Teradyne (TER) Citi's 2024 Global TMT Conference summary

Market outlook and segment performance

• SoC test market estimated at $3.6–$4.2 billion for the year, with compute at $1.6B, mobility at $0.8B, automotive at $0.5B, industrial at $0.3B, and service at $0.7B.

• Compute segment strengthened, driven by AI and strong demand in China, while mobility, auto, and industrial segments weakened.

• Memory market shows continued capacity rollout in China and significant HBM tailwinds, with DRAM wafer sort rebounding.

• Compute market expected to remain flat next year, with ongoing AI tailwinds and cautious outlook on China demand.

• Exposure to China remains low, with about 10% of revenue from the region, split between indigenous and multinational customers.

Competitive positioning and market share

• Strong position in networking and custom ASIC programs, with over 50% market share in VIP (vertically integrated producer) design wins.

• Strategic pivot to focus on hyperscalers and custom silicon has led to increased share in a growing compute market.

• Barriers to switching SoC test suppliers are high due to engineering and design protocol stickiness, with share shifts occurring mainly at technology discontinuities.

• Memory market share has grown from 4% to near parity with the main competitor, especially in high-complexity segments like HBM.

• Expectation of continued share gains in both SoC and memory, especially as new architectures and edge AI drive demand.

Technology trends and innovation

• AI and data center growth are major tailwinds for compute and memory segments.

• Edge AI is expected to drive a new upgrade cycle in mobility, increasing chip complexity and content.

• Transition to advanced nodes (3nm, 2nm) and new architectures (Gate-All-Around) will support future growth.

• HBM tester (Magnum 7) offers forward compatibility with HBM3E and HBM4, providing a unique competitive advantage.

• Forward compatibility in testers is seen as a net positive for market share, not a cannibalization risk.