Teradyne (TER) UBS Global Technology and AI Conference summary

Semiconductor test market dynamics

• AI has been the main growth driver in the semiconductor test market, positively impacting both SoC and memory segments, while mobile, automotive, and industrial markets remain weak.

• AI exposure now extends beyond GPUs to include bespoke silicon for hyperscalers, networking silicon, and power management for high-power servers.

• The VIP compute market, driven by hyperscalers and automakers designing their own silicon, is growing faster than expected, with 2024 already reaching $300M and projected to exceed $500M by 2026.

• Market share in VIP compute is around 50%, a significant increase compared to 10-20% in traditional compute, with aspirations to grow further.

• Entry into traditional compute markets is challenging due to entrenched vendor relationships, but technology inflections like silicon photonics and co-packaged optics present new opportunities.

SoC and memory test market trends

• SoC test intensity, after years of decline, has recently stabilized and begun to rise, tracking more closely with IC revenue since 2010.

• Mobile test market has shrunk due to increased capital efficiency, but this trend is seen as temporary, with complexity expected to drive future demand.

• There is a disconnect between front-end equipment investment and tester market size, especially in non-memory SoC, suggesting future tester demand as new capacity comes online.

• In memory, particularly HBM, share gains are expected as new performance test solutions are qualified and the market shifts from HBM3E to HBM4.

• HBM test market is split between die and stack testing, with wafer test expected to grow faster due to increasing die counts per stack.

Market outlook and growth drivers

• SoC test TAM peaked at $2B, troughed at $800M, and is expected to rise in 2025 as excess capacity is absorbed and incremental buys resume.

• Industrial automation and robotics markets are currently weak, especially in Europe and automotive, but new channels and products are driving growth against the trend.

• AI-driven robotics applications are expected to ramp significantly, with AI currently a small but growing portion of robotics revenue, especially in logistics.

• Partnerships, such as with NVIDIA, are enabling new AI capabilities in robotics, with new software and development kits supporting solution partners.

• Near-term growth in robotics is expected from new products and channels, while AI-driven growth is anticipated to accelerate from 2026 onward.