Okay. Good afternoon, everybody. Welcome to the Goldman Sachs Communacopia + Technology Conference. My name is Jim Schneider. I am the semiconductor analyst here at Goldman Sachs, and my pleasure to welcome Teradyne and CEO Greg Smith to the stage today. Welcome, Greg. Thanks for being here. Nice to be here. Likewise. Greg, you operate a very diverse business today, which has high-performance test and measurement at the core. If you think about the exposure that you have across tests, semiconductor tests, system-level tests, industrial robotics, and other areas, how do you think about Teradyne's business mix over the long run, and what objectives are you trying to move the business forward with? It is a really interesting question. Teradyne has, as you said, we have a semiconductor business that represents about 80% of our revenue, a robotics business that is about 10% of our revenue, and a product test business that is about another 10%. A little bit more for semi test recently because it has grown so quickly. The kind of uniting theme for all of those businesses right now is exposure to the AI build-out. Teradyne basically has exposure to the AI build-out from wafer all the way to data center, and some of that is upfront, wafer to package test with our semiconductor test business, and then our product test and system-level test business really takes us through the part, through the module, and the tray level. Our robotics business really picks up in the areas of robotic-assisted test, robotic-assisted assembly, and robotic-assisted operations in data centers. We're kind of in a unique period right now where these three parts of Teradyne's business are reinforcing each other much more than they ever have before. That's actually a very good thing because not only are we seeing this whole value chain cutting across our businesses, but increasingly, the end market is more and more concentrated in the form of these hyperscalers. The people that are actually building out these data centers and using them and developing the chips for them, they have diverse needs across the whole range of what Teradyne does. We have exposure to the whole value chain, and we have a set of customers that want to deal with us across those different nodes. Excellent. Another high-level question. If we come up here and get on stage in five years, what do you think is going to be the one thing that investors are surprised at retrospectively? This was the stumper from last year. It's a rerun of that. Had time to react. Yeah, I've had time to think it over. Unfortunately, the whole world is different 12 months on, right? One of the things that we've learned is that predicting five years out is a really tough thing to do. As an industry, we're even struggling to try and figure out how big things are going to be in the current year. I do think that there are some things that are pretty certain to be true, looking back from five years from now. One is that AI is going to continue to be the dominant force across our industry. Right now, that is mostly being driven through the build-out of this data center economy. But beyond that, there's a whole wave of physical AI, whether it's in robotics, autonomous vehicles, edge AI for mobile electronics, new types of devices that we expect to be a very big part of our business looking further into the future. If we're looking all the way out to 2031, 2032, I would expect to see that we will have experienced the most sustained period of growth that we've ever seen in our industry. I have no illusion that it's going to be perfectly monotonic, that there's going to be bumps and grinds along the way, but the setup in terms of the importance of information technology and AI is undeniable. Having ourselves positioned in this space to be able to benefit from not only the compute part of this, but the mobile and power and robotics part of it, means that Teradyne is looking at a kind of a unique period in our history in terms of aligning our corporate strategy with the direction that the whole global economy is going. I think looking back five years from now, other than feeling really, really old, I think we will have seen a kind of a golden age for the semiconductor industry and for the test industry in general. Much bigger. Yeah. Okay. Fine. Let's talk about sort of the shorter term. I think everything we see from at least our view of wafer fab equipment spending kind of suggests that we're going to have further revenue acceleration in 2027 relative to 2026. Now, realizing your revenue is tied to test capacity rather than units, of course, how would you handicap Teradyne's ability to grow faster next year as well, and what are the key levers that will determine whether that materializes or doesn't? Yeah. It's a really interesting question, and one that we've spent a lot of time trying to understand better, both so we can size our own business, but also so it can help people understand the factors that are at play. One way that people are trying to wrap their heads around the size of the test equipment market is to look at it as a portion of the entire semiconductor capital spend. Right now, the money is that semiconductor capital spend is going to be increasing pretty rapidly over the next few years. Right now, last year, kind of $120 billion, moving on towards $250 billion or even $300 billion of semiconductor capital spend in the 2028 to 2030 period of time. Semiconductor test represents a fraction of that. If you look back in 2023, that was maybe 4% of the total semiconductor CapEx went into semiconductor test. In the first five months of 2026, it's actually 8% of the total is going into test. So it's a much bigger market, and we have doubled the amount of that market that is going into test. Looking out into the future, as the market continues up to this $250 billion, we're not sure that it's going to continue to increase as a percentage, but it's certainly going to increase in proportion to that market. So we're going to expect to see that test is a really good place to play and the things that are driving that. If you think about semiconductor capital spend, the most important thing that that does is it enables new generations of process nodes and increased capacity. Each new process node allows additional transistor density. A way to think about this is the amount of test required for an entire wafer really is first order dependent on the number of transistors on that wafer. So if you're doing something in 1.4 nm versus 3 nm, you're going to get a whole bunch more transistors. That's going to drive a whole bunch more test per wafer. The other thing is to think about just how many wafers are being produced. That's the basic capacity. If you multiply those two things together, you get a rough idea of how much test is going to be required over the next few years. That's the part of the test market that should be a consistent percentage of semiconductor capital spend. The reason that it's accelerated over the past couple of years is because test intensity is increasing. The reason that test intensity is increasing is because people are now putting more than one die per package. When you start putting more than one die per package, that means that you need to ensure that each die is tested to a higher level of quality. So think about it. If every time you test a device, you sort out the ones that you think are good from the ones that you think are bad. In the pool of ones that you think are bad, are probably some good devices that you would've been able to ship. In the pool of devices that you decide are good, there are some that have latent defects. Those latent defects are ones that will be found later on in the process. If all you are doing is taking a single silicon die and putting it in a package, it does not have that much of an effect if you find the fault after you package it or before. But if you are doing something in a multi-die package, if you find a latent defect in one of those devices, it not only takes out that one device in the package, it takes out all the other die and HBM memories and everything else. When you are trying to test things that are going into these multi-die packages, you need to invest much more heavily in the wafer test for those devices. That is the primary reason that we believe that the test intensity as a fraction of the whole market has been going up. Got it. Okay. Your compute business, the part that is tied to AI GPUs, ASICs networking, has obviously done very well this year. I think one of the reasons why investors have been excited about the Teradyne story is the prospect of you gaining some GPU market share with a leading customer in that market. You have already shipped some product to that customer earlier this year. How would you frame for investors the next revenue opportunity for that customer and the share of the business you might ultimately be able to capture? Sure. In the middle of 2025, Teradyne was invited to attempt to qualify as a second vendor for test in a merchant compute account. The process for that culminated in the release of an initial part in the first part of this year, and that part being loaded in production on a small fleet of testers. That is great. So we have demonstrated that we can provide equivalent test to the incumbent platform on our platform. Having done that release, there are now two things that are going on. One is, we are developing all of the technologies and the processes necessary to keep both platforms' test solutions aligned with each other as they change. We have also begun the process of developing additional devices that will be released on both our platform and the incumbent platform. The first part that we did as a qualification vehicle was a part that was mature. It had already ramped. They had very good production data. So the one variable was our tester, and so by using a mature part, they were able to say, "Okay, you got a different result here. That is your fault. You have to fix it." If you are doing that on a new part, you do not know whether it is a part problem or a tester problem or something else. By doing it this way, they were able to isolate just what was associated with our platform, and we are through that. The next parts that we are working on are earlier in their life cycle. They have not fully ramped to their full volume, and we would expect to finish those projects in the second part of this year. Once those projects are finished and released, then we would be qualified to capture volume associated with those devices, and we would expect that to happen in 2027. We expect to be in this mode of converting programs from an incumbent platform to our platform probably for the next three to five years. Over this period of time, the customer will gain more familiarity with our platform, and we will also have all of these technology transitions going to next generation tester instrumentation and architectures, where we may have the right solution at the right time so that we would be selected as the new part qualification platform. Then the roles would be reversed on that part. The way to think about this is, for the next three to five years, we are going to slowly gain share up to maybe 30% of that compute portion of the account. Once you get through that period and either platform is being selected for initial part qualification, then it is purely on the basis of differentiation which vendor is going to get the most share. Got it. Second driver of your compute business has been custom silicon for XPUs. They are either being done by some of the world's largest hyperscalers, or sometimes custom ASICs. Maybe speak to the magnitude of the business you are expecting in that area for 2026, and are you expecting to add another customer or more customers as you look into 2027? Sure. Right now, if you think about custom AI silicon, there are really two very large players and a third that is at scale, but not of the same magnitude. Two of them are in cloud compute, and the other is primarily in the automotive and robotic space. Those are the three players that are loading hundreds of testers. Those three, let us just call them hyperscalers for lack of a better term. Teradyne has the two cloud compute hyperscalers. One of them has been dual-sourced for a number of years. It used to be exclusively on our competitor's platform. We began a process to qualify in 2023. That succeeded in 2024, and by 2026, we had the majority share in that hyperscaler account. The second cloud computing hyperscaler that is at scale has given us the opportunity to qualify as a second source, as a second supplier. We are in the process of doing that. We have correlated our first part, and we are in the process of releasing that to production and going on to follow on devices. We would expect to begin capturing meaningful production share in 2027 for that hyperscaler as well. Each one of these is hundreds of millions of dollars of TAM to $1 billion of TAM in any particular year. Winning a chunk of that share in any particular year is going to be very meaningful as an upside for us. Great. Finally, networking for AI. That is another area where you have a strong presence. Talk to the size of that business you saw in 2026, and whether or not it is reasonable to expect you could actually see that business outgrow hyperscaler CapEx growth in 2027. I think we have actually had this question in one or two of the smaller meetings that we have had today. Because if you look from 2025 to 2026, we saw really strong growth in both our networking business and in the AI ASIC business. We did not have the numbers in front of us, but our rough guesstimate is that they grew proportionally, that they kind of grew about the same. Looking forward from 2026 to 2027, there is probably more upside potential for the ASIC business than network. They are both going to grow strongly, but the sheer test intensity associated with AI accelerators is such that that has the potential to really sort of blow the doors off in terms of the total capacity needed. Whereas in networking, it is a more mature market and one that has probably a more predictable TAM growth. Yeah. Finally, on related networking, co-packaged optic, that has been an area of a lot of investor debate recently. Especially when it actually happens and when it ramps. What is market size, as you see it today, and can you maybe speak to your relative market position versus your competitive advantage? Okay. Let us start with the numbers. In 2026, we think that the test equipment TAM for silicon photonics co-packaged optics is about $100 million. And we expect by 2028 that that is going to be between $300 million and $700 million. And that is for just the test equipment part of this opportunity. There is also optical alignment and interface hardware and material handling. That is a different TAM, but it is all kind of mixed together. Right now, this is a very concentrated market. There is one customer and a very small number of devices at that customer that are driving most of the capital intensity in 2026. The thing that I want to try and emphasize is that this is really early days, that what you are seeing is companies trying to figure out how to scale this stuff into production. They are running into all of the things that you normally run into when you try and scale a complex new technology in production. So you see this playing out in a number of different ways. One is you can see that there is increasing excitement about copper networking for scale-up. You can see that there is increasing excitement for technologies like NPO, so that you do not have the same kind of yield risk associated with the full CPO device. And you can also see it in terms of people asking everybody who knows anybody inside of these companies who is up and who is down on a daily basis. But in terms of CPO, let me just sort of give you the lay of the land. If you are trying to build a CPO device, there are four major optical test insertions. There is insertion one, where you are testing just the photonics wafer. There's insertion two, where you're testing a silicon photonics wafer that has the electronics ICs bonded to it. There's insertion three, where you're testing the singulated optical engine dielets, and those usually a mounting plate has been put on them to align the FAU. Then the fourth is the assembled CPO device. They're insertion one, insertion two, insertion three, insertion four. For this first device, first customer, the way things have played out is that Advantest is strongest in insertion one, Teradyne is strongest in insertion two, a Taiwanese supplier is strongest in insertion three, and Teradyne is strongest in insertion four. What is going to happen as more customers get in and more parts are developed and the technology changes, is that all of that is going to change. The relative importance between insertion two and insertion three will change. The technology in terms of the lane counts and data rates is going to change. Whether or not you go to NPO or CPO is going to change. The way we think this is going to end up happening is that there are going to be players in the market that are experts at the device handling and alignment, and then there are going to be players in this market that are focused on test. Teradyne and Advantest are going to duke it out in test. There are going to be partners that we work with. Both of us will work with all partners that are handling the device alignment and device handling. By the time you get to 2030, when you got a billion dollars of test equipment being sold, that market is going to look a lot like the rest of the test market, where we're competing head-to-head on who has the highest performance test equipment, and other players are going to be competing on the alignment. Got it. Okay. Memory. That's been an area, especially HBM, which has really driven a lot of momentum in your results. I think you've kind of in the past talked about some uncertainty, well, maybe we could see a digestion phase, but sounds like you see most recently that that's going to maintain its strength. As we sort of think about the next four to six quarters, how do you handicap that relative level of strength and whether or not we see any kind of pullback in that space? To a little bit of historical context, 2024 was like Yahoo time in HBM. That was like the initial capacity ramp. From a test capacity perspective, it actually got ahead of production. In 2025, there was a significant HBM TAM, but it was actually basically flat year-on-year. 2026 is back to strong growth above 2025. Our initial view of 2027 is that it is not going to be a digestion, it is going to be continued growth from there. The thing that has changed in 2026 is that the rest of the DRAM market has really come alive. It is much, much stronger than we expected coming into the year. We expected 2026 to be a strong HBM year. We did not expect as strong of a burst of activity in LPDDR and DDR. LPDDR, it is all about CPUs and SoC and all of the memory that you need to do agentic AI. That was a happy surprise. The other thing that we are beginning to see towards the end of 2026 is a resurgence in the NAND market. Back in the olden days, the memory market was almost 50%/50% between NAND and DRAM. In 2025, it was like 85% DRAM, 15% flash. The flash market used to be that the flash market was really dominated by mobile. The DRAM market was kind of split between mobile and server cloud. Cloud is everything for everyone, and that is true for flash as well. The big growth driver in flash is really eSSD and solid state drives for data center applications. That is driving TAM growth in flash in 2026, and we expect that to be an even stronger year in 2027. I guess modest up for HBM and strong growth for DRAM and flash in 2027. Great. Finally, on your robotics business, I think there has been a lot of renewed optimism around that business, specifically centered on a key marquee customer as we head into next year. When do you think that dynamic starts to become meaningful for you in terms of revenue? There's two end market dynamics and one underlying technology that get us really excited about robotics. The two end markets, one is in logistics, and that's where our marquee customer is in the e-commerce logistics space. That is on plan. Revenue for that major customer tripled from 2025 - 2026. We expect it to triple again from 2026 - 2027. And we are still discovering new workflows within that customer that we'll be able to serve with variations of the solutions that they're developing using our products. The second vertical that we're very excited about for robotics is in electronics manufacturing, and all the way back into the semiconductor value chain. We've been calling this robotics assisted test and robotics assisted assembly and robotics assisted operations for data centers. And this is the fastest growing. It's now the largest vertical that we have for our robotics business, is really serving all of the contract manufacturers and other manufacturers that are helping to build out data centers. Those are the two verticals. The common thread between them is physical AI. The reason that this e-commerce customer is able to ramp this application is because this application is actually able to recognize product without pre-training on the product itself. Whatever the thing is, it figures out how to pick it up and what to do with it. And in order to do that, it needs a sophisticated physical AI application. The same thing in terms of electronics manufacturing for the kinds of stuff that go into data centers. There's a lot of things that stymie traditional automation, floppy cables, gooey thermal interface materials, adhesives, screwed fasteners, and very short product life cycles. All of that really needs AI so that you can get the application released and useful in a factory before the product goes obsolete. That's become, like physical AI underpinning our robotics applications is probably the most important trend that's going to drive our business over the next few years. Great. Integrated system test, that business, maybe unpack moving pieces there between the hard drive business and system-level test and how that segment has kind of evolved over the past few years. So- Well. Hard disk. No, it's- Wait, how much time do we have? No, no. It makes me happy because my first job in semiconductor test, I was an applications engineer working on a hard disk drive read channel. This is, like, in 1995, and back then, everybody was wondering how long it was going to be before hard drives were obsolete. Like, "Oh, any day now, NAND memory is going to take over." Anyway, now fast-forward today, 30 years later, and hard disk drives are showing the fastest exabyte growth that they've shown in years. The most important thing that's driving our short-term results in our integrated system test group is actually traditional hard disk drive test, and that's both higher exabyte growth, but also share gain. That right now, we serve all three major manufacturers of data center class hard drives, and that's the part of the market that's growing most rapidly. So that's kind of our core. On top of that, we have a business doing system-level tests for mobile. That's another case where we've gained share, we've won additional customers. The market itself is not growing robustly in units, so we're doing mostly helping to facilitate next generation parts on existing platforms. We expect that to provide growth over the next few years. The thing that we're working on right now that we do expect to drive strong growth over the next few years is system-level test and burn-in for AI-related products. We're doing that for some AI accelerators, for hyperscalers. We're also doing that for edge AI products that are going into applications like automotive. So very aggressive temperature ranges and very thorough testing to try and make sure that they are delivering products at a higher quality level than you get from traditional test. So those are sort of the three existing areas. The last area that we are just getting into in 2026 is in the test of solid-state drives. We test hard disk drives and we test flash memories. Before, we were not testing the actual SSD. The transition of SSDs to PCIe 6.0 is creating a discontinuity and increasing the test intensity. We see an opportunity there as well. Great. In this last couple of minutes we got left, I want to ask you about the financial management of the company. Clearly, you've got a very strong path for growth over the next several years. How are you managing that both, I think gross margins, 60%, kind of like this, kind of where you've been landing. How do you think about the OpEx growth needed to support all the things you just talked about, while also still getting financial leverage in the model? Yeah. From a gross margin perspective, our margins have. As we've grown, we've definitely gotten sort of into this 59%-61% range, and I would expect it to continue to operate in that range with both tailwinds from cases where we have differentiation and we get more pricing power, and headwinds from material costs. So, I don't expect to see a significant trend in gross margins. Around OpEx, we have a general rule of thumb that we want to constrain our OpEx growth to less than half of our revenue growth. Obviously, if we're growing revenue very, very rapidly, that's going to be on a lagging basis. So we expect to get significant leverage out of operating expense as we get to be a larger company. But many parts of our business are really fueled by the investments we're making in OpEx. If you look backwards in time, as the semiconductor industry pivoted hard towards AI, we leaned into OpEx at the same time that we were seeing headwinds in our mobile business. We leaned into the investments that we needed to make to be able to win and compute eventually, and we think that that was the right decision to make. We are still in a situation right now where the marginal utility of additional investment is very high. That is the stuff that is winning us a second hyperscaler. That is what is going to allow us to expand share inside of merchant compute and align to silicon photonics. We certainly do not think we need to grow OpEx at the same rate that we are growing our revenue, but the increase that we are, this 50/50 increase thing, we definitely have opportunities to spend on that that are going to deliver growth. Excellent. I think with that, we are on time. Thanks, Greg, for being here with us. We appreciate it. Awesome. Thank you. Thanks.