Teradyne ((TER)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Teradyne painted a mixed picture, highlighting both robust growth in the Semiconductor Test segment and challenges faced by the Robotics business. The sentiment overall was neutral, as strong performances in key areas were balanced by difficulties in others.
Semiconductor Test Revenue Growth
Teradyne’s Semiconductor Test segment saw a significant 17% year-over-year growth in SOC and memory test revenue for 2024. This increase was largely driven by AI accelerator ASICs, networking, HBM, and DRAM, showcasing the company’s strong foothold in the semiconductor market.
Record Free Cash Flow
In 2024, Teradyne achieved a record free cash flow of over $470 million, contributing to a 10% year-over-year increase in earnings per share. This financial milestone underscores the company’s ability to generate cash and enhance shareholder value.
Strong Performance in Compute Segment
The Compute segment outperformed expectations, becoming a larger revenue contributor than the Mobile segment. The SOC business in Compute grew more than 3.5 times compared to the previous year, reflecting a successful shift in focus and strategy.
Strategic Partnership with Infineon
A key highlight of the call was the announcement of a strategic partnership with Infineon. This collaboration aims to accelerate Teradyne’s roadmap in the power semiconductor space, focusing on silicon carbide and gallium nitride technologies.
WiFi 7 Design Wins
Teradyne secured 74 out of 80 tracked WiFi 7 design win opportunities in 2024, positioning the company for future growth in the Wireless Test business. This success signals a strong competitive position in the emerging WiFi technology market.
Weak Industrial Automation Market
The industrial automation market remained weak, adversely affecting Teradyne’s Robotics business. This sector ended 2024 slightly down for UR and flat for MiR, reflecting broader market challenges.
Challenges in Robotics Business
Teradyne’s Robotics business reported a revenue of $365 million in 2024, with a 13% non-GAAP operating loss in both Q4 and the full year. This was primarily due to muted seasonality and weak industrial spending.
Memory Market Softening
While the HBM device end market stayed strong, there is an expectation of softening in the test equipment market in 2025, as customers look to maximize productivity with existing tools.
Forward-Looking Guidance
Looking ahead, Teradyne provided guidance for modest growth in its Robotics business for the first quarter of 2025. The company expects a 7% growth in the Semiconductor SOC Test Total Addressable Market year-over-year. Overall, Teradyne projects a 15% revenue growth in 2025, driven by AI Compute and a recovery in the Mobile, Automotive, and Industrial markets. By 2028, the company aims to grow its revenue from $2.8 billion to $5 billion, with earnings per share increasing from $3.22 to $8.25.
In summary, Teradyne’s earnings call reflected a balanced outlook, with strong growth in the Semiconductor Test segment and strategic initiatives like the Infineon partnership, while also addressing challenges in the Robotics business. The company’s forward-looking guidance suggests optimism for future growth, driven by advancements in AI and a recovering market landscape.
