Teradyne Q4 2025 Teradyne Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Teradyne Inc Earnings Call
As a reminder, today's call is being recorded.
I would now like to turn the call over to Amy Macandrews, Vice President of corporate relations for Teradyne. Please go ahead.
Thank you operator, good morning, everyone and welcome to our discussion of Teradyne's, most recent financial results.
I'm joined this morning by our CEO, Greg Smith, and our CFO Michele Turner.
Following our opening remarks, we'll provide details of our performance for the fourth quarter and full year of 2025.
Our outlook for the first quarter of 2026.
And our new target earnings model.
The press release containing our fourth quarter results was issued last evening.
We are providing slides as well as a copy of this earnings script on the Teradyne Investor website that maybe helpful. In following the discussion.
Replays of this call will be available via the same page after the call ends.
Speaker #1: Please stand by. Your meeting is about to begin. Ladies and gentlemen, good morning and welcome to the Teradyne Q4 and full-year 2025 earnings conference call.
The matter that we discussed today will include forward looking statements that involve risks that could cause teradyne's results to differ materially from management's current expectations.
We caution listeners not to place undue reliance on any forward looking statements included in this presentation.
Speaker #1: At this time, all participants are in a listen-only mode. A question and answer session will follow the prepared remarks. At that time, if you wish to ask a question, please press star one on your telephone keypad.
We encourage you to review the Safe Harbor statements contained in the slides accompanying this presentation as well as the risk factors described in our annual report on Form 10-K for the fiscal year ended December 31, 2024 on file with the SEC.
Speaker #1: As a reminder, today's call is being recorded. I would now like to turn the call over to Amy McAndrews, Vice President of Corporate Relations for Teradyne.
Additionally, these forward looking statements are made only as of today.
During today's call, we will refer to non-GAAP financial measures.
Speaker #1: Please go ahead.
We've posted additional information concerning these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measures were available on the investor page of our website.
Speaker #2: Thank you, Operator. Good morning, everyone, and welcome to our discussion of Teradyne's most recent financial results. I'm joined this morning by our CEO, Greg Smith, and our CFO, Michelle Turner.
Looking ahead between now on our next earnings call Sharon unexpected to participate in technology or industrial focused investor conferences hosted by Citi Susquehanna Morgan Stanley and Cantor.
Speaker #2: Following our opening remarks, we'll provide details of our performance for the fourth quarter and full-year of 2025, our outlook for the first quarter of 2026, and our new target earnings model.
Our quiet period will begin at the close of business on March 13th 2026.
Speaker #2: The press release containing our fourth quarter results was issued last evening. We are providing slides as well as a copy of this earnings script on the Teradyne Investor website that may be helpful in following the discussion.
Following Greg and myself comments. This morning, we will open up the call for questions.
This call is scheduled for one hour.
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Speaker #2: Replays of this call will be available via the same page after the call ends. The matter that we discussed today will include forward-looking statements that involve risks that could cause Teradyne's results to differ materially from management's current expectations.
Thanks, Amy and thank you all for joining us today I'll start off by summarizing our fourth quarter and full year 2025 results and provide some context for our initial view of 2026, and our new target earnings model.
Speaker #2: We caution listeners not to place undue reliance on any forward-looking statements included in this presentation, and encourage you to review the safe harbor statement contained in the slides accompanying this presentation as well as the risk factors described in our annual report on Form 10-K for the fiscal year ended December 31st, 2024, on file with the SEC.
<unk> had a strong fourth quarter with 41% sequential revenue growth and more than 100% non-GAAP earnings growth, both revenue and EPS were above our high guidance as trends. We noted previously continued through the end of the year.
Semiconductor test product test and robotics, all delivered double digit sequential growth.
Speaker #2: Additionally, these forward-looking statements are made only as of today. During today's call, we will refer to non-GAAP financial measures. We have posted additional information concerning these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measures, where available, on the Investor page of our website.
A striking trend was the increase in AI driven revenue in the second half of 2025. This.
This is obvious and computer memory. However, the rapid build out of cloud and edge. AI is also driving demand for power management, SLP, HDD ICT and optical test.
Speaker #2: Looking ahead, between now and our next earnings call, Teradyne expects to participate in technology or industrial-focused investor conferences hosted by Citi, Susquehanna, Morgan Stanley, and Cantor.
This aligns with the themes of AI vertical <unk> and electrification that we have highlighted in prior calls.
When you roll it up AI demand drove 40% to 50% of our revenue in Q3.
Speaker #2: Our quiet period will begin at the close of business on March 13, 2026. Following Greg and Michelle's comments this morning, we'll open up the call for questions.
In Q4, AI drove more than 60% of our revenue looking forward to Q1 of 2026, we expect that upwards of 70% of our revenue will be driven by AI applications.
Speaker #2: This call is scheduled for one hour. Greg,
Speaker #3: Thanks, Amy. And thank you all for joining us today. I'll start off by summarizing our fourth quarter in full-year 2025 results and provide some context for our initial view of 2026 and our new target earnings model.
Now Michelle will go into a lot more detail about the quarterly results and trends I'd like to give you a little full year color for each of teradyne's businesses.
Starting first with the product test group.
Overall, we grew revenue 8% in 2025, driven by strength in defense and aerospace we have successfully integrated quantified photonics into this group, including training the sales team for light point and production Board test on the quantified product line.
Speaker #3: Teradyne had a strong fourth quarter with 41% sequential revenue growth and more than 100% non-GAAP earnings growth. Both revenue and EPS were above our high guidance as trends we noted previously continued through the end of the year.
We expect all of our business lines in this group to grow in 2026.
Speaker #3: Semiconductor tests, product tests, and robotics all delivered double-digit sequential growth. A striking trend was the increase in AI-driven revenue in the second half of 2025.
Turning now to robotics.
In 2025, we saw three consecutive quarters of growth starting in Q2 as we've discussed previously we are optimistic about the value, creating opportunity and physical AI and advanced robotics and our strategy has been to focus the organization on the segments customers and technologies with the high.
Speaker #3: This is obvious in compute and memory. However, the rapid buildout of cloud and edge AI is also driving demand for power management, SLT, HDD, ICT, and optical tests.
Speaker #3: This aligns with the themes of AI, verticalization, and electrification that we have highlighted in prior calls. When you roll it up, AI demand grew 40 to 50% of our revenue in Q3.
<unk> growth potential.
For all of 2025, the semiconductor test group delivered 19% year on year growth.
Soc test revenue grew 23% year over year, driven mainly by networking and VIP compute.
Speaker #3: In Q4, AI drove more than 60% of our revenue. Looking forward to Q1 of 2026, we expect upwards of 70% of our revenue will be driven by AI applications.
Memory test revenue was up slightly in a roughly flat memory test market on continued share gains in HBM and DRAM final test.
Speaker #3: Now, Michelle will go into a lot more detail about the quarterly results and trends. I'd like to give you a little full-year color for each of Teradyne's businesses.
With strong VIP revenue, we believe that we maintained about 50% market share in the VIP compute market in 2025.
Speaker #3: Starting first with the Product Test group. Overall, we grew revenue 8% in 2025, driven by strength in defense and aerospace. We have successfully integrated Quantifi Photonics into this group, including training the sales team for LightPoint and production board tests on the Quantifi product line.
This entire segment remains very concentrated with only a few players driving significant HEB purchases.
This contributed contributed to revenue Lumpiness in 2025, and complicates forecasting VIP share in the future.
Our full year financial results reflect our successful pivot to AI, driven demand and high performance computing.
Speaker #3: We expect all of our business lines in this group to grow in 2026. Turning now to robotics. In 2025, we saw three consecutive quarters of growth starting in Q2.
Back in 2020, and 2021, our business was dominated by mobile we were highly exposed to mobile and SLC memory and wireless test.
Speaker #3: As we've discussed previously, we are optimistic about the value-creating opportunity in physical AI and advanced robotics, and our strategy has been to focus the organization on the segments customers and technologies with the highest growth potential.
Now in 2025 compute is the largest component of our revenue and grew 90% year over year.
This growth can be attributed to the decisions and investments we've made over the past few years that are now yielding.
Speaker #3: For all of 2025, the Semiconductor Test group delivered 19% year-on-year growth. SOC Test revenue grew 23% year over year, driven mainly by networking and VIP compute.
Our historically strong networking business has been growing because of high density network connections in AI data centers and the increasing complexity of networking components.
Work that we've done to align our product roadmap and customer facing teams to VIP and merchant computing customers has enabled us to capture valuable new design wins.
Speaker #3: Memory Test revenue was up slightly in a roughly flat memory test market on continued share gains in HBM and DRAM final test. With strong VIP revenue, we believe that we maintained about 50% market share in the VIP compute market in 2025.
While we are gaining in compute and memory, we believe that diverse revenue mix as teradyne's long term strength.
Using round numbers in 2023, only about 10% of our Soc product revenue wasn't complete.
Speaker #3: This entire segment remains very concentrated, with only a few players driving significant ATE purchases. This contributed to revenue lumpiness in 2025 and complicates forecasting VIP share in the future.
50% was in auto and industrial and 40% was in mobile.
Now in 2025, nearly 50% was in compute and auto industrial and mobile were roughly balanced at a quarter. Each this balanced de risks on target earnings model.
Speaker #3: Our full-year financial results reflect a successful pivot to AI-driven demand in high-performance computing. Back in 2020 and 2021, our business was dominated by mobile.
The Soc Tam reached record levels in 2025, nearly 60% larger than 2024 looking forward, we expect that tend to grow robustly over the near term driven by continued data center build out and the growth of edge AI.
Speaker #3: We were highly exposed to mobile in SOC, memory, and wireless test. Now, in 2025, compute is the largest component of our revenue and grew 90% year over year.
Predicting this growth rates from year to year is going to be difficult because of the high concentration and less predictable product groups.
Speaker #3: This growth can be attributed to the decisions and investments we've made over the past few years that are now yielding. Our historically strong networking business has been growing because of high-density network connections in AI data centers and the increasing complexity of networking components.
One big sockets sliding across ear boundaries could have a significant positive or negative effect on year to year growth.
Although this uncertainty makes it challenging to predict that 2026th Soc Tam we are expecting robust year on year Tam growth at.
Speaker #3: The work that we have done to align our product roadmap and customer-facing teams to VIP and merchant computing customers has enabled us to capture valuable new design wins.
At a segment level, we expect compute to grow significantly from a very high base driven by AI.
We expect to see moderate recovery in auto industrial, but we are uncertain about the mobile Tam.
Speaker #3: While we are gaining in compute and memory, we believe that diverse revenue mix is Teradyne's long-term strength. Using round numbers, in 2023, only about 10% of our SOC product revenue was in compute.
Although we are expecting to see a significant jump in device complexity. There are questions about unit volume product mix and capital efficiency improvements all in all we believe that we are positioned to gain share in the single digits in Soc test in a significantly larger market.
Speaker #3: Fifty percent was in auto and industrial, and 40% was in mobile. Now, in 2025, nearly 50% was in compute, and auto, industrial, and mobile were roughly balanced at a quarter each.
Now shifting gears to memory.
In 2025, the overall memory Tam was down about 4% from 2024, and we were able to gain a little share.
Speaker #3: This balance de-risks our target earnings model. The SOC TAM reached record levels in 2025, nearly 60% larger than 2024. Looking forward, we expect that TAM to grow robustly over the midterm, driven by continued data center buildout and the growth of edge AI.
Bright spot in the test the memory test market was AI compute demand for both <unk> and DRAM.
Again, it is useful to take a longer term look at the changes in memory test.
Back in 2020 in 2021, the memory test market was split more or less evenly between flash and DRAM.
Speaker #3: Predicting this growth rate from year to year is going to be difficult because of the high concentration and less predictable product ramps. One big socket sliding across year boundaries could have a significant positive or negative effect on year-to-year growth.
In 2025, DRAM and HBM comprise nearly 90% of the memory Tam a trend we expect to continue into 2026.
Overall, we expect a resurgent memory market in 2026 with low double digit Tam growth over 2025% driven by continued strength in HBM in DRAM and we expect to continue our incremental share gains.
Speaker #3: Although this uncertainty makes it challenging to predict the 2026 SOC TAM, we are expecting robust year-on-year TAM growth. At a segment level, we expect compute to grow significantly from a very high base, driven by AI.
Our ISG business delivered over 50% growth from 2024 to 2025 <unk>.
Speaker #3: We expect to see moderate recovery in auto industrial, but we are uncertain about the mobile TAM. Although we are expecting to see a significant jump in device complexity, there are questions about unit volume, product mix, and capital efficiency improvements.
Historically <unk> has had very high segment and customer concentration in 2024 and before we served the HDD and mobile SLP markets and our revenue was mostly driven by a large single customer in each segment.
Speaker #3: All in all, we believe that we are positioned to gain share in the single digits in SOC test in a significantly larger market. Now, shifting gears to memory.
In 2025. This began to change we won a new customer in mobile <unk> in 2024 and that ramp strongly in 2025.
Speaker #3: In 2025, the overall memory TAM was down about 4% from 2024, and we were able to gain a little share. A bright spot in the memory test market was AI compute demand for both HBM and DRAM.
Also in 2025, we entered the compute esselte and won business from two customers in that segment.
Finally in late 2025, we received orders from a new customer in HDD, which will be ramping in 2026.
Speaker #3: Again, it is useful to take a longer-term look at the changes in memory test. Back in 2020 and 2021, the memory test market was split more or less evenly between flash and DRAM.
All of this is setting us up for continued strong revenue growth from <unk> in 2026 and beyond.
Michel will be going over our target earnings model in some detail I would like to comment on the underlying drivers of that model.
Speaker #3: In 2025, DRAM and HBM comprise nearly 90% of the memory TAM, a trend we expect to continue into 2026. Overall, we expect a resurgent memory market in 2026, with low double-digit TAM growth over 2025, driven by continued strength in HBM and DRAM, and we expect to continue our incremental share gains.
And looking at the future we have to answer two questions.
The first question is whether the markets. We're in are poised for growth in.
In our mind the answer to that is unequivocally true right now the prime mover of the market is AI data center, our product product lines cover this market from beginning to end from testing compute devices to complete server trace all the way to a robot assisted operations in AI data centers.
Speaker #3: Our IST business delivered over 50% growth from 2024 to 2025. Historically, IST has had very high segment and customer concentration. In 2024 and before, we served the HDD and mobile SLT markets, and our revenue was mostly driven by a large single customer in each segment.
Looking beyond the AI data center segments of the market, where teradyne has high share are poised for recovery auto.
Auto industrial will have long term growth tied to the transition to edge AI Evs and 800 volt datacenter power mobile is positioned for steep complexity increases as the compute power required to run influenced an LMS is crammed into phones physical AI has already expanded.
Speaker #3: In 2025, this began to change. We won a new customer in mobile SLT in 2024, and that ramped strongly in 2025. Also in 2025, we entered compute SLT and won business from two customers in that segment.
And the applications of advanced robotics, and we believe that trend will continue to strengthen.
Speaker #3: Finally, in late 2025, we received orders from a new customer in HDD, which will be ramping in 2026. All of this is setting us up for continued strong revenue growth from IST in 2026 and beyond.
The second question is whether we teradyne are positioned to gain share in the markets, where we play.
Again, I think the evidence from 2025 is clear.
We are.
Speaker #3: Michelle will be going over our target earnings model in some detail. I'd like to comment on the underlying drivers of that model in looking at the future.
We have gained share in HBM and DRAM, we have maintained high share in networking, we have ramped significant new VIP sockets.
Speaker #3: We have to answer two questions. The first question is whether the markets we are in are poised for growth. In our mind, the answer to that is unequivocally true.
We have a leadership position in Silicon Photonics device test and we are in play are in play for a share of merchant GPU.
We have one new segments and customers in our ISG group in both storage test and system level test of compute devices.
Speaker #3: Right now, the prime mover of the market is AI data center. Our product lines cover this market from beginning to end, from testing compute devices to complete server trays, all the way to robot-assisted operations in AI data centers.
But teradyne's exposure to the growing AI data center market extends beyond device test our production Board test business tests with server trays that devices go into or quantify photonics instruments test silicon photonics from device to rack.
Speaker #3: Looking beyond the AI data center, segments of the market where Teradyne has high share are poised for recovery. Auto industrial will have long-term growth tied to the transition to edge AI, EVs, and 800-volt data center power.
In alignment with our strategy to go from wafer to datacenter last Thursday, Teradyne announced an agreement with multi lane to form a joint venture.
Speaker #3: Mobile is positioned for steep complexity increases as the compute power required to run inference on LLMs is crammed into phones. Physical AI is
Multi lane as a global leader in high speed Io and datacenter interconnect test solutions.
This joint venture will be called Multilane test products and has been for them to serve the growing AI data center demand.
Speaker #1: Is already expanding the applications of advanced robotics , and we believe that trend will continue to strengthen . The second question is whether whether second is the question we , Teradyne , positioned to gain share in the where we play markets think the Again , I .
Upon the close of this transaction, which we expect in the first half of this year, we will be the majority owner of the JV and Multilane will maintain a minority position.
In robotics, we have built a world class platform for physical AI applications that is being applied in multiple industry verticals and we have embedded AI capabilities into our <unk> products. Most importantly, we have begun to ramp an important worldwide AI driven application in e-commerce.
Speaker #1: evidence from 2025 is clear . We are we gained have share in HBM and Dram . We have maintained high share in We networking .
Speaker #1: We have ramped significant new VIP sockets. We have a leadership position in silicon photonics device test, and we are in play for a share of merchant GPU.
So to sum up teradyne is positioned to deliver better than market growth in markets that are going to be growing robustly over the next few years.
Speaker #1: We have won new segments and customers in our IST group in both storage test and system-level test of compute devices. Exposure to the growing AI data center market extends beyond device test.
We foresee a future where the HDD Tam will be $12 billion to $14 billion up from about $9 billion in 2025.
In that market, our long term model illustrates our expectation that teradyne will deliver nearly two times 2020, five's revenue and two five times the earnings per share.
Speaker #1: Our production board test business tests the server trays that devices go into. Our Quantify Photonics instruments test silicon photonics from device to rack, in alignment with our strategy to go from wafer to data center.
With that I'll turn the call over to Michelle Turner, Our Chief Financial Officer and welcome her to her very first Teradyne Teradyne earnings call Michelle over to you.
Speaker #1: Last Thursday, Teradyne announced an agreement with Multilane to form a leader in global Multilane speed, IO, and data center interconnect test solutions.
Thank you, Greg and good morning, everyone I'm thrilled to have joined the Caribbean Keating and look forward to the value creating opportunities.
Speaker #1: This joint venture will be called Multilane Test Products and is being formed to serve the growing AI data center . Demand . Upon the close of this transaction , which we expect in the first half of this year , we will be the majority owner of the JV and Multilane will maintain a minority position in robotics .
Today, I will cover our fourth quarter and full year 2025 financial results, then I will share our Q1 2026 outlook and then finally I will discuss our new target earnings model.
Now onto Q4 fourth quarter sales were $1 billion 83, with non-GAAP EPS of $1 80, both above the high end of our guidance range.
Speaker #1: We have built a world class platform for physical AI applications that is being applied in multiple industry verticals , and we have embedded AI capabilities into our Amr products .
Fourth quarter sales were the highest revenue quarter of 2025, and our second highest quarter in history, only 3 million below our record during the mobile boom of 2021.
Speaker #1: Most importantly , we have begun to ramp an important worldwide AI driven application in e-commerce . So to sum up , Teradyne is positioned to deliver better than market growth and markets that are going to be growing robustly over the next few years .
Semi test revenue was 883 million fueled by AI compute and memory demand.
Within semi test Soc revenue was $627 million up 47% quarter on quarter.
Speaker #1: We foresee a future where the at Tam will be 12 to $14 billion , up from about $9 billion in 2025 . In that market , our long term model illustrates our expectation that Teradyne would deliver nearly two times 2025 revenue and two and a half times the earnings per share .
Memory revenue was $206 million.
61% quarter on quarter, marking a record sales quarter for our memory business.
The pilot test group at $110 million grew double digit sequentially and year on year, driven by strong defense and aerospace demand.
Speaker #1: With that, I'll turn the call over to Michelle Turner, our Chief Financial Officer, and welcome her to her very first Teradyne.
<unk> revenue of $89 million grew for the third consecutive quarter and was up 19% from Q3.
Speaker #2: Thank you , Greg , and morning , good everyone . I'm thrilled to have joined the Teradyne Inc team . And look forward to the value creating opportunities ahead .
Q4, greater than 5% of our robotics, where the revenue was driven by a large e-commerce customer.
Speaker #2: Today, I will cover our fourth quarter and full year 2025 financial results. Then I will share our Q1 2026 outlook, and finally, I will discuss our new target earnings model.
Moving on to bottom line non-GAAP gross margins were 57, 2% aligns with our guidance range driven by semi tests AIG demand strength offset primarily by lower product test strip margins and robotics next any inventory write down on legacy products.
Speaker #2: Now, on to Q4. Fourth quarter sales were $1,000,000,083, with non-GAAP EPS of $1.80. Both were above the guidance and at the high end of our range.
non-GAAP operating expenses were $306 million and the non-GAAP operating profit rate was 29% in the quarter.
Speaker #2: Fourth quarter sales were the highest revenue quarter of 2025 , and our second highest quarter in history . Only 3 million below our record during the mobile boom of 2021 , semi test revenue was 883 million , by fueled AI compute and memory demand within semi test SoC revenue was 647 million , up 47% quarter on quarter and memory revenue was 206 million , up 61% quarter on quarter , marking a record sales quarter for our memory business .
non-GAAP operating profit dollars in the quarter roughly doubled to $314 million in comparison to both the prior quarter and prior year.
We generated $219 million in free cash flow and returned $204 million to our shareholders through share repurchases and dividends.
Our tax rate for the quarter, excluding discrete items was 10, 6% and 10, 3% on a non-GAAP and GAAP basis, respectively.
Overall fourth quarter results were strong across the portfolio.
Speaker #2: product The test group , at 110 million , grew double digits sequentially and year on year , driven by strong defense and aerospace demand .
Now turning to full year results, our revenue was $3 2 billion up 13% from prior year at the beginning of the year, our SSD revenue with equally divided across our major end markets as cute mobility and auto and industrial.
Speaker #2: Robotics revenue of 89 million grew for the third consecutive quarter and was up 19% from Q3 in Q4 , greater than 5% of our robotics driven revenue was driven by a large e-commerce customer .
In the year fueled by strong AI driven demand compute is now the largest part of our SSD portfolio eclipsing our historical stronghold of mobile.
Speaker #2: Moving on to bottom line , non-GAAP gross margins were 57.2% aligned with our guidance range , driven by semi test AI demand strength offset primarily by lower product test group margins and robotics mix , and an inventory write down on legacy products .
From an overall portfolio perspective semi test now represents close to 80% of our enterprise sales an increase from the low seventy's over the last few years.
From a customer perspective, I'd like to remind you about a characteristic of our business model.
Speaker #2: non-GAAP operating expenses were 306 million and non-GAAP operating profit rate was 29% in the quarter . non-GAAP operating profit , dollars in the quarter , roughly doubled to 314 million .
Typically have a specifying customer who choose this platforms and drives demand and purchasing customer who actually places the order and receive the equipment.
And different cases, specifying and purchasing customers have more influence in the purchase decision.
Speaker #2: In comparison to both the prior quarter and prior year, we generated $219 million in free cash flow and returned $204 million to our shareholders through share repurchases and dividends.
In 2025, we had two greater than 10% specifying customers and one greater than 10% purchasing customer.
Gross margin for the year was 58, 3% Opex was $1 2 billion and operating profit was 22% non.
Speaker #2: Our tax rate for the quarter , excluding discrete items , was 10.6% and 10.3% on a non-GAAP and GAAP basis , respectively . Overall , fourth quarter results were strong across the portfolio .
non-GAAP EPS was $3.96.
We generated $450 million in free cash flow and returned 780, 590 or 174% of free cash flow to our shareholders through share repurchases and dividends.
Speaker #2: Now , turning to full year results . Our revenue was $3.2 billion , up 13% from prior year . At the beginning of the year , our SOC revenue was equally divided across our major end markets of compute , mobility and auto and industrial .
We ended 2025 with $448 million of cash and marketable securities.
Speaker #2: A strong AI driven demand compute is now the largest part of our SoC portfolio , eclipsing our historical stronghold of mobile from an overall portfolio perspective , Semitist now represents close to 80% of our enterprise sales , an increase from the low 70s over the last few years .
Our tax rate for the full year, excluding discrete items was 12, 8% and 12, 6% on a non-GAAP and GAAP basis, respectively.
Now to our outlook for Q1.
Since our October call, we continue to see demand across our group strengthen Q1 sales are expected to be between 115 billion and $1, two 5 billion, which would be a new quarterly record driven by all things AI.
Speaker #2: From a customer perspective , I'd like to remind you about a characteristic of our business model . We typically have a specifying customer who chooses platforms and drives demand , and a purchasing customer actually who places the order and receives the equipment in different cases , the specifying and purchasing customers have more influence in the purchase decision .
The midpoint of this revenue range is 11% growth from an already strong Q4, and 75% growth from the same period in 2025.
non-GAAP EPS in the range of $1 89 to $2 and 25 on.
Speaker #2: In 2025 , we two had greater than 10% specifying customers and one greater than 10% purchasing customer gross margin for the year was 58.3% .
158 million diluted shares.
From a margin perspective, we expect first quarter gross margins to be in the range of 58, 5% to $59 five.
Speaker #2: OpEx was 1.2 billion , and operating profit was 22% . non-GAAP EPs was $3.96 . We generated 450 million in free cash flow and returned 785 million , or 174% of free cash flow to our shareholders through share repurchases and dividends .
180 basis points at the midpoint of the guidance quarter over quarter.
Opex is expected to increase 6% from Q4 and run at approximately 26% to 28% of first quarter sales.
The non-GAAP operating profit rate at the midpoint of our first quarter guidance is 32%.
With the strong start to the year I wanted to take a minute to talk about our historical sales patterns and how this is a classic example of history is not necessarily indicative of the future.
Speaker #2: We ended 2025 with $448 million of cash and marketable securities . Our tax rate for the full year , excluding discrete items , was 12.8% and 12.6% on a non-GAAP and GAAP basis , respectively .
Many of you who have been following us for a while.
Historically, we've experienced what we call lumpy Q2, or Q3 revenue trends tied to mobile demand and product life cycles.
Speaker #2: Now to our for Q1 outlook . Since our October call , we've continued to see demand across our group strength . Q1 sales are expected to be between 1.1 5,000,000,001.5 billion , which would be a new quarterly record driven by all things AI .
From 2020 to 2024, we consistently deliver the majority of our sales in second and third quarter.
2025 broke this pattern.
Speaker #2: The midpoint of this revenue range is 11% growth from an already strong Q4 and 75% growth from the same period in non-GAAP 2025.
Q4 represented our largest quarter of the year.
As our compute and memory portfolios continue to grow our revenue will continue to be lumpy, yes follow on Thats predictable pattern, while 2025 sales were 40% in the first half and 60% in the second half based on what we know today, we expect 2026 sales for the Nbn versus.
Speaker #2: EPs is in the range of $1 . $0.89 to $2.25 on 158 million diluted shares , from a margin perspective , we expect first quarter gross margins to be in the range of 55 to 59.5 , up 180 basis points at the midpoint of the guidance quarter over quarter .
Before I walk through our new target earnings model, a few comments on our recently announced multi lane joint venture.
As Greg mentioned, we expect to close the joint venture in Q2 26.
Speaker #2: OpEx is expected to increase 6% from Q4 and run at approximately 26 to 28% of first quarter sales. The non-GAAP operating profit rate at the midpoint of our first quarter guidance is 32%. With the strong start to the year, I want to take a minute to talk about our historical sales patterns and how this is a classic example of how history is not necessarily indicative of the future.
For your modeling purposes. The results of this business will be consolidated into the results of our product test script.
Our EPS will reflect our share of the results of this business.
We'll disclose the net income attributable to Noncontrolling interest as a new line item on our income statement.
We expect this deal to be accretive in 2026 with a de minimis impact to EPS.
Speaker #2: Many of you who have been following us for a while know, historically, we've experienced what we call lumpy Q2 or Q3 revenue trends tied to demand and mobile product life cycles from 2020 to 2024.
Now moving onto our new target earnings model, rather than anchoring our earnings model to a specific future year as we've done historically this year, we are framing it around what our P&L looks like adding ETE Tam of $12 billion to $14 billion, which we believe is achievable within this midterm. This.
Speaker #2: We consistently delivered the majority of our sales in the second and third quarter. 2025 broke this pattern. Q4 represented our largest quarter of the year, as our compute and memory portfolios continue to grow.
Approach better reflects the inherent lumpiness in both compute and memory demand by program timing and customer buying patterns can shift revenue across the quarter in your boundaries.
Speaker #2: Our revenue will continue to be lumpy , yet follow a less predictable pattern . While 2025 sales were 40% in the first half and 60% in the second half , based on what we know today , we expect 2026 sales to be at the inverse .
So at an <unk> of $12 billion to $14 billion, our target model assumes roughly $6 billion of revenue.
At this scale, we expect gross margins between 59, and 61% a point higher at the high end versus our prior model.
Speaker #2: Before I walk through our new target earnings model, a few comments on our recently announced Multilane joint venture. As Greg mentioned, we expect to close the joint venture in Q2 '26 for your modeling purposes.
Anticipate opex of 27% to 29% of revenue, reflecting operating leverage and the benefits of scale.
This results in an operating profit of 30% to 34% and non-GAAP EPS of $9 50 to $11.
Speaker #2: The results of this business will be consolidated into the results of our Product Test group, and our EPS will reflect our share of the results of this business.
We expect this growth over the midterm to be proportional across each of our groups from a semi test group perspective, we expect to grow our revenue greater than the overall ETE market growth rate, reflecting our expectations of share gains.
Speaker #2: We will disclose the net income attributable to the noncontrolling interest as a new line item on our income statement. We expect this deal to be accretive in 2026 with a de minimis impact to EPS.
This growth is driven by continued strength in AI compute and memory as well as anticipated recovery in auto and industrial and mobile.
Speaker #2: Now , moving on to our new target earnings model , rather than anchoring our earnings model to a specific future year , as we've done historically this year , we are framing it around what our PNL looks like at an at Tam of 12 to 14 billion , which we believe is achievable within this mid-term .
Our mobile assumptions reflect recovery, but not a return to the 2021 peak.
Also expect growth in ISG tied to wins in SLT for compute as well as HDD.
From a product test group perspective, we expect growth across the portfolio tied to compute defense Photonics high speed Internet data and data centers.
Speaker #2: This approach better reflects the inherent lumpiness in compute and memory demand , where program timing and customer buying patterns can shift revenue across the quarter .
From our Robotics group perspective, we expect growth tied to physical AI, expanding tam reducing implementation complexity and continued persistent labor shortages, our strategic pivot towards large accounts, along with a sharper focus on e-commerce logistics semiconductor and electronics.
Speaker #2: In year boundaries . So at an at Tam of 12 to 14 billion , our target model assumes roughly $6 billion of revenue at this scale , we expect gross margins between 59 and 61% , a point higher at the high versus end our prior model .
Speaker #2: We anticipate opex of 27 to 29% of revenue , reflecting operating leverage in the benefits of scale . This results in an operating profit of 30 to 34% and non-GAAP EPs of $9.50 to $11 .
Articles is expected to further support growth.
This new target earnings model is reflective of our conviction in the growth potential of the AP Tam driven by all things AI, even at today's unprecedented levels.
Moving from a data driven earnings model to an evergreen line reflects this conviction while also recognizing a lack of precision in terms of which year. This comes to fruition.
Speaker #2: We expect this growth over the mid-term to be proportional across each of our groups . From a semi-truck group perspective , we expect to grow our revenue greater than the overall market growth rate , reflecting our expectations of share gains .
Now turning to capital allocation our.
Our strategy remains consistent to maintain cash reserves that enable us to run the business and have dry powder for M&A for reference from 2015 to 2025, we returned over $5 4 billion to shareholders through share repurchases and dividends, which is roughly a 100% of free cash flow.
Speaker #2: This growth is driven by continued strength in AI compute and memory, as well as anticipated recovery in industrial and mobile. Our mobile assumptions reflect recovery, but not a return to the 2021 peak.
Speaker #2: We also expect growth in IST , tied to wins in SLT for compute , as well as HDD from a product test group perspective , we expect growth across the portfolio tied to compute defense photonics , high speed internet data and data centers from a robotics group perspective , we expect growth tied to physical AI , expanding Sam , reducing implementation complexity , and continued persistent labor shortages .
We will remain opportunistic around value, creating inorganic opportunities as well as share buybacks.
So summing up exiting 2025, we are encouraged by the strength of the business. Our overall company revenues grew 13% year on year.
So seeing memory contributed 17% year over year, helping to achieve a 23% increase in our EPS to $3 96.
Speaker #2: Our strategic pivot towards key accounts, with a sharper focus on e-commerce, logistics, semiconductor, and electronics verticals, is expected to further support growth.
We are making strategic investments to drive competitive advantages and gain market share.
Semi test and product test scripts, we remained focused on large accounts in attractive verticals to drive sustainable growth in robotics.
Speaker #2: This new target earnings model is reflective of our conviction in the growth potential of the eight TAM, driven by all things AI.
We enter 2026 feeling good about the year ahead with that I'll turn the call back to the operator for questions operator.
Speaker #2: Even at today's unprecedented levels, moving from a date-driven earnings model to an evergreen one reflects this conviction, while also recognizing a lack of precision in terms of which year this comes to fruition.
Thank you.
We will now be taking questions from the Teradyne's research analysts.
At this time, if you wish to ask a question. Please press star one on your telephone keypad.
Speaker #2: Now , turning to capital allocation , our strategy remains consistent to maintain cash reserves that enable us to run the business and have dry powder for M&A for reference , from 2015 to 2025 , we returned over 5.4 billion to shareholders through share repurchases and dividends , which is roughly 100% of free cash flow .
You may remove yourself from the queue by pressing star two.
In the interest of time, we ask that you. Please limit yourself to one question and one quick follow up.
We will take our first question from C. J Muse with Cantor Fitzgerald. Please go ahead. Your line is open.
Thank you for taking the question.
Speaker #2: We will remain opportunistic around value creating inorganic opportunities as well as share buybacks . So summing up , exiting 2025 , we are encouraged by the strength of the business .
I guess wanted to focus our near term and then a longer term question on the near term can.
Can you kind of help us understand how to better think about calendar 'twenty six.
You talk about kind of the inverse of that 50, 842% we saw in.
Speaker #2: Our overall company revenues grew 13% year over year, and our SOC and memory contributed 17% year over year, helping to achieve a 23% increase in our EPS to $3.96.
Calendar 'twenty five but.
Curious how to think about.
Perhaps the overall revenue growth rate or thinking about June. So we can size. It will you grow above the high end of kind of the revenue target range of 25% or any help would be it would be great.
Speaker #2: We are making strategic investments to drive competitive advantages and gain market share in the Semi Test and Test product groups. We remain focused on large accounts and attractive verticals to drive sustainable growth in robotics.
Hi, Good morning, T J and thanks for the question. This is Michel so I'll give some color commentary I know this is going to be of interest to everyone. Who's listening in so a couple of things I would reference in terms of this year versus last year is one we are entering the year with a healthy backlog and so we're excited by it.
Speaker #2: We entered 2026 feeling good about the year ahead. With that, I'll turn the call back to the operator for questions. Operator.
Speaker #3: Thank you . We will now be taking questions from the Teradyne Inc research analysts at this time . If you wish to ask a question , please press star telephone remove .
That that's a positive when you think about our positioning for 2026, so we have better fidelity than we did at the same period last year and then the other thing I would highlight is we typically for those that follow the teradyne story.
Speaker #3: from the keypad one on your queue by You may yourself pressing star two . In the interest of time , we ask that you please limit yourself to one question and one quick follow up .
Talk about having my 13 weeks of demand kind of insights from a forecast perspective, I would say we have better insights this year to first half and so that's a positive from an overall 2026 perspective I do want to balances however, with kind of what I talked about in my opening remarks.
Speaker #3: We will take our first question from C.J. Muse with Cantor Fitzgerald. Please go ahead, your line is open.
Speaker #1: Thank you for taking the focus on near-term and the longer term question on the near term . Can you kind of help us understand how to better think about calendar 26 ?
We emphasize a lumpiness of this unit sales pattern, so I want to caution us against kind of a linearity trend assumptions with the recognition that we could see things move between quarters and between years as we recognize some of these ordering patterns in this kind of new AI infrastructure Buildout.
Speaker #1: heard you talk I about kind of the inverse of that . 5,842% . We saw in calendar 25 , but , you know , curious how to think about , you know , perhaps the overall revenue growth rate or thinking about June so we can size it , you know , will you grow above the high end of kind of the revenue target range of 25% or , any help would be would be great .
Yes.
Yes.
C J I'll add one thought here this is Greg.
<unk>.
The run rate that we have in Q1.
Speaker #2: Hi . Good morning and thanks for the question . This is I know this is going to be of interest to everyone who's listening in .
As like we are we.
We have a fair amount of strength in Q1.
Speaker #2: So a couple of things I would reference in terms of this year versus past years. One, we are entering the year with a healthy backlog.
We don't have great visibility into the second half. So we're we're a little bit cautious.
We don't want people to sort of take that and run with it for the full year.
Speaker #2: And so we're excited by that . That's a positive when you think about our positioning for 2026 . So we have fidelity than better we did say the same period last year .
Specs that were in kind of.
Two to three quarter surge that may.
Speaker #2: And then the other thing I would highlight is we typically for those that follow the Teradyne Inc story , you know , we talk about having like 13 weeks of demand , kind of insights from a forecast perspective .
<unk> lead to a shorter period of digestion afterwards.
Yeah.
Great very helpful. And then Greg longer term question implicit in your new target model as a vision for your share of hte to grow from about 25% to 46%. So would love to hear kind of your high level thoughts on what the key drivers are behind that.
Speaker #2: I would say we have better insights this year to first half. And so that's a positive from an overall 2026 perspective. I do want to balance this.
Speaker #2: However, with kind of what I talked about in my opening remarks, and really emphasize the lumpiness of this new sales pattern.
So.
Right now.
In the.
Speaker #2: So I want to caution us against kind of a linearity trend assumption, with the recognition that we could see things move between quarters and between years, as we recognize some of these ordering patterns in this kind of new AI infrastructure build-out environment.
Our model, our sort of 12% to $14 billion Tam model with us at $6 billion that actually.
Is moderated from that 46% level, just a little bit.
And that reflects in that model, we expect that the compute Tam is going to continue to grow we're going to be gaining share in the compute space, but we're coming from a much lower share position.
Speaker #1: And .
Speaker #4: CJ , I'll add one thought here . This is Greg , the the run rate that we have in Q1 is , you know , like we have a fair amount of strength in in Q1 , we don't have great visibility into the second half .
No.
I think we are like.
Think about it from a long term model perspective, we expect to gain share in compute we expect the mobile market to probably get to maybe one five times the size that it is now and we have maintained the share that we have auto and industrial probably the same kind of proportional gain in term.
Speaker #4: So we're we're a little bit cautious that , you know , we we don't want people to sort of take that and run with it for the full year .
Speaker #4: We expect that we're in kind of a , you two , three quarter surge that may lead to a shorter period of digestion afterwards .
Of the Tam size and we've maintained and then in memory.
It's going to have incremental growth through this midterm and right now we feel like.
Speaker #1: Great . Very helpful . And then , Greg , longer term question implicit your in new target model is a vision for your share of art to grow from about hear we'd 25% to 46% .
Speaker #1: Great . Very helpful . And then , Greg , longer term question implicit your in new target model is a vision for your share of art to grow from about hear we'd 25% to 46% . love to kind So your high level thoughts on what the key drivers are behind that .
If you look back a few years there were multiple parts of the memory market, where we were not even present now we feel like we are in most of the most of the segments for most of the customers.
Speaker #4: So right now, in the, you know, our model, our $12 to $14 billion TAM model, with $6 billion that actually is moderated from that 46% level.
And so we are in a position to sort of.
Split the share and rides the trends in the markets.
Does that help.
Very helpful. Thank you.
Thank you.
Speaker #4: Just a little bit . And that reflects in that model . We expect that the compute Tam is going to continue to grow .
Our next question comes from Timothy Arcuri with UBS. Please go ahead. Your line is open.
Thanks, a lot Greg I wanted to come up the last question from a different angle. So if.
Speaker #4: We're going to be gaining share in the compute space . But we're coming from lower a much share position . So I think we are , you know , like thinking about it from a long term perspective .
I think a new model and it seems if I take what you've already said for robotics, how much it will grow and I grow systems test had a pretty good clip.
Speaker #4: We gain share, expect to in compute. We expect the mobile market to probably get to maybe one and a half times the size that it is now.
Product tests at a good clip seems to me like the semi test share only gets back to the high <unk>.
Which is really only where it was from 2022 to 2025. So it doesn't really seem to imply that much share gain I mean, it does off of off of where it wasn't 2025, because it was sub 30, but it doesn't seem to imply very much share.
Speaker #4: And we maintain the share that we have auto and kind of proportional gain in terms the Tam size . And we'd maintain and then in memory , you know , it's it's going to have incremental growth through this mid-term .
Speaker #4: And right now we feel like , you know , if you look back a few years , years , there were multiple parts of the memory market where we were not even present .
From where it was in 2022 to 2024. So maybe you can provide a little more color like is that calculation as long as the is the semi test number assumed.
Speaker #4: Now we feel like we are in most of the most of the segments for most of the customers . And so we are in a position to sort of split the share and ride the trends in the markets .
Having share higher than lack of it seems like it's not that much higher than its been the past few years.
I think the.
<unk>.
Okay.
In order to get to the numbers that you have.
Speaker #4: Does that help . ?
You probably.
We have slightly more aggressive growth expectations for the for the robotics and the product first group. So we're kind of thinking across this mid term debt.
Speaker #1: Very helpful. Thank you.
Speaker #3: Thank you. Our next question comes from Timothy Arcuri with UBS. Please go ahead, your line is open.
Speaker #4: Thanks a lot , Greg . I wanted to come back to the last question from a different angle . So if I take your new model and seems if I it you've already said for grow robotics , how much it will and I grow , you know , systems tests at a pretty good clip , you know , product tests at a good clip .
Proportionate and sort of the 80 10, 10 proportions are going to be roughly the same and.
So.
And by my math, we are in the in the low <unk>.
For sure.
Speaker #4: It seems to me like the semi test share only gets back to the high 30s , which is really only where it was from 2022 to 2025 .
And remember that like that.
The ISP stuff is in our revenue, but it's not in the HDD Tam that's in our <unk>.
Speaker #4: So it doesn't really seem
Separate segment.
Yes.
Yes, Okay alright.
And then.
Can you break either your Michelle can you breakdown the Soc Tam in 'twenty 'twenty five to seven can you break it down between compute mobile auto and maybe also you've talked before about how large the VIP Tam is within compute can you give us a sense of how big that was in 2025.
So.
In 2025.
<unk>.
The Tam broke down roughly.
We think it's and this is subject to sort of totaling up the final numbers, which will come in over the next couple of months from third party sources, but our expectation was the complete was in the neighborhood of $5 billion for the year.
Mobility about $1 billion auto industrial just under a $1 billion.
Service was in the $700 million range for.
For memory overall, we think that the Tam was just under $1 4 billion and $1 two of that was DRAM. The rest was flush.
And Greg.
Compute portion how much is VIP site.
I think so.
Just over 600.
Okay awesome. Thank you.
Thank you.
We've almost next maybe hussaini with IAG. Please go ahead your line is open.
Thanks for taking my question this morning.
Additional follow up on that.
Greg you highlighted.
Market share of around 50% for constant basis back in 2025.
How do you see that evolving, especially given the increased new projects coming out of that.
It is my expectation that.
Christian it's actually going to get.
Brother, now then more customers coming to us and would that enable you to increase market share above 50% and I have a follow up.
Sure. So yes, so in 2025, we think.
Share was roughly 50% of VIP compute when you look into the future.
Expect that that share split is going to is it.
The thing about this space is that no sure is safe.
We are challenging for sockets that we don't have.
We're being challenged for sockets that we do have and Thats true for stuff that is in high volume right now and programs that have yet to ramp.
The thing that I am a little bit cautious in terms of trying to size the Tam for <unk>.
Basic programs that are not yet in volume because what tends to happen is that the hyperscale is will benchmark the performance of their own asics against what they could get commercially and they will only take their asics to full volume if they see an advantage in like tokens per <unk>.
What are what other what other.
Metric they are trying to focus on so.
I think long term is.
Likely that we'll be able to maintain 50%, but I am expecting that this is going to be a really noisy number <unk>.
Especially at the quarter by quarter level, but even yearly depending on when different ramps happen.
It's going to slosh the share around a fair amount.
And then for.
For the entire team as we look at.
<unk> been in near term revenue target.
Given your re was.
The market it was the only.
Six nine months ago that.
We were contemplating.
Your revenues would be.
Increased above a couple of billion and now there's a new target of what I wanted to figure out what was the question.
What is the sensitivity to that.
And the 6 billion revenue target is that is that a baseline assumption.
Is there a kind of average of awards that a best case scenario.
And then in <unk>.
It's around how you came up with the ATB.
The revenue target will be very helpful. Thank you.
So.
I think the.
The first I'll say that it's a balanced number that there are.
There are potential balloons and anchors around the our $6 billion.
Probably the most important.
Certainty is the speed at which the market growth like how how long does it take to get to this kind of a tam size and I.
I say that because like.
I've been in this business for a long time.
And I've been in situations, where we look into the future and we see like up into the right kind of Tam forecasts and then external conditions change things. So I think it's it's.
One of the reasons that we wanted to look at an evergreen model is because we can't predict the external factors that are going to drive the town. So that's probably the biggest X factor and all of this the next is our share in the ATV market and.
That is really related to the compute space. We have we believe we are positioned to gain share in the compute space on an incremental basis that it will take time, but we think that we have a good product and good position with the customers in this space to be able to IND.
Increase ourselves from a relatively low position.
The next part of this and the thing that gives me.
A fair amount of confidence around our $6 billion number is the other stuff beyond.
The core ATV the compute space. If you will I think the mobile space, we're going to ride whatever the Tam does and I think that Tim is going to recover on the basis of complexity. We are in a position to gain share in the industrial and automotive space because of the.
The acquisition of the power group that we got from Infineon last year to cover the the wideband gap power market.
And our ISP business has a much broader customer base to help drive.
Our healthy revenue growth through this mid term and then we have this.
Extra large customer in the robotics space on top of the core business that we think is a catalyst for growth there.
So I think we have a balanced plan going out into the future and I think that helps to derisk that number.
Okay.
Thank you.
Our next question comes from Krish Shankar with TD Cowen. Please go ahead. Your line is open.
Yeah, Hi, Thanks for taking my question and Greg Congrats on the Nutrisystem guidance I know you can't get into specifics. So I'm just kind of curious on the GPU side.
This is a growth opportunity for you what is the unit market share expectation for this year and how high can that go over the next two years or so.
Pardon me.
Big market you do another quick follow up.
Okay. So let me give you a sort of a quick update of where we are in this project. So.
Gregory Smith: to gain share in the non-industrial and automotive space because of the acquisition of the power group that we got from Infineon last year to cover the wide band gap power market. And our System Test business has a much broader customer base to help drive healthy revenue growth through this midterm. And then we have this extra large customer in the robotics space on top of the core business that we think is a catalyst for growth there. So I, you know, I think we have a balanced plan going out into the future, and I think that helps to de-risk that number.
Gregory Smith: to gain share in the non-industrial and automotive space because of the acquisition of the power group that we got from Infineon last year to cover the wide band gap power market. And our System Test business has a much broader customer base to help drive healthy revenue growth through this midterm. And then we have this extra large customer in the robotics space on top of the core business that we think is a catalyst for growth there. So I, you know, I think we have a balanced plan going out into the future, and I think that helps to de-risk that number.
We're making great project progress and we expect to achieve production qualification. The qual process for these things are is very complex, it's very expensive and the exact date for are released to production is tough to pin down, but we're really confident of our success here.
Once we achieve qualification I believe will incrementally gain share for these devices over the course of a couple of years.
I just want to be clear that our guidance for Q1 does not include any merchant GPU revenue, we see that as more of a factor in the second half of 2026, and we believe it would be.
A material amount of revenue for us, but it would not be.
Extra large, customer in the robotic space, on top of the core business that we think is, uh, a catalyst for growth there. Um, so I, you know, I think we have, we have a balanced plan going on in the future, and I think that helps to de-risk that number
Heck of a lot of share inside of the account, where we want so single digit kind of share numbers to start and then over time, what we've seen in other situations, where we have competitive dual source situation is that we eventually get to a situation where the vendors are bad.
Operator: Thank you. Our next question comes from Krish Sankar with TD Cowen. Please go ahead, your line is open.
Operator: Thank you. Our next question comes from Krish Sankar with TD Cowen. Please go ahead, your line is open.
Thank you.
Krish Sankar: Yeah, hi, thanks for taking my question, and Greg, congrats on the great results and guidance. I know you can't get into specifics. I'm just kind of curious on the GPU test side, which is a growth opportunity for you, what is the realistic market share expectation for this year, and how high can that go over the next two years or so? And can that parlay into maybe ASIC market share, too? And then I had a quick follow-up.
Krish Sankar: Yeah, hi, thanks for taking my question, and Greg, congrats on the great results and guidance. I know you can't get into specifics. I'm just kind of curious on the GPU test side, which is a growth opportunity for you, what is the realistic market share expectation for this year, and how high can that go over the next two years or so? And can that parlay into maybe ASIC market share, too? And then I had a quick follow-up.
Our next question comes from Chris sanar with TD Cowen please go ahead. Your line is open
<unk> between 30, and 70% share and that is not saying that like our share top is 30%, but we will take our take time to get up to that 30% and then we will essentially be going head to head on a competitive basis around who gets how much.
Gregory Smith: Okay, so let me give you sort of a quick update of where we are in this project. So, we're making great project progress, and we expect to achieve production qualification. The qual process for these things is very complex. It's very extensive, and the exact date for a release to production is tough to pin down, but we're really confident of our success here. Once we achieve qualification, I believe we'll incrementally gain share from these devices over the course of a couple of years. I just want to be clear that our guidance for Q1 does not include any merchant GPU revenue. We see that as more of a factor in the second half of 2026.
Gregory Smith: Okay, so let me give you sort of a quick update of where we are in this project. So, we're making great project progress, and we expect to achieve production qualification. The qual process for these things is very complex. It's very extensive, and the exact date for a release to production is tough to pin down, but we're really confident of our success here. Once we achieve qualification, I believe we'll incrementally gain share from these devices over the course of a couple of years. I just want to be clear that our guidance for Q1 does not include any merchant GPU revenue. We see that as more of a factor in the second half of 2026.
Yeah, hi. Thanks for taking my question, and congrats on the great results and guidance. I know you can't get into specifications—I'm just kind of curious on the GPU test side. Uh, this is a good opportunity for you. What is the realistic market share expectation for this year, and how high can it go over the next 3 years or so? And can the family and basic market share—do, and I had a quick follow-up.
Got it thanks have a great very helpful. And then just a quick follow up on the.
Finally, I want to give a full outlook in first half weighted for the year.
On the video front.
I'm just curious because given the moment is less.
No seasonality anymore. So I'm just curious why do you think at some first half weighted besides visibility in terms of labor day.
So.
Ill give michel a chance to comment I would say the par.
Part of it is because major programs that were a part of.
Our first half loaded.
And so the.
Gregory Smith: We believe it will be a, you know, a material amount of revenue for us, but it would not be a heck of a lot of share inside of the account where we want. So, you know, single digit kind of share numbers to start. And then over time, what we've seen in other situations where we have a competitive dual source situation, is that we eventually get to a situation where the vendors are balanced between 30% and 70% share. And that is not saying that, like, our share top is 30%, but we'll take time to get up to that 30%, and then we'll essentially be going head-to-head on a competitive basis around who gets how much.
We believe it will be a, you know, a material amount of revenue for us, but it would not be a heck of a lot of share inside of the account where we want. So, you know, single digit kind of share numbers to start. And then over time, what we've seen in other situations where we have a competitive dual source situation, is that we eventually get to a situation where the vendors are balanced between 30% and 70% share. And that is not saying that, like, our share top is 30%, but we'll take time to get up to that 30%, and then we'll essentially be going head-to-head on a competitive basis around who gets how much.
The demand that we can map for the full year is definitely more concentrated in the first half from the second half, but there's also an element of we don't know about the second half.
There are a lot of irons in the fire that could result in second half growth, but we can we can pin that down enough to sort of give a confidence forecast for where the full year will be I don't know Michelle do you want to add anything on there I think you summed it up well, Greg I think the only other thing I would add is in <unk>.
Okay, so, um, let me give you a sort of a quick update of where we are in this project. So, um, we're making great project, uh, progress and we expect it, um, achieve production qualification. The the call process for these things are is very complex. It's very extensive. And the exact date for a release to production is tough to pin down, but we're really confident of our success here. Once we achieve qualification, I believe we'll incrementally, gain share for these devices over the course of a couple of years. Um, I just want to be clear that our guidance for q1 does not include any Merchant GPU Revenue. We see that as more of a factor in the second half of 2026, um, we believe it would be, uh, you know, a material amount of revenue for us, but it would not be, uh, heck of a lot of share inside of the account where we want. So, you know, single digit kind of share numbers to start. And
In the previous years coming into 'twenty, six and really strong backhaul, which is giving us benefit already into.
Into the first half.
Thank you very much.
then over time what we've seen in other situations where we have uh competitive dual Source situation is that we eventually get to a situation where um the vendors are balanced between 30 and 70%, share. And that is not saying that, like our share top is 30%, but, um, we'll take a take time to get up to that 30%, and then we'll essentially be going head-to-head on a competitive.
Thank you.
Basis around how who gets, how much?
Our next question comes from Jim Schneider with Goldman Sachs. Please go ahead. Your line is open.
Krish Sankar: Got it. Thanks for that, Greg. Very helpful. And then just a quick follow-up. I understand you don't want to give a full year outlook and first half weighted for this year. Is it because of conservatism? I'm just curious, because given that mobile is less, I would expect no seasonality anymore. So I'm just curious, why do you think it's still first half weighted, besides visibility and conservatism?
Krish Sankar: Got it. Thanks for that, Greg. Very helpful. And then just a quick follow-up. I understand you don't want to give a full year outlook and first half weighted for this year. Is it because of conservatism? I'm just curious, because given that mobile is less, I would expect no seasonality anymore. So I'm just curious, why do you think it's still first half weighted, besides visibility and conservatism?
Good morning, Thanks for taking my question.
Just a bit of a clarification if I could.
And I may have missed it until I apologize, but if you think about 2026 can you maybe help give us a sense given everything you said about.
Got it. Thank you. Very helpful and then just a quick follow up. I understand, you don't want to give a full year outlook and first time waited for this year, um, is it because of conservative some? I'm just curious because given that mobile is less, I would expect no seasonality anymore. So I'm just curious. Why do you think it's still first upgraded besides visibility and conservative?
Gregory Smith: So I'll give Michelle a chance to comment. I would say that part of it is because major programs that we're a part of are first half loaded. And so, you know, the demand that we can map for the full year is definitely more concentrated in the first half than the second half. But there's also an element of, we don't know about the second half, that there are a lot of irons in the fire that could result in second half growth, but we can't pin that down enough to sort of give a confident forecast for where the full year will be. I don't know, Michelle, do you want to add anything on there?
Gregory Smith: So I'll give Michelle a chance to comment. I would say that part of it is because major programs that we're a part of are first half loaded. And so, you know, the demand that we can map for the full year is definitely more concentrated in the first half than the second half. But there's also an element of, we don't know about the second half, that there are a lot of irons in the fire that could result in second half growth, but we can't pin that down enough to sort of give a confident forecast for where the full year will be. I don't know, Michelle, do you want to add anything on there?
The first half of two quarter visibility.
The potential unknown in the back half.
Maybe give us any sense about how we should be thinking about the Q2 relative to Q1.
If members I mean, it's flattish or something we should expect is a reasonable jumping off point on a sequential basis.
And or can you help us on where you think roughly even if it's a large range we could land in terms of the ETE Pam in 2026.
So I I'll give Michelle a chance to comment up. I would say that, um, part of it is because major programs that we're a part of um are first half loaded. Um and so you know the the the demand that we can map for the full year is definitely more concentrated in the first half than the second half. But there's also an element of
Yes, so from a Q2 perspective rack and again, the second quarter guide and just kind of go back to we have better visibility within the first half and I would expect 26 to be the inverse of 2025 with a roughly 60% of our sales from the first half.
Michelle: I think you summed it up well, Greg. I think the only other thing I would add is, in comparison to previous years, coming into 2026, we have really strong backlog, which is giving us better visibility and insights into the first half.
I think you summed it up well, Greg. I think the only other thing I would add is, in comparison to previous years, coming into 2026, we have really strong backlog, which is giving us better visibility and insights into the first half.
We don't know about the second half that. Um, there are a lot of irons in the fire that uh could result in second half growth but we can't we can't pin that down enough to sort of give a confident forecast for where the full year will be. I don't know. Michelle, do you want to add anything on there? I I think you summed it up. Well Greg, I think the only other thing I would add is
We'll give you an update when we get into Q2, Thank you Jeff.
So.
Compared to previous years coming into '26, we have a really strong backlog, which is giving us better fidelity and insights into the first half.
Krish Sankar: Thank you very much.
Krish Sankar: Thank you very much.
On the HDD Tam for 2026, what we what we've talked about in our prepared remarks was robust growth from 2025.
Thank you very much.
Operator: Thank you. Our next question comes from Jim Schneider with Goldman Sachs. Please go ahead, your line is open.
Operator: Thank you. Our next question comes from Jim Schneider with Goldman Sachs. Please go ahead, your line is open.
Thank you.
And the reason that we're using adjectives versus numbers is that it comes down to a really wide range essentially based on the uncertainty in the second half. So like if you. If you wanted to put a big wide range around it it would be like 20% to 40% growth for the year, but we don't know where in that range of wood.
Jim Schneider: Good morning, thanks for taking my question. Just a bit of a clarification, if I could, and I may have missed it, so I apologize. But if you as we think about 2026, can you maybe help give us a sense, given everything you said about the first half and two quarter visibility, and the, you know, potential unknowns in the back half, maybe give us any sense about how we should be thinking about the Q2 relative to Q1, rough numbers. I mean, is flattish something we should expect as a reasonable jumping off point on a sequential basis? And/or can you help us on where you think, you know, roughly, even if it's a large range, we could land in terms of the ATE TAM in 2026?
Jim Schneider: Good morning, thanks for taking my question. Just a bit of a clarification, if I could, and I may have missed it, so I apologize. But if you as we think about 2026, can you maybe help give us a sense, given everything you said about the first half and two quarter visibility, and the, you know, potential unknowns in the back half, maybe give us any sense about how we should be thinking about the Q2 relative to Q1, rough numbers. I mean, is flattish something we should expect as a reasonable jumping off point on a sequential basis? And/or can you help us on where you think, you know, roughly, even if it's a large range, we could land in terms of the ATE TAM in 2026?
Our next question comes from Jim Schneider. With Goldman Sachs, please go ahead. Your line is open.
Lance.
Understood that is helpful. Thank you and then maybe just as a follow up it was referred to before and I think you've talked about I think to paraphrase many ways to get to the target model you know assuming that not everything happens perfectly even if the the endpoint is uncertain but.
As you think about that model is that what you think could be a mid cycle model.
A couple three years time, whereas that would kind of incorporate a lot of cyclical ups and downs once we get past this kind of period of very explosive growth. Thank you.
One, uh, rough numbers. I mean, is it flattish? Is that something we should expect as a reasonable jumping-off point on a sequential basis? Uh, and—or can you help us on where do you think, you know, roughly—even if it's a large range—we could land in terms of the AT E TAM in 2026?
Michelle: Yeah, so from a Q2 perspective, we're not going to give a second quarter guide. I'm just going to go back to, we have better visibility within the first half, and I would expect 2026 to be the inverse of 2025, with roughly 60% of our sales in the first half. We'll give you an update when we get into Q2. Thank you, Jim.
Michelle Kawai: Yeah, so from a Q2 perspective, we're not going to give a second quarter guide. I'm just going to go back to, we have better visibility within the first half, and I would expect 2026 to be the inverse of 2025, with roughly 60% of our sales in the first half. We'll give you an update when we get into Q2. Thank you, Jim.
yeah, so from a Q2 perspective, we're not going to give
Yes.
When we when we were doing a model that was.
Mike.
Fixed to a particular year, we always had all of these caveats around sort of what we're trying to average out the cycle looking at long term growth trends and all of that was in the end not particularly helpful. So what we decided to do was to.
We have better visibility within the first half, and I would expect '26 to be the inverse of 2025, with roughly 60% of our sales in the first half.
Gregory Smith: So, on the ATE TAM for 2026, what we talked about in our prepared remarks was robust growth from 2025. And the reason that we're using adjectives versus numbers is that it comes down to a really wide range, essentially based on the uncertainty in the second half... So, you know, like, if you wanted to put a big wide range around it, it'd be like 20 to 40% growth for the year, but we don't know where in that range it would land.
Gregory Smith: So, on the ATE TAM for 2026, what we talked about in our prepared remarks was robust growth from 2025. And the reason that we're using adjectives versus numbers is that it comes down to a really wide range, essentially based on the uncertainty in the second half... So, you know, like, if you wanted to put a big wide range around it, it'd be like 20 to 40% growth for the year, but we don't know where in that range it would land.
Give people an idea of sort of what teradyne would look like at $6 billion.
And.
At $6 billion.
We think that we need an HDD Tam between 12 and $14 billion to be at that kind of a revenue level and then the rest of the business model sort of drops down from there in terms of our expectations of the investments we need to make and the kind of margin will get so.
We'll give you an update when we get into Q2, thank you, John. So, and, um, on the TAM for 2026, what we, uh, what we talked about in our prepared remarks was, um, robust growth from 2025. And the reason that we're using adjectives versus numbers is that it comes down to a really wide range, essentially, based on the uncertainty in the second half. So, you know, like, if you wanted to put a big wide range around it, it would be like 20 to 40% growth for the year, but we don't know where in that range it would land.
Jim Schneider: Understood. That is helpful. Thank you. And then maybe just as a follow-up, it was referred to before, and I think you talked about, I think, to paraphrase many ways to get to the target model, you know, assuming that not everything happens perfectly, you know, even if the endpoint is uncertain. But, you know, as you think about that model, is that, you know, what you think could be a mid-cycle model, you know, in couple, three years' time, whereas, you know, that would kind of incorporate a lot? Thank you.
Jim Schneider: Understood. That is helpful. Thank you. And then maybe just as a follow-up, it was referred to before, and I think you talked about, I think, to paraphrase many ways to get to the target model, you know, assuming that not everything happens perfectly, you know, even if the endpoint is uncertain. But, you know, as you think about that model, is that, you know, what you think could be a mid-cycle model, you know, in couple, three years' time, whereas, you know, that would kind of incorporate a lot? Thank you.
I do believe that the model is achievable.
Over the next few years, but whether it's at the weather you interpret a few as a small number a few as a larger number really depends on how quickly the HDD Tam grows and that has to do with.
Whether the current pace of data center build out continues but kind of at this rate.
Gregory Smith: Yeah. So the, you know, when we, when we were doing a model that was like fixed to a particular year, we always had all of these caveats around, you know, sort of we're trying to average out the cycle, looking at long-term growth trends, and all of that was, in the end, not particularly helpful. So what we decided to do was to give people an idea of sort of what Teradyne would look like at $6 billion. And, you know, at $6 billion, we think that we need an ATE TAM between $12 and 14 billion to be at that kind of a revenue level. And then the rest of the business model sort of drops down from there in terms of our expectations of the investments we need to make and the kind of margin we'll get.
Gregory Smith: Yeah. So the, you know, when we, when we were doing a model that was like fixed to a particular year, we always had all of these caveats around, you know, sort of we're trying to average out the cycle, looking at long-term growth trends, and all of that was, in the end, not particularly helpful. So what we decided to do was to give people an idea of sort of what Teradyne would look like at $6 billion. And, you know, at $6 billion, we think that we need an ATE TAM between $12 and 14 billion to be at that kind of a revenue level. And then the rest of the business model sort of drops down from there in terms of our expectations of the investments we need to make and the kind of margin we'll get.
Understood that that is helpful. Thank you. And then maybe just as a follow up, it was referred to before. And I think you talked about I think if to paraphrase many ways to get to the Target Model, you know, assuming that not everything happens perfectly, you know, even if the uh, the endpoint is uncertain but you know, as you think about that model is that, you know what you think could be a mid-cycle model, you know, in in a couple of 3 years time uh whereas you know that would kind of incorporate a lot. Thank you.
The numbers that.
Yeah, so the, um, you know, when we—
That are out in terms of how much silicon is going into data centers are kind of mind boggling.
when we were doing a model that was like,
From 24% to 25, 60% more silicon revenue in data centers looking out to 2026, it's way more than a 100% year on year growth. So whether that can persist from 26% to 27 orphan moderates. That's the thing that's going to deter.
And how fast it takes to get to that $6 billion.
Thank you.
Thank you.
Well move next with Brian Chin with Stifel. Please go ahead. Your line is open.
Hi, there good morning, thanks for letting us ask a few questions maybe to start with Greg I was wondering if you could outline maybe a few catalysts for GPU share gain.
Gregory Smith: So, I do believe that the model is achievable, over the next few years, but, whether it's at the, you know, whether you interpret a few as a small number or a few as a larger number, really depends on how quickly the ATE TAM grows, and that has to do with whether the current pace of data center build-out continues, but kind of at this rate. You know, so the numbers that, you know, that are out in terms of how much silicon is going into data centers are kind of mind-boggling. It's, you know, from 2024 to 2025, it's like 60% more silicon revenue in data centers. Looking out to 2026, it's way more than 100% year-on-year growth.
So, I do believe that the model is achievable, over the next few years, but, whether it's at the, you know, whether you interpret a few as a small number or a few as a larger number, really depends on how quickly the ATE TAM grows, and that has to do with whether the current pace of data center build-out continues, but kind of at this rate. You know, so the numbers that, you know, that are out in terms of how much silicon is going into data centers are kind of mind-boggling. It's, you know, from 2024 to 2025, it's like 60% more silicon revenue in data centers. Looking out to 2026, it's way more than 100% year-on-year growth.
Fixed to a particular year, we always had all of these caveats around, you know, sort of where we're trying to average out the cycle. Looking at long term growth Trends and all of that was in the end, not particularly helpful. So what we decided to do was to give people an idea of sort of what Paradigm would look like at 6 billion dollars. And you know, at 6 billion dollars we think that we need an ATM between 12 and 14 billion dollars to to be at that kind of a revenue level. And then the rest of the business model sort of drops down from there, in terms of our expectations of the Investments, we need to make and the kind of margin we'll get. So, um, I do believe that the model is
Over the next few years in terms of paradigms platform differentiation.
Device power and complexity and maybe the addition of a new test insertions.
Yes. So the addition of new test insertions I think is a catalyst for Tam growth more than a catalyst for share growth.
<unk>.
As these new insertions come in.
We will have an opportunity to compete for them.
And the same thing.
As.
The merchant GPU market.
Has more specialized chip lifts per device I think theres more shots on goal more higher quality requirements for the test at the chip level. So there's a there's a bunch of things that I think are accelerating the compute Tam now in terms of compute sure there are.
Gregory Smith: So whether that can persist from 26 to 27 or if it moderates, that's the thing that's going to determine how fast it takes to get to that $6 billion.
So whether that can persist from 26 to 27 or if it moderates, that's the thing that's going to determine how fast it takes to get to that $6 billion.
<unk>.
A number of things that I think our customers like about our product.
Achievable, um, over the next few years. But uh, whether it's at the, you know, whether you interpret a few as a small number or a few as a larger, number really depends on how quickly the at Tam grows and that has to do with whether the current pace of data center build out continues, but kind of at this rate, you know? So the the numbers that, uh, you know, that are out in terms of how much silicon is going into Data Centers are kind of mind-boggling it's, you know, from 24 to 25. It's like 60% more, silicon revenue and data centers. Looking out to 2026. It's way more than 100% year-on-year growth. So whether that can persist from 26 to 27 or if it moderates, that's the thing that's going to determine how fast it takes to get to the 6.
Jim Schneider: Thank you.
Jim Schneider: Thank you.
Billion.
First and most obvious is that they.
Thank you.
Operator: Thank you. We will move next with Brian Chin with Stifel. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Brian Chin with Stifel. Please go ahead. Your line is open.
Thank you.
They believe that we have a more resilient supply chain that we're able to respond to demand with generally shorter lead times and Thats an important thing when their demands are somewhat unpredictable.
Brian Chin: Hi there. Good morning. Thanks for letting us ask a few questions. Maybe to start with Greg, I was wondering if you could outline maybe a few catalysts for GPU share gain over the next few years in terms of Teradyne's platform differentiation, higher device power and complexity, and maybe the addition of new test insertions.
Brian Chin: Hi there. Good morning. Thanks for letting us ask a few questions. Maybe to start with Greg, I was wondering if you could outline maybe a few catalysts for GPU share gain over the next few years in terms of Teradyne's platform differentiation, higher device power and complexity, and maybe the addition of new test insertions.
We will move next with Brian chin with stifel, please go ahead. Your line is open.
The second is that it's actually a better test.
Hi there, good morning. Uh, thanks for letting us ask a few questions. Um maybe to start with Greg. I was wondering if you could outline maybe a few catalysts for GPU share gain
We have very good reliability in.
In production circumstances.
We have good uptime.
Over the next few years, in terms of paradigms platform, differentiation—higher device power and complexity—and maybe the addition of new test insertions,
SaaS like it a lot so they are helping to advocate for.
Gregory Smith: Yeah. So the addition of new test insertions, I think, is a catalyst for TAM growth more than a catalyst for share growth, you know? So, as these new insertions come in, we will have an opportunity to compete for them. And the same thing is, you know, as, the merchant GPU market has more specialized chiplets per device, I think there's more shots on goal, more, higher quality requirements for the test at the chiplet level. So there's a bunch of things that I think are accelerating the compute TAM. Now, in terms of compute share, there are a number of things that I think our customers like about our product.
Gregory Smith: Yeah. So the addition of new test insertions, I think, is a catalyst for TAM growth more than a catalyst for share growth, you know? So, as these new insertions come in, we will have an opportunity to compete for them. And the same thing is, you know, as, the merchant GPU market has more specialized chiplets per device, I think there's more shots on goal, more, higher quality requirements for the test at the chiplet level. So there's a bunch of things that I think are accelerating the compute TAM. Now, in terms of compute share, there are a number of things that I think our customers like about our product.
That is a choice.
And we also have a next generation of instruments that is in beta test now, which will significantly increase the amount of power available to the devices and very importantly, the amount of.
Memory for the test programs in the test patterns.
These devices are going to need.
Last is that I think our tester has better capabilities to allow these devices to be tested in the same way that they are used in the server and our mission mode.
And that requires a pretty sophisticated almost like building a server into the tester itself. So I think we have some some advantages that allow us to achieve higher.
Gregory Smith: The first and most obvious is that they, they believe that we have a more resilient supply chain, that we're able to respond to demand with generally shorter lead times, and that's an important thing when their demands are somewhat unpredictable. The second is that it's actually a better tester. We have very good reliability in production circumstances. We have good uptime. The OSATs like it a lot, so they are helping to advocate for that as a choice. And we also have a next generation of instruments that is in beta test now, which will significantly increase the amount of power available to the devices, and very importantly, the amount of memory for the test programs and the test patterns that these devices are going to need.
The first and most obvious is that they, they believe that we have a more resilient supply chain, that we're able to respond to demand with generally shorter lead times, and that's an important thing when their demands are somewhat unpredictable. The second is that it's actually a better tester. We have very good reliability in production circumstances. We have good uptime. The OSATs like it a lot, so they are helping to advocate for that as a choice. And we also have a next generation of instruments that is in beta test now, which will significantly increase the amount of power available to the devices, and very importantly, the amount of memory for the test programs and the test patterns that these devices are going to need.
Higher coverage essentially moving.
Defect detection as far to the left as possible.
Great that's really helpful and then.
I think in the prepared remarks, you mentioned that a new <unk> a new HDD customer is that an example of your test platform outperforming their internal test or I guess, how much growth you expect from HDD test and 26% off of what revenue base.
25, and then kind of last part of that more broadly.
Are there other historical instances of semiconductor logic, and DRAM ibm's using captive test platforms and I've made the point, there where it complexity and semi test really compels those companies also to use external platforms.
So there's a, there's a bunch of things that I think are accelerating the compute Tam. Now in terms of compute share, there are um, a number of things that I think are customers like about our product. Uh, the first and most obvious is that they, um, they believe that we have a more resilient supply chain that we're able to respond to demand with generally shorter lead times and that's an important thing when their demands are somewhat. Unpredictable, the second is that it's actually a better tester. Um, we have very good reliability in, um, in production circumstances. Uh, we have good uptime, uh, the osaps like it a lot, so they are, uh, helping to advocate for, um, for that as a choice. Um, and we also have a next generation of instruments that is in beta test. Now,
Yes so.
In HDD Youre right that this is a case of a commercial test replacing in house test.
Gregory Smith: The last is that I think our tester has better capabilities to allow these devices to be tested in the same way that they're used in the server, in a mission mode. And that requires a pretty sophisticated, almost like building a server into the tester itself. So I think we have some advantages that allow us to achieve higher coverage, essentially moving defect detection as far to the left as possible.
The last is that I think our tester has better capabilities to allow these devices to be tested in the same way that they're used in the server, in a mission mode. And that requires a pretty sophisticated, almost like building a server into the tester itself. So I think we have some advantages that allow us to achieve higher coverage, essentially moving defect detection as far to the left as possible.
I actually think the right way to think about it as complementing internal tests I don't think that this is.
Like a <unk>.
Please flip as much as a way for a customer to effectively build capacity.
Which will significantly increase the amount of power available to the devices. And very importantly, the amount of, uh, memory for the test programs and the test patterns that uh, these devices are going to need the last is that I think our tester has better capabilities to allow these devices to be tested in the same way that they're used in the server in a mission mode. Um and that requires a pretty sophisticated.
So, but we're really excited about the change because we've been we've been working to try and achieve it for a number of years from a revenue perspective, we don't break out the HDD versus other revenue inside of the ISG group, but I will tell you that like our HDD revenue was going to like double between.
Brian Chin: Great. That's really helpful. And then I think in the prepared remarks, you mentioned a new HDD customer. Is that an example of your test platform outperforming their internal tester? I guess, how much growth do you expect from HDD test in 2026, and off of what revenue base in 2025? And then kind of last part of that, more broadly... Are there other historical instances of semiconductor logic and DRAM IDMs using captive test platforms? And are we at the point there where complexity in semi test really compels those companies also to use external platforms?
Indicated almost like building a server into the tester itself. So I think we have some, some, uh, advantages that allow us to achieve higher, um, higher coverage. Uh, essentially moving, uh, defect detection as far to the left as possible.
Brian Chin: Great. That's really helpful. And then I think in the prepared remarks, you mentioned a new HDD customer. Is that an example of your test platform outperforming their internal tester? I guess, how much growth do you expect from HDD test in 2026, and off of what revenue base in 2025? And then kind of last part of that, more broadly... Are there other historical instances of semiconductor logic and DRAM IDMs using captive test platforms? And are we at the point there where complexity in semi test really compels those companies also to use external platforms?
2025 and 2020.
Great. That's really helpful, and then—
Sorry to get a part B to your question, which is other captive in the in the rest of the semiconductor ATV space. So right now there are.
There are really there is one big player in Soc and there is one big player in memory that have <unk>.
I think in the prepared remarks you mentioned that a new HDD customer—is that an example of your test platform outperforming their internal tester? I guess, how much growth do you expect from HDD test in '26, and also, what revenue base in '25? And then, kind of last part of that, more broadly.
Captive ate's strategies I think the.
Like long term I think the memory, one is probably more persistence.
Gregory Smith: Yeah. So, in HDD, you're right that this is a case of a commercial test replacing in-house test. Or I actually think the right way to think about it is complementing internal test. I don't think that this is, you know, like a complete flip, as much as a way for a customer to effectively build capacity. So, but we're really excited about the change because we've been working to try and achieve it for a number of years. From a revenue perspective, we don't break out the HDD versus other revenue inside of the IST group, but I will tell you that, like, our HDD revenue is gonna, like, double between 2025 and 2026.
Gregory Smith: Yeah. So, in HDD, you're right that this is a case of a commercial test replacing in-house test. Or I actually think the right way to think about it is complementing internal test. I don't think that this is, you know, like a complete flip, as much as a way for a customer to effectively build capacity. So, but we're really excited about the change because we've been working to try and achieve it for a number of years. From a revenue perspective, we don't break out the HDD versus other revenue inside of the IST group, but I will tell you that, like, our HDD revenue is gonna, like, double between 2025 and 2026.
Are there other historical instances of semiconductor logic and DMS using captive tests platforms? And I already at the point there where complexity and semi tests really compel those companies offsets to use external platforms.
<unk> I think is probably going to change over the next couple of years as.
So, um, in HTTP, uh, you're right that this is a case of—
As the.
Is there a broader range of customers for foundry that want commercial platforms.
Great. Thanks, Thanks, Greg.
Thank you.
We don't walk next with Sonic <unk> with J P. Morgan. Please go ahead. Your line is open.
Yes.
Thanks, Thanks for taking my questions, Greg maybe if I can just change gears here and ask you about the mobile that youll see that and in your prepared remarks. I think you did say you were expecting it to be about one and a half price.
A commercial, uh, test replacing in-house tests, um, or actually think the the the right way to think about it is complementing, internal tests. I don't think that this is, uh, you know, like a, a complete flip as much as a way for a customer to effectively build capacity. Um, so, uh, but we're really excited about the the change because we've been, we've been working to try and achieve it for
<unk>.
And your target model I mean is that sort of all driven by the complexity or are you thinking about some sort of what volume does.
Gregory Smith: Now, like, and sorry, you had a part B to your question, which is other captive in the rest of the semiconductor ATE space. So right now, there are really, there's one big player in SOC, and there's one big player in memory that have captive ATE strategies. I think, like, long term, I think the memory one is probably more persistent. The SOC one, I think, is probably going to change over the next couple of years, as there are a broader range of customers for foundry that want commercial platforms.
Gregory Smith: Now, like, and sorry, you had a part B to your question, which is other captive in the rest of the semiconductor ATE space. So right now, there are really, there's one big player in SOC, and there's one big player in memory that have captive ATE strategies. I think, like, long term, I think the memory one is probably more persistent. The SOC one, I think, is probably going to change over the next couple of years, as there are a broader range of customers for foundry that want commercial platforms.
For a number of years. From a revenue perspective, we don't break out the HDD versus other Revenue inside of the IST group, but I will tell you that that like our HPD revenue is going to like double between 2025 and 2026.
And then you did mentioned <unk> been you set up a capital efficiency of customer, maybe making you a bit more cautious if you can explain that.
What are you seeing them back.
Thanks for that.
Sure so yeah.
Yes.
Thing that we want to try and emphasize is that.
In like a.
$12 billion to $14 billion Tam model.
We are not expecting the mobile Tam to get back to prior peak.
Yeah.
Mike.
A half decent guess is somewhere like halfway between where it is now and the prior peak so.
Now, the, like, and sorry, you had a Part B to your question, which is other captive in, um, the— in the rest of the semiconductor ATB space. So right now, um, there are really— there's one big player in SOC and there's one big player in memory that have, uh, captive AT strategies. I think the, uh, like, long term, I think the memory one is probably more persistent. The SOC one I think is probably going to change over the next couple of years as, um,
As the.
You are asking in terms of like what would drive that I think that it is primarily around complexity not units that smartphone units have been sort of hovering in a relatively narrow range.
There are a broader range of customers for Foundry that want commercial platforms.
Brian Chin: Great. Thanks. Thanks, Greg.
Brian Chin: Great. Thanks. Thanks, Greg.
Great thanks. Thanks great.
Operator: Thank you. We will move next with Sameek Chatterjee with J.P. Morgan. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Sameek Chatterjee with J.P. Morgan. Please go ahead. Your line is open.
Thank you.
There is a potential that if there's a compelling new form factor or.
Sameek Chatterjee: Yes. Hi, thanks, thanks for taking my questions. Greg, maybe if I can just change gears here and ask you about the mobile SoC TAM. In your prepared remarks, I think you did say you're expecting it to be about 1.5 times the current TAM in your target model. I mean, is that sort of all driven by the complexity, or are you thinking about some sort of volume tailwind as well? And then you did mention near-term, there being sort of a capital efficiency of customers that may be making you a bit more cautious, if you can explain that as, like, what you're seeing on that front, that would be helpful, and a quick follow-up.
Samik Chatterjee: Yes. Hi, thanks, thanks for taking my questions. Greg, maybe if I can just change gears here and ask you about the mobile SoC TAM. In your prepared remarks, I think you did say you're expecting it to be about 1.5 times the current TAM in your target model. I mean, is that sort of all driven by the complexity, or are you thinking about some sort of volume tailwind as well? And then you did mention near-term, there being sort of a capital efficiency of customers that may be making you a bit more cautious, if you can explain that as, like, what you're seeing on that front, that would be helpful, and a quick follow-up.
We will walk next with Sami chattery with JP Morgan. Please go ahead, your line is open
Yes. Hi. Um, thanks. Thanks.
Really compelling AI based features that it would drive a higher refresh rates, but that certainly hasnt been the case for the last four or five years. So we're we're modeling kind of relatively consistent.
Greg, maybe if
Unit volume increased.
Increased complexity across the broad product line now the.
The reason that we are cautious about that I think we like we're pretty certain that there is going to be a lot of complexity growth and more complexity means more testers are required.
Gregory Smith: Sure. So, yeah, the thing that we want to try and emphasize is that, in like a $12 to 14 billion TAM model, we are not expecting the mobile TAM to get back to prior peak. That it's, you know, like a half decent guess is somewhere, like, halfway between where it is now and the prior peak. So, you are asking in terms of, like, what would drive that? I think that it is primarily around complexity, that not units. That smartphone units have been sort of hovering in a relatively narrow range.
Change gears here and ask keyboard the mobile associate time. And in your prepared remarks, I think you did say, you're expecting it to be about 1 and a half times in the current time in your Target Model. I mean, is that sort of all driven by the complexity or are you thinking about some sort of mobile volume in as well? And then you did mention new term, there being sort of a capital efficiency of customers that maybe making you a bit more cautious. If you can explain that as like, what you're seeing on that front,
Gregory Smith: Sure. So, yeah, the thing that we want to try and emphasize is that, in like a $12 to 14 billion TAM model, we are not expecting the mobile TAM to get back to prior peak. That it's, you know, like a half decent guess is somewhere, like, halfway between where it is now and the prior peak. So, you are asking in terms of, like, what would drive that? I think that it is primarily around complexity, that not units. That smartphone units have been sort of hovering in a relatively narrow range.
However, there is a really large fleet of testers that are installed for mobile and there are a lot of different parts across a number of different vendors that could use very similar tester configurations, and so by carefully arranging the use of that bill.
They can optimize the utilization on a year on a year round basis and it can help to moderate the amount of additional capacity that they need to add in the old days like back in <unk>.
2000 22021.
There was a smaller installed base and there were fewer skus that were being tested more of them were being introduced and ramped very quickly that was the kind of thing that really piled up the demand to drive much higher tabs.
Gregory Smith: There's a potential that if there's a compelling new form factor or really compelling AI-based features, that it would drive a higher refresh rate, but that certainly hasn't been the case for the last 4 or 5 years. So we're modeling kind of relatively consistent unit volume, but increased complexity across the broad product line. Now, the reason that we are cautious about that, I think we—like, we're pretty certain that there's gonna be a lot of complexity growth, and more complexity means more testers are required. However, there is a really large fleet of testers that are installed for mobile, and there are a lot of different parts across a number of different vendors that could use very similar tester configurations.
There's a potential that if there's a compelling new form factor or really compelling AI-based features, that it would drive a higher refresh rate, but that certainly hasn't been the case for the last 4 or 5 years. So we're modeling kind of relatively consistent unit volume, but increased complexity across the broad product line. Now, the reason that we are cautious about that, I think we—like, we're pretty certain that there's gonna be a lot of complexity growth, and more complexity means more testers are required. However, there is a really large fleet of testers that are installed for mobile, and there are a lot of different parts across a number of different vendors that could use very similar tester configurations.
And maybe just for my follow up going back to <unk>.
The beauty side I mean, you did mention that the VIP asics sort of whats not launched already in production does the volumes that would be tough to call.
Uh, sure. So um, yeah, the the thing that we want to try and emphasize is that um in uh like a uh 12 to 14 billion dollar Tam model. Um, we are not expecting the mobile Tam to get back to Prior Peak that is you know like in a a a a half decent guess is somewhere like halfway between where it is now and and the, the prior Peak. So, uh and you you're asking terms of like what would drive that, I think that it is, primarily around complexity that, not units that smartphone units have been sort of hovering in a relatively narrow range. Um, there's a, there's a potential that if there's a compelling, new form factor or, um, really compelling AI based features that it would drive a higher refresh rate, but that certainly hasn't been the case for the last 4 or 5 years. So we're, we're modeling kind of
At this point, but in terms of broadening of the customer base given that gets very concentrated sort of pushing from a few customers right. So as you look out a bit.
Medium term, particularly in Pennsylvania.
But owning slaughter.
See you see a broadening out of the customer base does that sort of reduce then you get to that target model does that reduce the lumpiness in that business just given the visibility from a broader set of customers. Thank you.
Relatively consistent, um, unit volume but increased complexity across the broad product line. Now, the the reason that we are cautious about that and I think we like we're we're pretty certain that there's going to be a lot of complexity growth. And more complexity means more testers are required.
Yes.
12% to $14 billion Tam our expectation is that we would add additional logos in in terms of VIP compute wins.
Gregory Smith: And so by carefully arranging the use of that fleet, they can optimize the utilization on a year-round basis, and it can help to moderate the amount of additional capacity that they need to add. In the old days, like back in 2020, 2021, there was a smaller installed base, and there were fewer SKUs that were being tested. More of them were being introduced and ramped very quickly. That was the kind of thing that really piled up the demand to derive much higher TAMs.
And so by carefully arranging the use of that fleet, they can optimize the utilization on a year-round basis, and it can help to moderate the amount of additional capacity that they need to add. In the old days, like back in 2020, 2021, there was a smaller installed base, and there were fewer SKUs that were being tested. More of them were being introduced and ramped very quickly. That was the kind of thing that really piled up the demand to derive much higher TAMs.
However, there is a really large fleet of testers that are installed for mobile, and there are a lot of different parts across a number of different vendors that can use very similar tester configurations.
It's not like it's going to go from.
A very small number to dozens it's more like.
Or five different programs and what I expect to see the steady state in this market is that teradyne and advent tests are going to be competing on a generational basis for new design wins and those decisions are going to be made on the basis of the features of the tester.
The reliability of the test or more than sort of incumbency as the thing that drives the.
Sameek Chatterjee: Okay. And maybe just on a follow-up, going back to the AI compute side. I mean, you did mention that the VIP ASIC, sort of, was not launched already in production, as the volumes are a bit tough to quantify at this point. But in terms of broadening of the customer base, given it's a very concentrated set of purchasing from a few customers right now, as you look out to the medium term, particularly in terms of your earnings target earnings model, do you see a broadening out of the customer base? Does that sort of reduce, when you get to that target model, the lumpiness in that, in the business, just given higher visibility from a broader set of customers? Thank you.
Samik Chatterjee: Okay. And maybe just on a follow-up, going back to the AI compute side. I mean, you did mention that the VIP ASIC, sort of, was not launched already in production, as the volumes are a bit tough to quantify at this point. But in terms of broadening of the customer base, given it's a very concentrated set of purchasing from a few customers right now, as you look out to the medium term, particularly in terms of your earnings target earnings model, do you see a broadening out of the customer base? Does that sort of reduce, when you get to that target model, the lumpiness in that, in the business, just given higher visibility from a broader set of customers? Thank you.
And so by carefully arranging the use of that Fleet. They can optimize the utilization on a year, on a year-round basis. And it can help to moderate the amount of additional capacity that they need to add in the old days, like back in in 2020. 2021. Um, there was a smaller install base and there were fewer skus, that were being tested. More of them were being introduced and ramped very quickly. That was the kind of thing that really piled up the demand to drive much higher Tams.
The selection.
Perfect. Thank you.
Thank you.
Our next question comes from David Duley with Steelhead. Please go ahead. Your line is open.
Thank you for taking my questions I guess the first one is I think you mentioned, 310% customers could you talk about which segment they might be in or how large they might be I know you probably don't want to give us the names, but if you could give us the names that would be great as well.
Okay. Uh, and maybe just want to follow up going back to, um, the AI compute side. I mean, you did mention that the VIP A6 that, of course not launched already in production, is the volumes are a bit tough to, uh, quantify at this point, but in terms of broadening of the customer base given its a little concentrated. So, of course, using from a few customers right now, as we look at this out to the medium film, particularly in terms of your learning Target earnings model, do we see? Do you see a broadening out of the customer base? Does that sort of reduce when you get to that Target model of that reduce the lumpiness in that in the business? That's just given higher?
So.
Gregory Smith: Yeah. So in a $12 to 14 billion TAM, our expectation is that we would add additional logos in, you know, in terms of VIP compute wins. But it's not like it's gonna go from, you know, a very small number to dozens. It's more like, you know, you know, 4 or 5 different programs. And what I expect to see, the steady state in this market, is that Teradyne and Advantest are going to be competing on a generational basis for new design wins, and those decisions are going to be made on the basis of the features of the tester, the reliability of the tester, more than sort of incumbency as the thing that drives the selection.
Gregory Smith: Yeah. So in a $12 to 14 billion TAM, our expectation is that we would add additional logos in, you know, in terms of VIP compute wins. But it's not like it's gonna go from, you know, a very small number to dozens. It's more like, you know, you know, 4 or 5 different programs. And what I expect to see, the steady state in this market, is that Teradyne and Advantest are going to be competing on a generational basis for new design wins, and those decisions are going to be made on the basis of the features of the tester, the reliability of the tester, more than sort of incumbency as the thing that drives the selection.
Difficulty from a broader. Set of customers. Thank you.
In the 310% customers as Michelle said two of them were specifier is one was a purchasing customer.
The specifying customers one was in the mobile space one was in the compute space.
And the purchasing customer.
Does it all so yeah.
Okay and relative size of how much above 10% I guess I'm, just trying to figure out customer concentration.
Definitely yes.
Substantially higher than that.
Yeah, so in a, in a 12 to 14 billion tan, our expectation, is that we would add additional logos in, you know, in terms of VIP compute wins. Um, but it's not like it's going to go from, you know, a very small number to dozens. It's more like, you know, you know, 4 or 5 different programs. And what I expect to see the steady state in this market is that um, Paradigm and Advent tests are going to be competing on a generational basis.
Our new design.
So each one around 10% is that what you just said I'm sorry, yes, yes, okay.
Right.
Final question I guess is.
Greg I think you've kind of mentioned when you look at all of the pieces for 2026. The overall Tam growth I guess is going to be around 30%.
David Dooley: Got it. Thank you.
Samik Chatterjee: Got it. Thank you.
Wins and those decisions are going to be made on the basis of the features of the tester. The reliability of the tester, more than sort of incompetency, is the thing that drives the, uh, um, the selection.
Got it. Thank you.
Operator: Thank you. Our next question comes from David Dooley with Steelhead. Please go ahead, your line is open.
Operator: Thank you. Our next question comes from David Dooley with Steelhead. Please go ahead, your line is open.
I'm guessing that the.
Thank you.
The Soc Tam grows faster than that and Emory Tam growth slower than that in 2026. If you could just comment on roughly the growth in each piece and then if you said youre going to gain share in 2026, and that obviously youre going to grow faster than 30% is that a fair assumption.
David Dooley: Thank you for taking my questions. I guess the first one is, I think you mentioned 3, 10% customers. Could you talk about which segment they might be in or how large they might be? I know you probably don't want to give us the names, but if you could give us the names, that would be great as well.
David Dooley: Thank you for taking my questions. I guess the first one is, I think you mentioned 3, 10% customers. Could you talk about which segment they might be in or how large they might be? I know you probably don't want to give us the names, but if you could give us the names, that would be great as well.
Our next question comes from David Dooley with Steelhead. Please go ahead, your line is open.
Um, thank you for taking my, um, questions. Um, I guess the first one is—I think you mentioned three 10% customers. Could you talk about which segments they might be in, or how large they might be? I know you probably don't want to give us the names, but if you could give us the names, that would be great as well.
So.
Gregory Smith: So, in the 30% customers, as Michelle said, two of them were specifiers, one was a purchasing customer. The specifying customers, one was in the mobile space, one was in the compute space. And the purchasing customer does it all, so-
No.
Gregory Smith: So, in the 30% customers, as Michelle said, two of them were specifiers, one was a purchasing customer. The specifying customers, one was in the mobile space, one was in the compute space. And the purchasing customer does it all, so-
The.
Sure.
Yes.
Like in a range between 20% and 40, you may Arithmetically put that at the mean of 30, we are not trying to communicate that at all we're trying to communicate that we have.
Um, so, uh, in, uh, the 310% customers, as Michelle said, 2 of them were specifiers. 1 was a, uh, purchasing customer. Um, the, uh, specifying customers—1 was in the mobile space, 1 was in the compute space.
David Dooley: Yeah. Okay, and relative size of, you know, how much above 10%? I guess I'm just trying to figure out customer concentration.
David Dooley: Yeah. Okay, and relative size of, you know, how much above 10%? I guess I'm just trying to figure out customer concentration.
And the purchasing customer.
We don't have sufficient visibility into the second half to give a good Tam estimate for 2026.
Does it all so?
Your assumption around Soc growing faster in memory going slower I think is fair I think that we are expecting that kind of.
Okay, and relative size—do you know how much above 10%? I guess I'm just trying to figure out customer concentration.
Michelle: Roughly ten.
Michelle Kawai: Roughly ten.
Gregory Smith: Yeah.
Gregory Smith: Yeah.
Michelle: It's not substantially higher than that.
Michelle Kawai: It's not substantially higher than that.
Substantially higher than that.
David Dooley: Each one around 10%, is that what you just said? I'm sorry.
That kind of a market where the compute the compute Tam is already big and it's going to grow a lot.
David Dooley: Each one around 10%, is that what you just said? I'm sorry.
Michelle: Yes. Yes.
Michelle Kawai: Yes. Yes.
David Dooley: Okay. All right. Final question, I guess, is, I, Greg, I think you kind of mentioned, you know, when you look at all the pieces for 2026, the overall TAM growth, I guess, is gonna be around 30%. I'm guessing that the SoC TAM grows faster than that and the memory TAM grows slower than that in 2026. If you could just comment on, you know, roughly the growth in each piece. And then if you said you're gonna gain share in 2026, then that means obviously you're gonna grow faster than 30%. Is that a fair assumption?
David Dooley: Okay. All right. Final question, I guess, is, I, Greg, I think you kind of mentioned, you know, when you look at all the pieces for 2026, the overall TAM growth, I guess, is gonna be around 30%. I'm guessing that the SoC TAM grows faster than that and the memory TAM grows slower than that in 2026. If you could just comment on, you know, roughly the growth in each piece. And then if you said you're gonna gain share in 2026, then that means obviously you're gonna grow faster than 30%. Is that a fair assumption?
Yes. Yes. Okay.
The memory Tam is going to grow more incrementally.
We believe that we are positioned for share gain.
And that really depends to a certain extent around whether like which segments of the Tam grow the most so even if we gained share in compute since our since our share position in compute is relatively lower if the computer Tam grows a ton then that could be.
All righty. Um but I have a question, I guess is? I feel like I think you kind of mentioned, you know, when you look at all the pieces for 2026, the overall, Pam growth, I guess is going to be around 30%.
Dilutive to our overall share position, even though we're getting better in every segment that we serve so thats. The reason that I want to be cautious about that.
Gregory Smith: So, no. Yes, it's like in a range between 20 and 40, you may arithmetically put that at the mean of 30. We are not trying to communicate that at all. We are trying to communicate that we don't have sufficient visibility into the second half to give a good TAM estimate for 2026. Your assumption around SoC growing faster and memory going slower, I think, is fair. I think that we are expecting that kind of a market, where the compute TAM is already big, and it's going to grow a lot. The memory TAM is going to grow more incrementally.
Gregory Smith: So, no. Yes, it's like in a range between 20 and 40, you may arithmetically put that at the mean of 30. We are not trying to communicate that at all. We are trying to communicate that we don't have sufficient visibility into the second half to give a good TAM estimate for 2026. Your assumption around SoC growing faster and memory going slower, I think, is fair. I think that we are expecting that kind of a market, where the compute TAM is already big, and it's going to grow a lot. The memory TAM is going to grow more incrementally.
Um, I'm guessing that the SoC TAM grows faster than that, and the memory TAM grows slower than that in 2026. If you could just comment on, you know, roughly the growth in each piece. And then, if you said you're going to gain share in 2026, that means, obviously, you're going to grow faster than 30%. Is that a fair assumption?
so, um,
Thank you.
No. The uh, um.
Yes.
Thank you.
And we have time for one more question.
Next please.
<unk> <unk> with Evercore. Please go ahead your line is open.
Hi, Thanks for squeezing me in.
One clarification of how do you think.
GPU win I think keep you, making clean and that in any way.
Second half, let's say first half and then even in the new target model are you assuming contributions from from <unk>.
So yes.
Yes.
A significant ramp associated with merchant GPU would have an impact in the second half.
Gregory Smith: We believe that we are positioned for share gain, and that really depends to a certain extent around whether, like, which segments of the TAM grow the most. So even if we gain share in compute, since our share position in compute is relatively lower, if the compute TAM grows a ton, then that could be dilutive to our overall share position, even though we're getting better in every segment that we serve. So that's the reason that I wanna be cautious about that.
Yes. The uh it like in a range between 20 and 40, you may arithmetically put that at the mean of 30. We are not trying to communicate that at all. We are trying to communicate that we have uh, we don't have sufficient visibility into the second half to give a good Tam estimate for 2026, um, your assumption around, SOC, growing faster in memory going slower. I think is fair, I think that we are expecting that kind of, uh, that kind of a market where the, the compute, the compute Tam is already big and it's going to grow a lot. The memory cam is going to grow more in
We believe that we are positioned for share gain, and that really depends to a certain extent around whether, like, which segments of the TAM grow the most. So even if we gain share in compute, since our share position in compute is relatively lower, if the compute TAM grows a ton, then that could be dilutive to our overall share position, even though we're getting better in every segment that we serve. So that's the reason that I wanna be cautious about that.
Not sure I caught the second part of your question.
Is that a fido feeling and talking about.
Oh, yes, yes so.
And it's the thing I want to emphasizes.
As I said the merchant like share in merchant GPU is going to be an incremental gain over years and so it is a part of that.
$6 billion model, but we don't assume a radically high share in the merchant GPU space.
Incrementally. Uh, the we believe that we are positioned for share gain, um, and that really depends to a certain extent around whether like, which segments of the Tam grow the most. So, even if we gain share in compute since our, since our share position in compute is relatively lower, if the compute Tam grows a ton then that could be diluted for our overall share position. Even though we're getting better in every segment that we serve. So that's the reason that I I want to be cautious about that.
David Dooley: Thank you.
David Dooley: Thank you.
Thank you.
Understood.
Operator: Thank you. We have time for one more question. We will move next with Vaibhavi Shrotri with Evercore. Please go ahead. Your line is open.
Operator: Thank you. We have time for one more question. We will move next with Vaibhavi Shrotri with Evercore. Please go ahead. Your line is open.
And then the second question I had was either robotics, you have a nice ecommerce program starting to ramp.
Thank you.
Does that.
And we have time for 1 more question.
In that.
Is there possibility that your revenue is going to make.
The robotics piece.
Vaibhavi Shrotri: Hi, thanks for squeezing me in. The one clarification I had is, so the GPU win, the GPU merchant win, does that in any way dictate your second half versus first half dynamics? And then even in the new target model, are you assuming contributions from, from GPU wins?
Vedvati Shrotre: Hi, thanks for squeezing me in. The one clarification I had is, so the GPU win, the GPU merchant win, does that in any way dictate your second half versus first half dynamics? And then even in the new target model, are you assuming contributions from, from GPU wins?
We've almost next week, with the shelter we've ever core. Please go ahead. Here, let me open.
Higher than the breakeven.
Revenue that you have with that business.
Yes, so we're aiming a breakeven for robotics this year.
And.
We expect so just in terms of larger commerce customer, we think that that revenue is kind of going to triple ish between 2025, and 2026, and then grow substantially post 26 as the deployments go to a larger number.
Hi. Uh, thanks for squeezing me in. Um, so one clarification I had is, so the GPU—when the GPU merchant, when does that in any way dictate your second half versus first half dynamic? And then even in the new target model, are you assuming contributions from, uh, from CPU in?
Gregory Smith: Yes, a significant ramp associated with merchant GPU would have an impact in the second half. I'm not sure I caught the second part of your question.
Gregory Smith: Yes, a significant ramp associated with merchant GPU would have an impact in the second half. I'm not sure I caught the second part of your question.
Facilities. So that's a that's a pretty good tailwind.
Vaibhavi Shrotri: Is that a part of your new target model as well?
Vedvati Shrotre: Is that a part of your new target model as well?
And it.
Gregory Smith: Oh, yeah. Yeah. So, and it's – but the thing I wanna emphasize is, you know, as I said, the, the merchant, like, share in merchant GPU is going to be an, an incremental gain over years, and so it is a part of that, $6 billion model, but we don't assume a radically high share in the merchant GPU space.
Gregory Smith: Oh, yeah. Yeah. So, and it's – but the thing I wanna emphasize is, you know, as I said, the, the merchant, like, share in merchant GPU is going to be an, an incremental gain over years, and so it is a part of that, $6 billion model, but we don't assume a radically high share in the merchant GPU space.
Um, so, uh, yes, a significant ramp associated with Merchant GPU would have an impact in the second half. Um, I'm not sure I caught the second part of your question. Is that a part of your new target model as well?
So I think we're looking to have that business at breakeven in 'twenty six and then.
Oh yeah, yeah. So um and it's
The thing I want to.
Contributing positively beyond.
Understood. Thank you Inger.
Thank you.
And this concludes our Q&A session, where Alaska Teradyne fourth quarter and full year 2025 earnings call and webcast. You may disconnect. Your line at this time.
Vaibhavi Shrotri: Understood. And then the second question I had was, on the robotics, you have the large e-commerce program starting to ramp. So does that mean that, you know, is there a possibility that your revenues grow, like the robotics piece grows to higher than the break-even revenues that you have for that business?
Vedvati Shrotre: Understood. And then the second question I had was, on the robotics, you have the large e-commerce program starting to ramp. So does that mean that, you know, is there a possibility that your revenues grow, like the robotics piece grows to higher than the break-even revenues that you have for that business?
Analyze is, you know, as I said the the merchant like share in merchant GPU is going to be an incremental game over years. And so it is a part of that uh 6 billion dollar model but we don't assume a radically high share in the merchant GPU space.
Understood.
Okay.
Um, and then the second question I had was on the robot that you have the large e-commerce program starting program. Um, so does that mean that you know, you you is is is there a possibility that your revenue is going to um like the robotics Beast goes to higher than the break even uh revenues that that you have for that business?
Gregory Smith: Yeah. So we're aiming at break even for robotics this year, and we expect. So just in terms of the large e-commerce customer, we think that that revenue is kind of gonna triple-ish between 2025 and 2026, and then grow substantially post-2026, as the deployments go to a larger number of facilities. So that's a pretty good tailwind, and it, you know. So I think we're looking to have that business at break even in 2026 and then contributing positively beyond.
Gregory Smith: Yeah. So we're aiming at break even for robotics this year, and we expect. So just in terms of the large e-commerce customer, we think that that revenue is kind of gonna triple-ish between 2025 and 2026, and then grow substantially post-2026, as the deployments go to a larger number of facilities. So that's a pretty good tailwind, and it, you know. So I think we're looking to have that business at break even in 2026 and then contributing positively beyond.
Uh, yeah, so we're we're aiming at break even for robotics this year. And um, we expect so I just in terms of the large e-commerce customer, we think that that revenue is kind of going to Triple ish
Vaibhavi Shrotri: Understood. Thank you very much.
Vedvati Shrotre: Understood. Thank you very much.
Between 2025 and 2026 and then grow substantially post 26. Uh, as the deployments. Go to a larger number facilities. So that's a, that's a pretty good Tailwind. Um, and it, uh, you know, so I think we're, we're looking to have that that business at break, even in 26 and then, uh, um, contributing positively Beyond
Understood, thank you very much.
Operator: Thank you.
Operator: Thank you.
Gregory Smith: Mm-hmm.
Gregory Smith: Mm-hmm.
Operator: This concludes our Q&A session, as well as the Teradyne Fourth Quarter and Full Year 2025 Earnings Call and Webcast. You may disconnect your line at this time. Have a wonderful day.
Operator: This concludes our Q&A session, as well as the Teradyne Fourth Quarter and Full Year 2025 Earnings Call and Webcast. You may disconnect your line at this time. Have a wonderful day.
Thank you.
Sorry, our Q&A session, as well as the Paragon fourth quarter and full year 2025 earnings call and webcast.
