Question-and-Answer SessionSanjay MehtaCFO, VP & Treasurer So yes, that's true that we have stopped providing our TAM update publicly. But I will share a little bit of color as what's going on in the market from our perspective. So when I think about it, I'll cover -- first, I'll talk about compute. The compute segment has consistently grown and is very strong, really driven by AI. And from our perspective, what's driving our growth, and we'll have a strong second half, but what's driving our growth is real ...

Teradyne (TER) 2025 Conference Summary Industry Overview - **Semiconductor Testing Market**: The conference primarily focused on the semiconductor testing market, with specific emphasis on segments such as Compute, Mobility, Auto, Industrial, and Memory testing. Key Points and Arguments Compute Segment - **Growth Driven by AI**: The Compute segment is experiencing strong growth, primarily driven by AI and custom ASICs from vertically integrated producers (VIPs) or hyperscalers [3][4] - **Lumpy Shipments**: Shipments are expected to be inconsistent due to project ramps occurring in Q3, Q4, and Q1 [4] - **Market Dominance**: Compute remains the dominant segment in semiconductor testing [4] Mobility Segment - **Transitory Weakness**: The Mobility segment faced challenges in the first half of the year due to supply chain transitions rather than end-market demand [5] - **Potential Recovery**: There are signs of recovery with new system demand emerging, particularly as AI integration in smartphones increases [31][36] Auto and Industrial Segments - **Low Activity Levels**: The Auto and Industrial segments are currently operating at low levels, with no significant increase in activity observed [5] Memory Segment - **Strong 2024 Expectations**: A strong total addressable market (TAM) for memory is anticipated in 2024, but a decline is expected in 2025 due to excess HBM testers in the market [6][39] - **HBM Testers Driving Growth**: The second half of 2025 is expected to be strong for memory testing, driven by HBM memory testers [6][39] Strategic Themes - **Three Key Themes**: The company identified three themes driving market growth: AI, electrification, and verticalization [8] - **Diversified Revenue Streams**: Teradyne's revenue is becoming less dependent on mobile end-market launches, focusing more on AI-driven sectors [9] Competitive Positioning - **UltraFLEX Strategy**: Teradyne's UltraFLEX product tester is designed specifically for high-performance compute, aiming to differentiate from competitors [12] - **Market Share Growth**: The company aims to capture 50% of new VIP participants in the market, currently tracking at that level [21] Robotics and Automation - **Focus on Large Accounts**: Teradyne is pivoting towards large accounts and OEMs to drive growth in the robotics segment, despite current market weaknesses [25][30] - **Profitability Challenges**: The robotics segment is not expected to reach breakeven in the near term due to ongoing market challenges [29] Financial Outlook - **Gross Margin Targets**: Teradyne aims for gross margins of 59% to 60%, with fluctuations expected based on product mix and market conditions [46][50] - **Capital Allocation Strategy**: The company prioritizes technical acquisitions that enhance market capabilities over share buybacks, with a focus on AI demand cycles [51][52] Product Innovations - **Launch of Magnum 7H**: The new memory tester, Magnum 7H, is designed for high performance and compatibility with future memory technologies, providing economic benefits to customers [43][45] Additional Important Insights - **Supply Chain Resilience**: The company has focused on supply chain resilience to mitigate geopolitical risks, impacting gross margins in 2023 [48] - **Market Dynamics**: The mobility market is expected to show signs of recovery in Q1 and Q2 of 2026, with significant shipments typically occurring in the latter half of the year [38] This summary encapsulates the key insights and strategic directions discussed during the Teradyne conference, highlighting the company's focus on AI-driven growth and its adaptive strategies in various market segments.

Core Insights - Teradyne (TER) reported second-quarter 2025 non-GAAP earnings of 57 cents per share, exceeding the Zacks Consensus Estimate by 5.56% but down 33.7% year over year [1] - Revenues for the quarter were $652 million, surpassing the Zacks Consensus Estimate by 0.89% but declining 10.7% year over year [1] Revenue Breakdown - Revenue from Semiconductor Test platforms was $492 million (75.5% of total revenues), System Test business generated $75 million (11.5%), and Robotics and Product Test contributed $85 million (13%) [2] Margin and Expenses - Non-GAAP gross margin for the quarter was 57.3%, a contraction of 110 basis points year over year [2] - Selling and administrative expenses rose 2.1% year over year to $157.8 million, accounting for 24.2% of revenues, an increase of 300 basis points [3] - Engineering and development expenses increased 5.9% year over year to $118.4 million, representing 18.2% of revenues, up 280 basis points [3] Operating Income - Non-GAAP operating income fell 38.5% year over year to $98.2 million, with the operating margin contracting 680 basis points to 15.1% [4] Balance Sheet and Cash Flow - As of June 29, 2025, Teradyne's cash and cash equivalents were $367.9 million, down from $507.8 million as of March 30, 2025 [5] - Net cash provided by operating activities in the reported quarter was $182.1 million [5] - The board authorized an expansion of the share repurchase program, increasing the target to $1 billion by the end of 2026 [5] Q3 Guidance - For Q3 2025, Teradyne expects revenues between $710 million and $770 million, with the Zacks Consensus Estimate at $764.4 million, indicating 3.7% growth year over year [6] - Non-GAAP earnings are projected to be between 69 cents and 87 cents per share, with the Zacks Consensus Estimate at 91 cents per share, suggesting 1.1% growth year over year [7] Zacks Rank and Comparisons - Teradyne currently holds a Zacks Rank 3 (Hold) [8] - Comparatively, Arista Networks (ANET) has a Zacks Rank 1 (Strong Buy), while Leidos (LDOS) and Enovix Corporation (ENVX) hold Zacks Rank 2 (Buy) [8]