Teradyne (TER) Bank of America 2026 Global Technology Conference summary

Market outlook and growth drivers

• Automated test equipment (ATE) buy rates have increased, defying expectations as semiconductor revenue outpaces unit volume growth.

• Test market growth is driven by higher wafer output and advanced packaging, especially for AI accelerators and HBM, increasing test intensity.

• If wafer fab equipment (WFE) reaches $250B–$300B by decade's end, ATE total addressable market (TAM) could rise to $20B, up 150% from current levels.

• Company expects to outpace ATE TAM growth and increase market share over the next few years.

Market share and segment dynamics

• Current ATE market share is about 30%, with a target of 35–38% in a $12B–$14B market.

• Share gains are attributed to increased presence in compute, DRAM, and HBM segments, with further growth expected in mobile, power, industrial, and flash.

• CPU testing TAM is expected to grow as the ratio of accelerator to CPU test intensity narrows, with significant opportunity in Arm-based CPUs.

• Dual-vendor strategies at major customers may cap share at 30% in the near term, with gradual increases over three to four years.

Technology trends and future opportunities

• AI hardware demand is shifting from general-purpose data centers to inference-specific silicon, driving new test requirements through 2030.

• Edge-deployed AI, including robotics and autonomous systems, is a key focus, with the company aiming to provide robust platforms for physical AI.

• Co-packaged optics (CPO) test TAM is projected to grow from $100M in 2026 to $300M–$700M by 2028, potentially exceeding $1B by 2030.

• The company holds strong share in network switches for CPO and expects a competitive duopoly as the market expands.