Teradyne (TER) investor relations material

Strategic business overview

• Two main business segments: mature test businesses and early-stage advanced robotics, both positioned for significant growth over the next 4–5 years driven by AI and market expansion.

• Robotics focuses on advanced, flexible AI-driven solutions, aiming to capture secular growth as physical AI adoption increases.

• Significant R&D and sales investments have been made to increase share in the compute segment, with expectations of notable gains over the next five years.

• VIP (Vertically Integrated Platform) compute market is rapidly growing, expected to double tester demand from $400M in 2024 to $800M+ by 2028.

• Compute market share is currently in the teens, with expectations for continued share gains.

Market trends and demand outlook

• AI and networking are the fastest-growing areas, with high-volume opportunities expected between late 2025 and early 2026.

• Traditional business cycles in semiconductor test have shifted from consumer-driven to hyperscaler capital budgets, reducing timing predictability.

• Memory segment is positioned for significant share gains from 2024–2025, with moderate growth expected midterm; SoC share is lower but expected to recover.

• Mobile TAM is depressed at $800M for 2025 but expected to recover in 2026 due to new process and packaging technologies increasing test intensity.

• DRAM market remains strong, with flash expected to grow faster from a low base, shifting the mix toward a more balanced DRAM/flash split.

Financial performance and outlook

• Gross margin remains stable around 59–60%, with little sensitivity to volume changes; product mix is the main driver of margin fluctuations.

• OpEx growth is targeted at about half the rate of top-line growth, with a significant variable component tied to profitability.

• System-level test business, after a downturn, is expected to recover and potentially exceed previous peaks, driven by growth across HDD, SSD, mobile, and compute SLT.

• Robotics business is focusing on spend discipline and repositioning toward higher-growth segments, with modest growth in 2026 and stronger growth in 2027 as large customer deployments ramp.