Teradyne (TER): Semiconductor Testing Giant And Robotic Stock

Teradyne’s Core Business: Semiconductor Testing Leadership

In a period of boom for AI and robotics stocks, much of the attention is on the consumer side of these sectors, from humanoid robots to LLMs (Large Language Models).

Further from the public and investors’ attention, a lot of money is also being made in the B2B (Business To Business) side of the digitalization trend.

One such activity is semiconductor testing, an activity that is growing alongside the volume of manufacturing of processing chips, memory bars, antennas, sensors, etc.

A long-time leader of semiconductor testing is Teradyne, a pioneer in the sector.

The company is also today a major industrial robot manufacturer, which should benefit from automation and the rapid re-industrialization and reshoring of industries by the USA.

Teradyne History

The company was founded in 1960 by two MIT graduates, Alex d’Arbelof and Nick DeWolf, with the insight that, with mass manufacturing and the use of semiconductors, testing needed to be performed in an automated fashion.

Their first product was a diode tester for the defense contractor Raytheon, followed by other testing systems for early semiconductor products. It went public in 1970.

In the decades that followed, the company would keep developing new products, as well as acquire competitors or key technology firms to widen its hold on the semiconductor testing market.

Source: Teradyne

At the core of the company’s philosophy was to not just react to the market, but anticipate what is actually needed.

“What the customer demands is last year’s model, cheaper. To find out what the customer needs, you have to understand what the customer is doing as well as he understands it.

Then you build what he needs, and you educate him to the fact that he needs it.”

— Nick DeWolf

Initially more active in computing and defense products, the company expanded into the automotive market with the acquisition of General Radio (GenRad). It then entered the market of testing for electronic consumer goods with the acquisition of Nextest and Eagle Test Systems (memory, disk drives) and LitePoint Corporation (PC, tablet, cell phones, etc.).

A major departure from the historical focus on semiconductor testing happened in 2015, when the company acquired the Danish company Universal Robots, a leader in the collaborative robot market (see more below).

The acquisition of MiR in 2018 and of AutoGuide Mobile Robots in 2019 added further products to Teradyne’s robotic segment, in the autonomous mobile robots market (see below).

“Teradyne’s financial strength and global reach will help support AutoGuide’s growth, enabling us to maintain our agile approach to the development and deployment of high-value automation systems that bring industry-leading value to our customers.”

— Rob Sullivan, Former president and CEO of AutoGuide

Teradyne Semiconductor Testing

Teradyne today is still very much a semiconductor and electronic testing company, with robotics only a small portion of total revenues (13% of sales in 2024, and 9.8% in Q3 2025, thanks to growth in the testing segment).

Source: Teradyne

Semiconductor testing is a key step in the manufacturing of these goods, as it ensures quality control and limits risks and losses from defective chips or memory.

This requires specialized equipment for each type of semiconductor product and flexible designs able to adapt to each manufacturer’s specific requirements. The precise measurements detect, for example, highly technical characteristics of semiconductors like “merging defect removal, boundary scan, power-on BIST, parallel device flashing”.

Source: Teradyne

Overall, Teradyne is the leader of the industry, alongside its Japanese competitor Advantest (6857.T), with everyone else far behind in terms of market share in the Semiconductor ATE market (Automated Test Equipment).

The company sees its testing business driven by 3 fundamental trends: verticalization, electrification, and AI.

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Verticalization

Verticalization refers to most of the top tech companies in the S&P500 gradually integrating their manufacturing and technology in-house, especially for chips, after decades of offshoring and outsourcing their supply chains.

Source: Teradyne

“Growth was driven primarily by System-on-a-Chip (SOC) solutions for artificial intelligence applications and strong performance in memory.

As we look ahead to Q4, AI-related test demand remains robust across compute, networking, and memory segments. Q4’25 sales are expected to increase 25% sequentially and 27% from Q4’24.”

— Greg Smith, Teradyne CEO

Electrification

Electrification is about not just EVs, but also the exploding demand for electrical power from data centers, and the later expected growth in power requirements for other applications, which increases the demand for semiconductors (manufacturing, heavy industry, heating, etc.).

Source: Teradyne

This should create a stable new market, with, for example, electric cars requiring twice as much semiconductor testing as traditional internal combustion engine models.

In January 2025, Teradyne and Infineon, a German semiconductor design and manufacturing company, signed a partnership agreement regarding testing for power equipment.

In this deal, Teradyne acquires part of Infineon’s automated test equipment team (AET), with a focus on materials specialized in power applications like silicon carbide and gallium nitride.

“Infineon’s technology will enhance our market-leading ETS product portfolio, demonstrating our commitment to continue to provide innovative solutions that meet the evolving needs of our customers.”

— Rick Burns, President, Semiconductor Test Group at Teradyne

Infineon will benefit from Teradyne’s ability to scale up this activity and expand it globally.

“Teradyne is a strategic partner to Infineon to advance power semiconductor test capabilities.

Together, we are addressing the dynamic test challenges in new technologies like silicon carbide and gallium nitride at the scale and flexibility needed by our markets and customers. At the same time, we provide our employees a long-term perspective in a highly specialized company.”

— Dr. Rutger Wijburg, Chief Operations Officer Infineon

AI

Teradyne is obviously seeing this sector as a booming source of demand for semiconductor manufacturing.

While currently driven by compute, data centers, and IT businesses, it expects it to be driven by self-driving cars, mobile AI agents (AI-capable smartphones), and IoT in the medium-term.

In regard to AI, a lot of new designs, concepts, and semiconductor component categories specific to AI are only getting started in 2025 or 2026, with Teradyne already equipped to service all of them.

Source: Teradyne

Photonics

As AI data centers require ever more computing power, while also needing to reduce their electrical power consumption, they are turning to new computing technologies, especially photonics.

Silicon photonics is expected to reduce by 30% overall data centers’ energy consumption, while expanding data centers’ bandwidth 10x.

“The extraordinary growth and complexity driven by Cloud AI will require optical interconnect solutions to support the bandwidth and reduce the power required for next-generation networks.”

— Teradyne CEO – Greg Smith

To position itself in this market, Teradyne acquired in March 2025 Quantifi Photonics, a semiconductor testing company for “scalable and cost-effective high-volume manufacturing of photonic integrated circuits (PICs), co-packaged optics and pluggable optics.”

“The silicon photonics market is at an inflection point that requires innovative, state-of-the-art solutions to unlock its full potential.

By combining our strengths, Teradyne and Quantifi Photonics will provide customers with complete turn-key photonic test solutions that allow them to scale.”

— Quantifi Photonics co-founder and CEO Iannick Monfils

This acquisition is key to Teradyne’s goal of going back to a double-digit growth rate (aiming for 12% CAGR by 2028), capitalizing on the disruption by silicon photonics of traditional networking solutions in data centers.

Robotics

Collaborative Robots

Collaborative robots (Cobots) are cost-effective, simple-to-deploy robots designed to automate repetitive and dangerous work, for example, machine tending, packaging and palletizing, assembly, gluing, soldering, polishing, screw and nut driving, etc.

This makes this type of robot applicable not just to heavy industry, today’s largest segment for robotics, but also to almost any type of manufacturing, assembling, packing, or processing factories and warehouses, including for low-cost goods.

The lower cost and ease of deployment lead to an average payback time on the investment of 12-18 months, making it almost a no-brainer wherever it can be deployed.

Source: Teradyne

This also gives Teradyne a robotic segment where mass production can already be highly profitable, giving it scale to later grab market share in other emerging segments of the robotic market.

Autonomous Mobile Robots

Autonomous mobile robots are designed to move payloads from 250 kg (551 lbs) up to 1,350 kg (2,976 lbs), depending on the model.

Source: Teradyne

Teradyne’s AutoGuide autonomous mobile robots (AMRs) have proven their value at leading manufacturers and warehouse providers, including Pactiv, Ford, and Husqvarna.

These robots benefit from robust software like SurePath, helping with fleet management to make the robots safer and more efficient in a given warehouse. In the long term, more advanced AI solutions will increase their usefulness and efficiency further.

“The high-payload AMR market is an emerging, fast-growing segment of the global forklift market.

AutoGuide’s modular architecture and innovative technologies provide safe, easy-to-deploy products that naturally complement our MiR low- to mid-payload AMRs, extending Teradyne’s reach in this attractive market.”

— Mark Jagiela, Former CEO of Teradyne

Teradyne has been quickly expanding its robotic offering, adding many specialized tools for separate industries, for example, clean room-compatible robots or welding add-ons.

Source: Teradyne

The company is slowly deepening the integration between its several acquired robotic businesses like Universal Robots and MiR (Mobile Industrial Robots), especially by consolidating the marketing, sales, & services activities of these segments.

Teradyne sees the robotic market double by 2028, with the quickest growing segments being the ones where the company is concentrating on: logistics, life science, food & beverage, and semiconductors.

Source: Teradyne

Teradyne’s Role in U.S. Defense & Aerospace Testing

The US military budget is planned to grow from the enormous $1T / year to an even larger $1.5T in the next 2 years. And in this sector, the relocalizing of the supply chain into America is a top priority, even more than for other industrial sectors.

Source: Donald Trump

As the US president asks for weapons to be manufactured more quickly, and that more money be redirected to expand manufacturing capacity instead of dividends or share buyback, this will create a massive growth in demand for semiconductor testing equipment, an activity where Teradyne offers a “one-stop shop”.

In that context, semiconductor means not only chips, but also radars, electronic warfare, missiles, etc.

Source: Teradyne

Teradyne machines can also be used for maintenance, repair, and testing of active military equipment (“depot-level, intermediate-level, and operational-level”), an activity that will be in higher demand as the US military is clearly going to aim for a higher level of readiness.

So while the extra $500B pie of military budget will mostly be shared by military contractors, it is likely that their own suppliers, including Teradyne, will also greatly benefit from this massive and sudden surge in public spending.

Conclusion

Teradyne has historically been a company growing together with the semiconductor industry, as more chips and computerized systems made their way into our daily lives and consumer products like cars.

Today, with AI booming, electrification accelerating, and all the major companies verticalizing their IT-related manufacturing, Teradyne is in a good position to benefit from several strong growth trends.

In addition, the company is positioning itself to benefit from the upcoming boom in robotic activity in manufacturing and logistics, including the sector with lower capex and quicker return on investment, like collaborative robots.

Lastly, the position of the company as a key provider of service and testing capacity to the US military will make it a prime beneficiary of the surge in military spending under the Trump presidency, at least for the company’s size.

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