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Teradyne’s Outlook - 1 Q 2017


Highlights of the 1st Q conference call:


  • Orders +53% Y/Y
  • Sales +6% Y/Y
  • Driven by
    • Continued Semiconductor Test strength driven my
      • Continued strong and broadening customer demand from Q4
      • Healthy SOC unit growth
      • Rising device complexity,
        • Driving less parallelism
      • Move to 7nm
        • New defect modes
    • Universal Robots growth


Semiconductor Test Markets:

  • Mobile phone-related segment bookings largest
    • UltraFLEX platform
      • differentiated software and hardware for
      • cost and time-to-market constrained customers
  • Analog, memory, and image sensor test
    • marked increase in demand
    • Automotive driving orders across SOC product line
      • Demand to test
        • microcontrollers and related devices for
          • Engine control, adaptive driving, and infotainment
        • Power devices for
          • Hybrids and EVs
          • Safety devices for airbags and braking.
      • This plus demand from the catalog analog space
        • Led to highest Eagle Test orders in 7 quarters
    • Automotive image sensors gave P750 Image Sensor test platform
      • Devices require more extensive testing to ensure
        • long-term, reliable operation in broad extremes of
          • temperature and vibration
  • Memory test
    • More test capacity needed for high speed Flash
      • both smartphone and SSD demand
        • Growing unit volumes
      • 4K video driving need for interface speed
        • Requires refresh of tester installed base of testers
    • Magnum family gained traction in the quarter
      • Low-cost, high-throughput tester family
      • Orders +75% Q/Q



  • Orders, sales, and profitability up Y/Y
  • Driven by
    • Wi-Fi connectivity testing of gateway and networking devices
      • Wi-Fi to remain LitePoint driver until
        • millimeter wave Wi-Fi and 5G cellular hit the market
      • 802.11ax seeing increased buying in the access point space
      • 802.11ad, 802.11ay next gen technology buys
    • Millimeter-wave cellular still at R&D and preproduction levels


System Test:

  • Defense and Aerospace order level strength continued
  • Storage Test levels disappointing
    • Significant investments to extend the platform to new markets.
    • Will push the System Test Group into the red for the next few quarters
    • Expect the group to be profitable in 2H


Universal Robots:

  • Q1 revenue more than doubled Y/Y
    • Demand strong across all products
      • On track to continue the rapid growth
        • after 62% growth in 2016
    • Good mix of developed and emerging market sales continues
  • UR reshaping how companies think about industrial automation
    • Breadth of applications nearly limitless due to
      • universal nature of human scale cobots
      • shop floor operators can easily program to repurpose
    • Cobots market leader with ~60% market share


Current projections for full year of 2017:

  • SOC test market: $2.4 to $2.6B range for 2017
    • up $150 million at the midpoint from Jan. est.
    • expect to gain  ~1% share from last year's 51% SOC share
  • Memory test market: high end of $450 to $550M range
    • Overall memory sales should increase
    • But due to limited by TER’s lower exposure in DRAM
      • Overall memory market share may fall back a few points
        • from >30% in 2016.
  • Wireless Test: ~$200 million for the year
    • Unchanged from Jan. est.
    • Steady stream of new Wi-Fi standards expanding it into more apps
    • Adoption of new Wi-Fi standards in 2018 or later
  • Collaborative robot market: $250 to $350M
  • Seasonality expectations
    • Revenue more heavily weighted to 1H
      • Seen 51% to 55% of sales in the first half since 2014,
      • This year it will likely be in the high 50s
        • with customers are driving hard to get capacity in place
          • a bit sooner than in prior years


Links to more information:

Investor Relations:

Full Transcript: Seeking Alpha


Report File: VCR_TERt_170502


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