Ladies and gentlemen, good morning, and welcome to the Teradyne first quarter 2026 earnings conference call. I'll now like to turn the call over to Amy McAndrews, VP of Corporate Affairs 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, Gregory Smith, and our CFO, Michelle Turner. Following our opening remarks, we'll provide details of our performance for the first quarter of 2026 and our outlook for the second quarter. The press release containing our first quarter results was issued last evening. We're providing slides as well as a copy of these prepared remarks on the Teradyne investor website that may be helpful in following the discussion. Replays of this call will be available via the same page after the call ends. The matters that we discuss 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. We 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, 2025, on file with the SEC. 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. Looking ahead between now and our next earnings call, Teradyne expects to participate in technology-focused investor conferences hosted by Bernstein, TD Cowen, Stifel, and Bank of America. Our quiet period will begin at the close of business on June 12th, 2026. Following Greg and Michelle's comments this morning, we'll open up the call for questions. This call is scheduled for one hour. Greg? Good morning. With revenue of approximately $1.3 billion and non-GAAP EPS of $2.56, Teradyne delivered record results in the first quarter of 2026. Our previous high-water mark was in the consumer-driven mobile peak of Q2 of 2021. In Q1 of 2026, our revenue was $200 million or 18% higher than that previous record. This new record comes from durable AI demand drivers and the continuing acceleration of our wafer-to-AI data center strategy. This strategy is delivering demand across Teradyne's portfolio. In Q1, AI-related demand accounted for nearly 70% of our revenue, up from about 60% in Q4 of 2025. Our strategy continues to be anchored across three broad trends: verticalization, electrification, and AI. Verticalization is the concentration of our business into extremely large, vertically integrated technology companies. The verticalization trend was clear by 2024 and continues to accelerate. This includes companies like hyperscalers, but also huge AI ecosystem enablers like foundries, merchant compute, memory, and networking companies. Many of these companies are customers of all three of our businesses, Semiconductor Test, product test, and robotics. This product portfolio enables us to serve their needs from wafer to data center. While these massive customers are driving strong growth, it also means that the business is increasingly concentrated to these customers and to a smaller number of very large ASIC and commercial device programs. This concentration also increases the risk that bottlenecks in other areas could shift demand for our products, which can lead to short-term demand peaks and valleys superimposed over long-term strong growth trend. In other words, it's lumpy growth. The electrification trend continues. In the auto industrial segment, 46% of our revenue came from data center devices in the first quarter, which historically has been dominated by automotive and industrial devices. It goes without saying, AI is the dominant force shaping our business. We think about the opportunity presented by AI as three superimposed waves, each building on the one before it. We are in the heart of the first wave, which focused on the build-out of general-purpose AI data center capacity. This was behind the massive increase in data center spend in 2025. In 2026, we are entering the second wave. While there is still huge investment in general-purpose AI data centers, these data centers are being augmented with compute silicon optimized for inference at scale. This wave will grow to a high run rate over the next few years. Still yet to come is the edge AI, physical AI wave. As the technologies for silicon, packaging, memory, and AI models improve, compelling use cases for AI at the edge will be emerging. Obvious examples of this are self-driving cars, robotics, PCs, wearables, and smartphones. These waves are broad-based, and we expect them to stack on top of each other, driving significant ATE TAM growth over the full midterm. Because of Teradyne's wafer to AI data center strategy and our historic strength in mobile, automotive, and industrial, we are well-positioned to ride each of these waves as they arrive. Back in our January call, we shared that we expected robust double-digit year-over-year growth. We still expect that the compute TAM and revenue will grow significantly from an already strong 2025 base. We're seeing healthy engagement with both networking and VIP compute customers, and our pipeline of new design wins remains robust. Aligned with this momentum, I am pleased to share that we have received our first multi-system production test orders for merchant GPU in Q1. We expect these systems to ship, be installed, and be in production in Q2. Customer engagement remains strong, and we are well-positioned to capture further share as we bring up more devices on our platform. In automotive and industrial, we're seeing moderate but steady recovery in both TAM and revenue. There are signs of strength in automotive for primarily ADAS, and we're seeing increased demand for power going into AI data centers. As of now, mobile appears a bit weaker with memory pricing and availability affecting end market demand, especially outside the iOS ecosystem. Memory test demand appears to be even stronger than our view in January, with AI compute demand for both HBM and DRAM continuing to act as an accelerator. We're also beginning to see increasing flash test demand driven by SSD. The overall memory market is on track for solid TAM growth for the year, and we expect to gain low single-digit share. In 2025, our IST group expanded its HDD customer base and entered the SLT compute market. Now, in 2026, IST is on track to deliver against this expanded opportunity. We're seeing strength in HDD driven by greater than 20% annual exabyte growth fueled by AI. This translates into longer test times per drive and a larger HDD TAM and revenue for Teradyne. In robotics, we delivered our fourth consecutive quarter of sequential growth. This is particularly notable because Q4 is typically our strongest quarter and Q1 is typically down. We're seeing strong customer engagement across e-commerce, electronics manufacturing, and semiconductor end markets. Robotics is a key part of our wafer-to-AI data center strategy with robotic assisted assembly, test, and data center operations. Our robots are being used in environmental sensing in data centers. We recently demonstrated a complex physical AI work cell in partnership with Generalist AI as part of the recent NVIDIA GTC. In prior calls, we have often talked about the investments that we are making to capture growth opportunities coming from our wafer-to-data center strategy. In Q1, these investments have resulted in two significant new product introductions. The first is Photon 100, which is our platform for silicon photonics and Co-Packaged Optics testing. The Photon 100 is based on our proven UltraFLEXplus tester and is bringing SiPhO testing from lab to fab. I'll remind you that silicon photonics and co-packaged optics are in the very early stages of a ramp that will likely be substantial. There is uncertainty about the timing and the slope of this ramp, but as optical interconnections are increasingly used for scale-out and then scale-up networking, it is going to be a big chunk of the total networking TAM. As this market grows, we also expect to bring significantly more efficient test solutions online, so it would be a mistake to linearly extrapolate from today's test strategies and economics. That being said, we expect that this is a meaningful TAM expansion opportunity, which could reach $300 million-$700 million per year over the midterm. The second product introduction is Omnyx, which is a new production board test platform designed to address the unique set of test challenges for server boards and tray assemblies. This platform uses power, thermal, optical, and TDR test capabilities from across all of Teradyne to enable earlier detection of defects that are plaguing the build-out of AI data centers. In addition, we continue to pursue inorganic opportunities to grow our business. Our MultiLane Test Products joint venture closed on April eighth, and we believe this partnership will accelerate the development of high-speed IO and data center interconnect test solutions, a critical test need as AI data centers transition from cable-based connections to backplane and midplane architectures. Additionally, we closed the acquisition of TestInsight two weeks ago. TestInsight is the leading provider of test development tools that are used with our testers and complete competing platforms. This acquisition strengthens Teradyne's design to test software capabilities, enabling us to build a virtual test environment, which will reduce time to market for complex AI and networking devices. In summary, Q1 2026 was a record quarter for Teradyne. We're executing our strategy, capitalizing on secular growth drivers, and delivering value for our customers and shareholders. Our team, especially our operations team and manufacturing partners, went above and beyond to hit this ramp, and I'm grateful for their hard work and skill. We came into the second quarter with a lot of momentum and confidence that 2026 will be a strong growth year, and we are well on our way to achieving our target earnings model. With that, I'll turn the call over to Michelle. Thank you, Greg, good morning, everyone. Today, I will cover our first quarter financial results and our second quarter 2026 outlook. Starting first with Q1. First quarter sales were $1.282 billion with non-GAAP EPS of $2.56, both above the high end of our guidance range. Total company sales were up 87% from first quarter last year and up 18% sequentially from last quarter. Non-GAAP earnings per share was up 241% from first quarter last year and up 42% sequentially from last quarter. This represents a record financial performance for the company, driven by all things AI across all three of our business groups. In the quarter, we continue to have two specifying customers and one purchasing customer greater than 10% of our revenue. Building on that, let's look a little deeper at revenue, starting with Semi Test. Revenue was $1.1 billion, breaking the billion-dollar threshold for the first time, up 26% sequentially from last quarter and over 100% year-over-year versus Q1 2025. The revenue breakdown within Semi Test was SoC at $882 million, memory at $203 million, and IST at $27 million. The key drivers were continued AI strength in compute segments and memory. At roughly 75%, compute is the largest portion of our SoC product revenue. This continues the evolution of our test portfolio from being mobile-centric, shifting to AI dominant. Within auto and industrial, revenue nearly doubled sequentially from a low base last quarter, driven by power management demand increases for AI data center build-outs. Mobile revenue was roughly flat with fourth quarter 2025 and remains a muted impact to our overall results with the increasing importance of compute in our SoC portfolio. Aligned with our strong top-line performance, operationally, we have more than doubled our UltraFLEXplus shipments over the last nine months while sustaining our 12- 16 week lead times. Our multi-source strategy, primarily leveraging contract manufacturers, provides ultimate flexibility for our customers while ensuring capacity continuity in today's dynamic environment. Moving on to memory. Our memory business delivered another strong quarter of $203 million in revenue, relatively flat to our record last quarter, driven by robust HBM and DRAM test solution demand. We also successfully ramped the newest generation of our memory tester, Magnum 7. IST revenue of $27 million was relatively flat year-over-year, though we are seeing early indicators for potential growth, driven primarily by HDD in the second half and continuing into 2027. Product test group revenue was $80 million, up 8% year-over-year. Growth was led by sustained defense and aerospace demand and production board test. Robotics revenue was $91 million, up 32% year-over-year, representing our fourth sequential quarter of growth. Our one sales team approach is delivering results with revenue strength across end market verticals and e-commerce, electronics manufacturing, and semiconductors, including in AI data centers. Shipments associated with our large e-commerce customer increased sequentially, and AI revenue increased to 15% of the quarter's sales. Now moving down the P&L. A confluence of positive factors delivered record earnings results, including peak AI-driven volume, favorable product mix, and non-recurring one-time benefits. Gross margin for the quarter was 60.9%, up 370 basis points sequentially, driven by strong Semi Test volume and product mix and non-recurring operational impacts. OpEx declined sequentially from last quarter and was favorable to guidance due primarily to the timing of non-recurring engineering. Non-GAAP operating income was $480 million, with an operating margin of 37.5%, both all-time financial records. Moving on to capital allocation. Our capital allocation strategy remains consistent, and that is to maintain cash reserves to enable us to run the business and have dry powder for M&A. We ended the quarter with cash and investments of roughly $400 million. Working capital, predominantly in accounts receivable, increased and supported the revenue growth delivered in the quarter. Capital expenditures were flat year-over-year with the expectation that Q2 will increase, driven by continued investments in innovation and operation scaling. We paid $20 million in dividends in the quarter, and our share buybacks were de minimis. As Greg mentioned, we closed on two important inorganic asset opportunities this month. On April 8th, we closed on our previously announced Multi-Lane Test Products joint venture. The results of this business will be consolidated into the product test group, and our EPS will reflect our share of the results of this business. On April 16th, we closed on the acquisition of TestInsight business, furthering our wafer to AI data center product penetration. Combined, these two deals used roughly $165 million of cash in the second quarter, which we funded via our credit revolver. Looking ahead to our second quarter guidance. For the quarter, we expect revenue in the range of $1.15 billion-$1.25 billion and non-GAAP EPS of $1.86-$2.15. Gross margins are expected to be in the range of 58%-59%, normalized for peak volumes and one-time benefits. Operating expenses are expected to run at approximately 27%-28% of second quarter sales. The non-GAAP operating profit rate is expected to be between 30% and 32%. Based on current customer order visibility, we continue to expect first half weighted revenue with approximately 55%-60% of annual revenue expected in the first half. This expanded range from three months ago recognizes the continued strong demand signals we are hearing from our customers, while also balancing potential order lumpiness that could impact revenue timing across quarters or years. For the year, we have line of sight to about 50 million in revenue for merchant GPU, but our visibility into the second half is quite limited with increasing contributions over the midterm period. In closing, our teams delivered exceptional financial results reflecting strong execution and robust demand across our portfolio, aligned with our wafer to data center strategy. We remain confident in the full year trajectory and our target model of $6 billion in revenue and $9.50-$11.00 in non-GAAP EPS. I want to thank all of our Teradyne team members for their performance and operational discipline in delivering for our customers and shareholders. With that, we'll open the call for questions. Operator? Thank you. We will now be taking questions from Teradyne research analysts. At this time, if you wish to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue by pressing star two. In the interest of time, we ask you please limit yourself to one question and one quick follow-up. We'll take our first question from Timothy Arcuri with UBS. Please go ahead, your line is open. Thanks a lot, Greg. I guess my question is just on the back half of the year. It's a bit of a disconnect. It sounds like the demand signals, if anything, gotten better over the past three months, but you're not raising guidance for the back half of the year. Is this, you know, this kind of came up on the, on your competitor's call as well. Is this to some degree like factoring in some constraints that maybe are downstream of your business? And I know you did talk about this, you know, VIP stuff can be very lumpy, so maybe that's part of it. If you can talk about that. Thanks. Hi, good morning, Tim. It's Michelle. I'll start, and then Greg can add some specifics from a customer perspective. Let me start with where we're at today. Q1 was an exceptional quarter, a record quarter. You heard that throughout our script for the company. I mean, when you look at our Q2 guidance, it's equally strong. Revenue of $1.15 billion-$1.25 billion, this represents about a 84% year-over-year growth at the midpoint after coming off a really strong Q1 of 87% growth. As a result of the strength in the first half, we have expanded our first half revenue range to 55%-60%. This is a change from January, where we'd given a point estimate of 60%. When I think about the ranges, just to kind of bound this, the low end of the range really reflects the potential for timing impact. This is either lumpiness in terms of large customer ordering patterns, or it could also be hiccups in the AI data center build-out, the ecosystem, if you will, in terms of when our testers actually get accepted. These dynamics, as you know, can impact revenue within the quarter or across year boundaries. That is part of the dynamics that's playing out in second half. When I think about the high end of the range, this really reflects continued strength that we're seeing from a demand perspective across compute, networking, and memory. The other element I would add to this is in terms of visibility. We talked in our January call around improved visibility from a customer ordering perspective. That is consistent with where we're at today. Historically, this business has had about 13 weeks of visibility. Coming into this year, we improved that. We can now see into another quarter out, although not as strong as the current quarter. We still do have some undefined parts as we think about Q4. Yeah. Tim, let me give you a little bit more color in terms of sort of how the first half, second half polarization breaks down by sort of group or technology. The part of our business that we believe is most first half weighted is VIP compute. That's, you know, like we have pretty good visibility into the timing of programs associated with that and the specific customers that we have. We think that that's like that it's really strong in the first half of the year, and the next wave of that for the next generation of that technology is early 2027. It might start bleeding in or pulling into the end of 2026, we really don't know about that. When you go from then to, like, networking has started off very, very strong, and we think it is going to stay at a reasonably strong level through the year, but our visibility is not as strong into the second half, and we have historically seen that sort of filling in more as time goes on. You know, like, as you look beyond two quarters, you start to see that sort of that tending to go up, not down. There is potential upside in the networking space. When you look at memory, that I think is actually going to end up being more back-half weighted than front-half weighted. That is a counter thing. The stronger that memory gets, the more we are going to be able to trend towards that 55% end of the range that we gave. If you look beyond the semiconductor test part of this. Well, actually in semiconductor test, just to sort of finish the story around auto and industrial, right now, data center is hot, hot in that segment, and we expect that to continue. What we're seeing and hearing from those customers is that the rest of their portfolio, that like, there's reduced inventories and potential demand increases, but we haven't seen that translate into increased demand for capital equipment in the, you know, in the auto and industrial part of that beyond data center. Moving beyond that, getting into IST, we definitely think that's stronger second half than first half, but, I mean, we're talking about coming off of a base at $27 million in Q1. There's a lot of upside to go before it really moves the needle at the enterprise level. Product tests similarly will be back-half weighted, but again, it's like a smaller percentage of the total. Typically, our second half is much stronger in robotics than the first half, but we've started this year at a really good run rate. We, you know, like, the signs are encouraging, but we've learned to be very careful about predicting what's gonna happen beyond lead time in the robotics space. Did that help a little bit? It does, Greg. Yes. Thank you for that. I guess I just wanted to ask you about the TAM for the year. You didn't give us a TAM. I know Advantest is saying, like, low $9 billion for SoC and sort of low to mid $2 billion for memory, kind of a total of, like, you know, $11.5 billion. You've usually been pretty close to their number, you know, a bit lower in memory and a bit higher in SoC. Is that total $11.5 billion for the year? Is that, like, a, you know, reasonable TAM number for the year? Bearing in mind how far off both Teradyne and Advantest were about the 2025 TAM when it was April, make that the big asterisk on this answer, you know. That, because a lot changed last year, and the TAM strengthened significantly from the April view through the full year view. For 2026, there's three, you know, just at a logical level, there are three possible things. One is that people have overcorrected in terms of estimating what the TAM is, people have gotten the TAM exactly right, or it could follow the same pattern that it followed in 2025. I would say that, you know, we are not talking about a TAM publicly because we feel really uncertain about which of those timelines we're living in. I don't think the numbers that Advantest gave are absurd, but I don't feel confident enough in our forecasts to share them. Okay, great. Thank you. Thank you. We'll take our next question from C.J. Muse of Cantor Fitzgerald. Please go ahead, your line is open. Yeah, good morning. Thank you for taking the question. I guess first question, and again, congrats on your first merchant GPU win. Curious, you know, how to think about the follow-through there. What kind of are the steps to try to ascertain a greater percentage penetration there? As well as, you know, how are you thinking about custom ASICs from here beyond your one very large customer? Yeah. First on GPU, what we've said previously, I think is the way it is tending to play out, that the first project is the hardest project because it involves qualifying the test platform and converting all of the underlying libraries that support the testing. That part of this project is behind us, and we are into the phase where that initial qualifying part can go into production. The next phase is what you could call the fast follower phase. We're going to begin working on projects that are earlier in their life cycle and that we will be able to complete more quickly than the first qualification project. Those are projects that probably have a timeline where we would be releasing into production late in this year. Whether that capacity ramp starts to hit at the end of 2026 or into 2027 is an open question. The thing that I want to caution is, you know, like the long-term view. Over the midterm, we expect that a dual source customer is going to be managing share in that 30%-70% range. It's going to take us a few years to get there because there are so many different part types, so many different SKUs that, as an incumbent platform, there's a lot of flexibility about what, you know, like if you need capacity for a particular device, you know that you have the solution for it on the incumbent platform. So during the fast follower, we're really competing on the basis of differentiation of the platform and an ability to serve spot demand more quickly than our competition. We're trying to be very responsive. We're trying to get as many SKUs converted over to our platform as possible. I would expect it's gonna take, you know, it's gonna take us a few years to get from low single digits in 2026 to sort of entering that 30%-70% range over the midterm. Very helpful. Maybe a question on gross margins. You're taking a downtick here, and historically the business has not been fixed cost. It's been much more, product cycle driven. Curious, you know, what is precisely driving that downtick in June, and how should we be thinking about modeling the second half of the year? Thank you. Hang on. I'd like, my colleagues have reminded me that I neglected the second half of your question about custom ASICs. We'll take your gross margin question right after. I just wanna hit the custom ASICs. Right now there are two hyperscaler programs, two compute hyperscaler programs that are at scale. If you include like edge automotive, there are three hyperscalers that are at commercial scale and driving tons of volume for us or our competitor. We are actively competing for parts that have not yet ramped and also for dual source status against the hyperscalers that have already ramped. The timing for that would be more 2027 than 2026. You know, stay tuned for news of that as we go on. I'll pass it over to Michelle for the gross margin commentary. Well, I think technically now C.J. has three questions now as a result of this, but we'll go with it. That's my error. Yeah, from a gross margin perspective, we did have a really strong Q1, 60.9%, again, another record for the company. There were several favorable factors coming into play simultaneously that drove this. One was related to the AI demand, really strong Semi Test volume, which was 87% of our overall portfolio within Q1. Along with that, we also had favorable product mix and some benefit from some non-recurring operational benefits. As you think about the shift from or the step down from Q1 into Q2, at the midpoint, that's about 240 basis points. About half of that is driven by the 1-time non-recurring kind of operational benefits that we had. You couple that with what we're seeing from a mix perspective within Q2, this is somewhat of a normalization. The one thing I will highlight, however, is when you look at first half, overall margins will be at around 59.7%. This is at the low end of our target model range. I think it's important to kind of keep in context that you should expect to see our margins move around a bit. They are lumpy like our revenue. We typically will see up to 400 basis points within a year. However, when you look year-on-year, it's a much tighter range. It's within like 200 basis points. Some of this is noise just within the first half, is how I would think about it from a modeling perspective. Thank you. Thank you. We'll take our next question from Mehdi Hosseini with SIG. Please go ahead. Your line is open. Yes. Thanks for taking my question. I also have two. The first one has to do with how you have been managing quarterly guide, and your performance has actually been exceeding on a consistent basis. With that as a background, my question to you is, are you seeing a consistent trend where late in the quarter you get the rush order, you get the programs in line, and the last month of the quarter becomes the source of upside? Or is there something fundamentally different in the way you've, you communicate with The Street? I have a follow-up. I'll start and Michelle, if you wanna chime in with some additional color. When we sit down to do our guide, we try to give the very best view in terms of balancing the risks and opportunities that we see in the current quarter. We are typically carrying some upside capacity that if we get quick turn orders that we, you know, like if we can help improve customer satisfaction by serving orders within lead time, and we have the capacity to do it, we are going to do that. In a strengthening demand environment, we will tend to overperform. At the same time, we are, like everyone else, working really hard to solve the supply chain issues that come from ramping capacity. There are, you know, supply chain risks that our operations team does a great job solving. When we go into the quarter, we don't know that we have a solution for all of those. The other thing that I'll say at a like minor level is we are still being quite cautious about robotics, that we are seeing much improved predictability and improved growth from that unit. We don't want to get ahead of ourselves in terms of assuming that we are in, like, a bold new future there. We want to make sure that we really understand exactly what our funnel of opportunities looks like and our conversion rate and, you know, like, we're really happy about having four good on-track quarters in a row, but we are still quite careful in terms of predicting, like, higher rates of growth against that business until we get a little bit further down the road. Yeah. The only other thing I would add to that, to Greg's point about the supply chain variability, that's not just within Teradyne, but also with our customers. To the extent, for example, all the parts of a test cell are not coming together, they're not looking to take our testers and install them, there could be slips that happen within the quarter, and so that could be either upside or downside in terms of how it plays out within a particular week. You'll see this sitting on our receivables at the end of Q1, where we shipped a lot of units that originally we had been told to kind of push out. I think it's important to note that we're seeing variability not only on the order side, but also in terms of the supply chain from a customer's perspective. Got it. Thank you. Since last earnings conference call, agentic AI has become the new buzzword, there are a number of existing and new semiconductor companies that are trying to capitalize on tokenization and offer a new kind of CPO. My question to you is, given the fact that historically x86 has been driving more of an in-house test solution, now you have a diversification of a CPO because of agentic AI, does that also add a new layer of opportunity for you? Was that already embedded in your longer-term forecast, or is this something new and could potentially provide some upside? I think of it more as providing potential upside than something that's in our plan. We are testing primarily Arm-based CPUs for data center applications. I think we have active design-in opportunities that I expect to be able to convert in this space as well. I would add that in addition to sort of new demand for CPO in agentic, there's also a big trend towards this optimizing data centers for inference at scale. I talked about that a little bit in the prepared remarks that, you know, if you look at what NVIDIA is doing to try to decrease time to first token on inference and other players are doing, I think we have reasonable exposure to those types of devices as well. As things shift towards more inference and more agentic, then I think we have potential long-term upside. Okay, great. Thank you. Thank you. We'll take our next question from Shane Brett, Morgan Stanley. Please go ahead. Your line is open. Thank you for letting me ask a question. My first question is on networking. Regarding CPO and silicon photonics, can you talk about where you stand in terms of share now and how you anticipate your share tracking? I'm asking as your competitor announced that they received their first high volume ATE order for silicon photonics. Thank you. Hi. Thanks for the question. Our best guess so far in 2026, that share is quite balanced between us and our competitor. I think the, like, the only difference is whether we're talking about single large orders or multiple smaller orders. I think share is kind of balanced, and that's where we think things are right now. It's really early days. Right now there is, you know, there are very few end customers that are trying to ramp CPO into production, and the share split right now is mostly around which test insertion is being done by what companies. Our strength is primarily in insertion two, where you're actually connecting electrically to a compound, a wafer, on the top for electrical and looking at light down on the bottom. We are in the process of releasing solutions for that in production, you know, we are working with partners to do that. It's really kind of a 4-way partnership involving foundry, end customer, light contact, and Teradyne. We're working that with a team in Taiwan, Israel, Germany, North America, to bring this technology to production. We think that it's a, you know, this is a very important market, and as, like, the way we see this happening is that in 2027, this is primarily gonna be associated with scale-out kind of networking. The scale-up networking is likely to be even higher volume but over a longer period of time, like 2028, 2029. We are going to be rapidly changing the efficiency of test at all four insertions. The balance of where things are gonna be done across those die attach is really going to be driven by the end economics, you know. If they are finding a lot of faults at a particular level, they will keep doing that test. If they have very high yields, then they will look to see if they can eliminate that. Personally, I think efficiency is gonna go up by like a factor of 10 over the next couple of years. Despite the fact that that efficiency is going to get that much higher, I think that this is still going to be $300 million-$700 million worth of equipment once you get a few years into this midterm. Thank you. That's really insightful. For my follow-up, one of your auto industrial customers talked about a bit of a tester shortage on their earnings call. When I was listening to that, my interpretation was, "Oh, there may be a fight among customers to get in the queue at Teradyne." Just where do we stand right now in terms of capacity and utilization, and how much capacity are we looking to expand over the next year or so? Thank you. If that customer is having trouble getting testers, they're obviously not buying them from Teradyne. That we are able to serve the demand that we have. Our capacity has ramped rapidly, where we have multiple contract manufacturing partners that are enabling our production. We were surprised by that. We, you know, for this particular end customer, we have a very good relationship, and for the parts of their business that we serve, we're able to deliver the testers that they need in the lead time that they need it. I think this is another reason that more and more customers are really looking at supply chain resilience all the way back to their test equipment capital supplier. That kind of strategy isn't something that is just solved by increasing capacity. What customers really need is to be able to get the capacity that they need when they need it for the parts that they are ramping. You don't know how that demand is gonna overlap as a supplier. I think it's, you know, I think the trend in the future is that for high volume devices, we're going to increasingly see this trend towards multiple sourcing of test equipment. Overall, I see that as a real positive for Teradyne. Great. Thank you very much. Thank you. We'll take our next question from Krish Sankar with TD Cowen. Please go ahead. Hi. Thanks for taking my question. I have two of them. First one on the silicon photonics. Michelle or Greg, you spoke about the $300 million-$700 million opportunity. I understand it's a midterm. How big is the market this year? Is it tens of millions of dollars this year? Along the same path, is the ficonTEC being acquired by Chinese entity an issue, or is it a non-issue for you? I had a quick follow-up. Yeah. This year we're probably looking at silicon photonics right around 100-ish, you know, maybe a little bit less, maybe a little bit more. It's substantial, but it's, you know, pretty early days. With regards to ficonTEC has been an independently operated unit of a Chinese corporation since 2021, I think. I mean, this is not a new thing. You know, our relationship with ficonTEC is with both the unit, which is in Germany, and also the Chinese company that it's a part of, RoboTechnik. We have a great relationship with the CEO there. You know, they are one of the absolute world-class providers of active alignment for silicon photonics assembly and for test. That there are a lot of hard things that you need to do when you're building silicon photonics. One of the most difficult is achieving alignment in the assembly process for electro-optic modules or for CPOs. ficonTEC is like one of the world leaders in that technology, and they are working to build their business in semiconductor capital equipment, you know, like the test part of it. You know, that is something that is a high priority for us, high priority for them. I think that the press reports that came out like they've been refuted by ficonTEC, and we don't see any evidence on the ground that it's at all true. Greg, that's very helpful. Thanks for that. A quick follow-up for Michelle. I know you gave some color on how to think about gross margins, just visually thinking, you know, as auto analog industrials cyclically starts rebounding, is it fair to assume that's a huge tailwind for your gross margin given those legacy Eagle Test testers are pretty high margins? I think the short answer is no. When you think about kind of our full year expectations and what's really gonna influence the end result even over the midterm, right? We've given a target model of 59%-61%. We're sitting at 60.9% in Q1. We expect the first half to be about 59.7%. I still think that that's within the range. Auto and when you think about auto and industrial, it's not gonna be the biggest swinger in terms of our overall margin portfolio. I'm just gonna go back to just the tightness in our overall margins within, you know, 200 basis points year on year. When you use the words like huge or significant, I probably react to that a little bit. I do think it can be somewhat of a tailwind, but just given the size of it to the overall portfolio, I would say no in terms of the significance. Yeah, I mean, over the years, we've seen most of our product lines converging towards similar margins. You know, I would not expect to see even if we saw a significant increase in the percentage of total revenue that's coming from auto and industrial, I don't think we'd see that as a big mover. The other thing to remember is that one of the things that goes into auto and industrial is ADAS. If you squint at an ADAS tester, it looks a hell of a lot like a VIP compute tester, you know? Just because things are aggregating into particular end markets, it doesn't necessarily reflect the platform that's being sold to serve it. Got it. Thank you very much. Super helpful. Thank you. We'll take our next question from Vivek Arya with Bank of America Securities. Please go ahead, your line is open. Thanks for taking my questions. Greg, on the GPU engagement, when we look at the large customer, the demand is clearly increasing. You know, the number of queues across training and inferences is going up. I'm curious, what is the gating factor to getting to that, you know, let's say whatever, 20%, 30%, you know, market share? What is your share assumed in your $6 billion target model? Let me start at the beginning. The thing that is setting the timeline to get to, say, 25% share of GPU is how efficiently we execute our fast follower strategy. How fast we can bring up test programs and test solutions for devices that are early enough in their life cycle that we capture a significant portion of the ramp. You know, that ultimately is the limitation. As time goes on, the ultimate phase of fast follower is something that I've referred to as tester-agnostic development. What many of our customers are talking about in this space is that they really want to develop their test solutions against a, like think of it as like a virtual test system. By flicking a switch in software, they can target that towards our platform or towards another platform. When we get to that, then we're gonna be in a world where it's much more about the differentiation on throughput and performance and availability than incumbency. You know, I think that we have certain advantages around test coverage for elements of the device. I think we have some advantages in terms of platform reliability. I certainly think that we have some advantages in terms of responsiveness to demand. And what we've seen, like the one of the reasons that we feel like we know what we're talking about here is that this is basically the world that we live in in high-performance memory. You know, we were later to market than our competitor when it came to HBM performance testing. Once we released a platform that delivered better economics and better performance, then we began to see significant share gains because the customer can choose which platform they're going to buy, and we were able to capture that. As the AI accelerator world migrates more towards this idea where there are solutions existent on both platforms, then we think that we can compete on being able to get them the capacity that they need and getting the most parts out of each test cell. At the end of the day, it's like the limitations are turning into things like floor space and number of probers and handlers that they can buy. Having very productive test equipment is a potent advantage. And, and- Now in terms of the part of the $6 billion, I think that we are looking at. I don't think we need to be much. Like, we can get to this, our model, in the fast follower phase of this, where we're just doing specific part conversions, and I think we would only need kind of low double-digit share in order for us to hit our model. Right. If I may follow up, I just wanted to get back to this visibility question. AI is over 70% of your sales, but when we look at any other semiconductor company involved in AI, you know, logic or networking or memory, even the semi cap front-end players, they all claim to have great visibility, not just for this year, consistent sequential growth, then visibility even in 2027. I'm curious, why is that not translating into stronger visibility for the testing part? Because you guys are an important part of that supply chain also, how come everyone else has great visibility and confidence, but we are not hearing that from the testing side as much? Thank you. I think the point that Michelle made is really important, that the lead time for a tester is on the order of the same as the lead time for the actual wafer, not the wafer front-end equipment. Our customers are rapidly trying to build out capacity to be able to support all of the phases of production. Where, you know, like, at the end of the day, these customers are definitely leaning hard into creating the front-end capacity to increase the number of wafers that go through. Until they actually are seeing the wafers go through, they are holding back on the orders for the test equipment. I mean, we definitely are working against a, you know, a long-term plan around capacity expansion for our products. We have an idea of our, think of it as like a strategic forecast that we're working against, but that's very, very different from the level of commitment that we get from our customers around what they'll buy and when. Since the, like, testers are sold for particular devices and particular device ramps, those ramps can move significantly if you have an issue with, you know, like, if it's an ASIC, if the first silicon doesn't work, then that can inject a two-quarter delay in a ramp. That would have a meaningful effect on the timing of our growth. It wouldn't have a meaningful effect on the long-term growth that we'll achieve. I think the front end is less lumpy, but growth in the front end inevitably leads to growth in the back end. It's just uncertain in the timing. Thank you. Thank you. We'll take our next question from James Schneider with Goldman Sachs. Good morning. Thanks for taking my question. Relative to the CPO opportunity, I think you did a good job kind of outlining where you believe the market is going. Just kind of two follow-ups on that. One is, could you maybe level set us for where you expect your CPO revenue to land in terms of a range for this year, 2026? You talked about kind of a four-way kind of tie-up for to pull off some of the second insertion solutions. Do you have any kind of plans or thoughts about how you might integrate that a little more under one roof in some way or another? I don't think we're publicly disclosing our expectations for 2026 revenue, mainly because there's so much uncertainty about where in the test flow the investment will go. You know, will they lean harder into insertion 2 or insertion 1 or insertion 3? There's a lot of noise on that data right now, so we're not trying to make a prediction. The 4-way partnership is actually, that's kind of the way the world works normally. You know, that if you think about non-CPO devices, there's a fabless specifier, there's a foundry, there's an OSAT, there's a handler or prober provider, and there's a tester provider, and there's a probe card provider. There's a whole ecosystem that makes these test cells work. We are a real strong advocate of this open ecosystem long term. We think that that's what our customers want, and it's how we want to try and work. We also want to make sure that all of the providers in this space, you know, for probers, handlers, whatever, that they feel like we are treating people alike, that we're not showing favorites. What we're really trying to do is we're trying to lean hard into helping ficonTEC build their capability in the semiconductor test equipment space, but we're acknowledging that they are the world experts in active alignment, you know. They're a great company. They know what they're doing. We wanna help stand them up to be a great member of this ecosystem versus trying to integrate them. That's helpful. Just as a follow-up for Michelle, you know, clearly the growth and margins and everything else are kind of turning out very well, and seems like you will indeed probably get to your model at some point. Just from a philosophical standpoint, from an OpEx perspective, to the extent you do tend to grow on a multi-year basis a lot stronger, would you tend to believe that you could actually under punch the OpEx intensity, or do you plan to devote more OpEx resources to R&D over time? Thank you. The answer is yes. You know, we've historically talked about growing OpEx at 50% of revenue, and we still believe in that model. We believe in investing back in the business, particularly in today's environment. As we think about the pain points in our kind of wafer to data center strategy, there's lots of opportunities for us to help our customers. We're gonna look for those opportunities to reinvest back in the business, which will impact OpEx. When we think about the short term, however, in the current year, in such a hyper-growth mode, we wouldn't expect that same translation to play out within 2026. Definitely over the midterm and the longer term, that's the aspiration that we would be driving to. Yeah. The only color that I'd add to that is, there is such a high rate of technology change in this end market and so many interesting opportunities. Like, there is a ton of waste due to yield issues and quality escapes. It's kind of a perfect environment for a company that is delivering something to help other companies get to high quality. For a while, we were in a world where the marginal utility of additional R&D spend was not that great. Like, if you look back a few years. Now, we have just a really long list of great things that we can invest in that will drive long-term revenue growth. We're gonna, you know, we're gonna do our very best to constrain the growth of our G&A. We're gonna do the very best that we can to manage the growth of our sales and marketing so that most of that is customer-focused technical investments, and we're gonna lean into R&D because it's a target-rich environment. Thank you. Thank you. This concludes our Q&A session. I'd like to now turn it back to our presenters for any additional or closing remarks. Thank you, operator. Thanks everyone for joining the call. We are really looking forward to Q2, another really strong quarter. You know, I just wanna reiterate our thanks to the team around the performance for Q1. It was, you know, we're calling 2026 the year of execution, and we are, like, hitting on all cylinders. The team is doing really, really well, and we appreciate you having the interest in the company. Thank you. This concludes today's Teradyne first quarter 2026 earnings call and webcast. You may disconnect your line at this time, and have a wonderful day.