business. to UR, our XX% At sales Industrial were Automation

expand the We and certified machine more tending continue partners apps. with the XXX of of apps number popular and palletizing most plug-and-play assembly, available than UR+ to the among

X,XXX of reach new strength large. hundreds XXXX the MiRXXX, now MiR more of of robot applications, also than as AMRs management At saw growing than faster year at those to We notable MiR, markets, of on software play X% to the beyond advanced into grows. units, full example of fleet of with the the partners. XX% than more a It's Welding potential from UR kilogram XX% finished We installed that sales year expansion continue broaden amplified often large the also AMRs. size Xx OEM XXXX our our fleet levels. with the with account and existing this we exceptional deploy XXX for higher last growth is our with out sales, with applications account welding sales. payload the base value nearly year is grew One above where

drivers Looking Automation in power ahead long-term growth strong. the that our are to XXXX, Industrial Test and

you hear XXXX Sanjay, in from as our growth will higher earnings sales and for updated expected profits an both fact, model In reflects areas.

XX% shift IA as pushed see to is X-nanometer to during contracting the our expect we SOC we to while XXXX, likely growth, production volume power our with business plus in business XXXX. year the However along

can this in the we to our see in ramp of XQ You summer as usually begin effect beginnings of see March. some guidance our

effects our period as We our to similar for tooling expect peak largest market. show it's XQ usually

impact don't XX% into second to we a half. We expect sales extend result, As are half modeling to first the of this down XX%.

we SOC to to again Overall, $X.X investments to $X packaging. billion. memory growth demand to X-nanometer, XXXX test. and to gate-all-around XXXX size as billion similar approximately advanced to Shifting accelerate see related for begin to expect at in XXXX the we the expect be We in complexity market

a midpoint billion that's similar to with We million range in XXXX expect to the market in to $XXX the XXXX. be $X.X

driven expected and expect of Test we we X Storage XXXX after with Automation. to Test high Shifting Test year combined expect and be the In ramp. in at but product server be flat market applications about XXXX at Test adoption a we'll will We headwind the DRAM years be our our line, as share we by XX% growth weighted for System XXXX. shift Test, significant DDRX spending gap, would maintain softening System Industrial is popularity. In be Magnum grows past, digestion revenue expect to DRAM Wireless slightly. sales that LitePoint, Test spending will in with Wireless tester as expect however in for toward so to to the fill EPIC expands LPDDRX a DRAM about us, a from

Our business than outlook ever. is brighter

drive The Sanjay As environment exploit a rate the I the robots is quality all helping to shortages, it collaborative robots front markets of our with worker The of last capacity fullest. us we've investing and to favorable safer and the call, and noted for in drive IA growth our and relentless long-term operations, in mobile segment of level, At higher under production immense, closer end increased the X%. demand. is are opportunity to autonomous XXXX key us we of that OEM for Expanding to is will movement penetration strategy. welding revenue the bearing make to in of in economic both expanding and investments relationships key part made market. the grow flight. will is this have served and success our more markets fruit, in Like several is One example long-term we is others a initiative e-commerce. short- rate off and we've and in than both point the our expect position XXXX. but modeling provide is details, continue sales the long-term XX% to

AI, uses platform grippers warehouse partners, high-volume brands. our and to consumer UR of Robotics, on Nimble operations clever our goods software unique national numerous One for pick and cobot

article with in action. recent Their automated retrieval widely photos of have Street solution, Wall e-commerce. and seen You innovative goods in the to complete systems storage used robot, Journal may the dubbed complements solution

are cobot executes for the this of natural Our ambitious million XX plan have an growth use products durability over as been XXX,XXX date to application. Well Nimble e-commerce items and across picked unique in ease space. a

cobots high-quality example. driver added competitiveness to on tasks. has reshoring and of to is to high-value growth Pantech, local maker good to in allow manufacturing ceramics IA improve growing They've focus been of the Another automation the high-volume Finnish of craftspeople UR of skilled of a a use production. support

cobots demanding at XX%, as UR physically impressive such year another and was at glazing XXXX do rate respectively. summarize, and XX% To the grown caps and sales ones, of repetitive of stretch Teradyne and earnings ceramics. where and While a compounded have five-year finishing growth of a non-GAAP

managed we've the before, trend we've said business model. line a As to

market In drivers. growth and with investment increasing reflecting XXXX lines the projections the will likely and expect we our market hockey below. to above XXXX below. XXXX XXXX way, sticks. updated Test, in trend the model a patterns performance not and earnings semiconductor business. shows trend confidence in trends automation our Our dynamics. correlated part These They some are consistent above other trend improved are past years were perform Along are while in our will line swings of line years, years customer year-to-year buying These be

this outsourced designed complexity us the gross leverage than ever. of to volume our margins semiconductors good stronger growth dynamic. market improving model business Our absorb give and propels and within efficiently manufacturing underlying with test increasing these test and Also, is is dynamics. The that in

of should Sanjay? All back Our and sales both details. macro well dynamics earnings. to that, trends turn Automation portfolio growth and is net to I Industrial growth. positioned it more mid-term out for against Sanjay to over attractive high With these

Sanjay Mehta

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

mid-term Looking forward, outlook our our capital update I'll and our plans. earnings provide model QX and allocation

the product Automation from XE year year-over-year, plan at test board XX% XX% of up revenue higher System and in XX% million, apps in test demand the on last had Revenues million, $XXX revenue and XX.X%, volume QX. LitePoint and on Test of defense with and was was and by both $XX SOC the MiR. year-ago a profit EPS million WiFi across $X.XX.Semi higher quarter-over-quarter non-GAAP strong flash UR margins revenue $XXX to mix. Industrial Storage on of memory. gross were operating fourth X in speed processor strong aerospace. Now revenue from to notable early up million WiFi up due $XXX was million group of Non-GAAP period and Test we driven and demand XX% of Test and test over were and of lower $XXX down of delivered for and RF and sales demand. quarter

generated excluding to was tax You'll XX.X% discrete quarter quarter. million expenses items and operating non-GAAP The million We in $XX million our were third the non-GAAP to investments. XX.XX%. ongoing from fourth on in $XXX quarter, basis was the rate, a the see primarily up automation industrial $XXX cash for free due GAAP

on XX.XX% securities and the GAAP ended billion. For basis cash a was it a full and XX.X% on with of marketable year basis. year, $X.X We non-GAAP the

to-date, Regarding been debt bond $XXX and million redeemed convertible early our has of repaid.

a of have $XXX We value face million. remaining

XXXX. $X.X over free for while revenue through full million grew XXXX. up cash Non-GAAP XXXX. drove of and were million or $XXX returned Test the year was repurchases IA approximately Teradyne growth. share Turning and and a million XXXX XX%, in was million XX% $XXX Gross billion in The results the indirectly of to $XXX the revenues EPS XXXX. that respectively, generated margins from increase profit one $XX our dividends. XX% $X.XX, growth in of $XXX year-over-year. directly XX%, year We was our XX.X% or XX.X% from in operating We of of delivered and million portfolio, customer XX% had

growth. Looking the at more revenue of XXXX components closely

memory, included year and SOC compute, As the sales, System strength but $XXX growth outlined, $XXX in All XX% sales to group is an XXXX, in long-term market growth grew subsegments a is impressive industrial that of in has was drivers with WiFi and XXXX. also of demand XXXX segments, to impact the technology Growth UR Sales expect as X managed under were million, constraints or Test above in level. million WiFi $XXX increased million, In In we systems $XXX XX% early for on while to million XXXX. drove XX% and at reposition sustainable million, up applications million, from XXXX in an revenue in notable at XXXX, path. XXXX. and XXXX. to without In million ramp to XX% and in as new UWB Test XXXX's in XXXX delivering AutoGuide up fifth grown $XXX test MiR XX% for MiR for on numerous we trajectory sales. up It's UR Storage grew System on LitePoint $XX consecutive the revenues XX% since market XE, grew production automotive moving a particular $XXX In X%. to $XXX engineering long-term material expansion. with grew that we XXXX million test Test this continue NAND sales Mark emerge. grew markets. from its $X growth UWB CAGR revenues million. through XX% growth supply all largest the were growth. penetration increase $XXX million, from million the $XXX IA

become We expect those guidance. they timing in half may that the our more constraints of and considered some of to severe in the impact shipments expect XXXX. We've first

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

a interest non-cash quarter amortization the First debt. excludes guidance and acquired intangibles convertible imputed on the of

estimated XX% rate are XX.X%, first non-GAAP operating sales. of midpoint the of at at and guidance quarter XX% quarter is XX%. margins gross OpEx quarter to XX.X% first profit first our at quarter The First

Looking at XXXX.

is XXXX half levels. be will quarters than be XX% and from sales Our with company QX first lower about XXXX. in XXXX outlook the to second QX felt down This expected first

likely long-term for investment majority year and all targeted growth. coming our of OpEx support ease with this model XXXX. in capabilities, our model The strengthen go-to-market earnings and is robot will to to product in incremental at R&D in the of OpEx growth to broaden use, XX% is put improve above XXXX. OpEx lines before XXXX sales plans IA. of our of XX% growth in OpEx the our Regarding back expected This

to expenditures. Turning capital

CapEx expect $XXX to We be million. approximately

and XX% based GAAP laws. estimated tax For current on our rate XXXX, non-GAAP is at tax

our earnings to Moving model.

XX% and margin increase a at point $X.X on growth XX%, current tax at to prior and leverage non-GAAP sales will billion to expected and from of to the basis will is We mix operating estimated expect $X to margin test Gross EPS higher is IA decline model. The and to and XXXX based will revenue assumes drive product of revenue. XX%. OpEx our non-GAAP midpoint operating company to XXX model percent a XX% model from as XX% be laws. the XX%, updated

in new is line shown performance. slide, on supporting the the the As model with trend line

the businesses. a provide we've With of strength earnings me early our color. XXXX $X.XX, let EPS Now little model XXXX our non-GAAP test achieved previous of three years on

swings $X XXXX process billion. be we approximately 'XX, unit growth businesses transistor by high technologies was yield an size steady illustrated driven our we we along long-term gate As our versus but transition of when with trends. increased growth the IA, for and test revenues at past, XXXX the complexity and the evaluate grow growth. through times. XX% SemiTest, both XX% that longer collection relative size revenue rates the growth expect earlier X-nanometer average baseline, In In in test we've line consider to year. and When the in done and occur as grow projections. the ATE single-digit building device and our The we to point past and in approximately IA on in complexity are and all-round model, increase absolute increases, earnings as the average trend average the data significant that expect of X% revenue test baseline models, densities, semiconductor Therefore, taking year-on-year to XXXX our market use XXXX, learning across Both we test our billion. From market model. from to demand to XXXX. recent compounded a drive will and will 'XX at both be growth complexity XX% The terms by for any specific in and higher is $X looking will

the CapEx demand. Our assumes WFE market being earnings semiconductor test is leading is ATE put continued capacity model service a indicator place and in growth in market, we end to future believe favorable trends. This of

data and and growth solutions AI a the First, solutions past. The ARM-based cadence include applications both in the of from market the for than edge benefiting with xXX in higher-performing the hyperscale is center new solutions devices faster compute. along compute ARM at

automotive are complexity elevated Second, growth Increases higher chips market per the and pushing car. driving and and to autonomous level. of a electric in number has

applications Third, expected broaden. digitalization the as of economically market operate IA, range continues continue robots industrial the attacking X%, we're at continues of higher expand. analog end they to remains is sustainable below The In a level to and to of industry attractive serve and opportunity. to the growth an mobile market penetration long-term autonomous while cobots

low IA markets lean of in strategy, investments. balanced Our To number point but this of range. in In moderate We'll to growth growth per operating margins and $X.XX industry the does, we expect verticals. in reinforce higher strategy We'll the we penetration expect allocation. XX% in dial strategy. year, applications our growth This expect grow continue by X% we the OpEx We our we’ll end the to position. of the Shifting drive it to XXXX. margin drive business is enable new existing to the the capital to invest XX%. towards midterm, back XXXX, OpEx future to the we'll rate with a quarterly operate share we'll operate competitive dividend above don't in new to our to XX% and increase at while operating into target if our the XX%, continue and X%

summary, year earnings. XXXX, minimum reflecting and share sales shares million for XXXX was our in price Regarding we million and operating repurchases, record bought XXXX, $XXX.XX. $XXX repurchases. average of In million markets model of an the X for we confidence a we In of our our $XXX In at back serve. a end expect

customer The business extraordinary needs challenging of in changing constantly a results environment. collection pandemic-induced demand constraints balancing amidst success in global and Our a impressive. was deliver team's continued team to

As outlook. to look our strong that long-term remain we've in model and ahead, updated growth we earning markets trends end reflect our

XXXX the our that, be lines, we're long-term confident Andy. I'll to and turn below in long-term the them. and thrive our ability While expect will back With revenue markets in we trends growth trend earnings to in things

Andy Blanchard

like Thanks, Thank questions. Sanjay. you. Michelle, Instruction] take we'd to some [Operator now

Operator

Hosseini And from [Operator comes question with Mehdi line the Instructions] of first our SIG.

open. is go ahead. line Please Your

Mehdi Hosseini

for Thanks my question. Yes. taking

you it think it if detail give great customer. be would more as us your some I relates to could largest

you understand given customer to what XXXX, push make but been your in not is period. go XXXX on particular six for think but has two-year I I X-nanometer, seems which the suggest unit that and again, I known insightful, out commentary back can for comment and for Your digestion for for if shipment a enough. and in XX% that I was guide follow-up. like on we up and said to we're expectation two-year digestion I X-nanometer, contribution months, have a you wondering And just am that's it higher

Mark Jagiela

Mehdi. Sure,

divulge because Of not customer course, appropriate, about I'm you be that too but additional going to wouldn't color. some give our specific much I'll

a So portion their outside which first all. down sort Last tremendous we digestion that our brought of growth year, concentration, of of of I low below XXs year call XX%. period, wouldn't from had last the revenue

has drove a versus -- growth So -- that whether this digestion. to is variety such unit something things that The it them phenomena due attribute growth bit it's of to complexity been we volume. elsewhere as year really a in down

But we've year, is it that, as will because, here too comment in news bit the for peaks quarter information. gets half be there a that in proprietary we It to best tooling about don't fall the new ramp into the usually But March. quantified indicated, products. we've significant of have and first the in And half launch to little is of the again, that some want don't I which typically, tooling second a July. as dribbles think second I we pretty the starts see. into of can much the reduction we latest big

we'll So where impact. the feel that's

Mehdi Hosseini

between you're continued automated IA. just And end. Perhaps in OpEx on or and investment is and margin ROIC And XXXX, Thank test. to low give Sanjay in difference us that the some make longer-term mentioned Got could at for at it. the other the maybe operating some follow-up that you quick perhaps us about the a help And on that investment target you. X% attractive IA at can a IA making? metrics would better ROIC think color

Sanjay Mehta

Yes.

So hi, it's Mehdi, Sanjay.

latter the think I first. of So part question the

within in board to is, a the to and mid-term, capture starts are the grow in is moving the we I at XX% As market the market starts slow competitive and our comment is continue invest we to to the perspective, At our broaden above over fundamentally, market slow investment. that with to than less X%, growth. XX% with of point to growth going comment of ROIC will market in another point engineering when leverage see moderating see don't the across continue we the growth -- mid-term revenue we more portfolio, segment considered penetration to go the and are the some continue that will corporate the advantage, we ROIC and time when that our towards future, profitability in haven't From average. to lower margins gross driving share. to the or market on to that go the

growth are when starts really start to starts moderate, the to to that we'll fundamentally, revenue return capture we the leaning But invested on So, OpEx to moderate. higher capital market. into

Mehdi Hosseini

you. Thank

Operator

question the line And our comes Credit you. of John Pitzer next from Suisse. with Thank

Please is line ahead. go Your open.

John Pitzer

growth the that guided SOC same about this flat. to it's XXXX. overnight, of Mark, because be good and morning year market their to bit always trying I for But Thanks of my I little just view have XX% for -- compare guys. starting you Yes, the can think they up ask reported rate night, I'm different. questions. off a versus last and letting think Advantest yours kind it's me dangerous of points

And customer, is market your view square guess, your So, the how as to circle square you should guess I you the outside concentration? whether your circle relative year? to I'm not trends just SOC conservative, see I guidance or do for largest this as particularly the customer way look I if the or trying just being you

Mark Jagiela

those good a I numbers, saw it's too. Yes, question.

there's cited you I that phenomenas two think going on.

them we to annual our what them. bit in concentration year size of doing largest is the I than are fact think lower terms probably that to is of this is guide. a opaque the Part that market somewhat due

that's a in that the their market, not that's in And so you And this do market the probably numbers. I is the expect. of concentration look there high what if factor is of excluding at we think growth year rest ours,

So, it's -- probably almost probably XX/XX that difference. gets the

John Pitzer

then to And going business. Sanjay, on helpful. the That's just back Mehdi's IA question

I have is business? revenue kind rate is is of can that level op out drive build in operating expect level the in margin. curious, some that sort you a over, growing, a IA this out there the scale or growth faster to guys revenue there hitting we channels? in of a think take natural to some that's see the you I'm time more that business leverage you just I of of to you're where But expect to just going would future

Sanjay Mehta

Yes. But in to engineering I'd the play about And reducing significantly. we're those building we mid-term, different of to grow those really implementation going revenues and into time the we our fixed the that both different as in model, ask -- within in verticals, grow. can friction product, get reducing if as verticals fixed applications of how are capability think we Sure, leverage. -- are verticals a on bit little you our to that gain out of costs seeing over certain the

R&D see a are some as the But quick there earlier, will plan the I scale portfolio, mid-term, different investments. is to is as the implementation So, wanted friction -- that in is, reducing But we and of point we I invest just territories significant really seeing and go-to-market to the scaling continue said portion the segments. in and to of answer different that broadening in and go-to-market we tied reinforce continue well in come as in. that to

John Pitzer

guys. Thanks

Operator

America. with from Arya Bank And line you. question our of next of Vivek Thank the comes

Please ahead. open. line is Your go

Vivek Arya

Thanks for question. taking my

X in much nanometers function change of from you XXXX, how first just X-nanometers And or For is intensity X step around? intensity to it complexity, to move and test and whichever how XXXX? around? XXXX Mark, from XXXX nanometers way much does as all X, and this there then So flat change conceptually, my does one, want quantify get X a stays from a to is all get growth curious, to it, I'm you X-nanometers test or in

Mark Jagiela

couple There's industry, you you the way just look the node. faster and look two ATE node economic at history into a our transition in it revenue at When see would bit. a Okay. see than, market, can of ways grows the say, we look little years to a it. major Maybe at that tester can a the market let's

against at count, this the earnings years above to tend of big those times, it And trend nodes means sort is to time. for correlate Certain look over more a couple line jump big the last new you testers. trends if economically, normalized new economically, the you the transistor enable get means published business. with deck test But a is a of when part drives our what and nodes the the So volume. that transistors shows years transistor a in in count line, -- of trend that revenue More more new and node or can takes see reach that the introduced. to charts we jump its

will year. it's maybe of ramp it XX%, minus maybe first like grow XX%. year, next to somewhere revenue or continue plus closer will to that. So it's Maybe XX% let's represent say, In X-nanometer semiconductor year in X-nanometer to of around something maybe XXXX, the XX%, and next production, it will XX%,

from X-nanometer of stream. its contribution overall couple revenue of benefit to years a in see we'll the So it as grows

Vivek Arya

evolves Got it. it And And how XG unit and to we XXXX, what about content current my a curious, modems? a follow-up, is your should from how from perspective? exposure for both think I'm

Mark Jagiela

Modems for their strong are starting own build and us. more phone changing there modems. are area because are cell more a manufacturers to dynamics The a bit

trend positive share the And us our of building that's there's newcomers relative the that for been say, suppliers below let's the market. modems market. their that at was have disaggregation our established share share average disaggregated So the are we by of position And a a higher. and is large, modems at, because own in

look positive. a as we at So that

Vivek Arya

XXXX would be And in or your is that that contemplated incremental? outlook,

Mark Jagiela

yes. It is complemented,

Vivek Arya

Okay. you. Thank

Operator

next UBS. comes you. with And the our line question Arcuri from Timothy of Thank

line is open. Please Your go ahead.

Timothy Arcuri

I'm is then all autos of and TAM mobility lot. the wondering, can and compute assume in you Thanks if sense market also, and And those different SOC Hi. a can XXXX break the give kind industrial us you you like segments, some $X.X ask be down Mark, you you into things? the follow-up billion of and it's mix to is, going flat. shifting And hard it XXXX? I'm would then as which believe well. a market talk But how just if had the would I you in that the about a you can flat, follow-up, see to assume

Mark Jagiela

I'll to the $X.X them an you for course, the $X.X we estimates matter. compute we market, XXXX see last a give today. as segments that And, this was XXXX billion. these by market, think and and grow But numbers about about of Okay. we ATE year going for think to kind that's as example, currently the year of are billion

MCU, $XXX come that our compute Mobility segment. probably, We million million. growth to And will concentrated $XXX business was $XXX of Automotive think the million. at down due about and Industrials maybe billion. million $XXX billion. So to we $XXX year that will million from to area. year-over-year. $X.X then flat to last $X about Much in there's think, billion the down grow $X.X is service is slightly

Timothy Arcuri

Got it.

market SOC you I test the having the I have you're just I for the this true those to the ratio relationship, And seeing non-memory is But market size guess, once to $X.X of we've anywhere mean, -- TAM installed this the of are you tools WFE Okay. some year close maybe going compare size. billion industry -- a in suppliers seen mean, installed, TAM the years, I every question $XX what you're tools Thanks. But billion, get TAM because on I low. hold year. the you to to $XX tester XX have it WFE to mean size a doesn't chips. then, of SOC of those only billion some and if whatnot. a compare to between And the followed had that SOC non-memory, WFE like is never to And get non-memory and struggling if

just either be So that? sort you this or year look say it hard believe higher, that Can would talk that ratio the sort has but it that to of low. of you gets be the installed it that as you next year. guys number stuff those up about I make a that seems to at would just know Thanks. numbers, lot

Mark Jagiela

a taking absolutely to bring You're And up bring taken a what the right. kind X-nanometer kind up into is it's is you hinted of it's reason stretching time to new it We're than the node. three-year at, is longer traditionally window. of

of So have -- the way, lot in tools, a by the tool the place. put been

put ramp, in been getting the incrementally recipe cycle lot a is for wafers than bit the the themselves recipe, are whole supply, them through crank the tuning the then have switch constrained Once the of mass for wafers the longer. on, time node. turns a cycle production place, process it's to prior -- but Some and it ready longer by little but

throughput. there So a is

X-nanometer to talk So because we a midterm impact it's all this so XXXX. XXXX. didn't we've is that about the of this of that is and And kind support -- too, a for model significantly thing unfortunate technology has bow-wave in ago, it ratios it look new -- compared our going why is to make moves all equipment of way. coming year carefully, this only increased earnings you our at But the of to the

Timothy Arcuri

it. Got

Thanks, Mark. Okay.

Operator

our And the line question next with from Atif Malik Citi. of you. comes Thank

Please open. ahead. is line Your go

Atif Malik

how Yes. Thanks portion you have next to should for spending, almost taking follow-up no think exposure and question the question. a about mean, very WFE Mark, low we very as a which year, your is growth? about the to big or a xXX-related year that I mean, a of compute, test this I when I can government for given things WFE relation, driver prior heterogeneous ton lot then those what like the if a because of there become talk packaging attach spending don't about meaningful think and they're you breaks advanced that probably of correlation you about whatnot. markets? and exposure spending end have test and down rates a And from Tim's

Mark Jagiela

Yes.

market Teradyne's business tooling. and -- in the world are quite customers XXXX whereas growth who because let's example, Teradyne's was about. xXX there's, the was say, growth of think and to anemic And for year quite which So that strong we're where concentrated

is even. benefit we than tooling So going that be much last the from in year year. robustly this I to And won't XXXX, think, more world, xXX

modestly will a concerns a on XXXX all thereafter. first chiplets two packaging in then that kinds feel different use They phones sort say, advanced think to fact, I are maybe, true nanometer happening in once until think I ubiquitous probably and not them and top cell is won't moving, of come And more will with follow staggered. that's because X the but of two each ago, and while those -- that, will other something the yield going the the moved at then would dynamic. keep we're that, of of things compute, shortly But of jump the packaging So of advanced new just market. in technologies things I into other

Atif Malik

guidance shortages is other impact a follow-up getting labor for any the as March in and Great. from as from issues? freight-related supply quarter talked your have And Sanjay, suppliers constraints about for there hit

Sanjay Mehta

are we that and second with in supply a this the fab it But supply supply Many a loss, in $XX guide. environment. incremental sales. in in result players impact None of about of risk, the of impact our more allocation, I'd market in impression the on and of incrementally supply semiconductor share to we commentary under tightening were the pushed bit into supply-demand on QX. material investments substrate say no going have tightness in the loosen. We worth that million with the Sure. QX, -- in will XXXX XXXX. will really I'd updated there's the half Fundamentally, million say QX, XXXX. the little tightening see into which in is supply be revenue we've formal indicate which just But dynamic contemplated would the $XX alleviate

the our of with currently view XXXX, out However, being discussion our first half the pushed really supply based that's partners. to that on chain is

increasing XXXX. fab and we the deployed supply, still capital and is see while tightness over so, substrate being And

Atif Malik

you. Thank

Operator

Thank you. next our Sachs. with Toshiya Goldman question And comes from of the line Hari

is ahead. line open. Your go Please

Toshiya Hari

Good IA. Test prepared taking Mark, and morning. of Test a in your growing I the much Semi other the for you the remarks, Thanks as and XX% Eagle about questions. on talked platform I had so on think side well, one two sort year-over-year.

to Eagle in about that's your very posture we right, consistent processing, customers with think When the 'XX? I how I or in wafer also really Test is curious prior of to TAM question. it customers. long gave be response I just thinking microchip, about SD just whether listen test, some of numbers a a only not you're you aggressive, in their am CapEx but intentions, TI talk list the in mean out or

your flattish you're estimate year-over-year? how curious is thinking TAM Just about Test and why Eagle

Mark Jagiela

Yes.

there. going couple a of on there's So things

in to we automobile. the the usually content automotive, talk Test the power-related traditional an Eagle So thing more product tends be called and that about, semiconductor

devices And Eagle, I what of not started as to replenished automobile growth. said, control, year needed growth. up, the market so similar last those all as well, lot come year think not the it production this airbag and was Eagle so be will of for last demand. antilock we drove for those supply traditional to brake And a chain back the kind to as year, be of things And control,

something automotive, targeted However, content We put there's advanced time that harder classifying that those more the having another UltraFLEX digital to the is put is thing that and platform. automobiles. our the And at is in market. compute of we're a tend on which moment controllers are

expecting there applications, for digital compute. to the moment, see growth in some are somewhat for growing, least, at applications, nascent content. it's their we and because automotive But bucketed So it's

Toshiya Hari

with you Got of you business penetration given side, business the on Thank XX-ish about you you've as I'm constraints. it. shorter. follow-up rate that. is guys realize grow percent why certainly the guess about, payback curious, near-term. this my inflation, on talked shortages, the bad think But wage I got IA a the three supply labor But for And guessing basis, I'm faster periods I are to that when growth. in wouldn't five-year cobots growth have not the then

and all user a like COVID I going with feel So perspective, these it's things from particularly a on. no-brainer,

as you the XX%, important an wouldn't business. as XX%, the kind it why it XX%? XX% of talked grow is have out But past, that So is about opposed think Is in guys manufacturing capacity? distribution? I this getting to you. grow you XX%, word dynamic Thank

Mark Jagiela

The on number million-dollar every to The constrained dynamics faster weeks is cobot deploy the of depending because -- That and day the growth is sort spend it The I human technician, that ask somewhat by a we're biggest that not ROI takes a how it's Yes. today and therefore, XX-plus on obstacle to you're And that train. same is that some the is hire and global growing an are. unfortunate our human, limitation It's right. absolutely all as some as production. that a question there. industry fact army. year, takes experiencing. can are much of to a there. is But skilled and into it Everything a there. army putting that hire application, We're issues percent hire, the labor practical supply they quickly we distribution an they ourselves army partners that there's

deployment out human and to things. is way install these people the quicker, fleet make that why of which and So bottleneck the growing we're is quicker of this are time than faster actually to quicker we growing

that got to we've gap. widen So

But that XX% we're assuming the at efficiency. to thing for XX% of the in deployment sort more to and that. year that XX% model – XX% to We're have In that's planning to biggest this working presented growing single applications XXXX, get through We on we're every to on people, continuing we're we space. rate the progress -- example, takes grow grow going here, only though. make

Toshiya Hari

Mark. Thanks helpful. Very

Operator

you. comes And C.J. question the next Thank our with line from Muse of Evercore.

line ahead. is go Please Your open.

C.J. Muse

well-positioned. sounded still new spending million an it you you confidence XXXX Mark, I XX%, in four like to Thank But players, combined customer elsewhere question, SOC ago, gave is customer, you test now was decline lower, told if guess, $XXX about that customer to you're you'd relative share your if morning. I of were emerging certainly that commentary advanced $XXX ARM-based that the your gains the months even your breadth the with guiding is largest three, market at Good your and at to largest for top go million. diversification taking be us that test to which question. back first

telling you that And months? the in I I be year? a change us three are that was known would to dramatically node XXXX. last you're basically customer to So that four X-nanometer it that think widely was to much in largest this guess going why small so taking XXXX, larger in your zero very

has last curious changed what your view? in the three four in really to So months

Mark Jagiela

revenue. It's No, certainly, the it's right, around number to Well, million represents how $XXX our below customer XX% largest zero. probably macro to not is the -- much I think his last around of revenue XX%. be at year going going

and of think magnitude, into amount that will the visibility I now, expected. be we occurred the the So has have And transparency vague. than represents even is still the I what that larger -- is would that change think, that

not confirmation something to it's get full we that it until April of this speak. of So typically so year,

past, scenarios play can get get of And as received. we've with recent time. -- to So along year we're said that in that they've always can dramatically range I've in the think forecasts working And we're this as flight we way. in there's how done out. updated And there's a the swing the area concentrated fundamentally that inputs on as the the they're I most multiple those

but on guiding. on I think portion don't either it anything between big we're for think X% with way. from prudent is million $XXX a changed either or theirs, think the in perhaps delta could to So and lot be I around you But I that share could there's account. Advantest do what this that that have way, forecast year. guiding of precision of than go is I down that close. our more difference then probably we're side I any And And or don't if that's it insight be what into XX%-ish pretty a a the year, think we're below large

C.J. Muse

Very, I on target question very guess helpful. model. your follow-up my

about at a plus System three And growth if million like I'm revenues that's I to years' are time. HDD CAGR. Test LitePoint growing underlying your that SemiTest. down for rate assuming your assumption, revenues in You're $XXX X% talking that make test plus then XX% essentially

kind So I of of, there guess, something else are you in assuming bucket? a SemiTest, slower, is kind the for or going CAGR on growth other

Sanjay Mehta

Yes. It's Sanjay here.

yes. So

So of at higher. overall component test largest But growing test the is is marginally a marginally our the or portfolio. Semi think XX%. growing X% Obviously, of in test to as marginally same bit our little Test level other businesses

C.J. Muse

you. Thank

Operator

Thank Company. you. And our comes with Cowen next Sankar question line & from the of Krish

Please ahead. Your go open. is line

Krish Sankar

for had on by taking thanks my SOC X market size the segment. I Hi. Thanks color for Mark, of them. question. the

compute kind about if give the from to that should between help on a color more last of you little that versus just billion You xXX can I'm and on $X.X curious, mentioned year. grow split billion US $X.X platforms of doing in-house-designed foundry IDMs non-xXX. follow-up. at have where that then they And start looking testers? outside And a start as one would more SOC business, an large the opportunity I is

Mark Jagiela

also part compute shorthand conversations, attribute that chips We Yes. FPGAs are these wouldn't but xXX. this thing growing and I all other it sometimes as year. there's use in that to that like are graphics, that areas of

of What collection FPGAs that. was be the of and plus of driver xXX second So the would the the part graphics question?

Andy Blanchard

Foundry.

Mark Jagiela

Yes.

to that if foundry internal global going who is they will -- business, It's see. of our -- product foundry thing is, company other to platforms. midterm market. commercial real that external into some a And change new a equipment. foundry would the because in of I is where that not from test equipment. for and doesn't share question they it believe they're there's only stealing there's The assuming The do just shift today let's equipment the is in-house doubt to any wait have that, commercial their getting development, we're just use buy no -- overall also plans. thing test player the accommodate So doesn't They're sort --

a used that. it's It up, the does invest is plan slow to But is that cost to roadmap that. imagine now tester cadence. through with now heated up this fast harder not for can and in assume that competition group And manufacturers So of high. quite the rate and And keep furious, of xXX change you XXXX continuing very to high. it's the the the of any for harder be predictable and internal is

a I X think my 'XX, in suggests, cards maybe X happen, to sort certainly we So in of not it's probably played are bet. but by to That would happen, or be the way out that the years. don't next going but assume

Krish Sankar

follow-up, maybe Fair it. question, helpful. a enough. I Got just And X-part enough. can. if Fair Super quick a then

they IA include think side, from faster I the when throughput they the vantage an getting just down market, advances as the tail issue than for into talk services like industrial start or quick your they seems folks point? then it. And you is might On SOC if is, robotic be when a that issue in cobot, it follow-up the about

You guys not. do

hundred think of couple dollar million would is versus what services of you this a a year? that can year last Maybe be explain maybe? way this difference So,

Mark Jagiela

Yes.

from environment time products had reason, such for years, solution one a it's solved. couldn't change high the If picking for that some right That's the was X,XXX one cages. thing in times have is space too good or decades. been for them So fast flexibility those up XX-year-old partly and minute a Collaborative they're perform kept speed. much thing for speed first, of cost enough on lightning Yes, they pick partly people. where decades, frankly, away from new the really dangerous, wasn't a why to and those whole the They're higher up to the it's cycle around application been move robots onerous. or have things over a mix And opening products times. place They why either and of moving and terms tend isolating was and robot it's robots at can repeatability the question. faster because in industrial humans they're of traditional

things is thing. didn't places It's exciting. -- opening those new what's co-bots co-bots. the that make a we're that's all I brand up And sense with So, think

news think your there's last the And was TAM, don't any in question service I yes. So, there.

frankly million to on the don't in probably know million estimates think it's $XXX somewhere estimated range. I we $XXX what close. that, but I Advantest

Krish Sankar

Mark. Thanks

Andy Blanchard

operator, And one more question, for just we please. have time

Operator

of last All will from the our question right. with Stifel. Chin Brian Then line come

Your go line is please open, ahead.

Brian Chin

bottom Hi, lower I'm revenue it I in. the a just questions. unit good views a declines Semi few in half, seasonality, has guess, relationship half. basis, morning. first applies typical of half to looks like side, ask a out your first for this But still the Thanks half of base, us you or guess, first this squeezing first, quarterly the been year-over-year Mark, sort XQ XX%, certainly I on might given and on it do year? unfair for second TAM sort think expect off Test XX%

Mark Jagiela

Yes.

good bit expect a kind see years of of little to we're second forecasting not of two on that last of the first the first. we going half, in the would in abnormal an hole a the in I proven of because average half But the that weighting we've -- this second The little year. because more you're a have this half second abnormality

wouldn't be more they're probably it a weighted. typical a be little back year, So,

Brian Chin

Okay.

bias stronger maybe So, a half. second not even but to even set level

Mark Jagiela

Yes.

Brian Chin

commentary, but And the across side, Industrial half? sense year. to the slow you on revenue to term or of you growth constraints Interesting. Can you based a creating perishable half? in moving near and the give magnitude expect I there's year-over-year as view demand on Automation do first of imagine accelerate us shifting guess I'd second Okay. impact this And is that your

Sanjay Mehta

asking supply? a question about you are Brian,

Brian Chin

in or against overlay first in constraints profile Well, a constraints in severe that business. constraints talk Automation. there supply of of It was Industrial half it's supply the the like demand you see -- sounds some even

so or kind shifts the that just impact if and perishable. half wondering is then of it's And it to I'm what also second revenue if

Sanjay Mehta

of out in in just it $XX of I the of million a is remarks, million $XX IA. million prepared allocation really it Yes, little bit is about tied the our $XX the noted, for to strong to my And QX, there. impact so commentary had given demand and QX, quite

expect for first we first demand some supply So a first impact would it's the larger I seeing are say than the revenue half, be and But in in from true IA in do we half, the half second that half. to second half.

Brian Chin

Sanjay. Okay. Great. Thanks,

Andy Blanchard

All folks. right,

time. We out of are

to Bye-bye. those For in with joining weeks thanks up the talking queue, forward the follow look in us, we and ahead. to for and I'll off-line, you you

Operator

today's conference concludes for you call. Thank participating. This

great You day. may now have a disconnect. Everyone,

Teradyne (TER) 27 Jan 222021 Q4 Earnings call transcript