Teradyne (TER) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Industry environment and test intensity

• Semiconductor test intensity is at unprecedented levels, driven by AI compute and high-margin memory and SoC segments.

• Test intensity, measured as a ratio of device COGS, has seen a significant increase, especially in HBM and AI accelerators.

• Current cycle is broader and more durable than the 2020–2021 mobile-driven boom, with AI and data center investments extending into 2027.

• AI revenue growth is fueling capital expenditure, with multiple waves expected, including future edge AI and co-packaged optics.

• Data center architecture changes and AI are transforming the global economy, creating tailwinds for test and robotics businesses.

Compute, networking, and VIP market dynamics

• Networking market is consolidating, with three main players and increased test intensity due to denser data center architectures.

• Significant growth in networking expected from 2024 to 2025, with future upside from silicon photonics and co-packaged optics starting in late 2024.

• VIP compute market is concentrated, with two major hyperscaler ASIC programs at scale and potential for more to ramp up.

• Merchant GPU market penetration is on track, with tester qualification expected in H1 2026 and initial revenue in H2 2026.

• Tester agnostic development is being adopted, enabling easier platform competition and potential for share gains over the next three years.

Memory and storage trends

• DRAM test intensity is rising, especially for HBM, with differentiation in post-stack wafer test and strong share in stack and final test.

• DRAM market is robust, with complexity and unit volume both increasing the total addressable market.

• HDD market has inflected and is expected to grow from 2025 to 2026, with new customer wins contributing to share gains.

• SSD demand has not yet inflected, but a disconnect between data center flash needs and manufacturer investment may resolve, driving future TAM growth.