TER - Earnings call transcript Q4 2024

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Operator

Greetings, and welcome to the Fourth Quarter 2024 Teradyne, Inc. Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Traci Tsuchiguchi, Vice President, Investor Relations. Thank you, Traci.

You may begin.

Traci Tsuchiguchi

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

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

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

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

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

analyst Eastern We beginning will financial you which to webcast March Investor were at to the We hope most XXXX. have available posted on additional GAAP website. XX, our be X:XX us non-GAAP for plan of including concerning information measures that our p.m. financial join page the measures, Time meeting, these directly comparable financial reconciliation on

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

Gregory Smith

and I'll market provide of our all of and Teradyne I'll trends updated by all quarter the initial our full some off expect Sanjay detail results view thank greater summarizing growth on context for topics. today. earnings highly context us XXXX. and and the into around Traci, through year to model. our fourth you midterm. for we XXXX Thanks, joining Then I'll start go midterm these describe will strategy drive earnings then leveraged to drive the provide

benefited our Strength semiconductor XXXX, the in accelerator of at mobile memory revenue from we dominant specifically quarter offset HBM ASICs, business, business. In growth, through driver grew and In the test noted trends automation XX% customer-specific market DRAM. our end weakness fourth the shifts fourth and test space, market, purchases. industrial Cloud quarter Our of robotics year. than improvement test guidance the years seen automotive, business excluding in networking was as customer came which dominant AI continuing the of short-term semiconductor our impacted our by the the range of and previously driven our supply industrial test our the some our continued we in DIS. high has end our AI X after chain AI declines, of equipment been base. more driver and year-over-year, SOC have in

develop for whether the first Cloud In customers. integrated AI in the they of half class edge VIP these automotive. second products, we We driven or end vertically to cars phones, cloud because strength called or customers compute half, by their strength was use custom in described this producers. AI XXXX, have VIP We differentiation term of previously VIPs provide customers are a saw AI silicon computing. In

revenue been systems believe the goal. come XXXX double was XXXX. system the computing that much particularly left had DIS total the we flow. divestiture our Our mobile would we XX% demand we If what in VIP in have market. the level, upgrades share XXXX X%, form the VIP demand X% $XXX VIPs, generated cash we more achieved one underutilized sales, of earnings year. At and over was recognized than this million achieve of that goal excludes by grew the of in market in test our to per notable by XX% If came in XXXX free the revenue year-over-year business, and in company to is in growth This weak we share grew the form in because of

financial to an pivot with base test successful of and inflection was reflect our were customer test. semiconductor to XXXX in and year wireless that terms concentration in our reduce results exposed and memory our customer we business, diversify in highly more recovery, full a Our frame, cyclical importantly, Back both mobile XXXX high business in concentration. In mobile time dominated market. SOC, customer then, by but

more the market revenue compute Now business than prior our the of as component than SOC in a larger XXXX, grew in the compute end X.Xx was our year. market mobile

million capitalize ASICs, investing the been secular and on have was $XXX we towards that in to XXXX. in around shift share XX% TAM roughly a yielded VIP believe We what

XX% past we which unit AI demand improving lower but the remarkable. In product for was seen in In auto see was drive catalyst XXXX, that of demand may XX% have revenue SOC this to lower test power was in the believe markets we our development. years in directly increased We in early develop benefit appear industrial, and have compute mobile pivot inference test our think automotive. applications balance by be It's and opportunities where historical space. AI computing strength, for Recent which we have was couple XX% AI to model. and complexity XXXX, driven time-to-market our the We faster key system-level could in growth executed days, auto in for longer-term cost The and underpins reduce AI that advancements can edge and and the we networking historical in strength and is growth inputs a in SOC over compute. edge, are at industrial. of equipment. and to accelerate time cost, XX% And the a AI solutions

to TAM forward expect X% to we SOC XXXX, to grow year-over-year. the roughly continue Looking

by that recovery year. some While in modest this industrial the growth of digits the we and believe low in in We is driven are positioned mobile, automotive we in AI compute, half gain single SOC expect of test. back the a to share

at and of we to XX% were by was memory. shifting up our HBM to gears AI growth qualified the grew half the fueled test major compute for supplier. memory HBM our over DRAM. million, demand Now XXXX, In Strength memory business XXXX, year-over-year. market second in for $XXX a In performance

compatibility to us test share XXXX. significant and the forward higher competitive second created of market Our the enabling differentiation, of throughput in half capture performance HBM

to through XXXX. market be We expect HBM the device strong end

However, we expecting market from are as perspective, equipment a soften absorb customers the tools. productivity to capacity higher test with

to the recover expect in TAM HBM XXXX. We

to single-digit we memory test market range. although flattish do the the As gain expect XXXX, a entire we result, to be expect in in low share

segments we growth. AI the for there the that are offer market test other believe Beyond semiconductor in compute, long-term that opportunity accelerating

One demand term EVs generation, the These and of power with power more will the for long to continue grow devices distribution. storage these efficient and crossover to semiconductors. areas is

specifically our their tester semiconductor needed nitride silicon with partnership acquire Germany. will the serve market. Infineon, in map announcing a group space in areas Regensburg, gallium to carbide team are to road automotive development power strategic the in to and enable This and leader internal the at power We like accelerate semiconductors in market us renewables scale

product segments drive expect While operating System the Semi to in XXXX out continued growth Test Test we healthy Test by end businesses, product to test Teradyne's some impacted business from in include which wins saw but other and scored program XXXX, market weak programs Wireless into Within XXXX, our was we our key strong test conditions. businesses, that push be XXXX.

wireless WiFI in XX return of XXXX business our growth to test expect opportunities after in X We tracked design out XX XXXX. to securing win

muted the of seasonality continued to half weak this inherently in The be NVIDIA, and MiR to Turning MiR's in the progress the QX In strong and ADI's XXXX, see operations Visibility place of with and XXXX, to Teradyne Analog high quarter. MiRXXXX industrial turns growth this customers market into AI-enabled typically the quick seasonality in most XX% And channel group. orders QX. also We in business. XXXX. unified MiR software initiative. In back low fourth delivering automation quarter a turn its product as is accounts robotics. in underperformed to Pallet channel group. Despite outperformed our and was with highlights that for headwinds, strategic robotics. the accelerator. new multifaceted were expectations continues as large Jack peer year-over-year partnership AI far slightly the the customers. fourth the support than a combined and develop Robotics down part of [ to roughly partnership prior flat a we ended UR years, transformation we quarter, announced shipping our automation quarter, for UR Devices UR XX% The Late UR industrial automation launched robots, fourth there AI from deploy but began growth delivering This year. OEM to In in flagship our more robotics operations and year recently, with ]

million robotics MiR product partners robotics better our organization. are Now restructuring enable go-to-market and our increases in UR in a to our in to million customers level with service reduces and we QX serve functions to revenue customer at XXXX line single to XXXX. $XXX from XXXX, the consolidating best the of sell our breakeven full our This and $XXX efficiency

we optimistic. time, the there VIPs market million did, And XXXX, Looking million could as thought ahead years, to $XXX in we to $XXX business. to are we At $XXX $XXX opportunity win if the to to million year that the growing million were ago, would compute be time A their XXXX VIP matter. questions in next would X frame. whether they very

$XXX XXXX as believe XXXX could million compute $XXX is $XXX will be compute to will AI in us TAM. like gains Cloud Our robust later midterm continue growth share around, estimate million drive for by approach expect the gate moves by AI in technology VIP that VIP mobile centered of that enabled in SOC the XXXX. We the process the million the and years to was mobile for around all we and edge market market this and of latest and in X-nanometer memory

for test we for computing performance This the test and steps. additional was of additional decision reliable our AI remarkable consideration cloud need the both complexity use growing test at primary system insertions integrated the unit align the and the Semi for The in demand and edge system-level Test. highly creates AI systems in addition models, to a of With growth for of an compute AI expect in the training Teradyne. vector within

considerable provide AI in applications. mobile electrification, impact potential trends specifically increasing of devices, outsized per pure Going believe EV have or will on an hybrid towards vehicle. and forward, edge that the we growth growth longer-term automotive the Also with content silicon whether

we this market. Based segment automotive will investments these with our including drive in midterm. this partnership space, to healthy in of Our share over test on in growth long-term the highly segments the trends, strategic market expect gains the the Infineon help intensive mobile of complex see and TAM us

segments growth. $X.X market our Our our $X model, will to XXXX trends model. of midpoint position positive in in billion our grow from strong revenue fuel the we underpin XXXX. in These these billion revenue of At XXXX help earnings to expect

XXXX and EPS considerable same model. To year. period, to to revenue CAGR in to share share that EPS a demonstrating XX% up, a CAGR $X.XX XX% business XX% grow XX% operating our per implying over to sum leverage expect very period, $X.XX good We from over per was the a

from AI, We in in investments memory. and have compute company success seeing our the and the are repositioned in

good expect We that another will year. XXXX be

that, the sustainable We business and a on will of higher driven return Robotics mobile, Sanjay. up call to for share setting over by our VIPs, test path growth, are turn demand our and gains capacity industrial automotive. With utilization long-term in continued in and strength grow, tightening Sanjay? in the business I'll

Sanjay Mehta

financial Thank year QX you, everyone. Today, summary. our full morning, Good and I'll Greg. cover XXXX

model discuss XXXX We allocation will updated our and earnings plan. provide and QX full year the guidance our outlook, capital for planning some

both $X.XX, now Fourth includes QX. million. Semi million, of System $XXX of memory revenue, Test, of which Test lines non-GAAP Within to our comprised sales IST shipments, end was million. $XX Now system-level revenue test with IST, the Test with for our high at and Integrated million $XXX guidance million and business, test range. Semi product HDD or were of quarter SOC $XXX shipments was $XXX EPS

and muted test The $XX other and defense ongoing comprised $XX wireless was board test businesses product to production of weak million. million, revenue was contributed seasonality XX% spending. due task aerospace, industrial sequentially up Robotics with

were did that QX, Robotics our expenses to Non-GAAP the majority engineering guide. accelerated robotics. turns As than in operating performance million our XX.X%, tied business in Greg noted, Non-GAAP to increase SemiTest. higher spend rate below range XX%. typical materialize. Non-GAAP to gross the operating softer-than-expected just A not we was was business $XXX had guidance was tied profit of due margin in

Some was rate, excluding in items We X.X% non-GAAP repurchased XX% planned quarter. discrete other $XXX we [ opportunistically rate of basis the financial facts. share product in X.X% of buybacks. quarter a because had mix The tax on and Semi million, shares discrete QX, million Dividends was shift were $XX tax excluding we items. as to the X for lower and ] accelerated the customer in our quarter GAAP than Test.

Turning to the full year results.

$X.XX free We or and ended returned securities. margin through was for only billion of of shareholders XX% [ flow operating customer dividends. year $XXX was XX% in million We greater with EPS our than was flow profit $XXX for XX.X%. Gross generated XX.X%. the was year revenue and was was revenue free We to $X.XX. XXXX. Samsung and ]. OpEx share marketable million year. $XXX cash the Non-GAAP in million cash of our Our the $X.X the cash billion repurchases

million. on IST, revenue excluding Our revenues Semi memory, items, basis for unit with XXXX including non-GAAP tax Test XX.X% follows: year, XX.X% was a billion, as and SOC billion Business were the on million discrete $X.XXX full the contributing GAAP rate IST, year, for $X.XXX basis. revenue was $XXX $XX and for a

year-over-year. XX% in year growth the and Excluding compute, our by and the specifically VIPs SOC was for DIS divestiture, revenue ASICs was custom driven networking. SOC impact AI memory of our

year-over-year, underutilized driven test due HBM Our XX% year-over-year, up in XX% memory primarily demand DRAM. sales capacity compute AI were primarily by revenue to HDD. for IT declined

XXXX, down in group, from defense Board X our to combined XXXX product Production Turning is XXXX of year-over-year. segments in down and revenue combined aerospace due was of slower X% to $XXX the Test revenue System in The the XXXX. and WiFI X. $XXX had other million, Wireless was flattish test which of businesses. million, Test ramp Test million revenue operating $XXX

volumes million Now profitability and $XXX both to the robotics. than drove was in non-GAAP with XXXX full the contributing fourth UR expectations, expected in $XX Considerably below lower well group million, near million. Robotics revenue year. QX the operating had $XXX XX% our in quarter loss

customers actions will single of across and experience. to efficiency. in marketing The XXXX we to result these partners growth of sales, mentioned, service automation UR actions robotics These point the to and Greg help drive top robotics restructuring As our are business MiR continue line organizations enable and business market. create industrial our will to improve improve a for contact and customer outperform

our Now call, for to our outlook has strong. Semi our remained Test October QX. outlook Since

$X.XX EPS soft. be QX $XXX expected to $X.XX robotics of However, million remains seasonably range and sales forecast to with between million non-GAAP are $XXX shares. on the in diluted XXX

and amortization The restructuring charges. guidance intangibles of the quarter acquired excludes first

be flat XX.X% first to the expected run the and OpEx to midpoint are operating XX.X%. be our to is margins with first non-GAAP in approximately XX.X% at QX The guidance of is expected roughly rate to quarter sales. gross profit at XX%. XX.X% quarter of First range quarter of

Greg the XXXX. driven semiconductor test broad-based a As will growth believe noted, TAM see we second recovery. SOC by in half healthy And

the at and $X.X TAM to We SOC the between billion billion midpoint. billion or $X.X be $X.X expect

to For the expectations end deck. a more please market table detailed earnings view for of SOC, our our refer in

billion XXXX. the over around in grown $X.X million to between from We XXXX billion. this, $XXX be million to Recall memory $XXX that within HBM in are forecasting TAM $X.X and has

expected approximately is roughly both In SOC conditions. in with current When the expect Semi still we low we visibility by the at memory a through growth we markets, Our plans currently for expansion industrial XXXX channel difficult period a market is XXXX. low-digit in to growth Test forecast spending SAM we initiatives digestion. In for in tester market year-over-year HBM to our operating business yield The and of share environment. going revenue terms. memory flat and driven gain TAM XXXX XX% are look robotics, see

range points QX's In around assist for is wide you QX, there enterprise. XXXX to this sequential growth X% growth course, midpoint. the the in we modeling from a expectation. Few expect Of XX% to

We full XX% revenue. revenue to XX% first approximately of year expect half be to

Now to gross margins.

XX%. margins year full expect be gross We to XX% to

We to from expect half improve to revenue year. slightly margins half gross higher second second the of in levels current the tied expected

Regarding OpEx for the full year.

acceleration view which year is a in teens We XXXX per Semi synergies line have expect and of $X other full year-over-year, income driving MiR million our is from to The the QX. UR XX% at and cash changes October. while and X% key were low increase capture between Test forecasted Interest projects we yield. in to the restructuring robotics to and reduction OpEx quarter of

in items P&L. losses line included also in FX like We and gains our have this

XX% to discrete items. Our GAAP forecasted is tax rate non-GAAP excluding and be XX.XX% in XXXX,

capital to Turning allocation.

strategy we for have balanced run Our as enable a approach business remains to the maintain cash powder that to M&A. us dry consistent and reserves take

reference, of returned $X.X XX% our billion buybacks repurchases to to cash flow. through share XXXX and of For XXXX, level share is from executing $XXX to dividends. free million which current up of dividends. XXXX, over we've with plan along we shareholders on

to model. our earnings Moving midterm

our XXXX tracking markets provide company. model the in power we A prior how the As which of ranges model. this and with model to growth to few earnings. revenue model our are We're our said, believe prior replaces and XXXX XXXX, for our of midterm midterm with terms context. points That we each rolling forward competitive We model. positioning at we've insight we of January, earnings investors do the share serve, we into and ultimately, updated our look we

compute with in test and to continued driven CAGR and related grow AI Over recovery demand XXXX XX% a long-term growth strength by of broader off industrial our the results XX% midterm, markets, to auto, including we end at in mobile. revenue expect

assuming we're markets Our the expanding XXXX. assumption robotics, but to industrial recovery, we're the persistent prior to mobile begin labor is expecting with return recover shortages. for peak a AI not In SAM the and to

off XXXX expect We of to a with XXXX, these to midterm. CAGR top of drive accelerate growth the dynamics XX% we line expect over to XX% modest in which

the robotics our towards range deliver end business. to model the X% will target operating profit XX% the midterm, through this for operating increasing forward, of high leverage Going operating ending

between billion $X.X billion Our revenue updated expected to to is midterm EPS XXXX drive model and to non-GAAP and $X.XX. $X.X $X

Greg a XX% at to the XXXX, OpEx CAGR Semi test XX% a from the a As to good in our demonstrating CAGR percentage as midpoint, a year was operating leverage businesses. Gross and XX% XX% and sales Test. XX% yielding XX%, be robotics this to XXXX XXXX is non-GAAP between EPS driven and implies to expected mentioned, operating XX%. of of between by up coming of strength margin XX%, a margin overall,

memory and the Excluding revenues our grew X% XX% year-over-year, and overall to our DIS SOC grew XX% to helping combined increase our in divestiture, achieve year-over-year, a EPS company $X.XX.

business, investments and for We We sustainable the enter advantage drive to of call Operator? about our logical growth XXXX leveraging long-term that, Semi are are robotics. between making strategic and UR model. With to sight we in in the year and line to turn I'll questions. drive MiR, midterm Test operator to synergies the back competitive the our feeling good

Operator

question C.J. Muse first is Our from Fitzgerald. with Cantor Instructions] [Operator

Christopher Muse

moving what in of a your Can could Test. share speak I considering half. walk we your number a the what's in then of if were kind in expanding businesses incrementally low through better? question, driving to in bit that growth of bit potentially that noncompute to that? outlook second could of in hoping single-digit terms parts terms see to upside in Can for guess was come that you're on you single-digit low you a you expecting time first little the And Semi spend of recovery

Gregory Smith

the C.J., sort mobile to this VIPs, to is year of of as TAM improvement a incremental In that has going grow. expecting make up primarily that compute our progress this steady got the increases some we for low we're And testers. in complexity there's by growth SoC so of driving think to the share -- filling are we number continue space, Yes, in Greg. that been that maintain XX% things with that see there's the single-digit driven outlook been continues in space, pool we're that share. big to underutilized

would But of the in incremental and now, short-term each in proceeding increase of we so content, growth model march to it industrial, year. And that comes with slowdown automotive that, year. of is the we increase auto expect space. sort And space TAM of think then complexity continuing actually there's of into automotive content that in this will when that a right in semiconductor in the kind that turn

we in depressed similar end that modest be growth even or So expect that unit automotive at to space. sales the

in vehicles pure something is market as hybrids other the The say in electronics but it's and trend that towards in plans pure nearly is content the EVs, thing bit I'll is that the more the that impacting high EVs little electronic content a less. hybrid the impacting for the as auto semiconductors certainly is

driver in industrial. sustain AI actually power industrial point-of-load electronics fueled actually helping incredibly power market is that there power industrial, and traditional GPU really things one And is indirect not as been when our space. market really, AI the the has that the with to of helping for a for things market strong. like customers is an drive it these good pass-through is servers. to compute even needs hungry. The the from the that of is And of converters, compute some all last that's Now -- In to quite

over in the move is gradual of parts recovery market. help the in to memory, mobile to you going if Now

DRAM of market because appetite the And driving going weaker is part and be LPDDR for to little So servers factor. stronger, bit incrementally, incredible. to memories. that's a the is the is little of both in that the DDR part a AI year-on-year, that digestion of market going bit be HBM But

market of part. better to So sustain we're expecting a non-HBM HBM DRAM bit the than the the part little

you whole the in won So or we're flash, the position we've plus HBM in our new gains to well. look strong if test to DRAM, look and thing final digits and share for accrue low at single LPDDR that XXXX, that memory especially in as test in insertions DRAM you at expecting

Christopher Muse

gives helpful. robotics could restructuring once kind multiple the guess, guess, a as think again. And I that paths you giving many side, of on Very this And then, on right what of what the you is confidence pursue of Teradyne kind that front? struggles follow-up within had that frame the business And for I you you're that success Obviously, question, that the has you had time are given yourself path? points I for years? this business

Gregory Smith

Yes.

think that things this tease of So trying what is is struggles the we're I do one this of part and struggles. parts are what Teradyne of to apart market to

if coming what were, outperforming is that look performance our certainly ourselves under you at space. companies in our it is we of So unit, Robotics the expectations compare the industrial the it but automation in

introductions. changes market. Having that said actually help with areas R&D that would thought that we progress that building enabling an OEM really the our to positive. The very in that important improve we've our weak AI to we think and made of content very, in terms in releases product significant AI-based product preserve. something account to could definitely significant have very made of robotics UR a things in terms big also are we make And seen channel new there's adding we've are or organization. need we are XXXX that, think progress for the positive And of pace and we've positive think of we is competency in a positive, that building we do partners clicking. that some that MiR we that the a So One And the the was MiR, is UR groups was associated large

So restructuring we're part the if changes the make that the had creation business. product doing, we the very in business. that modest we're in of We our not look changes at already made making wanted really -- of operations to you the part -- we we're are

business. And of the we're really on X focusing to the there, we're now so think trying commercial things. side do And

The is we successful they And first between to more of that can And them our giving that, actually way partners range drives efficiencies we can already. be broader a MiR think, partners be UR want both largest successful. and sell. is out. help partners more by MiR, we is It our help natural to sell help our UR going and product also the really

a so see be in those to success component a we're in get going we're by improvement a And service very partners way. Also, seeing efficiency with this success. we important that natural of able definitely to large we is single as that covering account MiR, approach

believe UR line single a having large the by so accounts to MiR to going service with And and us we as we've organization, the had that's that allow expand success well. to product

up we're our to ability to market overperform, that a trying by we're So that so is this thing set do operating is end do impacted to the that main to rate what The the the the to is always margin deliver have with important is have that breakeven going to we against thing trying be robots. we ability to better growth restructuring sell more next most conditions.

Operator

Mehdi is from SIG. question Hosseini Our next with

Mehdi Hosseini

partnership semi. at how this should Infineon? It's for From any the I in on Infineon. follow-up. Terragen to have I of if I Infineon But with And benefits focusing bottom about you're doing with do think to this I'm could worse. wanted is that semi. and silicon get it partnership my what's understand another benefits carbide end not the interesting power sure

Gregory Smith

Sure.

power of classic semiconductor of the adverse a market, promise is cycle where in people internal is in way WiFI the like definitely in bandgap, discrete this quickly for was especially combustion gallium alternative is the between nitride. of hype in technologies of it times energy So these in -- yes, and terms both situation, think would for crossover delivering of happen ahead silicon got saw we people and And I efficiency how conversion cars The EVs. carbide, a sort applications. higher look there that themselves at terms

waned. and on was enthusiasm So of that, there lot think a this over market, has enthusiasm we definitely, that

this long-term market we is think is us of the to is here a pretty a for increasing way. going discrete look of here The kind healthy we is to actually, this to XXXX, that time going advantage to this a from semiconductor Teradyne move. think make kind be we as in So market test to the for good -- path

products, all management the We battery to going system also semiconductor conversion is that content of products whose that increase. also other with associated believe other isolation

for these road of that partnership able this to higher support The devices and a specialty market capabilities with making to now they types products address. a our into be that Teradyne inside is Infineon of business. By commercial powers Teradyne, the and is new map Infineon to advantage group, going to to Infineon the accelerate of number So going by the number of they're market-leading advantage to than to rather company a to trying moving be cover test ATE just had able this we're the those using that Infineon's like they are market. equipment were entire those technologies addressing be

has point which Infineon horizon a our accelerate kind group of building focus road to gets their on is the that and and of than before. has an to opportunity broader chips, Paradigm company. So map designing

Mehdi Hosseini

here? Are for assume should payment a is acquiring asset this there price? you purchase We a actually

Gregory Smith

Yes.

Mehdi Hosseini

Have you it is? much disclosed how

Gregory Smith

is not not we're It level material price. purchase disclosing disclosure. a No, the at for

Mehdi Hosseini

margin QX very at with year-end look the guided quickly Got OpEx, automation look industrial off speak If what for at industrial the and just automation. and less from I just you extrapolate And the contribution themselves. you're numbers have it. and better and for switching to

needs partners. may it to with system question B? my or is, much the more more. And to years a to there partnering the plan there end to question the management industrial up spent automation. to the several reorganizing, you So would again, have channel way How seems me, But saying, be make integrator enhancing you have is to willing B? team-- You what's before to have maybe like be plan the part investment you you with okay,

Gregory Smith

Yes.

industrial first off we kind point not near decision. would where making automation. in address want of a that nowhere ways the less definitely better we're to So I part we of are be sort But point your question with the a

automation. business automation, to with that's are the leverage more better model with has do off built for We the into and that a industrial lot industrial

So we've would above that that -- to operating we -- we XX% and be in level positive XXXX. group. that be conditions, reset market believe this from delivering our level, margin that delivering current million $XXX are we breakeven given growth But we'll

it's be dilutive we believe For and something for us the growth certain, whole going but over to earnings this to long vector across an that that's important the accretive it term. is the earnings, percentage is to company,

yet. us set driving experience But we opportunity to highest be our an the into definitely plan up that improve and money saw save are So stage we're at things put to a to investments B the really able customer and not growth.

Operator

is from Capital Steve Our Barger KeyBanc with next question Markets.

Unknown Analyst

This Jacob for Steve. is on [ Moore ]

for the data all for in out is First changed timing outlook versus Has current all? X-nanometer around. your look you'd on transistor differences And that call me What ramp the are one any testers new generations? at year? is notable of that like for architecture the there over

Gregory Smith

take Greg. that is This I'll one.

now, in looking late very, the the X-nanometer of we like at right occurring -- XXXX. that So very leading utilize in are devices edge

our compute -- taking early least of in of mobile that Just and production of XXXX. to that in is and The terms bulk are in that XXXX. we advantage see sight, be both And note. at late going line to of devices be going

higher that higher power are differences -- of is more requiring the more tester that, actually is primary much, difference tester memory. the for requiring it significantly these peak they're terms complexity, and have much that from higher devices -- complexity. And the devices In with these

And of there's to us. ATE a there's test space also in system and space creating be opportunities technical some going that is level for of is in obsolescence impact the that the so -- degree the

So we to to be we're -- demand we device discontinuity X of because going think like to that it's increase think is cataclysmic in this the in not going nanometer, helpful. [indiscernible]. It's that a do but transition be power

Unknown Analyst

That's it. helpful. Got

for markets. is one Second me end on

dynamic? us you conversion are in strong but from PC volume you and but the for tester I gradual HPC clearly meaningful And compute thinking And I and drivers, notebook more there in improvement frame year, has segments over can you're been up total the help that mobile -- I based. shift affect said big to still those a could that growth mobile think about year? AI think you a are know how

Gregory Smith

Okay.

terms it's the think the going CPUs expect unit Group. When demand. think from we are off, an first there's accelerators, and units, the actually a and spoke nudge that And to And a it a analysts but I the half that going inventory related but cloud continue second increase primary that would more our for dynamics probably you in of the looking the think generally, mobile, returning now, of would compute. be recovery balanced. model upward then end towards there of space, to and is complexity in expect are to that depends sort benefit normal going our in be weak at, bit is in be about in pretty there's greater industrial automotive, you're definitely that So compute be where spot which and market. people the by more terms about increasing year. And march And the business LifePoint to -- wireless primary be phones. client content driver I little digestion we networking on I year. would to of we'll of There's that that part AI by that is already in semiconductor the optimistic thing that a primary we're in

Operator

Arcuri Timothy next Our from is with UBS. question

Timothy Arcuri

I had X.

your ask Greg, TAM forecast. VIP So I about test to wanted

I think XXX you and said maybe to going XXX.

in Broadcom billion One listen going the XXXX. question what my ASIC to on TAM. custom about is, to basically and is are Marvell that saying I be saying So it's $XX if

billion going other saying to be XXXX. The is in XXXX, it's $XXX

average billion pretty plus I So $XX get if I to X, easily time can those frame. that in

and conservative So less like tons forecast. like the than this would for pretty that a that these that's X% stuff all seems intensity of stuff. And it imply numbers transistors, has test is

this custom test intensity underpin the So talking size of low very that would ASIC numbers what your market market. your customers revenue the end what upon the based relative I'm wondering are because about it to is seems number end like

Gregory Smith

Yes.

a on the into our model that X not on bottoms-up Our the devices Broadcom device thing unit any factored a producing. Marvell like The model is getting built based may they're definitely margin that be or is complexity. is variability quantities that more in

mainly X than a answer $XXX And outlook of what the hearing of of line because the And these low where sort discerned that's -- area for working billion what end theirs. -- so directly, what [indiscernible] sort high But folks more of we're with can would mill. of disconnect versus be sight are from we chip to we sort to question more the your be we that's definitely the of end. in XXXX our the that in aligned the forecast off of we've hyperscalers from versus actual

Timothy Arcuri

low. Okay. -- But okay. Yes, seems

So then IA. on

has negative lose Cumulatively, -- usually, markets PBT the money the chasing been past when companies growing we're So and years. it's And this, growth. for lost $XXX very you've million. like X are fast,

really need you the this? And and maximize market dollar guess just like kind change of you more this you see make asked to is do would? Or I outside question try you investments that still the it coming the in profitability? is I thought something going thing. can a the not hasn't do it plan like to of to is actually grow? talk which really It's And context you to to what's do there So business? costs cut bigger Or to scale grown that investment just this want this here market like

Gregory Smith

Yes.

the caught the been is starting PMIs factor an in down So now, been really long industrial -- I been weak. x investment, And we've here from cycle have to automation extremely consistently think in it's XXXX, way all in that.

hasn't our to. growth that while we've peers, -- it's While it supposed we've the delivered outperformed outperformed

limit So -- may idiosyncratic that a advanced to OpEx align other line operating market growth a that that of and like robotics to the our little this be increase making things we under going that we margin not that business are that conditions, we that the the operating is marathon, then do along. a gross increase our be weak that we players we so go believe is bit hoping we're top incrementally leverage sprint by view in improve one from growth margin and even as generate positive margin and any our OpEx have able between sure to

are going market this growth that is macro end we headwind. the We don't visibility when headwinds to is to think that So come have space potential an being into significant by in there masked end. those

up this on maximize weak during definitely there so trying impact conditions. to under we negative from efficiency our earnings make on isn't period business So sure Robotics we are to our that ourselves that setting even were focused incremental business

that's the So primary thing.

I'd to like on comments over Sanjay pass this for to think couple as I of it a well.

Sanjay Mehta

Yes.

quick, really Just Tim.

we sure years, of XXXX, at million. true. profitable. point you're XXXX X $XXX last XXXX where operating to not Just for level, it's a I'm reference, since an profit were In of the kind

But have operating have lost million. to profit $XX XXXX level about since cumulatively, of We an we'll XXXX, money. lost

context. for Just

Operator

Cowen. with from Our is next Sankar Krish question

Sreekrishnan Sankarnarayanan

I of along A, 'XX, levels. you maybe from couple like in calendar them the the to on your grow is going little seem on your are I And about it year XXXX told 'XX one, more at first Sanjay looks or Greg, XX% for revenues mid-teens now. growth a teens color if same right ago, that confident right? months versus path, high a look

change for kind what of I then on outlook Teradyne's XXXX? And a follow-up. So have

Sanjay Mehta

are period. what XX%, we It's our enhanced, here. to for of actually the obviously, that Sure. or I'd down say of thought the could of our test X-quarter which last I'd actually Test. year forecast over changed into of it's it in Yes, and It's changed the in other is QX plus the but more we Semi over Sanjay midpoint that a days days, XX And at view business robotics market, or the our be the add us estimation. been product has what's hasn't plans for businesses rate our of or QX about. 'XX, from our robotics, will plan And minus And about what gives roughly line into come XX saw our acceleration our year-over-year. I is strengthened. our of of midpoint over thinking a roughly Test same actually the confidence view XX% Semi on growth past has that held guide, say, We obviously, there. the

Sreekrishnan Sankarnarayanan

the a compute has it. your I'm how thanks SoC of of TAM. your Got revenue $X.X spoke up growing to XX% end And year it billion it. then from context XX% SOC year. follow-up, being Got as you think in been you color, last could the this where about for kind curious

of percentage how year. is SoC on If you that could much some color mobile from is and give get compute you this revenue both just mobile can much what compute, and how

Sanjay Mehta

Yes.

percentage we will be should I growers have. a SOC as that compute largest one of and our revenue of think the increase So

in We also see, compute. obviously the TAM growing

tracking to we're continued see So it. in We strength VIP.

XX, XXXX Greg for of see of noted, XXX roughly in -- centered as XXX. And TAM around in of VIPs roughly we XXX. a that VIPs As compute

as tracking and we're to So in see you'd expect, we in growth XXXX, growth compute. that

that along our industrial, consistent growing. growing with growing business perspective, the TAM when auto similar mobile along a a I at XXXX. do look see take or and we we do with -- level just it XXXX think we from continuing then XXXX likely And to see

So more slightly strength up. little perspective, TAM and as and shipment compute as from well bit our auto and I'd mobility industrial to with in then say a growing flattish

Operator

with Hari Goldman Toshiya from is question next Sachs. Our

Toshiya Hari

customers customers? are more and and within well expect your 'XX the My business. could in the new VIP AI specifically? in about come When from 'XX of -- Or touch a to the first breadth to the growth or customer and expected base was new on as one existing on context business that of product you ramp business. sort looking compute 'XX. VIP of the hoping growth outlook think or you is in 'XX do you to Is mostly you I for

Gregory Smith

Yes.

have The it's X-nanometer pay Greg. I for VIP to companies So necessary accelerator. scale are a there the pretty business ASIC concentrated. very that is mean, few

is definitely lumpy. So this to going be

and you between like we big lot trying adding be capacity sockets But And existing you're have. we're it's a that drive we we the always would to expecting this or If have. X into to our XXXX a of customers 'XX, business like very at the is that single not that broad-based. 'XX expecting customers adds, going are for if situation get a be X a that where logos understanding of an to look ramp robust

Toshiya Hari

that on I'm guys then total around just bottoms-up digestion That view my 'XX and Is growth, technology customer based a 'XX. as I HBM based about potential view formed on And Is primarily Yes. combination? on HBM and Test, sense. in on talked makes then recovery the evolution? forecast? think. bit it 'XX follow-up you Are 'XX, how you a internal making assumptions curious your you in

Gregory Smith

most relationships the of we very with good have major memory So producers.

And a this them and doing in capable capital x fair is capacity of amount be is based there with filled a is having of that, needs their factor said now, time, HBMXE. that what transition is timing kind would happen. right out model the lot so time, that then a comes going view TAM we've going is from upside in hearing further to delays terms the is in place our our our be If weakened. to that transition with to HBMX. customers would TAM, of of in our in, transition an The that thing that and on in The conversations advanced that there's that planning. if to mean that of best But that, of when we're transition from --

Toshiya Hari

I do Or... wanted half time, say And just when 'XX? sort clarify. to you you first mean of in

Gregory Smith

to in that real is certain a XXXX. the half there's that of that pull in yes, more of to 'XX. volume HBMX There whether XXXX. early from HBMX be certainly is for capacity And people volumes schedules significant the to question customer desire in going if The that, latter production have would 'XX support in is, try the like are needs into

Operator

next Our from is Samik JPMorgan. Chatterjee question with

Samik Chatterjee

recovery of sort more risk, of your first year you're in the definitely last second when years sort industrial. risk a the we talking the half terms upside, there particularly you for skewed second second sort I this couple then you of upside, indicating between seasonality brings the How first derisking given half than are about half second that mobile of about have that sort the into question of that half And improvement first you're should in follow-up. visibility, half about how second like think and of is guess and downside and downside that versus auto one, already? I the half of sort and half think markets

Sanjay Mehta

Sanjay. It's Yes.

right. that's So

say we've an see and some have upgrades we we the really to really first we or see that getting visibility levels about upgrades, then that capacity, in high these talked coming I'd of occurred the to we're that the QX time second underutilized have half, As where into of environment utilization. to as half,

we upgrades, tightening. First half-ish, still see capacity probably while there'll and some be minor

can You as how and reports well the our that with utilization go we and and count testers when VLSI methodology as the there. of see getting

we as tightens that second a engaging recovering pipeline the second also well the the So And half. do utilization the And in recovery. noted, it's around we half, in we're customers Greg market a as then as broad-based, test thing us tailwind see as think -- in is perspective. end semi and gives I'd industrial say, focused a market second compute that automation about industrial to we tied end more have And the as well. from as auto confidence

Samik Chatterjee

and XXXX, of keep in share existing customers to customers? the customers of or of logos you to new some expecting. maintain on a ASIC share that investor wins, well back XX% of is in your that concern But made XXXX, VIB talking in that's your when to sort TAM Got terms how I in into that that maybe sort ability we about. [ existing you're look that terms share. about the sort with in more going think terms visibility it. the we with look there new question ], of you're maintaining Or confidence of continuing pipeline comments of And broader sockets does terms XX% specifically, of last terms to work that either as highlighted, the is And driving XX%

Gregory Smith

take Yes, one. I'll this that is Greg.

believe But around ATE one leading-edge we platform in have the that base the factors product have that critical you're best of we for you installed devices. training So selection of the tools that else the these everything using. is and and

that has way the and [indiscernible] success that like with the traditional or we're the Marvell in relationships UC product. our Teradyne's our VIPs with XX a these our we and that of So market to they're last differentiation are with service or space do result product for lot customers that compute a use these new for Samsung people Broadcom that we And was to reason. a have lose choosing a the by excellent product, years. The in think having the these getting is able shaped using good demonstrate devices the share a providers we're of and design the

that. to And we that product we order a the customer in believe we think have So do with from differentiation the to and think we logos to be that We try the right have have that the we right add that able right the recipe perspective, we need. maintain share. hyperscalers to relationships themselves relationships

pretty that we're at keep confident going So be to XX% to this we're level. able going

Operator

America. Vivek from question with next is Bank Arya Our of

Vivek Arya

in then for in but first XX% think, 'XX? compute year, $XXX that million last expecting VIP a slowdown? is is versus to TAM grew I what the, causing 'XX. the only you're last year, VIP So TAM it one, curious I'm grow X% what And

Gregory Smith

to can are I very, a situation space. are limit to we doesn't have stuff in going HBM. sequential capital necessarily the that that going at the very very, this the are parts equipment lockstep. Right little -- still of a coming that's this you to in the a in terms now, growth, that have to -- The experience more of growth situation very So hot. similar that the terms for an produced test test of look And can space times -- be is believe going to and could that's lot that, support there bit being of long in of market reduced become follow you or think equipment devices compute -- in compute way volumes as but up The in the end mature. curve stay

and we after sockets in it's in space sort primary from new the introduction traditional experienced the space VIPs, So opportunity year of is where compute these think the in situation. the not a

data affecting the going that there's there balloon in increasing are for anchor efficiency CapEx definitely for So devices. going to obviously that's The are huge that of be and this. production is we anchors is think balloons the center this

Vivek Arya

are Okay. reconcile expecting then But has then think XX-plus growth driven percent the growing, how I that you compute. half. grow been do almost the strong to with year than Teradyne's normal If X we second by TAM that is how depend half-on-half much this seasonality half-on-half on the not more in can what that

Sanjay Mehta

Yes.

So should think growth, share as of I some think that. you it about

Gregory Smith

expecting automotive, say growth. And compute and other Yes. more thing back is to be we're the industrial delivering the the It's of kind to share be and throughout I loaded. expecting we're mobile year. segments would half that

think. we're back a half So not big compute, expecting for I that it's

Sanjay Mehta

Yes.

to little stronger half it's I going a think than first. more but bit compute, seeing we are -- the back be balanced, is

Vivek Arya

is Okay. not it? But increase, it's XX%

Sanjay Mehta

is. It

reasonable a increase. to Okay. have It's going

Gregory Smith

But affected curve. behind you're that related are new think if capacity the parts, you you volume parts on are that increasing new that by need that is this production, introducing logic in if the support to experience that's that then already I to part introduction

Sanjay Mehta

And TAM? on then, Vivek, a question had the VIP you

Vivek Arya

I 'XX? think this in what year million, the $XXX is it

Sanjay Mehta

and in Yes. it's but What around XXX. growing expect that be million then XXXX, remarks centered our to prepared we to we $XXX said in

million line. going You higher think the should maybe $XXX trend is about towards for about range million, end you that to $XXX grow to how It should a a it. if bias has on expect you But XXXX think that's range.

Operator

Chin with Stifel. Brian question next from Our is

Brian Chin

here. questions few A

size that Sorry XXXX? one and And movement market sort if cetera? across into test can you But SOC missed of there of different sort compute, how around was of -- I breaks asked certain buckets. billion no of the et yet, but XXXX for if I this, streams decompose $X.X revenue what down in know was some us the mobile, TAM

Sanjay Mehta

got in and is midpoint. service have $X.X the backup, X.X. at auto billion you Mobile at but slide a if to 'XX, compute industrial and compute get the $X billion, $X.X mobile go and Sure. ] in $X.X On to at the X.X then Industrial's $X.X you've billion billion us million at 'XX, believe to -- services, 'XX. auto is billion. $X.X SOC TAM in [ X.X, And and we X.X I

Brian Chin

sort Can close maybe of to where to ago sense rates half. you a underpin utilization to helpful. bridging give view of are That's in cell you versus second it. touched better Got but the a of a test and just now little for we on the And this year bit, -- recovery us test are kind that just how modest gap? that semiconductor

Gregory Smith

Yes.

accuracy So these we've cautioned I of of before absolute utilization. mean in terms the

before. coming loaded. There delay X sales. already away and of are when towards more more exiting about was utilization those we strongly shifted upgrades shipped year. So XX% testers that the at right will actively our into but think being year changes quarter through are year we to year-on-year the in that our say drifted actively through from a to the tend that business the And The point we end it idle upgrades the mix of And of a like shipped impact probably up 'XX the in look than that maybe from into from more we by customers, around has they 'XX. being previously through where it's has now, at shipped that quarter-to-quarter. upgrades increase the really I that's utilization we're loaded from XXXX, system turned in inflected and testers

passed of that's we've that, think kind -- point tipping we So the there.

Brian Chin

what question. robotics by could mean consolidating your Maybe unpacking the a sneak you box benchmark year? a broader Would this And mind bit XXXX, also the little go-to-market? think like outlook you something kind industry Okay. if in down of suggests that the growth in is you I XX% modest does of

Gregory Smith

Yes.

going the improve us. MiR, where customers. There's an also of we combined are and to customers terms have of where they to X largest partners that customers and details no that organization. largest really and could of improve and There's and -- growth And in of for was our obvious it our in simpler UR make we functions functions way OEMs go-to-market groups. the of place see vectors our the unified customers. and terms things is so largest is consolidation primary the go-to-market together of MiR functions, so that that we we sales them we've are large marketing the that the both service really for for and the So these And drive primary change and some to partners efficiency that is interface for the lot overlap our our interface a UR

versus both those continuing so across lean into lines we're product now those programs. an we're basis. But to isolated doing on And

remind could Now your what there? was -- the you second me question in

Brian Chin

Yes. It was mean kind XX% does this previously And growth than something benchmark. I like think you're better that down modest the to of that said is benchmark XX% XX% you maybe you that of benchmark the if this industry, that, year, think guiding just kind I benchmark against year? outperforming said for a for targets growth

Gregory Smith

Yes.

of out figure -- trying exactly the would automation I think recovery in be. everyone what we're industrial shape a to is

per is XX% we you're think the like our like -- maybe outgrow automation per or traditional more intent by thinking that to are year. in I year XX% players right

think delivering looking with X% us probably above we're at I down So like it's that. more

down, market if then -- XX% flat, like significantly the think automation up a down growth. deliver we growth. would were if we it's XX% X%, If it's XX% So I If around higher, be growth. around

Operator

from Stanley. Our Brett next Morgan question is Shane with

Shane Brett

the kind finer long-term model, I revenue that are more So of higher to of wanted extends? a is a context sort appears up business. of of how that bar are visibility set The understand, the to XXXX model? And of I far the as question your just behind continuing bit it importance details for this for your assumptions understand since you though giving XXXX, forecast investors but what the better little of

Sanjay Mehta

It's Sanjay Yes. Yes. here.

overall to see would So that's product perspective we've level. to key have, from then are OEMs really in SAM of And robotics, to out a growth an XX%. remarks, starting robotics, XX% and channel prepared -- we see and say, some we and our really test XX%, from large expansion focused test on AI-enabled new broken I XX% as with growing introduction. that there drivers we accounts XX% through revenues XX% said revenues

And we years. in has noted past had tremendous so penetrated some sub-X% a couple as we believe over headwinds, Greg The market. of are market the

incremental see will that incremental solutions, develop these help segment products verticals. we However, AI-enabled in that as address to that, enable we capabilities, our us

model. From as players, the would just the to are that I'm want in return, in with go at analyze maybe, to things think TAM. ASICs. our TAM. and need of a do look Greg, forecast we the and when some look We perspective, different take like as or And so it the custom compute at that, what compute, but this. have we to confidence, add the is see compute We our about customers. But networking it's a in I external we the We we you analyze done. segments test comments AI like from how well we the talking the predicting high-performance and view market also

drivers, well a silicon or look cars, increased as at a as segment it's growing it mentioned, in as content EVs. we top-down driver in driver an segment, Greg a bottoms-up. But So hybrid by fast-moving and both well as high-level

Gregory Smith

of Test bit growth. of terms One Yes. color the Semi in

think X it market. I think incredible XXXX way you for there should that that in the about memory is this inflection was

market, in So really XXXX. up the bumped like memory

of if the you're market So XXXX memory at of we sort that the XXXX period. rates, in has built growth longer think that already growth looking some of to

and So lower SOC through linear period. the model going TAM in to more growth XXXX market a incremental expecting that we're for of growth memory out rate TAM a sort of the

Sanjay Mehta

markets. One we gains, believe And X flesh view XXXX more [indiscernible], want kind going gain we the as system-level think custom is also as inherently shift those That X higher quality larger to then on ASICs, relative as you're the a to we adding mobile we've insertions And in share in try test continue markets see those see become the industrial win probably demanding. thing traditionally market to In to X for TAM test sockets. you share. as share we well achieve auto out a in levels as think markets factor. growth to other I in more to are point markets those customers the important a recover, going of and compute is I'll we to recovers share the of going our be those should that consider that long-term that be maybe we're market that as to and to XXXX portion had trying to add is

that's of one that going from it said was system And XX% is that, -- that growth level is drive test growth there that coming you that to test believe be for so helps a chunk we to to things that the XX% reps, that the of stuff.

Operator

no comments. Tsuchiguchi further for closing I'd any time. the over at Traci to are back floor like There to questions hand this

Samik Chatterjee

morning. this us with hope of Day joining March you for We again our able soon. Bye. [indiscernible], you forward be for And will to look speaking you to us many on we XX. join Thank that Analyst

Operator

conference. today's concludes This

this disconnect time. participation. at lines Thank You your your you for may

Teradyne (TER) 30 Jan 252024 Q4 Earnings call transcript