Teradyne Stock

Teradyne, Inc. (Teradyne) is a global supplier of automated test equipment and robotics solutions.

The company designs, develops, manufactures, and sells automated test systems and robotics products. The company's automated test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries, including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. The company's robotics products include collaborative robotic arms and autonomous mobile robots (AMRs) used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs.

The company's automated test equipment and robotics products and services include semiconductor test (Semiconductor Test) systems; storage and system level test (Storage Test) systems, defense/aerospace (Defense/Aerospace) test instrumentation and systems, and circuit-board test and inspection (Production Board Test) systems (collectively these products represent System Test); wireless test (Wireless Test) systems; and robotics (Robotics) products.

The market for the company's test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for its products both through direct sales and sales to the customer's supply partners.''

In 2023, the demand in the company's Semiconductor Test business continued to be impacted by a correction cycle driven by excess semiconductor inventory, primarily in the mobility segment of the market. The depth of this slowdown and the timing of the recovery are uncertain, however, strong automotive and image sensor demand partially offset these declines. The growth of DDR5 and High Bandwidth Memory (HBM) devices for data center applications continued to drive demand for its products in the memory market in 2023.

The company's Robotics segment consists of Universal Robots A/S (UR), a leading supplier of collaborative robotic arms, and Mobile Industrial Robots A/S (MiR), a leading maker of AMRs for industrial automation. The market for the company's Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (SMEs) throughout the world. Demand in the fourth quarter of 2023 increased, tied to introduction of new products and seasonally high demand in Robotics after market softness and the impact of the company's channel transformation resulted in a weaker than forecasted first half of 2023.

On November 7, 2023, Teradyne and Technoprobe S.p.A (Technoprobe), a leader in the design and production of probe cards, announced the establishment of a strategic partnership that will seek to accelerate growth for both companies and enable higher performance semiconductor test interfaces for customers worldwide. As part of the partnership, Teradyne will make an investment of 481.0 million Euros in exchange for a 10% equity investment in Technoprobe and Technoprobe will acquire 100% of Teradyne's Device Interface Solutions (DIS) business. The transaction is expected to close during the first half of 2024.

In 2023, inflation had minimal effect on the company's results. The company's corporate strategy continues to focus on profitably gaining market share in its test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in its Robotics businesses. The company plans to continue investing in its growth while balancing capital allocations between stock repurchases and dividends and using capital for acquisitions.

The company depends on Flex Ltd. (Flex) to manufacture and test its FLEX and J750 family of products from its facility in Malaysia; Plexus Corp. (Plexus) to manufacture and test its Magnum products from its facilities in Malaysia and also Thailand and ETS family of products from its facility in Malaysia; SAM Meerkat to manufacture and test the company's storage test family of products from its facilities in Malaysia and Thailand and on other contract manufacturers to manufacture other products.

Products

Semiconductor Test

The company designs, manufactures, sells and supports Semiconductor Test products and services on a worldwide basis. The test systems the company provides are used both for wafer level and device package testing of semiconductor devices. These devices are used in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game applications, among others. Semiconductor devices span a broad range of functionality, from very simple low-cost devices, such as appliance microcontrollers, operational amplifiers or voltage regulators to complex digital signal processors, Artificial Intelligence/Machine Learning (AI/ML) training, high performance computing and microprocessors as well as memory devices. Semiconductor Test products and services are sold to integrated device manufacturers (IDMs) that integrate the fabrication of silicon wafers into their business, Fabless companies that outsource the manufacturing of silicon wafers, Foundries that cater to the processing and manufacturing of silicon wafers, and semiconductor assembly and test providers (OSATs) that provide test and assembly services for the final packaged devices to both Fabless companies and IDMs. Fabless companies perform the design of integrated circuits without manufacturing capabilities and use Foundries for wafer manufacturing and OSATs for test and assembly.

The company's FLEX Test Platform architecture advances its core technologies to produce test equipment that is designed for high efficiency multi-site testing. Multi-site testing involves the simultaneous testing of many devices in parallel. Leading semiconductor manufacturers are using multi-site testing to significantly improve their Cost of Test economics. The FLEX Test Platform architecture addresses customer requirements through the following key capabilities:

A high efficiency multi-site architecture that reduces tester overhead such as instrument setup, synchronization and data movement, and signal processing;

The IG-XL software operating system which provides fast program development, including instant conversion from single to multi-site test; and

Broad technology coverage by instruments designed to cover the range of test parameters, coupled with a universal slot test head design that allows easy test system reconfiguration to address changing test needs.

The company's J750 test system shares the IG-XL software environment with the family of FLEX Test Platform systems. The J750 is designed to handle high volume semiconductor devices, such as microcontrollers, that are central to the functionality of almost every consumer electronics product, from small appliances to automobiles. J750 test systems combine compact packaging, high throughput and ease of production test. The company extended the J750 platform technology to create the IP750 Image Sensor test system. The IP750 is focused on testing image sensor devices used in smartphones, automobiles and other imaging products. The company has continued to invest in the J750 platform with new instrument releases that bring new capabilities to existing market segments and expand the J750 platform to new devices that include high end microcontrollers and the latest generation of image sensors.

The company's Magnum platform addresses the requirements of mass production test of memory devices for flash and DRAM memory. Flash and DRAM memory are widely used core building blocks in modern electronic products finding wide application in consumer, industrial, and computing equipment. Magnum 7, the newest member of the family introduced at the end of 2021, is a next generation memory test solution designed for parallel memory test in the flash, DRAM and multi-chip package markets. In 2019, the company introduced a high-speed DRAM test version of its Magnum platform called Magnum EPIC giving it full product coverage of the memory test market.

The company's ETS platform is used by semiconductor manufacturers and assembly and test subcontractors, primarily in the analog/mixed signal markets that cover more cost sensitive applications. The company's proprietary SmartPin technology enables high efficiency multi-site testing, on an individual test system, permitting greater test throughput. Semiconductors tested by ETS platform systems are incorporated into a wide range of products in historically high-growth markets, including mobile devices, automotive electronics, computer peripherals, and notebook and desktop computers. The Eagle platform includes the ETS-88, a high performance multi-site production test system designed to test a wide variety of high volume power and precision devices, including Silicon Carbide (SiC) and Gallium Nitride (GaN) power devices used in vehicle electrification, and the ETS-800, a high performance multi-site production test system, is used to test high complexity power devices in automotive, industrial and consumer applications.

System Test

The company's System Test segment consists of three business units: Storage Test, Defense/Aerospace, and Production Board Test.

Storage Test

The Storage Test business unit addresses the high throughput, automated manufacturing test requirements of hard disk drive (HDD) and semiconductor manufacturers. The company's HDD products address the client and enterprise storage markets. The client market is driven by the needs of desktop, laptop, and external HDD storage products. The enterprise market is driven by the needs of data centers and cloud storage. The company's system level test product for the semiconductor production market is used to test devices following wafer and package test. The business unit's products lead in addressing customer requirements related to factory density, throughput and thermal performance.

Defense/Aerospace

The company is a leading provider of high performance test systems, subsystems, instruments and service for the defense and aerospace markets. The company's test products are used to ensure the readiness of military and commercial aerospace electronics systems. New programs, such as tactical aircraft and missile systems, as well as upgrade programs, continue to fuel the demand for high performance test systems in this market. The company's test products are well-suited to the demands of defense/aerospace electronics manufacturers and repair depots worldwide. The company's leadership in this market is underscored by its success with major Department of Defense programs across all the U.S. military service branches and many allied defense services worldwide.

Production Board Test

The company's test systems are used by electronics manufacturers and OEMs worldwide to perform In-Circuit-Test (ICT) and device programming of printed circuit board assemblies. The company offers the Test Station in off-line and automated in-line configurations. The automated in-line configurations address the growing requirements for automating production lines for high volume applications, such as automotive electronics, computing, and communications.

Wireless Test

The company's Wireless Test segment is a business unit run under the LitePoint brand name providing wireless test solutions for silicon validation, wireless module manufacturing, and wireless end device manufacturing. The world's leading makers of smartphones, laptops, access points, and Internet-of-Things (IoT) devices rely on LitePoint equipment to ensure their products get into consumer's hands with high quality and high efficiency.

LitePoint wireless test systems span design verification to high volume manufacturing and are deployed across the entire production chain from wireless chipset suppliers to consumer brands. Design verification involves comprehensive automated testing of small quantities of devices in an R&D lab to ensure the device meets its design targets over a wide range of conditions and scenarios. High Volume manufacturing involves the calibration and testing of each wireless device to ensure the product will deliver the intended customer experience. This ensures all the products perform identically in terms of their wireless characteristics.

LitePoint equipment serves an ever-expanding number of wireless standards in three segments: connectivity, cellular, and secure ranging. Connectivity encompasses numerous short range unlicensed communication standards. Cellular includes standards operating in licensed spectrum from a few GHz to 10s of GHz (mmWave). Finally, secure ranging uses Ultra Wideband (UWB) technology to provide centimeter level positioning with secure data transactions for applications, such as "digital keys" and item location (tag type trackers).

LitePoint serves these wireless segments with multiple product families. The LitePoint IQxel-MX and IQxel-MW7G series provide leading edge measurement performance for both design validation and high volume manufacturing of connectivity products. The LitePoint IQxstream-5G and IQgig-5G families combine support for 4G and 5G technologies across a wide range of frequencies to serve all the needs of both end user (smartphones) and network infrastructure (small cells and O-RAN) equipment. Finally, the IQgig-UWB+ provides comprehensive certification and manufacturing test support for UWB (802.15.14) products used for secure ranging.

Robotics

The company's Robotics segment consists of two business units: Universal Robots and Mobile Industrial Robots.

Universal Robots

Universal Robots is a leading provider of collaborative robots (cobots) used across various industries, including automotive, food and beverage, metal and machining, electronics, pharmaceutical, and in education.

Universal Robots has recently established global Centers of Excellence for Welding, Palletizing, and Machine Tending applications. These centers, led by subject matter experts, serve as knowledge hubs, offering expert recommendations and guidance on the latest trends in the field to UR partners and key customers worldwide.

Mobile Industrial Robots

MiR is a leading provider of autonomous mobile robots (AMRs) for the manufacturing and logistics segments. The MiR AMRs enhance productivity, offering a high return on investment by streamlining workforce efficiency, reducing lead times, and improving workplace safety. These AMRs operate autonomously, eliminating the need for traditional guidance infrastructure. MiR offers three models-MiR250, MiR600, and MiR1350-each with varying payload capacities, all managed by the company's unified fleet management software, MiR Fleet. Launched in fall 2021, MiR600 and MiR1350 are industrial-grade robots with IP52 rating, compliant with ISO 3691-4 safety standards, and TÜV certified.

Sales and Distribution

In 2023, revenues from Texas Instruments Inc., a customer of the company's Semiconductor Test segment, accounted for 10% of its consolidated revenues. In 2021, revenues from Taiwan Semiconductor Manufacturing Company Ltd., a customer of the company's Semiconductor Test segment, accounted for 12% of its consolidated revenues.

OSAT customers, such as Taiwan Semiconductor Manufacturing Company Ltd., often purchase the company's test systems based upon recommendations from OEMs, IDMs and Fabless companies. In all cases when an OSAT customer purchases a test system from it, the company considers the OSAT as the customer since credit risk, title and risk of loss, among other things, are between Teradyne and the OSAT. The company estimates consolidated revenues driven by Qualcomm, a customer of its Semiconductor Test, System Test, and Wireless Test segments, combining direct and indirect sales, accounted for approximately 11% of its consolidated revenues in 2022.

The company has sales and service offices located throughout North America, Central America, Asia and Europe. The company sells in these areas predominantly through a direct sales force, except for Robotics products, which are sold principally through distributors. The company's manufacturing activities for its test businesses are primarily conducted through subcontractors and outsourced contract manufacturers with significant operations in China and Malaysia. The manufacturing activities for the company's Robotics businesses are done primarily in is production facilities in Denmark and the U.S.

Sales to customers outside the United States were 84% of the company's consolidated revenues in 2023. Sales are attributed to geographic areas based on the location of the customer site.

Competition

The company faces significant competition throughout the world in each of its reportable segments. Competitors in the Semiconductor Test segment include, among others Advantest Corporation and Cohu, Inc.

Competitors in the System Test segment include, among others, Keysight Technologies, Inc., Advantest Corporation, Test Research, Inc. SPEA S.p.A. and Astronics Corporation.

Competitors in the company's Wireless Test segment include, among others, Rohde & Schwarz GmbH & Co. KG, Anritsu Company, Keysight Technologies, Inc., National Instruments Corporation, Welzek and iTest.

Competitors in the company's Robotics segment include manufacturers of traditional industrial robots such as KUKA Robotics Corporation, ABB, FANUC, Staubli and Yaskawa Electric Corporation, companies with emerging collaborative robot offerings, such as Techman, Doosan, Jaka, and AUBO Robotics, and manufacturers of autonomous mobile robots in the material handling space, such as Omron, Rockwell Automation, Junion, HikRobot, Agilox, and KION.

Regulatory Environment

The company must comply with the U.S. Department of Commerce export control regulations restricting transactions with certain customers in China

History

Teradyne, Inc., a Massachusetts corporation, was founded in 1960. The company was incorporated in 1960.