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What changed in Teradyne's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Teradyne's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+264 added−284 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in Teradyne's 2024 10-K

264 paragraphs added · 284 removed · 217 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

57 edited+9 added−20 removed35 unchanged
Biggest changeMagnum 7, the newest member of the family introduced at the end of 2021, is a next generation memory test solution designed for parallel memory test in the flash, DRAM and multi-chip package markets. In 2019, we introduced a high-speed DRAM test version of our Magnum platform called Magnum EPIC giving us full product coverage of the memory test market.
Biggest changeOur Magnum 7 solution is designed for parallel memory test in the flash, DRAM and multi-chip package markets while our Magnum platform called Magnum EPIC giving us full product coverage of the memory test market. Our ETS platform is used by semiconductor manufacturers and assembly and test subcontractors, primarily in the analog/mixed signal markets that cover cost sensitive applications.
An extensive ecosystem has grown around the company's cobot technology creating innovation, choice for customers and a wide range of components, kits and solutions to suit every application.
An extensive ecosystem has grown around the company's cobot, technology creating innovation and choice for customers and a wide range of components, kits and solutions to suit every application.
MiR’s products are differentiated by their: • Ease of Use and Speed of Deployment: Our robots are designed for quick deployment and flexibility, allowing customers to adapt tasks based on changing demands. • Safe Operations: Equipped with 360 safety coverage, our robots navigate around static and dynamic obstacles, ensuring safety in busy environments. • Reliable Autonomous Navigation: The MiR robots demonstrate consistent, reliable navigation across large manufacturing and warehouse areas. • Short Payback Period: With an average payback period of 12–24 months, MiR's products provide a swift return on investment.
MiR’s products are differentiated by their: • Ease of Use and Speed of Deployment: Our robots are designed for quick deployment and flexibility, allowing customers to adapt tasks based on changing demands. • Safe Operations: Equipped with 360 safety coverage, our robots navigate around static and dynamic obstacles, ensuring safety in busy environments. • Reliable Autonomous Navigation: MiR robots demonstrate consistent, reliable navigation across large manufacturing and warehouse areas. • Short Payback Period: With an average payback period of 12–24 months, MiR's products provide a swift return on investment.
In 2019, we introduced our next generation UltraFLEX Plus tester, the newest member of the UltraFLEX family, UltraFLEX Plus uses the new PACE TM architecture to deliver superior economics and fast time to market for complex digital devices. Our J750™ test system shares the IG-XL software environment with the family of FLEX Test Platform systems.
In 2019, we introduced our next generation UltraFLEX Plus tester, the newest member of the UltraFLEX family, which uses the new PACE TM architecture to deliver superior economics and fast time to market for complex digital devices. Our J750™ test system shares the IG-XL software environment with the family of FLEX Test Platform systems.
In certain circumstances, export control and economic sanctions regulations prohibit the export of certain products, services, and technologies, and in other circumstances we are required to obtain an export license before exporting the controlled item. For example, we must comply with current U.S. Department of Commerce export control regulations restricting transactions with certain customers in China.
In certain circumstances, export control and economic sanctions or regulations prohibit the export of certain products, services, and technologies, and in other circumstances we are required to obtain an export license before exporting the controlled item. For example, we must comply with current U.S. Department of Commerce export control regulations restricting transactions with certain customers in China.
These customers obtain the overall benefit of comprehensively testing devices and reducing the total costs associated with testing by using our Semiconductor Test systems to: • improve and control product quality; • measure and improve product performance; • reduce time to market; and • increase production yields.
Our customers obtain the overall benefit of comprehensively testing devices and reducing the total costs associated with testing by using our Semiconductor Test systems to: • improve and control product quality; • measure and improve product performance; • reduce time to market; and • increase production yields.
We are subject to U.S. laws and regulations that limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, business partners and other persons.
We are subject to U.S. and foreign laws and regulations that limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, business partners and other persons.
We estimate consolidated revenues driven by Qualcomm, a customer of our Semiconductor Test, System Test, and Wireless Test segments, combining direct and indirect sales, accounted for approximately 11% of our consolidated revenues in 2022.
In 2022, we estimate consolidated revenues driven by Qualcomm, a customer of our Semiconductor Test, System Test, and Wireless Test operating segments, combining direct and indirect sales, accounted for approximately 11% of our consolidated revenues.
UR also provides an all-encompassing customer experience including UR Academy - an award-winning training program, available both online and in person in more than 120 training centers worldwide, and three tiers of service offerings carefully designed to accelerate customer success. 5 Table of Contents Universal Robots has recently established global Centers of Excellence for Welding, Palletizing, and Machine Tending applications.
UR also provides an all-encompassing customer experience including UR Academy - an award-winning training program, available both online and in person in more than 120 training centers worldwide, and three tiers of service offerings carefully designed to accelerate customer success. 4 Table of Contents Universal Robots has recently established global Centers of Excellence for Welding, Palletizing, and Machine Tending applications.
Additionally, we offer reimbursement for educational courses related to an employee’s work or as part of a degree program, including tuition, lab fees and books. We also offer a scholarship program for employees with college-age children, step-children and grandchildren. In 2023, approximately half of the scholarship recipients were outside of the United States.
Additionally, we offer reimbursement for educational courses related to an employee’s work or as part of a degree program, including tuition, lab fees and books. We also offer a scholarship program for employees with college-age children, step-children and grandchildren. In 2024, approximately half of the scholarship recipients were outside of the United States.
We sell in these areas predominantly through a direct sales force, except for Robotics products, which are sold principally through distributors. Our manufacturing activities for our test businesses are primarily conducted through subcontractors and outsourced contract manufacturers with significant operations in China and Malaysia.
We sell in these areas predominantly through a direct sales force, except for Robotics products, which are sold principally through distributors and OEMs. Our manufacturing activities for our test businesses are primarily conducted through subcontractors and outsourced contract manufacturers with significant operations in Malaysia.
Some of our competitors may have greater financial and other resources to pursue engineering, manufacturing, marketing, and distribution of their products. We also face competition from emerging Asian companies and from internal suppliers at several of our customers.
Some of our competitors may have greater financial and other resources to pursue engineering, manufacturing, marketing, and distribution of their products. We also face competition from emerging Asian companies and from internal supply at several of our customers.
Regulatory Environment We are subject to various federal, state, and local government laws and regulations relating to international trade, business conduct, the protection of employee health and safety and the environment. 9 Table of Contents We accrue for all known environmental liabilities when it becomes probable that we will incur cleanup costs and those costs can reasonably be estimated.
Regulatory Environment We are subject to various federal, state, and local government laws and regulations relating to international trade, business conduct, the protection of employee health and safety and the environment. We accrue for all known environmental liabilities when it becomes probable that we will incur cleanup costs and those costs can reasonably be estimated.
The loss of, or significant decrease in demand from this OEM customer or any of our five largest direct customers, could have a material adverse effect on our business, results of operations and financial condition. We have sales and service offices located throughout North America, Central America, Asia and Europe.
The loss of, or significant decrease in demand from key OEM customers or any of our five largest direct customers, could have a material adverse effect on our business, results of operations and financial condition. We have sales and service offices located throughout North America, Central America, Asia and Europe.
The manufacturing activities for our Robotics businesses are done primarily in our production facilities in Denmark and the U.S. Sales to customers outside the United States were 84%, 85%, and 89%, respectively, of our consolidated revenues in 2023, 2022 and 2021. Sales are attributed to geographic areas based on the location of the customer site.
The manufacturing activities for our Robotics businesses are done primarily in our production facilities in Denmark and the U.S. Sales to customers outside the United States were 87%, 84%, and 85%, respectively, of our consolidated revenues in 2024, 2023 and 2022. Sales are attributed to geographic areas based on the location of the customer site.
Fabless companies perform the design of integrated circuits without manufacturing capabilities and use Foundries for wafer manufacturing and OSATs for test and assembly.
Fabless companies perform the design of integrated circuits and use Foundries for wafer manufacturing and OSATs for test and assembly.
We also leverage contractors to provide flexibility for our business and manufacturing needs. As of December 31, 2023, we worked with approximately 300 contractors globally. Since the inception of our business, we have experienced no work stoppages or other labor disturbances.
We also leverage contractors to provide flexibility for our business and manufacturing needs. As of December 31, 2024, we worked with approximately 400 contractors globally. Since the inception of our business, we have experienced no work stoppages or other labor disturbances.
Products Semiconductor Test We design, manufacture, sell and support Semiconductor Test products and services on a worldwide basis. The test systems we provide are used both for wafer level and device package testing of semiconductor devices. These devices are used in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game applications, among others.
Products Semiconductor Test We design, manufacture, sell and support Semiconductor Test products and services and hard disk drives on a worldwide basis. The test systems we provide are used for wafer level, device package testing, and system level testing of semiconductor devices. These devices are used in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game applications, among others.
We do not believe that any single piece of intellectual property or proprietary rights is essential to our business. Human Capital We believe that our future success depends upon our continued ability to attract, develop, and retain a high-performance workforce, comprised of people with shared values.
We do not believe that any single piece of intellectual property or proprietary rights is essential to our business. Human Capital We believe that our future success depends upon our continued ability to attract, develop, and retain a high-performance workforce bound by shared values.
However, these protections might not be effective in all circumstances. Competitors might independently develop similar technology or exploit our proprietary information and our brands in countries where we lack enforceable intellectual property rights or where enforcement of such rights through the legal system provides an insufficient deterrent. Also, intellectual property protections can lapse or be invalidated through appropriate legal processes.
Competitors might independently develop similar technology or exploit our proprietary information and our brands in countries where we lack enforceable intellectual property rights or where enforcement of such rights through the legal system provides an insufficient deterrent. Also, intellectual property protections can lapse or be invalidated through appropriate legal processes.
These delays have impacted and may continue to impact the manufacturing of certain products and the timing of delivery of those products to our customers. While the majority of our components are available from multiple suppliers, certain items are obtained from sole sources.
We have experienced delays in obtaining timely delivery of certain components. These delays have impacted and may continue to impact the manufacturing of certain products and the timing of delivery of those products to our customers. While the majority of our components are available from multiple suppliers, certain items are obtained from sole sources.
Health and Safety The health and safety of our employees worldwide is our highest priority. We are committed to complying with all applicable regulatory health and safety requirements wherever we operate. We conduct internal audits, regular reviews and monitoring of regulations to ensure compliance with laws and regulations at the local, state, province and country levels.
We are committed to complying with all applicable regulatory health and safety requirements wherever we operate. We conduct internal audits, regular reviews and monitoring of regulations to ensure compliance with laws and regulations at the local, state, province and country levels.
The Eagle platform includes the ETS-88, a high performance multi-site production test system designed to test a wide variety of high volume power and precision devices, including Silicon Carbide (SiC) and Gallium Nitride (GaN) power devices used in vehicle electrification, and the ETS-800, a high performance multi-site production test system, is used to test high complexity power devices in automotive, industrial and consumer applications.
The Eagle platform includes the ETS-88 which is a high performance multi-site production test system designed to test a wide variety of high volume power and precision devices including Silicon Carbide ("SiC") and Gallium Nitride ("GaN") power devices used in vehicle electrification.
As of December 31, 2023, we employed approximately 6,500 employees, of whom approximately 2,000 were employed in the United States and approximately 4,500 were employed outside of the United States. Our largest non-US employee populations are in the Philippines (18%), Denmark (12%), China (10%), Taiwan (7%) and Costa Rica (6%).
As of December 31, 2024, we employed approximately 6,500 employees, of whom approximately 2,200 were employed in the United States and approximately 4,300 were employed outside of the United States. Our largest non-US employee populations are in the Philippines (18%), Denmark (12%), China (7%), Costa Rica (7%) and Taiwan (5%).
See also “Item 1A: Risk Factors” and Note T: “Operating Segment, Geographic and Significant Customer Information” in Notes to Consolidated Financial Statements. 6 Table of Contents Competition We face significant competition throughout the world in each of our reportable segments. Competitors in the Semiconductor Test segment include, among others, Advantest Corporation and Cohu, Inc.
See also “Item 1A: Risk Factors” and Note U: “Operating Segment, Geographic and Significant Customer Information” in Notes to Consolidated Financial Statements. Competition We face significant competition throughout the world in each of our reportable segments. Competitors in the Semiconductor Test segment include, among others, Advantest Corporation, SPEA S.p.A., and Cohu, Inc.
To make it easier for employees to support charitable activities and magnify the impact of support, we established a formal matching gift program, “Teradyne Gives.” The program matches up to $1,000 per year of an employee’s donations to charities of their choosing, selected from a wide range of qualified non-profit organizations.
To make it easier for employees to support charitable activities and magnify the impact of support, we established a formal matching gift program, “Teradyne Gives.” The program matches up to $1,000 per year of an employee’s donations to charities of their choosing, selected from a wide range of qualified non-profit organizations. 8 Table of Contents Additionally, advancing education for future generations is a primary initiative at Teradyne.
Competitors in the System Test segment include, among others, Keysight Technologies, Inc., Advantest Corporation, Test Research, Inc. SPEA S.p.A. and Astronics Corporation. Competitors in our Wireless Test segment include, among others, Rohde & Schwarz GmbH & Co. KG, Anritsu Company, Keysight Technologies, Inc., National Instruments Corporation, Welzek and iTest.
Competitors in the System Test operating segment include, among others, Advantest Corporation and Test Research, Inc. Competitors in our Wireless Test operating segment include, among others, Rohde & Schwarz GmbH & Co. KG, Anritsu Company, National Instruments Corporation, Welzek and iTest.
We protect our rights in proprietary information, brands and technology through various methods, such as: • patents; • copyrights; • trademarks; 7 Table of Contents • trade secrets; • standards of business conduct and related business practices; and • technology license agreements, software license agreements, non-disclosure agreements, employment agreements, and other agreements.
We protect our rights in proprietary information, brands and technology through various methods, such as: • patents; • copyrights; • trademarks; • trade secrets; • standards of business conduct and related business practices; and • technology license agreements, software license agreements, non-disclosure agreements, employment agreements, and other agreements. However, these protections might not be effective in all circumstances.
We enable employees worldwide to share in the success of the company through various programs including a stock purchase program, equity compensation, profit sharing and bonus plans. We seek competitiveness and fairness in total compensation with reference to peer comparisons and internal equity.
We seek to achieve this objective by linking a meaningful portion of compensation to company and business unit performance. We enable employees worldwide to share in the success of the company through various programs including a stock purchase program, equity compensation and bonus plans. We seek competitiveness and fairness in total compensation with reference to peer comparisons and internal equity.
Our employees worldwide also receive annual performance reviews and are involved in setting goals for their own development and performance. Employees and managers look back on the previous year, review career development plans and create goals for the next year. In 2022, we implemented a new learning management system integrated with our human resource system.
Our employees worldwide also receive annual performance reviews and are involved in setting goals for their own development and performance. Employees and managers look back on the previous year, review career development plans and create goals for the next year.
We are an equal opportunity and affirmative action employer committed to making employment decisions without regard to race, religion, ethnicity or national origin, gender, sexual orientation, gender identity or expression, age, disability, protected veteran status or any other characteristics protected by law.
We have policies regarding gender pay equity and regularly conduct audits of pay equity in the United States. We are an equal opportunity employer committed to making employment decisions without regard to race, religion, ethnicity or national origin, gender, sexual orientation, gender identity or expression, age, disability, protected veteran status or any other characteristics protected by law.
In each of the years, 2023, 2022 and 2021, our five largest direct customers in aggregate accounted for 32%, 26% and 33% of our consolidated revenues, respectively. OSAT customers, such as Taiwan Semiconductor Manufacturing Company Ltd., often purchase our test systems based upon recommendations from OEMs, IDMs and Fabless companies.
Sales and Distribution In each of the years, 2024, 2023 and 2022, our five largest direct customers in aggregate accounted for 36%, 32% and 26% of our consolidated revenues, respectively. 5 Table of Contents OSAT customers often purchase our test systems based upon recommendations from OEMs, IDMs and Fabless companies.
Our automated test equipment and robotics products and services include: • semiconductor test (“Semiconductor Test”) systems; • storage and system level test (“Storage Test”) systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); • wireless test (“Wireless Test”) systems; and • robotics (“Robotics”) products.
Our automated test equipment and robotics products and services include: • semiconductor test (“Semiconductor Test”) systems; • robotics (“Robotics”) products; and • defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, circuit-board test and inspection (“Production Board Test”) systems, and wireless test systems (referred collectively as "All Other").
The IP750 is focused on testing image sensor devices used in smartphones, automobiles and other imaging products. We have continued to invest in the J750 platform with new instrument releases that bring new capabilities to existing market segments and expand the J750 platform to new devices that include high end microcontrollers and the latest generation of image sensors.
We have continued to invest in 3 Table of Contents the J750 platform with new instrument releases that bring new capabilities to existing market segments and expand the J750 platform to new devices that include high end microcontrollers and the latest generation of image sensors.
Additionally, advancing education for future generations is a primary initiative at Teradyne. We seek to increase the diversity of STEM graduates worldwide through our support of STEM programs at the middle, high school and collegiate level. We also donate test equipment and robots to colleges, universities, and vocational programs.
We seek to increase the diversity of STEM graduates worldwide through our support of STEM programs at the middle, high school and collegiate level. We also donate test equipment and robots to colleges, universities, and vocational programs. Health and Safety The health and safety of our employees worldwide is our highest priority.
See also “Item 1A: Risk Factors.” Backlog At December 31, 2023 and 2022, our backlog of unfilled orders in our four reportable segments was as follows: 2023 2022 (in millions) Semiconductor Test $ 822.8 $ 879.6 System Test 223.8 253.0 Robotics 42.3 42.6 Wireless Test 35.7 60.0 $ 1,124.6 $ 1,235.2 Customers may delay delivery of products or cancel orders suddenly and without advanced notice, subject to possible cancellation penalties.
See also “Item 1A: Risk Factors.” Backlog At December 31, 2024 and 2023, our backlog of unfilled orders in our reportable segments was as follows: 2024 2023 (in millions) Semiconductor Test $ 921.9 $ 893.4 Robotics 36.6 42.3 All Other 203.7 188.9 $ 1,162.2 $ 1,124.6 Customers may delay delivery of products or cancel orders without advanced notice, subject to possible cancellation penalties.
We plan to continue investing in our growth while balancing capital allocations between stock repurchases and dividends and using capital for acquisitions. Investor Information We are a Massachusetts corporation incorporated on September 23, 1960. We are subject to the informational requirements of the Securities Exchange Act of 1934 (“Exchange Act”).
Our capital allocation plan will continue to be balanced between investing in organic and inorganic growth and returning cash to shareholders through share repurchases and dividends. Investor Information We are a Massachusetts corporation incorporated on September 23, 1960. We are subject to the informational requirements of the Securities Exchange Act of 1934 (“Exchange Act”).
Semiconductors tested by ETS platform systems are incorporated into a wide range of products in historically high-growth markets, including mobile devices, automotive electronics, computer peripherals, and notebook and desktop computers.
Our proprietary SmartPin ™ technology enables high efficiency multi-site testing on an individual test system permitting greater test throughput. Semiconductors tested by ETS platform systems are incorporated into a wide range of products in historically high-growth markets including mobile devices, automotive electronics, computer peripherals, and notebook and desktop computers.
Diversity and Inclusion We believe in fostering a diverse workforce and equitable and inclusive culture in order to build a stronger and more resilient company for our customers, our investors, our employees and our communities worldwide.
Diversity and Inclusion We believe in fostering a diverse workforce, an equitable and inclusive culture in order to build a stronger and more resilient company for our customers, our investors, our employees and our communities worldwide. To support this effort, we have developed programs and training courses for our employees, to aid in recruiting candidates from various backgrounds and experiences.
You can access financial and other information, including the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, our Corporate Governance Guidelines and Code of Conduct, by clicking the Investors link on our web site at www.teradyne.com.
The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file documents electronically. 2 Table of Contents You can access financial and other information, including the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, our Corporate Governance Guidelines and Code of Conduct, by clicking the Investors link on our web site at www.teradyne.com.
The MiR AMRs enhance productivity, offering a high return on investment by streamlining workforce efficiency, reducing lead times, and improving workplace safety. These AMRs operate autonomously, eliminating the need for traditional guidance infrastructure. MiR currently offers three models—MiR250, MiR600, and MiR1350—each with varying payload capacities, all managed by our unified fleet management software, MiR Fleet.
MiR AMRs enhance productivity, offering a high return on investment by streamlining workforce efficiency, reducing lead times, and improving workplace safety. These AMRs operate autonomously, eliminating the need for traditional guidance infrastructure.
Founded in 2005 and headquartered in Odense, Denmark, Universal Robots aims to create a world where people work with robots, not like robots. Its mission is simple: “ Automation for anyone.
Universal Robots Universal Robots is a leading provider of collaborative robots ("cobots") used across various industries, including automotive, food & beverage, metal & machining, electronics, pharmaceutical, and in education. Founded in 2005 and headquartered in Odense, Denmark, Universal Robots aims to create a world where people work with robots, not like robots. Its mission is simple: “ Automation for anyone.
Due to possible customer changes in delivery schedules and cancellation of orders, our backlog at any particular date is not necessarily indicative of the actual sales for any succeeding period. Delays in delivery schedules or cancellations of backlog during any particular period could have a material adverse effect on our business, financial condition or results of operations.
Due to possible customer changes in delivery schedules and cancellation of orders, our backlog at any particular date is not necessarily 6 Table of Contents indicative of the actual sales for any succeeding period.
The business unit’s products lead in addressing customer requirements related to factory density, throughput and thermal performance. Defense/Aerospace We are a leading provider of high performance test systems, subsystems, instruments and service for the defense and aerospace markets. Our test products are used to ensure the readiness of military and commercial aerospace electronics systems.
System Test Our System Test operating segment is comprised of two business units: Defense/Aerospace and Production Board Test. Defense/Aerospace We are a leading provider of high performance test systems, subsystems, instruments and service for the defense and aerospace markets. Our test products are used to ensure the readiness of military and commercial aerospace electronics systems.
Fast, accurate and cost-effective test capabilities are hallmark features of our Test Station product families. We offer the Test Station in off-line and automated in-line configurations.
Fast, accurate and cost-effective test capabilities are hallmark features of our Test Station product families. We offer the Test Station in off-line and automated in-line configurations. The automated in-line configurations address the growing requirements for automating production lines for high volume applications, such as automotive electronics, computing, and communications.
This enabled our business to more easily create and offer business training courses. 8 Table of Contents We are committed to recruiting and developing talent at the collegiate level to help advance Science, Technology, Engineering and Mathematics (“STEM”) education for the future generation.
We are committed to recruiting and developing talent at the collegiate level to help advance Science, Technology, Engineering and Mathematics (“STEM”) education for the future workforce.
We are committed to conducting business in a responsible manner, with strategic operational policies, procedures and values that support transparency, sustainability and legal compliance. We ensure ethical operations and business commitments through robust governance of the company’s code of conduct and global environmental, health and safety programs.
We are committed to conducting business in a responsible manner, with strategic operational policies, procedures and values that support transparency, sustainability and legal compliance.
Raw Materials Our products contain electronic and mechanical components that are provided by a wide range of suppliers. Some of these components are standard products, while others are manufactured to our specifications. We have experienced delays in obtaining timely delivery of certain components.
Delays in delivery schedules or cancellations of backlog during any particular period could have a material adverse effect on our business, financial condition or results of operations. Raw Materials Our products contain electronic and mechanical components that are provided by a wide range of suppliers. Some of these components are standard products, while others are manufactured to our specifications.
Competitive Pay and Benefits The primary objective of our compensation program is to provide a compensation and benefits package that will continue to attract, retain, motivate and reward high performing employees who operate in a highly competitive and technologically challenging environment. We seek to achieve this objective by linking a meaningful portion of compensation to company and business unit performance.
We ensure ethical operations and business commitments through robust governance of the company’s code of conduct and global environmental, health and safety programs. 7 Table of Contents Competitive Pay and Benefits The primary objective of our compensation program is to provide a compensation and benefits package that will continue to attract, retain, motivate and reward high performing employees who operate in a highly competitive and technologically challenging environment.
These end use markets continue to be drivers for the FLEX Test Platform family of products because they require a wide range of technologies and instrument coverage.
The broad consumer, automotive and broadband markets have historically driven most of the device volume growth in the semiconductor industry. These markets include mobile phones and tablets, PCs, servers, networking and automotive electronics. These end use markets continue to be drivers for the FLEX Test Platform family of products because they require a wide range of technologies and instrument coverage.
We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future. In 2023, the demand in our Semiconductor Test business continued to be impacted by a correction cycle driven by excess semiconductor inventory, primarily in the mobility segment of the market.
We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future. In 2024, we saw strength in our Semiconductor Test business, with memory and compute offerings growing considerably compared to 2023.
Strengthening of the U.S. dollar would adversely affect Robotics revenue growth in 2024. 2 Table of Contents Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses.
Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in 2025. Our corporate strategy for our test businesses is to profitably grow market share while in Robotics, we plan to profitably grow revenue through the introduction of differentiated products targeting expanding markets.
Sales and Distribution In 2023, revenues from Texas Instruments Inc., a customer of our Semiconductor Test segment, accounted for 10% of our consolidated revenues. In 2021, revenues from Taiwan Semiconductor Manufacturing Company Ltd., a customer of our Semiconductor Test segment, accounted for 12% of our consolidated revenues.
In 2024, we estimate consolidated revenues driven by Samsung, a customer of our Semiconductor Test and Wireless Test segments, combining direct and indirect sales, accounted for appropriately 12.5% of our consolidated revenues. In 2023, revenues driven by Texas Instruments Inc., a customer of our Semiconductor Test segment, accounted for 10% of our consolidated revenues.
We file periodic reports, proxy statements and other information with the SEC. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file documents electronically.
We file periodic reports, proxy statements and other information with the SEC.
The client market is driven by the needs of desktop, laptop, and external HDD storage products. The enterprise market is driven by the needs of data centers and cloud storage. Our system level test product for the semiconductor production market is used to test devices following wafer and package test.
The client market is driven by the needs of desktop, laptop, and external HDD storage products. The enterprise market is driven by the needs of data centers and cloud storage. Robotics Our Robotics segment is comprised of two business units: Universal Robots and Mobile Industrial Robots.
System Test Our System Test segment is comprised of three business units: Storage Test, Defense/Aerospace, and Production Board Test. Storage Test The Storage Test business unit addresses the high throughput, automated manufacturing test requirements of hard disk drive (“HDD”) and semiconductor manufacturers. Our HDD products address the client and enterprise storage markets.
Our SLT testers for the semiconductor production market are used to test devices following wafer and package test. SLT testers address customer requirements related to factory density, throughput and thermal performance. HDD products address the high throughput and automated manufacturing test requirements of hard disk drive and semiconductor manufacturers. Our HDD products address the client and enterprise storage markets.
The automated in-line configurations address the growing requirements for automating production lines for high volume applications, such as automotive electronics, computing, and communications. 4 Table of Contents Wireless Test Our Wireless Test segment is a business unit run under the LitePoint brand name providing wireless test solutions for silicon validation, wireless module manufacturing, and wireless end device manufacturing.
Wireless Test Our Wireless Test operating segment is a business unit run under the LitePoint brand name providing wireless test solutions for silicon validation, wireless module manufacturing, and wireless end device manufacturing. LitePoint wireless test systems span design verification to high volume manufacturing and are deployed across the entire production chain from wireless chipset suppliers to consumer brands.
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The depth of this slowdown and the timing of the recovery are uncertain, however, strong automotive and image sensor demand partially offset these declines. The growth of DDR5 and High Bandwidth Memory ("HBM") devices for data center applications continued to drive demand for our products in the memory market in 2023.
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We expect mobile, automotive, and industrial will grow in 2025 and that recent advancements in AI inference may help mid-term recovery in these markets. Beyond AI compute, we are investing in other areas of the semiconductor test market that offer the opportunity for accelerating long-term growth, including power semi-conductors and the shift towards vertically integrated products ("VIPs").
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Over the midterm, we expect the ramp of 3 nanometer and gate-all-around process technology, increasing multichip packaging, additional device complexity and unit growth will drive additional demand for Semiconductor Test. Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms, and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation.
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We have seen the benefits start to materialize in 2024 and expect them to continue through the mid-term. 2024 was a very weak industrial automation market resulting in a year-over-year decline in Robotics revenues while outperforming our peer group.
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The market for our Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (“SMEs”) throughout the world.
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In 2024, we built key OEM, systems integrators and large account strategic partnerships which will strengthen our go to market for years to come. Introduction of new products, including the MiR 1200 Pallet Jack, will further expand our available markets to support our growth .
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Demand in the fourth quarter of 2023 increased, tied to introduction of new products and seasonally high demand in Robotics after market softness and the impact of our channel transformation resulted in a weaker than forecasted first half of 2023.
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On May 27, 2024, we paid 483.1 million Euros, equivalent to $524.1 million, to purchase a combination of previously issued and outstanding shares and shares newly issued by Technoprobe, S.p.A. ("Technoprobe"). The shares purchased represent 10% of the issued and outstanding shares of Technoprobe. We also received a board seat as part of the purchase.
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On November 7, 2023, Teradyne and Technoprobe S.p.A (“Technoprobe”), a leader in the design and production of probe cards, announced the establishment of a strategic partnership that will seek to accelerate growth for both companies and enable higher performance semiconductor test interfaces for customers worldwide.
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Additionally, as part of the transaction, we completed the sale of the Device Interface Solutions ("DIS") business, a component of our Semiconductor Test segment, to Technoprobe for $85.0 million in cash, net of cash and cash equivalents sold, and a customary working capital adjustment.
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As part of the partnership, Teradyne will make an investment of 481.0 million Euros in exchange for a 10% equity investment in Technoprobe and Technoprobe will acquire 100% of Teradyne’s Device Interface Solutions ("DIS") business in exchange for $85.0 million. The transaction is expected to close during the first half of 2024.
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The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations. Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies.
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In 2023, inflation had minimal effect on our results. While both our test and robotics businesses may continue to be influenced by supply constraints, which could impact our revenue and costs, we do not anticipate that supply chain constraints will have a material impact on our financial results in 2024. Our financial statements are denominated in U.S. dollars.
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The IP750 is focused on testing image sensor devices used in smartphones, automobiles and other imaging products.
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While the majority of our revenues are in U.S. dollars, approximately 70 percent of our Robotics sales are denominated in foreign currencies. There was no material impact to our 2023 results due to changes in foreign exchange rates, however, in 2022, the strengthening of the U.S. dollar was a factor in lower than forecasted revenues in our Robotics segment.
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The ETS-800, a high performance multi-site production test system, is used to test high complexity power devices in automotive, industrial and consumer applications. The Integrated System Test group is comprised of our system level test ("SLT") testers and our hard disk drive ("HDD") testers.
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The broad consumer, automotive and broadband markets have historically driven most of the device volume growth in the semiconductor industry. These markets include mobile phones and tablets, PCs, servers, networking 3 Table of Contents and automotive electronics.
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MiR currently offers three deckload AMR models, each supporting a different payload capacity—MiR250, MiR600, and MiR1350—as well as a pallet jack AMR—MiR1200 Pallet Jack—all managed by our unified fleet management software, MiR Fleet. All models can be easily integrated into existing production environments.
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Our ETS platform is used by semiconductor manufacturers and assembly and test subcontractors, primarily in the analog/mixed signal markets that cover more cost sensitive applications. Our proprietary SmartPin ™ technology enables high efficiency multi-site testing, on an individual test system, permitting greater test throughput.
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The world’s leading makers of smartphones, laptops, access points, and Internet-of-Things (“IoT”) devices rely on LitePoint equipment to ensure their products get into consumer’s hands with high quality and high efficiency. LitePoint wireless test systems span design verification to high volume manufacturing and are deployed across the entire production chain from wireless chipset suppliers to consumer brands.
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Design verification involves comprehensive automated testing of small quantities of devices in an R&D lab to ensure the device meets its design targets over a wide range of conditions and scenarios. High Volume manufacturing involves the calibration and testing of each wireless device to ensure the product will deliver the intended customer experience.
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This ensures all the products perform identically in terms of their wireless characteristics. LitePoint equipment serves an ever-expanding number of wireless standards in three segments: connectivity, cellular, and secure ranging. Connectivity encompasses numerous short range unlicensed communication standards. Cellular includes standards operating in licensed spectrum from a few GHz to 10s of GHz (mmWave).
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Finally, secure ranging uses Ultra Wideband (UWB) technology to provide centimeter level positioning with secure data transactions for applications such as “digital keys” and item location (tag type trackers). LitePoint serves these wireless segments with multiple product families. The LitePoint IQxel-MX and IQxel-MW7G series provide leading edge measurement performance for both design validation and high volume manufacturing of connectivity products.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition to the risks associated with the tariffs and trade regulations detailed below, we are subject to the following risks associated with doing business in China: • adverse changes in Chinese political, economic or social conditions or Chinese laws, regulations or policies, including the imposition of unexpected or confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency, the nationalization or other expropriation of private enterprises, or the reversal of economic reform policies that encourage private economic activity, foreign investments and greater economic decentralization; • differing economic practices compared to most developed countries, including with respect to the amount of government involvement, control of foreign exchange and allocation of resources; • uncertainties presented by the Chinese legal system, which is not fully integrated and continues to rapidly evolve, impeding our ability to interpret certain Chinese laws and regulations, predict and evaluate the outcome of administrative and court proceedings and the level of legal protection to enforce contracts we have entered into in China; and Chinese controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China, restricting our ability to remit sufficient foreign currency to pay dividends or make other payments to us, or otherwise satisfy foreign currency-denominated obligations.
Biggest changeIn addition to the risks associated with the tariffs and trade regulations detailed below, we are subject to the following risks associated with doing business in China: • adverse changes in Chinese political, economic or social conditions or Chinese laws, regulations or policies, including the imposition of unexpected or confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency, the nationalization or other expropriation of private enterprises, or the reversal of economic reform policies that encourage private economic activity, foreign investments and greater economic decentralization; • differing economic practices compared to most developed countries, including with respect to the amount of government involvement, control of foreign exchange and allocation of resources; • uncertainties presented by the Chinese legal system, which is not fully integrated and continues to rapidly evolve, impeding our ability to interpret certain Chinese laws and regulations, predict and evaluate the outcome of administrative and court proceedings and the level of legal protection to enforce contracts we have entered into in China; and Chinese controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China, restricting our ability to remit sufficient foreign currency to pay dividends or make other payments to us, or otherwise satisfy foreign currency-denominated obligations. 11 Table of Contents The foregoing risks and the ongoing geopolitical tensions and economic uncertainty between the United States and China and the unknown impact of current and future Chinese rules and regulations, may cause increased costs, as well as restrictions on our ability to sell, or a decreased demand from customers to purchase, our products, which could harm our business, financial condition and operating results.
In addition, an increasing portion of our products and the products we purchase from our suppliers are sourced or manufactured in foreign locations, including China, Malaysia and Denmark, and a large portion of the devices our products test are fabricated and tested by foundries and subcontractors in Taiwan, China, Korea and other parts of Asia.
In addition, an increasing portion of our products and the products we purchase from our suppliers are sourced or manufactured in foreign locations, including Malaysia and Denmark, and a large portion of the devices our products test are fabricated and tested by foundries and subcontractors in Taiwan, China, Korea and other parts of Asia.
While we intend to operate in such a manner to maintain and maximize our tax incentives and tax holidays, no assurance can be given that we have so qualified or that we will so qualify for any particular year or jurisdiction.
While we intend to operate in such a manner to maintain and maximize our tax incentives and tax holidays, no assurance can be given that we have so qualified or that we will qualify for any particular year or jurisdiction.
In addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, factors that could cause fluctuations in the market price of our common stock include the following: • ratings changes by any securities analysts who follow our company; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • changes in accounting standards, policies, guidelines, interpretations, or principles; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • developments or disputes concerning our intellectual property or our products and platform capabilities, or third-party proprietary rights; • cybersecurity attacks or incidents; • announced or completed acquisitions of businesses or technologies by us or our competitors; • changes in our board of directors or management; • announced or completed equity or debt transactions involving our securities; 15 Table of Contents • sales of shares of our common stock by us, our officers, directors, or other stockholders; and • other events or factors, including those resulting from global and macroeconomic conditions, including heightened inflation, rising interest rates, bank failures, and a potential recession, and speculation regarding the same, as well as public health crises, geopolitical tension, incidents of terrorism, or responses to these events.
In addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, factors that could cause fluctuations in the market price of our common stock include the following: • ratings changes by any securities analysts who follow our company; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • changes in accounting standards, policies, guidelines, interpretations, or principles; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • developments or disputes concerning our intellectual property or our products and platform capabilities, or third-party proprietary rights; 14 Table of Contents • cybersecurity attacks or incidents; • announced or completed acquisitions of businesses or technologies by us or our competitors; • changes in our board of directors or management; • announced or completed equity or debt transactions involving our securities; • sales of shares of our common stock by us, our officers, directors, or other stockholders; and • other events or factors, including those resulting from global and macroeconomic conditions, including heightened inflation, rising interest rates, bank failures, and a potential recession, and speculation regarding the same, as well as public health crises, geopolitical tension, incidents of terrorism, or responses to these events.
The following factors could impact future operations: • a worldwide economic slowdown or disruption in the global financial or industrial markets; • cost increases from inflation on materials, employee wages, third party labor, and contract manufacturing; • competitive pressures on selling prices; • our ability to introduce, and the market acceptance of, new products; • changes in product revenues mix resulting from changes in customer demand; • the level of orders received which can be shipped in a quarter because of the tendency of customers to wait until late in a quarter to commit to purchase due to capital expenditure approvals and constraints occurring at the end of a quarter, or the hope of obtaining more favorable pricing from a competitor seeking the business; • engineering and development investments relating to new product introductions, and the expansion of manufacturing, outsourcing and engineering operations in Asia; • provisions for excess and obsolete inventory relating to the lack of demand for and the discontinuance of products; • impairment charges for certain long-lived and intangible assets, and goodwill; • an increase in the leasing of our products to customers; • disruption caused by health pandemics, such as the coronavirus; • the success of sales channel expansion in Robotics; • our ability to expand our global distribution channel for our collaborative and mobile robots; • parallel or multi-site testing which could lead to a decrease in the ultimate size of the market for our semiconductor and electronic test products; and • the ability of our suppliers and subcontractors to meet product quality or delivery requirements needed to satisfy customer orders for our products, especially if consolidated revenues increase.
The following factors could impact future operations: • a worldwide economic slowdown or disruption in the global financial or industrial markets; • cost increases from inflation on materials, employee wages, third party labor, and contract manufacturing; • competitive pressures on selling prices; • our ability to introduce, and the market acceptance of, new products; • changes in product revenues mix resulting from changes in customer demand; • the level of orders received which can be shipped in a quarter because of the tendency of customers to wait until late in a quarter to commit to purchase due to capital expenditure approvals and constraints occurring at the end of a quarter, or the hope of obtaining more favorable pricing from a competitor seeking the business; • engineering and development investments relating to new product introductions, and the expansion of manufacturing, outsourcing and engineering operations in Asia; • provisions for excess and obsolete inventory relating to the lack of demand for and the discontinuance of products; • impairment charges for certain long-lived and intangible assets, and goodwill; • an increase in the leasing of our products to customers; • disruption caused by health pandemics, • the success of sales channel expansion in Robotics; • our ability to expand our global distribution channel for our collaborative and mobile robots; • parallel or multi-site testing which could lead to a decrease in the ultimate size of the market for our semiconductor and electronic test products; and • the ability of our suppliers and subcontractors to meet product quality or delivery requirements needed to satisfy customer orders for our products, especially if consolidated revenues increase.
Despite these preventative security measures we have implemented, we may continue to be vulnerable to attempts by third parties to gain unauthorized access to our networks or sabotage our systems. These attempts, which might be related to criminal hackers, industrial espionage or state-sponsored intrusions, include trying to covertly introduce malware to our computers, networks and systems and impersonating authorized users.
Despite the preventative security measures we have implemented, we may continue to be vulnerable to attempts by third parties to gain unauthorized access to our networks or sabotage our systems. These attempts, which might be related to criminal hackers, industrial espionage or state-sponsored intrusions, include trying to covertly introduce malware to our computers, networks and systems and impersonating authorized users.
If other banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.
If banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose some or all of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.
Successful product development or acquisition, introduction and acceptance depend upon a number of factors, including: • new product selection; • ability to meet customer requirements including with respect to safety and cyber security; • development of competitive products by competitors; • timely and efficient completion of product design; • timely and efficient implementation of manufacturing and manufacturing processes; • timely remediation of product performance issues, if any, identified during testing; • assembly processes and product performance at customer locations; • differentiation of our products from our competitors' products; • management of customer expectations concerning product capabilities and product life cycles; • transition of customers to new product platforms; • compliance with product safety regulations; • ability to protect products from cyber attacks when used by our customers; • ability to attract and retain technical talent; and • innovation that does not infringe on the intellectual property rights of third parties.
Successful product development or acquisition, introduction and acceptance depend upon a number of factors, including: • new product selection; • ability to meet customer requirements including with respect to safety and cyber security; • development of competitive products by competitors; • timely and efficient completion of product design; • timely and efficient implementation of manufacturing and manufacturing processes; • timely remediation of product performance issues, if any, identified during testing; • assembly processes and product performance at customer locations; • differentiation of our products from our competitors' products; • management of customer expectations concerning product capabilities and product life cycles; • transition of customers to new product platforms; 10 Table of Contents • compliance with product safety regulations; • ability to protect products from cyber attacks when used by our customers; • ability to attract and retain technical talent; and • innovation that does not infringe on the intellectual property rights of third parties.
(“Plexus”) to manufacture and test our Magnum products from its facilities in Malaysia and also Thailand and ETS family of products from its facility in Malaysia; SAM Meerkat to manufacture and test our storage test family of products from its facilities in Malaysia and Thailand and on other contract manufacturers to manufacture other products.
(“Plexus”) to manufacture and test our Magnum products from its facilities in Malaysia and Thailand and our ETS family of products from its facility in Malaysia; SAM Meerkat to manufacture and test our storage test family of products from its facilities in Malaysia and Thailand and on other contract manufacturers to manufacture other products.
Additionally, we have confidentiality obligations to certain customers and if breached would require the payment of significant penalties. If we become liable under any of these obligations, it could materially and adversely affect our business, financial condition or operating results. For additional information see Note M: “Commitments and Contingencies-Guarantees and Indemnification Obligations” in Notes to Consolidated Financial Statements.
Additionally, we have confidentiality obligations to certain customers and if breached would require the payment of significant penalties. If we become liable under any of these obligations, it could materially and adversely affect our business, financial condition or operating results. For additional information see Note N: “Commitments and Contingencies-Guarantees and Indemnification Obligations” in Notes to Consolidated Financial Statements.
However, if we are unable to secure manufacturing capacities from our current or new suppliers and contract manufacturers, on acceptable terms or at all, or successfully manage our purchase commitments and inventory for components, our ability to deliver our products to our customers in the desired quantities, at competitive prices or in a timely manner may be negatively impacted for 2024.
However, if we are unable to secure manufacturing capacities from our current or new suppliers and contract manufacturers, on acceptable terms or at all, or successfully manage our purchase commitments and inventory for components, our ability to deliver our products to our customers in the desired quantities, at competitive prices or in a timely manner may be negatively impacted for 2025.
Our international sales and operations are subject to significant risks and difficulties, including: • unexpected changes in legal and regulatory requirements affecting international markets; • cost increases due to inflation; • changes in tariffs and exchange rates; • social, political and economic instability, acts of terrorism and international conflicts; 11 Table of Contents • disruption caused by health pandemics; • difficulties in protecting intellectual property; • difficulties in accounts receivable collection; • cultural differences in the conduct of business; • difficulties in staffing and managing international operations; • compliance with anti-corruption laws; • compliance with data privacy regulations; • compliance with customs and trade regulations; and • compliance with international tax laws and regulations.
Our international sales and operations are subject to significant risks and difficulties, including: • unexpected changes in legal and regulatory requirements affecting international markets; • cost increases due to inflation; • changes in tariffs and exchange rates; • social, political and economic instability, acts of terrorism and international conflicts; • disruption caused by health pandemics; • difficulties in protecting intellectual property; • difficulties in accounts receivable collection; • cultural differences in the conduct of business; • difficulties in staffing and managing international operations; • compliance with anti-corruption laws; • compliance with data privacy regulations; • compliance with customs and trade regulations; and • compliance with international tax laws and regulations.
We have taken actions to address the effects of general economic variability and recurring industry cyclicality, including implementing cost control and reduction measures. We cannot predict whether these measures will be sufficient to offset global or market-specific disruptions that might affect our businesses and we may need to take additional or different measures in the future.
We have taken actions to address the effects of general economic variability and recurring 9 Table of Contents industry cyclicality, including implementing cost control and reduction measures. We cannot predict whether these measures will be sufficient to offset global or market-specific disruptions that might affect our businesses and we may need to take additional or different measures in the future.
Restrictive covenants in the agreement governing our senior secured revolving credit facility may restrict our ability to pursue business strategies. The agreement governing our senior secured revolving credit facility limits our ability, among other things, to incur additional secured indebtedness; sell, transfer, license or dispose of assets; consolidate or merge; enter into transactions with our affiliates; and incur liens.
Restrictive covenants in the agreement governing our senior secured revolving credit facility may restrict our ability to pursue business strategies. 13 Table of Contents The agreement governing our senior secured revolving credit facility limits our ability, among other things, to incur additional secured indebtedness; sell, transfer, license or dispose of assets; consolidate or merge; enter into transactions with our affiliates; and incur liens.
As a result, the existing tariff has not had a material adverse effect on our business, financial condition or results of operations. The implementation of additional tariffs by the United States could have a material adverse effect on our business, financial condition or results of operations.
As a result, the existing tariffs have not had a material adverse effect on our business, financial condition or results of operations. The implementation of additional tariffs by the United States could have a material adverse effect on our business, financial condition or results of operations.
These tax savings may not be achievable in subsequent years due to changes in Singapore’s tax laws, issuance of new global minimum tax laws, or the expiration of the tax holiday. In addition, we may incur additional costs, including headcount expenses, in order to maintain or obtain a foreign tax incentive or tax holiday in a particular foreign jurisdiction.
These tax savings may not be achievable in subsequent years due to changes in Singapore’s tax laws, issuance of new global minimum tax laws, or the expiration of the tax holiday. 12 Table of Contents In addition, we may incur additional costs, including headcount expenses, in order to maintain or obtain a foreign tax incentive or tax holiday in a particular foreign jurisdiction.
The loss of suppliers either as a result of financial viability, bankruptcy or otherwise could have a material adverse effect on our business, results of operations or financial condition. The global supply shortage of electrical components and inflationary cost increases has impacted our ability to meet customer demand and could adversely affect our business and financial results.
The loss of suppliers either as a result of financial viability, bankruptcy or otherwise could have a material adverse effect on our business, results of operations or financial condition. The global supply shortage of electrical components and inflationary cost increases impact our ability to meet customer demand and could adversely affect our business and financial results.
Such attempts could result in the misappropriation, theft, misuse, disclosure or loss or destruction of 18 Table of Contents the intellectual property, or the proprietary, confidential or personal information, of Teradyne or our employees, customers, suppliers or other third parties, as well as damage to or disruptions in our information technology networks and systems.
Such attempts could result in the misappropriation, theft, misuse, disclosure or loss or destruction of the intellectual property, or the proprietary, confidential or personal information, of Teradyne or our employees, customers, suppliers or other third parties, as well as damage to or disruptions in our information technology networks and systems.
In addition, we rely on contract manufacturers for certain of our products, and our ability to meet customer orders 16 Table of Contents for those products depends upon the timeliness and quality of the work performed by these subcontractors, over whom we do not exercise any control.
In addition, we rely on contract manufacturers for certain of our products, and our ability to meet customer orders for those products depends upon the timeliness and quality of the work performed by these subcontractors, over whom we do not exercise any control.
As of December 31, 2023, we have not incurred material costs as a result of the monitoring and remediation steps taken at the Massachusetts and New Hampshire sites.
As of December 31, 2024, we have not incurred material costs as a result of the monitoring and remediation steps taken at the Massachusetts and New Hampshire sites.
The loss of one or 17 Table of Contents more key or other employees, a decrease in our ability to attract additional qualified employees, or the delay in hiring key personnel could each have a material adverse effect on our business, results of operations or financial condition.
The loss of one or more key or other employees, a decrease in our ability to attract additional qualified employees, or the delay in hiring key personnel could each have a material adverse effect on our business, results of operations or financial condition.
We may discontinue or reduce our quarterly cash dividend or share repurchase program. 13 Table of Contents In January 2014, our Board of Directors initiated a quarterly cash dividend. Since 2014, the Board of Directors has increased our quarterly cash dividend from $0.06 per share to $0.12 per share.
We may discontinue or reduce our quarterly cash dividend or share repurchase program. In January 2014, our Board of Directors initiated a quarterly cash dividend. Since 2014, the Board of Directors has increased our quarterly cash dividend from $0.06 per share to $0.12 per share.
In addition, when our products contain defects or have reliability, quality or safety issues, we have conducted a product recall which resulted in significant repair or replacement costs and substantial delays in product shipments and may damage our reputation which could make it more difficult to sell our products.
In addition, when our products contain defects or have reliability, quality or safety issues, we have conducted a product recall which resulted in significant repair or replacement costs and 19 Table of Contents substantial delays in product shipments and may damage our reputation which could make it more difficult to sell our products.
However, notwithstanding our efforts, the retaliatory tariffs or other trade restrictions implemented by China could disrupt our business operations, sales and supply chain and, therefore, have a material adverse effect on our business, financial condition or results of operations.
However, notwithstanding our efforts, the retaliatory tariffs or other trade restrictions implemented by China and possible future retaliatory actions by China or other nations could disrupt our business operations, sales and supply chain and, therefore, have a material adverse effect on our business, financial condition or results of operations.
In addition, third party suppliers and service providers that we rely on to manage our networks and systems and process and store our proprietary and confidential data, including the data of our customers and suppliers, may also be subject to similar attacks.
In addition, third party suppliers and service providers that we rely on to manage our networks and 17 Table of Contents systems and who process and store our proprietary and confidential data, including the data of our customers and suppliers, may also be subject to similar attacks.
In an effort to mitigate these risks, in some cases, we have incurred higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or placed non-cancellable purchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts and assumptions prove inaccurate.
In an effort to mitigate these risks, we may in some cases, incur higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or non-cancellable purchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts prove inaccurate.
In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new $2.0 billion share repurchase program. In 2023, we repurchased $400.5 million of common stock. We intend to repurchase up to $90.0 million in 2024.
In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new $2.0 billion share repurchase program. In 2024, we repurchased $199.4 million of common stock and, in 2023, we repurchased $400.5 million of common stock. We intend to repurchase up to $400 million in 2025.
On March 10, 2023, Silicon Valley Bank (SVB), who is a lender in our revolving credit facility and where we maintain certain accounts and cash deposits, was placed into receivership with the Federal Deposit Insurance Corporation (FDIC), which resulted in all funds held at SVB being temporarily inaccessible by SVB’s customers.
For example, on March 10, 2023, Silicon Valley Bank ("SVB"), who is a lender in our revolving credit facility and where we maintain certain accounts and cash deposits, was placed into receivership with the FDIC, which resulted in all funds held at SVB being temporarily inaccessible by SVB’s customers.
We have also sourced components from additional suppliers and multi-sourced and pre-ordered components and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced.
We have also sourced components from additional suppliers and multi-sourced and pre0ordered components and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced in the past.
We have pursued a global tax strategy that could be adversely affected by the mix of earnings and tax rates in the countries where we operate, changes to tax laws, tax regulations or an adverse tax ruling by administrative authorities. We are also subject to tax audits in the countries where we operate.
We have pursued a global tax strategy that could be adversely affected by the mix of earnings and tax rates in the countries where we operate, changes to tax laws (including but not limited to Pillar Two), tax regulations or an adverse tax ruling by administrative authorities. We are also subject to tax audits in the countries where we operate.
The global supply shortage of electrical components, including semiconductor chips, continued to impact our supply chain in 2023. As a result, we have experienced, and may experience in the future, increases in our lead times and costs for certain components for certain products and delays in the delivery of some orders placed by our customers.
The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in 2023. As a result, we experienced and may experience in the future, increases in our lead times and costs for certain components for certain products. We may also experience delays in the delivery of some orders placed by our customers.
We maintain an export compliance program but there are risks that the compliance controls could be circumvented, exposing us to legal liabilities. Compliance with these laws has not significantly limited our sales but could significantly limit them in the future.
We maintain an export compliance program but there are risks that the compliance controls could be circumvented, exposing us to legal liabilities. As further described below, compliance with these laws has not significantly limited our sales over time, but could significantly limit them in the future.
The U.S. government from time to time has issued export restrictions that prohibit U.S. companies from exporting U.S. manufactured products, foreign manufactured products with more than 25% controlled U.S. content, as well as U.S. origin technology. For example, the U.S.
The U.S. government from time to time has issued export restrictions that prohibit U.S. companies from exporting U.S. manufactured products, foreign manufactured products with more than 25% controlled U.S. content, foreign made product which was produced using U.S. technology, as well as U.S. origin technology. For example, the U.S.
Our employees in Cebu succeeded in restoring most of our operations within days despite the severity of the damage in the region. The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear but could be severe.
For example, when our operations in Cebu, Philippines experienced a devastating typhoon, our employees in Cebu succeeded in restoring most of our operations within days despite the severity of the damage in the region. The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear but could be severe.
The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2023, 2022 and 2021 were $1.4 million or $0.01 per diluted share, $16.0 million or $0.09 per diluted share, and $33.3 million or $0.18 per diluted share, respectively.
The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2024, 2023 and 2022 were $17.1 million or $0.10 per diluted share, $1.4 million or $0.01 per diluted share, and $16.0 million or $0.09 per diluted share, respectively.
Any of these conditions could have a material adverse effect on our business, financial condition or results of operations. Global climate change can result in natural disasters occurring more frequently, with greater intensity and with less predictability. For example, in December 2021, our operations in Cebu, Philippines experienced a devastating typhoon.
Any of these conditions could have a material adverse effect on our business, financial condition or results of operations. Global climate change can result in natural disasters occurring more frequently, with greater intensity and with less predictability.
Our business may suffer if we are unable to attract and retain key employees. Competition for employees with skills we require is intense in the high technology industry. We expect intense competition for employees to continue in 2024. Our success will depend on our ability to attract and retain key technical employees.
Competition for employees with skills we require is intense in the high technology industry. We expect intense competition for employees to continue in 2025. Our success will depend on our ability to attract and retain key technical employees.
In addition, future regulations in response to global climate change may affect us, our suppliers, and our customers. Such regulations could cause us to incur additional direct costs for compliance, as well as increased indirect costs resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us.
In addition, future regulations in response to global climate change may affect us, our suppliers, and our customers. Such regulations could cause us to incur additional direct costs for compliance, as well as increased indirect costs resulting from our customers and/or suppliers. Future climate change regulations could result in decreased demand for our products.
Our failure to comply with financial and other restrictive covenants could result in an event of default, which if not cured or waived, could result in the lenders requiring immediate payment of all outstanding borrowings or foreclosing on collateral pledged to them to secure the indebtedness. [3] Our warrant transactions could impact the value of our stock.
Our failure to comply with financial and other restrictive covenants could result in an event of default, which if not cured or waived, could result in the lenders requiring immediate payment of all outstanding borrowings or foreclosing on collateral pledged to them to secure the indebtedness. We may not be able to pay our debt and other obligations.
As a result of the foregoing and other factors, we have experienced and may continue to experience material fluctuations in future operating results on a quarterly or annual basis which could materially and adversely affect our business, financial condition, operating results or stock price.
As a result of the foregoing and other factors, we have experienced and may continue to experience material fluctuations in future operating results on a quarterly or annual basis which could materially and adversely affect our business, financial condition, operating results or stock price. 15 Table of Contents If our suppliers do not meet product or delivery requirements, we could have reduced revenues and earnings.
The new rules, which took effect on November 17, 2023, significantly limit the impact of the October 7, 2022 restrictions on our business. However, the regulations may continue to have an adverse impact on certain actual or potential customers and on the global semiconductor industry.
The new rules, which took effect on November 17, 2023, significantly limit the impact of the October 7, 2022 restrictions on our business. On December 2, 2024, the U.S. Department of Commerce released additional new rules updating export controls. These regulations may continue to have an adverse impact on certain actual or potential customers and on the global semiconductor industry.
Additionally, we may fund acquisitions of new businesses, strategic alliances, or joint ventures by utilizing our cash, incurring debt, issuing shares of our common stock, or by other means.
Additionally, we may fund acquisitions of new businesses, strategic alliances, or joint ventures by utilizing our cash, incurring debt, issuing shares of our common stock, or by other means. Additionally, we may face restrictions pursuant to the terms of an acquisition or strategic alliance agreement.
In November 2023, we announced entering into strategic partnership agreement with Technoprobe which included 12 Table of Contents Teradyne acquiring 10% of the equity in Technoprobe. We may not be able to realize the benefits of acquiring or successfully growing these businesses.
In May 2024, we closed on our strategic partnership agreement with Technoprobe which included Teradyne acquiring 10% of the equity in Technoprobe. We may not be able to realize the benefits of acquiring or successfully growing these businesses.
Future climate change regulations could result in decreased demand for 20 Table of Contents our products. If we fail to comply with present and future regulations, or are required to perform site remediation, we could be subject to future liabilities or cost, including penalties or the suspension of production.
If we fail to comply with present and future regulations, or are required to perform site remediation, we could be subject to future liabilities or cost, including penalties or the suspension of production.
Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations, which may be volatile and due to factors beyond our control. The market price of our common stock is subject to wide fluctuations in response to various factors, some of which are beyond our control.
The market price of our common stock is subject to wide fluctuations in response to various factors, some of which are beyond our control.
However, we cannot be certain that the actions we take will mitigate all the risks associated with the export controls that may impact our business. On October 7, 2022, the U.S.
We will continue to assess the impact of these export controls on our business and operations and take appropriate actions to ensure compliance and minimize any disruption. However, we cannot be certain that the actions we take will mitigate all the risks associated with the export controls that may impact our business. On October 7, 2022, the U.S.
We estimate consolidated revenues driven by one OEM customer, of our Semiconductor Test and Wireless Test segments, combining direct sales to that customer with sales to the customer’s OSATs (which include Taiwan Semiconductor Manufacturing Company Ltd.), accounted for 19% of our consolidated revenues in 2021. Customer consolidation could affect our operating results.
We estimate consolidated revenues driven by Samsung, a customer of our Semiconductor Test and Wireless Test Segments, combining direct sales to that customer with sales to the customer’s OSATs, accounted for 12.5% of our consolidated revenues in 2024. Customer consolidation could affect our operating results.
Our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerous countries throughout the world.
In certain cases, our insurance policy may be insufficient to cover losses. Our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerous countries throughout the world.
Adverse developments affecting the financial services industry, including events or risks involving liquidity, defaults or non-performance by financial institutions, could have a material adverse effect on our business, financial condition or results of operations.
Adverse developments affecting the financial services industry, including events or risks involving liquidity, defaults or non-performance by financial institutions, could have a material adverse effect on our business, financial condition or results of operations. We hold cash balances in several large financial institutions significantly in excess of the Federal Deposit Insurance Corporation ("FDIC") and global insurance limits.
Also, our controls related to Entity List compliance could be circumvented, exposing us to legal liabilities. On April 28, 2020, the U.S. Department of Commerce published new export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela. The definition of military end user is broad.
On April 28, 2020, the U.S. Department of Commerce published new export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela. The definition of military end user is broad. The regulations went into effect on June 29, 2020. In December 2020, the U.S.
Additionally, there may be difficulties encountered in coordinating the outsourced operations with existing functions and operations. If we fail in successfully coordinating and managing the outsourced service providers, it may cause an adverse effect on our operations which could have a material adverse effect on our business, results of operations or financial condition.
If we fail in successfully coordinating and managing the outsourced service providers, it may cause an adverse effect on our operations which could have a material adverse effect on our business, results of operations or financial condition. 16 Table of Contents Our business may suffer if we are unable to attract and retain key employees.
The regulations went into effect on June 29, 2020. In December 2020, the U.S. Department of Commerce issued a list of companies in China and other countries that it considered to be military end users. Compliance with the new export controls has impacted our ability to sell products to certain customers in China.
Department of Commerce issued a list of companies in China and other countries that it considered to be military end users. Compliance with the new export controls has impacted our ability to sell products to certain customers in China. In addition, while we maintain an export compliance program, our compliance controls could be circumvented, exposing us to legal liabilities.
In addition to the actions taken by the United States, China has implemented retaliatory tariffs on products made in the United States and imported into China, including certain Teradyne products. We have implemented, if appropriate, operational changes that would mitigate the impact of the retaliatory tariffs.
In addition to the actions taken by the United States, China has implemented retaliatory tariffs on products made in the United States and imported into China. These tariffs have not yet impacted Teradyne products.
In 2018, the United States Trade Representative imposed a 25% tariff on many lists of products, including certain Teradyne products that are made in China and imported into the United States. We have implemented operational changes that mitigate the impact of the 25% tariff on the import of our impacted products into the United States.
Our business operations and supply chain are global and may be disrupted by the implementation of tariffs. In 2018, the United States Trade Representative imposed a 25% tariff on many lists of products, including certain Teradyne products that are made in China and imported into the United States.
In addition, in 2023, inflationary pressures contributed to increased costs for product components and wage inflation, which had minimal impact on our cost of products, gross margin and profit for the year. Our supply chain team, and our suppliers, continue to manage numerous supply, production and logistics obstacles.
In addition, inflationary pressures have in the past contributed to increased costs for product components along with wage inflation which yielded a minimal impact to the costs of our products, gross margin and profit for the year.
New product introductions by competitors could cause a decline in revenues or loss of market acceptance of our products.
New product introductions by competitors could cause a decline in revenues or loss of market acceptance of our products. The market for our products is concentrated, and our business depends, in part, on obtaining orders from a few significant customers.
In each of the years, 2023, 2022 and 2021, our five largest direct customers in aggregate accounted for 32%, 26% and 33% of consolidated revenues, respectively.
The market for our products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. In each of the years, 2024, 2023 and 2022, our five largest direct customers in aggregate accounted for 36%, 32% and 26% of consolidated revenues, respectively.
Department of Commerce has restricted the access of U.S. origin technologies to certain Chinese semiconductor companies by adding those companies to the Entity List under U.S. Export Administration Regulations (“EAR”). The addition of certain of these companies to the entity list has had and will continue to have an adverse impact on our business with these customers.
The addition of certain of these companies to the entity list and FDP has had and will continue to have an adverse impact on our business with these customers. We will take appropriate actions, including filing for licenses with the U.S. Department of Commerce to attempt to minimize the impact of the restrictions on our business.
(“Flex”) to manufacture and test our FLEX and J750 family of products from its facility in Malaysia; Plexus Corp.
Our operations may be adversely impacted if our outsourced contract manufacturers or service providers fail to perform. We depend on Flex Ltd. (“Flex”) to manufacture and test our FLEX and J750 family of products from its facility in Malaysia; Plexus Corp.
However, we may not be fully able to pass additional costs on to our customers, which could have a negative impact on our results of operations and financial condition. Our operations may be adversely impacted if our outsourced contract manufacturers or service providers fail to perform. We depend on Flex Ltd.
We also have been, and may continue to attempt to, offset the effect of these inflationary pressures by increasing the prices of our products. However, we may not be fully able to pass additional costs on to our customers, which could have a negative impact on our results of operations and financial condition.
Risks Related to Legal and Regulatory Compliance The implementation of tariffs on our products may have a material impact on our business. Our business operations and supply chain are global and may be disrupted by the implementation of tariffs.
The jurisdictions in which we conduct business have and may adopt laws and regulations related to AI, which could cause us to incur greater compliance costs, limit our use of AI tools, or subject us to legal liabilities. Risks Related to Legal and Regulatory Compliance The implementation of tariffs on our products may have a material impact on our business.
As of March 13, 2023, access to our cash and cash equivalents at SVB was fully restored.
As of March 13, 2023, access to our cash and cash equivalents at SVB was fully restored. There is no guarantee that the FDIC or any other global insurer will provide access to uninsured funds in the future in the event of the closure of any other banks or financial institutions in a timely fashion or at all.
While the majority of our revenues are in U.S. dollars, approximately 70% of our Robotics revenue in 2023 was denominated in foreign currencies. Correspondingly, our results of operations and our ability to realize projected growth rates in sales and earnings in Robotics could be adversely affected if the U.S. dollar strengthens significantly against foreign currencies.
While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively affect Robotics revenue growth.
We will take appropriate actions, including filing for licenses with the U.S. Department of Commerce to attempt to minimize the impact of the restrictions on our business. 19 Table of Contents On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under the EAR.
Department of Commerce has restricted the access of U.S. origin technologies to certain Chinese semiconductor companies by adding those companies to the Entity List and the Foreign Direct Product Rule ("FDP") under U.S. Export Administration Regulations (“EAR”). On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S.
Removed
The market for our products is concentrated, and our business depends, in part, on obtaining orders from a few significant customers. 10 Table of Contents The market for our products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment.
Added
On May 16, 2024, we borrowed $185.0 million under this credit facility, primarily to fund our acquisition of the 10% equity interest in Technoprobe discussed above. By December 31, 2024, we had fully repaid all amounts borrowed under the credit facility. As of February 20, 2025, there are no outstanding borrowings under the credit facility.
Removed
The foregoing risks and the ongoing geopolitical tensions and economic uncertainty between the United States and China and the unknown impact of current and future Chinese rules and regulations, may cause increased costs, as well as restrictions on our ability to sell, or a decreased demand from customers to purchase, our products, which could harm our business, financial condition and operating results.
Added
Any inability to access or delay in accessing these funds could adversely affect our business, financial position, and liquidity. Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations, which may be volatile and due to factors beyond our control.
Removed
Additionally, we may face restrictions pursuant to the terms of an acquisition or strategic alliance agreement, such as the three year restriction on the transfer or disposition of the Technoprobe shares upon closing of the agreement, subject to certain early termination events.
Added
Additionally, there may be difficulties encountered in coordinating the outsourced operations with existing functions and operations.
Removed
As of February 22, 2024, we have not borrowed any funds under this credit facility.
Added
We are exposed to risks related to the use of AI tools by us and others.
Removed
On December 12, 2016, we completed a private offering of $460.0 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) that matured on December 15, 2023. Concurrent with the offering of the Notes, we entered into convertible note hedge transactions with the initial purchasers or their affiliates (the “Option Counterparties”).
Added
Although we are evaluating, and where we believe appropriate, incorporating AI tools into our products and operations, our use of AI tools may subject us to significant competitive, legal, regulatory and other risks, and there can be no assurance that our use of AI tools will enhance our products, business operations or result in a benefit to us.
Removed
Separately and concurrent with the pricing of the Notes, we entered into warrant transactions with the Option Counterparties (the “Warrant Transactions”) in which we sold net-share-settled (or, at our election subject to certain conditions, cash-settled) warrants to the Option Counterparties.
Added
Our competitors may be more successful in their use of AI tools, including by developing superior products or improving their operations with the assistance of AI. Additionally, there could be adverse impacts from flawed algorithms.
Removed
The Warrant Transactions, which expire between March 18, 2024 and July 10, 2024, cover, subject to customary 14 Table of Contents anti-dilution adjustments, approximately 14.7 million shares of our common stock. The strike price of the warrants is $39.40 per share.
Added
Our use of AI tools, or our customers uses of our products that incorporate AI, could also result in the loss of confidential information or intellectual property or an inability to claim or enforce intellectual property rights, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy, cybersecurity, and the unauthorized use of our data.
Removed
The Warrant Transactions could result in increased common stock outstanding to the extent that the market price per share of our common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants. We may not be able to pay our debt and other obligations.
Added
On February 1, 2025, President Trump issued an executive order directing the United States to impose an additional 10% tariff on all imports from China effective February 4, 2025.We plan to implement operational changes that mitigate some of the impact of these tariffs on the import of our impacted products into the United States.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese cybersecurity threats and related risks make it imperative that we maintain a strong focus on cybersecurity. 21 Table of Contents Governance The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
Biggest changeGovernance The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
Periodically we have a recognized independent security expert firm to assess our cyber security maturity along with risks and provide feedback on where we should continue to improve to mitigate exposures. We share this review with our Board and develop a security roadmap which incorporates this feedback.
Periodically we have a recognized independent security expert firm to assess our cyber security maturity along with risks and provide 21 Table of Contents feedback on where we should continue to improve to mitigate exposures. We share this review with our Board and develop a security roadmap which incorporates this feedback.
Senior leadership, including our Chief Information Security Officer ("CISO"), regularly brief the Audit Committee of the Board of Directors on our cybersecurity and information security posture. The corporate information security organization, under the CISO, has implemented a governance structure and processes to assess, identify, manage, and report cybersecurity risks.
Senior leadership, including our Chief Information Security Officer ("CISO"), brief the Audit Committee of the Board of Directors quarterly and the full Board of Directors at least annually on our cybersecurity and information security posture. The corporate information security organization, under the CISO, has implemented a governance structure and processes to assess, identify, manage, and report cybersecurity risks.
We believe we are well positioned to meet the requirements of the CMMC and are preparing for certification once the requirements are effective. 22 Table of Contents
We believe we are well positioned to meet the requirements of the CMMC and are preparing for certification once the requirements are effective.
Our customers, suppliers, and partners face similar cybersecurity threats and, while we have not been materially affected to date, a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance, and results of operations.
Our customers, suppliers, and partners face similar cybersecurity threats and, while we have not been materially affected to date, a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance, and results of operations. These cybersecurity threats and related risks make it imperative that we maintain a strong focus on cybersecurity.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur corporate headquarters is in North Reading, Massachusetts, in buildings that we own consisting of approximately 422,000 square feet. We believe our existing facilities and planned expansions noted below are adequate to meet our current and reasonably foreseeable requirements. We regularly evaluate our expected facility needs and periodically make adjustments based on these evaluations.
Biggest changeWe believe our existing facilities are adequate to meet our current and reasonably foreseeable requirements. We regularly evaluate our expected facility needs and periodically make adjustments based on these evaluations. In 2024, we completed construction of an approximately 200,000 square foot building in Odense, Denmark, for our Robotics operations.
Item 2: P roperties We conduct manufacturing, engineering, sales and marketing, service, corporate administration and other operations in various leased and owned facilities throughout the world. We own approximately 720,000 square feet of office space and lease approximately 1,500,000 square feet of office space.
Item 2: P roperties We conduct manufacturing, engineering, sales and marketing, service, corporate administration and other operations in various leased and owned facilities throughout the world. We own approximately 920,000 square feet of office space and lease approximately 1,340,000 square feet of office space. We own our corporate headquarters in North Reading, Massachusetts, which is approximately 422,000 square feet.
Removed
In 2019, we purchased land in Denmark, approximately 200,000 square feet, to construct a new building for our Robotics operations. The new building construction is expected to be completed by the first half of 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4: Mine S afety Disclosure Not Applicable. 23 Table of Contents PART II
Biggest changeItem 4: Mine S afety Disclosure Not Applicable. 22 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosure 23 PART II. Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 24 Item 6. (Reserved) 24 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 25 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 36 Item 8.
Biggest changeItem 4. Mine Safety Disclosure 22 PART II. Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 23 Item 6. (Reserved) 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 24 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 35 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table includes information with respect to repurchases we made of our common stock during the three months ended December 31, 2023 (in thousands except per share price): Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs October 2, 2023 – October 29, 2023 363 $ 97.65 362 $ 1,615,390 October 30, 2023 – November 26, 2023 185 85.97 185 1,599,497 November 27, 2023 – December 31, 2023 1 93.70 — 1,599,497 549 (1) $ 93.70 (1) 547 (1) Includes approximately two thousand shares at an average price of $94.13 withheld from employees for the payment of taxes.
Biggest changeThe following table includes information with respect to repurchases we made of our common stock during the three months ended December 31, 2024 (in thousands except per share price): Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs September 30, 2024 – October 27, 2024 104 $ 129.01 103 $ 1,531,150 October 28, 2024 – November 24, 2024 475 107.04 475 1,480,482 November 25, 2024 – December 31, 2024 668 120.26 668 1,400,063 1,247 (1) $ 115.95 (1) 1,246 (1) Includes approximately two thousand shares at an average price of $122.14 withheld from employees for the payment of taxes.
(2) As of January 1, 2023, share repurchases net of share issuances are subject to a 1% excise tax under the Inflation Reduction Act. Excise tax incurred is included as part of the cost basis of shares repurchased in the Condensed Consolidated Statements of Convertible Common Shares and Stockholders' Equity.
As of January 1, 2023, share repurchases net of share issuances are subject to a 1% excise tax under the Inflation Reduction Act. Excise tax incurred is included as part of the cost basis of shares repurchased in the Condensed Consolidated Statements of Convertible Common Shares and Stockholders' Equity.
(3) In January 2023, the Board of Directors cancelled the 2021 repurchase program and approved a new $2.0 billion of common stock. Unless terminated by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the share repurchase program.
In January 2023, the Board of Directors cancelled the 2021 repurchase program and approved a new $2.0 billion of common stock. Unless terminated by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the share repurchase program.
Item 5: Market for Registrant’s Common Equity, Rel ated Shareholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TER.” As of February 22, 2024, there were approximately 1,148 holders of record of shares of our common stock.
Item 5: Market for Registrant’s Common Equity, Rel ated Shareholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TER.” As of February 20, 2025, there were approximately 1,084 holders of record of shares of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther (income) expense, net decreased by $4.8 million primarily due to the change in pension actuarial gains/losses, from a $25.6 million gain in 2022 to a $2.7 million loss in 2023, partially offset by the change in unrealized gains/losses on equity securities, from a $9.7 million loss in 2022 to a $7.2 million gain in 2023, and a $7.5 million unrealized gain on our call option purchased in connection with our agreement to acquire a 10% investment in Technoprobe S.p.A. 31 Table of Contents Income (Loss) Before Income Taxes 2023 2022 2022-2023 Change (in millions) Semiconductor Test $ 453.3 $ 634.5 $ (181.2 ) System Test 94.1 166.9 (72.8 ) Wireless Test 30.6 66.8 (36.2 ) Robotics (54.3 ) (16.2 ) (38.1 ) Corporate and Eliminations (1) 1.9 (11.6 ) 13.5 $ 525.6 $ 840.4 $ (314.8 ) (1) Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, employee severance, pension and postretirement plan actuarial gains (losses), legal and environmental fees, acquisition and divestiture related expenses, contract termination settlement charge, and an expense for the modification of Teradyne's former chief executive officer's outstanding equity awards.
Biggest changeIncome (Loss) Before Income Taxes 2024 2023 2023-2024 Change (in millions) Semiconductor Test $ 558.2 $ 498.5 $ 59.7 Robotics (77.6 ) (54.3 ) (23.3 ) All Other 65.7 79.5 (13.8 ) Corporate and Eliminations (1) 62.7 1.9 60.8 $ 609.1 $ 525.6 $ 83.5 (1) Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses), acquisition and divestiture related fees, legal and environmental fees, contract termination settlement charge, and modification of outstanding equity awards.
Discount rate and expected return on assets are two assumptions which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate and expected rate of return on assets assumptions annually on a plan and country specific basis.
Discount rate and expected return on assets are two assumptions which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate and expected rate of return on assets assumptions annually on a plan and country specific basis.
Investing activities during 2023 used cash of $179.6 million, due to $161.9 million used for purchases of marketable securities, $159.6 million used for purchases of property, plant and equipment, and $5.0 million used for issuance of convertible loan, partially offset by $85.0 million and $61.4 million in proceeds from maturities and sales of marketable securities, respectively, and $0.5 million in proceeds from the cancellation of Teradyne owned life insurance policies related to the cash surrender value.
Investing activities during 2023 used cash of $179.6 million, due to $161.9 million used for purchases of marketable securities, $159.6 million used for purchases of property, plant and equipment, and $5.0 million used for issuance of convertible loans, partially offset by $85.0 million and $61.4 million in proceeds from maturities and sales of marketable securities, respectively, and $0.5 million in proceeds from the cancellation of Teradyne owned life insurance policies related to the cash surrender value.
Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" , which will require us to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.
Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" , which requires us to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.
Financing activities during 2023 used cash of $501.9 million, due to $397.2 million used for the repurchase of 3.9 million shares of common stock at an average price of $102.47 per share, $67.9 million used for dividend payments, $50.3 million used for the payments of convertible debt principal, and $20.8 million used for payments related to net settlement of employee stock compensation awards, partially offset by $34.3 million from the issuance of common stock under employee stock purchase and stock option plans.
Financing activities during 2023 used cash of $501.9 million, due to $397.2 million used for the repurchase of 3.9 million shares of common stock at an average price of $102.47 per share, $67.9 million used for dividend payments, $50.3 million used for the 31 Table of Contents payments of convertible debt principal, and $20.8 million used for payments related to net settlement of employee stock compensation awards, partially offset by $34.3 million from the issuance of common stock under employee stock purchase and stock option plans.
We evaluate other assumptions related to demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and expectations for the future. In developing the expected return on U.S. Plan assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations.
We evaluate other assumptions related 32 Table of Contents to demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and expectations for the future. In developing the expected return on U.S. Plan assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations.
During 2023, we made contributions of $3.1 million to the U.S. supplemental executive defined benefit pension plan, and $1.0 million to certain qualified plans for non-U.S. subsidiaries. In 2024, we expect to contribute approximately $3.1 million to the U.S. supplemental executive defined benefit pension plan.
During 2024, we made contributions of $3.1 million to the U.S. supplemental executive defined benefit pension plan, and $1.0 million to certain qualified plans for non-U.S. subsidiaries. In 2025, we expect to contribute approximately $3.3 million to the U.S. supplemental executive defined benefit pension plan.
The comparison assumes $100.00 was invested on December 31, 2018 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Historic stock price performance is not necessarily indicative of future price performance.
The comparison assumes $100.00 was invested on December 31, 2019 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Historic stock price performance is not necessarily indicative of future price performance.
Restructuring and Other During the year ended December 31, 2023, we recorded $14.7 million of severance charges related to headcount reductions of 215 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, $3.1 million of acquisition and divestiture expenses related to the Technoprobe transaction, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental liability.
During the year ended December 31, 2023, we recorded a charge of $14.7 million of severance charges related to headcount reductions of 215 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, $3.1 million of acquisition and divestiture expenses related to the Technoprobe transaction, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental liabilities.
We believe that 4.75% was an appropriate rate of return on assets to use for 2023. The December 31, 2023 asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities.
We believe that 4.65% was an appropriate rate of return on assets to use for 2024. The December 31, 2024 asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities.
In the second half of 2023, we saw improvements related to supply constraints and, consequently, did not experience material increases in our lead times and costs for components.
In the second half of 2023 and the full year of 2024, we saw improvements related to supply constraints and, consequently, did not experience material increases in our lead times and costs for components.
We believe that 4.75% was an appropriate rate of return on assets to use for 2023. The December 31, 2023 asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities.
We believe that 4.65% was an appropriate rate of return on assets to use for 2024. The December 31, 2024 asset allocation for our U.S. Plan was 94.0% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities.
For the year ended December 31, 2023, our pension expense, which includes the U.S. Qualified Pension Plan (“U.S. Plan”), certain qualified plans for non-U.S. subsidiaries, and a U.S. Supplemental Executive Defined Benefit Plan, was approximately $6.8 million. Pension expense is calculated based upon a number of actuarial assumptions.
For the year ended December 31, 2024, our pension expense, which includes the U.S. Qualified Pension Plan (“U.S. Plan”), certain qualified plans for non-U.S. subsidiaries, and a U.S. Supplemental Executive Defined Benefit Plan, was approximately $0.1 million. Pension expense is calculated based upon a number of actuarial assumptions.
During the year ended December 31, 2022, we recorded an inventory provision of $31.5 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products.
During the year ended December 31, 2024, we recorded an inventory provision of $18.9 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products.
“Income Taxes” of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $414.4 million, with $379.1 million expected to be paid within twelve months.
“Income Taxes” of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $419.8 million, with $409.6 million expected to be paid within twelve months.
Changes in operating assets and liabilities used cash of $9.6 million. This was due to a $33.2 million decrease in operating assets and a $42.8 million decrease in operating liabilities.
Operating activities during 2023 provided cash of $585.2 million. Changes in operating assets and liabilities used cash of $9.6 million. This was due to a $33.2 million decrease in operating assets and a $42.8 million decrease in operating liabilities.
Plan pension expense estimate for 2024 is based on a 4.75% discount rate and a 4.65% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
Plan pension expense estimate for 2025 is based on a 5.45% discount rate and a 5.05% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2023 and 2022 were $1.4 million or $0.01 per diluted share and $16.0 million or $0.09 per diluted share, respectively.
The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2024 and 2023 were $17.1 million or $0.10 per diluted share and $1.4 million or $0.01 per diluted share, respectively.
Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 4.75% at December 31, 2023, down from 4.95% at December 31, 2022. We estimate that in 2024, we will recognize approximately $0.2 million of pension expense for the U.S. Plan. The U.S.
Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.45% at December 31, 2024, up from 4.75% at December 31, 2023. We estimate that in 2025, we will recognize approximately $0.1 million of pension expense for the U.S. Plan. The U.S.
As of December 31, 2023, our pension plans had no unrecognized pension prior service cost. The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have increased from $111.8 million at December 31, 2022 to $112.6 million at December 31, 2023, while the U.S.
As of December 31, 2024, our pension plans had no unrecognized pension prior service cost. The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have decreased from $112.6 million at December 31, 2023 to $81.4 million at December 31, 2024, while the U.S.
Plan’s liability increased from $100.0 million at December 31, 2022 to $101.1 million at December 31, 2023. Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such contributions are tax deductible.
Plan’s liability decreased from $101.1 million at December 31, 2023 to $69.4 million at December 31, 2024. Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such contributions are tax deductible.
Plan’s expected cash flows and was 4.75% at December 31, 2023, down from 4.95% at December 31, 2022. We estimate that in 2024 we will recognize approximately $0.2 million of pension expense for the U.S. Plan. The U.S. Plan pension expense estimate for 2024 is based on a 4.75% discount rate and a 4.65% return on assets.
Plan’s expected cash flows and was 5.45% at December 31, 2024, up from 4.75% at December 31, 2023. We estimate that in 2025 we will recognize approximately $0.1 million of pension expense for the U.S. Plan. The U.S. Plan pension expense estimate for 2025 is based on a 5.45% discount rate and a 5.05% return on assets.
Total dividend payments in 2022 were $69.7 million. In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. In 2023, we repurchased 3.9 million shares of common stock for $397.2 million, which excludes related excise tax, at an average price of $102.47 per share.
Total dividend payments in 2023 were $67.9 million. In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. In 2024, we repurchased 1.7 million shares of common stock for $198.6 million, which excludes related excise tax, at an average price of $114.63 per share.
In January 2023, May 2023, August 2023 and November 2023, our Board of Directors declared a quarterly cash dividend of $0.11 per share. Total dividend payments in 2023 were $67.9 million. In January 2022, May 2022, August 2022 and November 2022, our Board of Directors declared a quarterly cash dividend of $0.11 per share.
In January 2024, May 2024, August 2024 and November 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Total dividend payments in 2024 were $76.4 million. In January 2023, May 2023, August 2023 and November 2023, our Board of Directors declared a quarterly cash dividend of $0.11 per share.
At December 31, 2023, our future contractual obligations were related to debt, leases, retirement plan liabilities, deferred tax benefits, and purchase obligations. See Note J. “Debt”, Note I. “Leases”, Note P. “Retirement Plans”, and Note S.
At December 31, 2024, our future contractual obligations were related to debt, leases, retirement plan liabilities, deferred tax benefits, and purchase obligations. See Note K. “Debt”, Note J. “Leases”, Note Q. “Retirement Plans”, and Note T.
We use the if-converted method in the diluted EPS calculation for convertible instruments. Income Taxes Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Income Taxes Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
As of February 22, 2023, we have not borrowed any funds under the credit facility. 33 Table of Contents We expect operations to continue to be the primary source of cash to operate the business and meet material cash commitments, including any payments of convertible debt principal, our stock repurchase program, our quarterly dividends, our office lease obligations, contractual obligations related to inventory purchases and the construction of new facilities.
We expect operations to continue to be the primary source of cash to operate the business and meet material cash commitments, including any payments of convertible debt principal, our stock repurchase program, our quarterly dividends, our office lease obligations, contractual obligations related to inventory purchases and the construction of new facilities.
In addition, in the 2023, inflationary pressures contributed to increased costs for product components and wage inflation, which had a minimal impact on our cost of products, gross margin and profit for the year. Our supply chain team, and our suppliers, continue to manage numerous supply, production, and logistics obstacles.
In addition, in 2023 and 2024, inflationary pressures contributed to increased costs for product components and wage inflation, which had a minimal impact on our cost of products, gross margin and profit for the year.
The decrease in operating liabilities was due to a $40.3 million decrease in accrued employee compensation, a $29.8 million decrease in income taxes, a $10.8 million decrease in accounts payable, a $9.3 million decrease in other accrued liabilities, a $6.2 million decrease in deferred revenue and customer advance payments, and $5.1 million of retirement plan contributions.
The decrease in operating liabilities was due to a $48.2 million decrease in accounts payable, a $6.2 million decrease in other accrued compensation, $5.8 million of retirement plan contributions, and a $3.6 million decrease in income taxes, partially offset by a $12.2 million increase in deferred revenue and customer advance payments.
The decrease in operating assets was due to a $71.0 million decrease in accounts receivable due to lower sales and a $5.3 million decrease in inventories, partially offset by a $43.1 million increase in prepayments and other assets due to prepayments to our contract manufacturers. 32 Table of Contents The decrease in operating liabilities was due to a $57.2 million decrease in deferred revenue and customer advance payments, a $26.9 million decrease in income taxes, a $21.2 million decrease in accrued employee compensation, and $5.5 million of retirement plan contributions, partially offset by a $45.0 million increase in accounts payable, and a $23.0 million increase in other accrued liabilities.
The decrease in operating liabilities was due to a $57.2 million decrease in deferred revenue and customer advance payments, a $26.9 million decrease in income taxes, a $21.2 million decrease in accrued employee compensation, and $5.5 million of retirement plan contributions, partially offset by a $45.0 million increase in accounts payable, and a $23.0 million increase in other accrued liabilities.
The demand forecast is based on assumptions around the product life and customer and market expectations. Retirement and Postretirement Plans We recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans.
Retirement and Postretirement Plans We recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans.
Of the $28.4 million of total excess and obsolete provisions, $22.5 million was related to Semiconductor Test, $2.3 million was related to Robotics, $1.9 million was related to System Test, and $1.7 million was related to Wireless Test.
Of the $28.4 million of total excess and obsolete provisions, $22.5 million was related to Semiconductor Test, $2.3 million was related to Robotics, and $3.6 million was related to All Other.
The following table presents information about these plans as of December 31, 2023 (share numbers in thousands): Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column one) Equity plans approved by shareholders 1,548 (1) $ 94.85 7,863 (2) (1) Includes 1,377,662 shares of restricted stock units that are not included in the calculation of the weighted average exercise price.
The following table presents information about these plans as of December 31, 2024 (share numbers in thousands): Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column one) Equity plans approved by shareholders 1,668 (1) $ 99.51 6,862 (2) (1) Includes 1,527,351 shares of restricted stock units that are not included in the calculation of the weighted average exercise price. 33 Table of Contents (2) Consists of 3,638,237 securities available for issuance under the 2006 Equity Plan and 3,224,044 of securities available for issuance under the Employee Stock Purchase Plan.
Our automated test equipment and robotics products and services include: • semiconductor test (“Semiconductor Test”) systems; • storage and system level test (“Storage Test”) systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); • wireless test (“Wireless Test”) systems; and • robotics (“Robotics”) products.
Our automated test equipment and robotics products and services include: • semiconductor test (“Semiconductor Test”) systems; • robotics (“Robotics”) products; and • defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, circuit-board test and inspection (“Production Board Test”) systems, and wireless test systems (referred collectively as "All Other").
The increase in operating assets was due to a $140.7 million increase in prepayments and other assets due to prepayments to our contract manufacturers, and an $80.8 million increase in inventories, partially offset by a $50.6 million decrease in accounts receivable due to lower sales.
The decrease in operating assets was due to a $71.0 million decrease in accounts receivable due to lower sales and a $5.3 million decrease in inventories, partially offset by a $43.1 million increase in prepayments and other assets due to prepayments to our contract manufacturers.
Financing activities during 2022 used cash of $893.0 million, due to $752.1 million used for the repurchase of 7.3 million shares of common stock at an average price of $103.69 per share, $69.7 million used for dividend payments, $66.8 million used for the payments of convertible debt principal, and $33.2 million used for payments related to net settlement of employee stock compensation awards, partially offset by $28.7 million from the issuance of common stock under employee stock purchase and stock option plans.
Financing activities during 2024 used cash of $251.8 million, due to $198.6 million used for the repurchase of 1.7 million shares of common stock at an average price of $114.63 per share, $76.4 million used for dividend payments, and $14.1 million used for payments related to net settlement of employee stock compensation awards, partially offset by $37.3 million from the issuance of common stock under employee stock purchase and stock option plans.
Our reportable segments accounted for the following percentages of consolidated revenues: 2023 2022 Semiconductor Test 68 % 66 % Robotics 14 13 System Test 13 15 Wireless Test 5 6 100 % 100 % Revenues by country as a percentage of total revenues were as follows (1): 2023 2022 United States 16 % 15 % Korea 15 17 Taiwan 14 20 China 12 16 Japan 11 5 Europe 10 9 Philippines 7 4 Singapore 4 3 Thailand 3 4 Malaysia 3 5 Rest of the World 5 2 100 % 100 % (1) Revenues attributable to a country are based on the location of the customer site.
The decrease in Robotics revenues of $10.4 million, or 2.8%, was driven primarily by continued weakness in the Industrial Automation market and softer sales in Universal Robots. 27 Table of Contents Our reportable segments accounted for the following percentages of consolidated revenues: 2024 2023 Semiconductor Test 75 % 73 % Robotics 13 14 All Other 12 13 100 % 100 % Revenues by country as a percentage of total revenues were as follows (1): 2024 2023 Korea 25 % 15 % Taiwan 21 14 United States 13 16 China 13 12 Europe 9 10 Japan 6 11 Singapore 3 4 Philippines 2 7 Thailand 2 3 Malaysia 2 3 Rest of the World 4 5 100 % 100 % (1) Revenues attributable to a country are based on the location of the customer site.
Results of Operations Information pertaining to fiscal year 2021 results of operations, including a year-to-year comparison against fiscal year 2022, was included in our Annual Report on Form 10-K for the year ended December 31, 2022 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on February 22, 2023.
Although realization is not assured, based on our assessment, we concluded that it is more likely than not that such assets, net of the existing valuation allowance, will be realized. 26 Table of Contents Results of Operations Information pertaining to fiscal year 2022 results of operations, including a year-to-year comparison against fiscal year 2023, was included in our Annual Report on Form 10-K for the year ended December 31, 2023 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on February 22, 2024.
Capital Resources and Material Cash Requirements Our cash, cash equivalents and marketable securities balance decreased by $68.0 million in 2023 to $937.2 million.
Capital Resources and Material Cash Requirements Our cash, cash equivalents and marketable securities balance decreased by $213.4 million in 2024 to $723.8 million.
The following table sets forth the percentage of total net revenues included in our consolidated statements of operations: Years Ended December 31, 2023 2022 Percentage of revenues: Revenues: Products 78.3 % 82.1 % Services 21.7 17.9 Total revenues 100.0 100.0 Cost of revenues: Cost of products 33.0 33.0 Cost of services 9.6 7.8 Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) 42.6 40.8 Gross profit 57.4 59.2 Operating expenses: Selling and administrative 21.6 17.7 Engineering and development 15.6 14.0 Acquired intangible assets amortization 0.7 0.6 Restructuring and other 0.8 0.5 Total operating expenses 38.7 32.8 Income from operations 18.7 26.4 Non-operating (income) expenses: Interest income (1.0 ) (0.2 ) Interest expense 0.1 0.1 Other (income) expense, net — (0.2 ) Income before income taxes 19.6 26.6 Income tax provision 2.9 4.0 Net income 16.8 % 22.7 % 28 Table of Contents Revenues Revenues for our reportable segments were as follows: 2023 2022 2022-2023 Dollar Change (in millions) Semiconductor Test $ 1,818.6 $ 2,080.6 $ (262.0 ) Robotics 375.2 403.1 (27.9 ) System Test 338.2 469.3 (131.1 ) Wireless Test 144.3 201.7 (57.4 ) Corporate and Eliminations — 0.3 (0.3 ) $ 2,676.3 $ 3,155.0 $ (478.7 ) The decrease in Semiconductor Test revenues of $262.0 million, or 12.6%, was driven primarily by lower tester sales for compute and mobility applications.
The following table sets forth the percentage of total net revenues included in our consolidated statements of operations: Years Ended December 31, 2024 2023 Percentage of revenues: Revenues: Products 81.4 % 78.3 % Services 18.6 21.7 Total revenues 100.0 100.0 Cost of revenues: Cost of products 34.1 33.0 Cost of services 7.4 9.6 Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) 41.5 42.6 Gross profit 58.5 57.4 Operating expenses: Selling and administrative 21.9 21.6 Engineering and development 16.3 15.6 Acquired intangible assets amortization 0.7 0.7 Restructuring and other 0.6 0.8 Gain on sale of business (2.0 ) 0.0 Total operating expenses 37.4 38.7 Income from operations 21.1 18.7 Non-operating (income) expenses: Interest income (0.9 ) (1.0 ) Interest expense 0.1 0.1 Other (income) expense, net 0.2 (0.0 ) Income before income taxes and equity in net earnings of affiliate 21.6 19.6 Income tax provision 2.1 2.9 Income before equity in net earnings of affiliate 19.5 16.8 Equity in net earnings of affiliate (0.3 ) 0.0 Net income 19.2 % 16.8 % Revenues Revenues for our reportable segments were as follows: 2024 2023 2023-2024 Dollar Change (in millions) Semiconductor Test $ 2,123.9 $ 1,957.2 $ 166.7 Robotics 364.8 375.2 (10.4 ) All Other 331.1 343.9 (12.8 ) $ 2,819.9 $ 2,676.3 $ 143.5 The increase in Semiconductor Test revenues of $166.7 million, or 8.5%, was driven primarily by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive applications.
We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met.
These decreases in expense were partially offset by reductions in benefits from foreign tax credits, U.S research and development credits and the U.S. foreign derived intangible income deduction. We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met.
In December 2023, FASB issued ASU 2023-09 – “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” , which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each.
See Note U: "Segment, Geographic and Significant Customer Information." The adoption of this standard had no impact on our results of operations, cash flows or financial condition. 34 Table of Contents In December 2023, the FASB issued ASU 2023-09 – “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” , which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each.
Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed within the forecasted demand window, is written down to estimated net realizable value. Forecasted demand information is obtained from the sales and marketing groups and incorporates factors such as backlog and future revenues.
This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed within the forecasted demand window, is written 25 Table of Contents down to estimated net realizable value.
The breakout of product and service gross profit was as follows: 2023 2022 2022-2023 Dollar / Point Change (in millions) Product gross profit $ 1,213.4 $ 1,549.0 $ (335.6 ) Percent of product revenues 57.9 % 59.8 % (1.9 ) Service gross profit $ 323.4 $ 318.1 $ 5.3 Percent of service revenues 55.7 % 56.5 % (0.8 ) Product revenues gross profit percentage decreased by 1.9 points, primarily due to lower volume, higher spending to strengthen our supply chain, and product mix.
Gross Profit 2024 2023 2023-2024 Dollar / Point Change (in millions) Gross profit $ 1,648.9 $ 1,536.7 $ 112.2 Percent of total revenues 58.5 % 57.4 % 1.1 Gross profit as a percent of total revenues increased by 1.1 points, primarily due to a higher volume and product and service mix. 28 Table of Contents The breakout of product and service gross profit was as follows: 2024 2023 2023-2024 Dollar / Point Change (in millions) Product gross profit $ 1,334.0 $ 1,213.4 $ 120.6 Percent of product revenues 58.1 % 57.9 % 0.2 Service gross profit $ 314.9 $ 323.4 $ (8.5 ) Percent of service revenues 60.0 % 55.7 % 4.3 Service and product revenues gross profit percentage increased by 4.3 points and 0.2 points, respectively, primarily due to higher volume and product and service mix.
We plan to continue investing in our growth while balancing capital allocations between stock repurchases and dividends and using capital for acquisitions. 25 Table of Contents Supply Chain Constraints and Inflationary Pressures The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in the first half of 2023.
Our capital allocation plan will continue to be balanced between investing in organic and inorganic growth and returning cash to shareholders through share repurchases and dividends. Supply Chain Constraints and Inflationary Pressures The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in the first half of 2023.
Inventories Inventories are stated at the lower of cost using a standard costing system which approximates cost based on a first-in, first-out basis or net realizable value. On a quarterly basis, we evaluate all inventories for net realizable value. This quarterly process identifies obsolete and excess inventory.
We monitor on an ongoing basis its equity method investments for indicators of other-than-temporary declines in fair value below carrying value. Inventories Inventories are stated at the lower of cost using a standard costing system which approximates cost based on a first-in, first-out basis or net realizable value. On a quarterly basis, we evaluate all inventories for net realizable value.
Mezzanine equity representing unsettled shares value was reduced to zero and additional paid-in capital was reduced by $100.8 million. In accordance with ASU 2020-06, we account for a 27 Table of Contents convertible debt instrument as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives.
In accordance with ASU 2020-06, we account for a convertible debt instrument as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Unsettled shares are recorded in current debt, and there is no recognition of a debt discount, which was previously amortized to interest expense.
Selling and Administrative Selling and administrative expenses were as follows: 2023 2022 2022-2023 Change (in millions) Selling and administrative $ 577.3 $ 558.1 $ 19.2 Percent of total revenues 21.6 % 17.7 % The increase of $19.2 million in selling and administrative expenses was primarily due to the charge of $5.9 million related to the modification of Teradyne’s chief executive officer’s outstanding equity awards in connection with his retirement and higher sales and marketing spending in Robotics and Semiconductor Test.
Selling and Administrative Selling and administrative expenses were as follows: 2024 2023 2023-2024 Change (in millions) Selling and administrative $ 617.0 $ 577.3 $ 39.7 Percent of total revenues 21.9 % 21.6 % The increase of $39.7 million in selling and administrative expenses was primarily due to higher sales and marketing spending in Semiconductor Test.
Operating activities during 2022 provided cash of $577.9 million. Changes in operating assets and liabilities used cash of $272.6 million. This was due to a $170.9 million increase in operating assets and a $101.7 million decrease in operating liabilities.
Changes in operating assets and liabilities used cash of $23.9 million. This was due to a $75.5 million decrease in operating assets and a $51.6 million decrease in operating liabilities.
This 26 Table of Contents determination is based on an assessment of contractual rights of the contract and the ability of the performance obligation to perform on its own or with readily available resources.
This determination is based on an assessment of contractual rights of the contract and the ability of the performance obligation to perform on its own or with readily available resources. In bundled transactions we estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among said performance obligations.
Contributions to be made in 2024 to certain qualified plans for non-U.S. subsidiaries are based on local statutory requirements and are estimated at approximately $1.4 million. 34 Table of Contents Equity Compensation Plans In addition to our 1996 Employee Stock Purchase Plan discussed in Note Q: “Stock-Based Compensation” in Notes to Consolidated Financial Statements, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”) under which equity securities are authorized for issuance.
Equity Compensation Plans In addition to our 1996 Employee Stock Purchase Plan discussed in Note R: “Stock-Based Compensation” in Notes to Consolidated Financial Statements, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”) under which equity securities are authorized for issuance. The 2006 Equity Plan was initially approved by stockholders on May 25, 2006.
We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future. In 2023, the demand in our Semiconductor Test business continued to be impacted by a correction cycle driven by excess semiconductor inventory, primarily in the mobility segment of the market.
We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future. In 2024, we saw strength in our Semiconductor Test business, with memory and compute offerings growing considerably compared to 2023.
Continued strengthening of the U.S. dollar would adversely affect Robotics revenue growth in 2024. Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses.
Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in 2025. Our corporate strategy for our test businesses is to profitably grow market share while in Robotics, we plan to profitably grow revenue through the introduction of differentiated products targeting expanding markets.
Cash decreased due to stock repurchases in the amount of $397.2 million, quarterly cash dividend payments in the amount of $67.9 million, and payments of convertible debt principal in the amount of $50.3 million, partially offset by cash generated by our global operations. Operating activities during 2023 provided cash of $585.2 million.
Cash decreased due to investments in businesses for $532.1 million, stock repurchases in the amount of $198.6 million, and quarterly cash dividend payments in the amount of $76.4 million, partially offset by proceeds from the sale of business and cash generated by our global operations. Operating activities during 2024 provided cash of $672.2 million.
Engineering and Development Engineering and development expenses were as follows: 2023 2022 2022-2023 Change (in millions) Engineering and development $ 418.1 $ 440.6 $ (22.5 ) Percent of total revenues 15.6 % 14.0 % The decrease of $22.5 million in engineering and development expenses was due to lower variable compensation and lower spending in Semiconductor Test, partially offset by higher spending in Robotics.
Engineering and Development Engineering and development expenses were as follows: 2024 2023 2023-2024 Change (in millions) Engineering and development $ 460.9 $ 418.1 $ 42.8 Percent of total revenues 16.3 % 15.6 % 29 Table of Contents The increase of $42.8 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test.
Investing activities during 2022 provided cash of $43.8 million, due to $268.1 million and $222.9 million in proceeds from sales and maturities of marketable securities, respectively, $3.4 million due to sale of an asset, partially offset by $287.4 million used for purchases of marketable securities and $163.2 million used for purchases of property, plant and equipment.
Investing activities during 2024 used cash of $622.3 million, comprised of $532.1 million used for investments in businesses, $198.1 million used for purchases of property, plant and equipment, and $45.8 million used for purchases of marketable securities, partially offset by $90.3 million in proceeds from the sale of a business, $38.4 million and $24.0 million in proceeds from the maturities and sales of marketable securities, respectively, and $0.9 million in proceeds from life insurance.
(2) Consists of 4,352,428 securities available for issuance under the 2006 Equity Plan and 3,510,784 of securities available for issuance under the Employee Stock Purchase Plan. The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and compensation opportunities in Teradyne.
The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and compensation opportunities in Teradyne. The aggregate number of shares available under the 2006 Equity Plan as of December 31, 2024 was 3,638,237 shares of our common stock.
As of December 31, 2023, total unrecognized compensation expense related to non-vested restricted stock units and options was $73.7 million and is expected to be recognized over a weighted average period of 2.5 years. 35 Table of Contents Performance Graph The following graph compares the change in our cumulative total shareholder return in our common stock with (i) the Standard & Poor’s 500 Index and (ii) the Morningstar Global Semiconductor Equipment & Materials GR USD Industry Group.
Performance Graph The following graph compares the change in our cumulative total shareholder return in our common stock with (i) the Standard & Poor’s 500 Index and (ii) the Morningstar Global Semiconductor Equipment & Materials GR USD Industry Group.
In 2023 and 2022, our five largest direct customers in aggregate accounted for 32% and 26% of our consolidated revenues, respectively. We estimate consolidated revenues driven by Qualcomm, a customer of our Semiconductor Test, System Test and Wireless Test segments, combining direct and indirect sales, accounted for approximately 11% of our consolidated revenues in 2022.
In 2023, revenues from Texas Instruments Inc., a customer of our Semiconductor Test segment, accounted for 10% of our consolidated revenues. In 2024 and 2023, our five largest direct customers in aggregate accounted for 36% and 32% of our consolidated revenues, respectively.
In 2022, we repurchased 7.3 million shares of common stock for $752.1 million at an average price of $103.69 per share against the 2021 repurchase program. The cumulative repurchases as of December 31, 2022, under the 2021 repurchase program, were 12.0 million shares of common stock for $1,352.1 million at an average price per share of $112.44.
The cumulative repurchases as of December 31, 2024, under the 2023 repurchase program, were 5.6 million shares of common stock for $595.2 million, exclusive of tax, at an average price per share of $106.21. In 2025, we intend to repurchase up to $400.0 million.
Of the $31.5 million of total excess and obsolete provisions, $21.5 million was related to Semiconductor Test, $4.6 million was related to Wireless Test, $3.7 million was related to Robotics, and $1.7 million was related to System Test. 30 Table of Contents During the years ended December 31, 2023 and 2022, we scrapped $26.4 million and $8.8 million of inventory, respectively, and sold $5.2 million and $1.8 million of previously written-down or written-off inventory, respectively.
During the years ended December 31, 2024 and 2023, we scrapped $10.6 million and $26.4 million of inventory, respectively, and sold $2.2 million and $5.2 million of previously written-down or written-off inventory, respectively. As of December 31, 2024, we had inventory related reserves for amounts which had been written-down or written-off totaling $141.4 million.
Unsettled shares are recorded in current debt, and there is no recognition of a debt discount, which was previously amortized to interest expense. Settled shares reduce the outstanding debt balance in an amount equal to the cash paid, but do not result in any gain or loss on extinguishment.
Settled shares reduce the outstanding debt balance in an amount equal to the cash paid, but do not result in any gain or loss on extinguishment. We use the if-converted method in the diluted EPS calculation for convertible instruments.
The maximum number of shares of stock-based awards that may be granted to one participant during any one fiscal year is 2,000,000 shares of common stock.
The maximum number of shares of stock-based awards that may be granted to one participant during any one fiscal year is 2,000,000 shares of common stock. As of December 31, 2024, total unrecognized compensation expense related to non-vested restricted stock units and options was $82.6 million and is expected to be recognized over a weighted average period of 2.5 years.
The decrease in income before income taxes in Wireless Test was driven primarily by a decrease in sales of connectivity test products. The decrease in income before income taxes in Robotics was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots sales channel.
The decrease in income before income taxes in Robotics was primarily driven by continued weakness in the Industrial Automation market and softer sales in Universal Robots along with higher selling and administrative costs. The decrease in income before income taxes in All Other was driven primarily by a decrease in sales of Wireless Test products.
While our businesses could be impacted by supply constraints in the future, we do not anticipate supply chain constraints will have a material impact on our financial results in 2024.
While our businesses could be impacted by supply constraints in the future, we do not anticipate supply chain constraints will have a material impact on our financial results in 2025. 24 Table of Contents Government Regulations We are subject to numerous United States and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, and other laws and regulations.
Future cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition. On November 7, 2023, Teradyne announced a strategic partnership with Technoprobe S.p.A including Teradyne's agreement to acquire a 10% equity investment in Technoprobe for 481.0 million Euros.
While we declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Future cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.
The decrease in income before income taxes in Semiconductor Test was driven primarily by lower tester sales for compute and mobility applications. The decrease in income before income taxes in System Test was primarily due to lower sales in Storage Test of system level and hard disk drive testers.
The increase in income before income taxes in Semiconductor Test was driven primarily by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive application.
Interest and Other 2023 2022 2022-2023 Change (in millions) Interest income $ (27.3 ) $ (6.4 ) $ (20.9 ) Interest expense 3.8 3.7 0.1 Other (income) expense, net (1.0 ) (5.8 ) 4.8 Interest income increased by $20.9 million due to higher interest rates in 2023.
Interest and Other 2024 2023 2023-2024 Change (in millions) Interest income $ (24.8 ) $ (27.3 ) $ 2.5 Interest expense 3.6 3.8 (0.2 ) Other (income) expense, net 5.9 (1.0 ) 6.8 Other (income) expense, net decreased by $6.8 million primarily due to $9.8 million loss on our call option in connection with our agreement to acquire a 10% investment in Technoprobe S.p.A, partially offset by the change in pension actuarial gains/losses, from a $2.7 million loss in 2023 to a $4.4 million gain in 2024.
Additionally, we will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no impact on our results of operations, cash flows or financial condition.
This standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the impact of this new standard.
In bundled transactions we estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among said performance obligations. The estimated standalone selling price is determined using all information reasonably available to us, including standalone transactions, market information and other observable inputs.
The estimated standalone selling price is determined using all information reasonably available to us, including standalone transactions, market information and other observable inputs. Equity Method Investments We account for investments using the equity method of accounting when it has significant influence over the financial and operating policies, but not control, of the investee.
Our service revenues increased $16.5 million, or 2.9%, primarily in Semiconductor Test and Storage Test. In 2023, revenues from Texas Instruments Inc., a customer of our Semiconductor Test segment, accounted for 10% of our consolidated revenues. In 2021, revenues from Taiwan Semiconductor Manufacturing Company Ltd., a customer of our Semiconductor Test segment, accounted for 12% of our consolidated revenues.
Our service revenues decreased $55.1 million, or 9.5%, primarily in Semiconductor Test related to the sale of the DIS business on May 27, 2024. In 2024, revenues from Samsung, a customer of our Semiconductor Test segment, accounted for 12.5% of our consolidated revenues.
Teradyne will face a three year restriction on the transfer or disposition of the Technoprobe shares upon closing of the agreement, subject to certain early termination events. On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400 million.
The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations. On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400 million.
The breakout of product and service revenues was as follows: 2023 2022 2022-2023 Dollar Change (in millions) Product revenues $ 2,096.3 $ 2,591.6 $ (495.3 ) Service revenues 580.0 563.5 16.5 $ 2,676.3 $ 3,155.0 $ (478.8 ) 29 Table of Contents Our product revenues decreased $495.3 million, or 19.1%, primarily due to lower tester sales in Semiconductor Test for compute and mobility applications, a decrease in sales in Storage Test of system level and hard disk drive testers, and a decrease in Wireless Test sales of connectivity test products.
The breakout of product and service revenues was as follows: 2024 2023 2023-2024 Dollar Change (in millions) Product revenues $ 2,294.9 $ 2,096.3 $ 198.6 Service revenues 524.9 580.0 (55.1 ) $ 2,819.9 $ 2,676.3 $ 143.5 Our product revenues increased $198.6 million, or 9.5%, primarily driven by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive application.
The effective tax rate for 2023 and 2022 was 14.6% and 14.9%, respectively. The decrease in the effective tax rate from 2022 to 2023 is primarily attributable to increases in benefit from tax credits and the U.S. foreign derived intangible income deduction.
The effective tax rate for 2024 and 2023 was 9.8% and 14.6%, respectively. 30 Table of Contents The decrease in the effective tax rate from 2023 to 2024 is primarily attributable to a shift in the geographic distribution of income which resulted in a reduction in income in higher tax rate foreign jurisdictions, the benefit of the release of reserves for uncertain tax positions as a result of the expiration of statute and a decrease in non-deductible officer’s compensation.
As of December 31, 2023, we had inventory related reserves for amounts which had been written-down or written-off totaling $136.0 million. We have no pre-determined timeline to scrap the remaining inventory.
We have no pre-determined timeline to scrap the remaining inventory.
Removed
The depth of this slowdown and the timing of the recovery are uncertain, however, strong automotive and image sensor demand partially offset these declines. The growth of DDR5 and High Bandwidth Memory ("HBM") devices for data center applications continued to drive demand for our products in the memory market in 2023.
Added
We expect mobile, automotive, and industrial will grow in 2025 and that recent advancements in AI inference may help mid-term recovery in these markets. Beyond AI compute, we are investing in other areas of the semiconductor test market that offer the opportunity for accelerating long-term growth, including power semi-conductors and the shift towards vertically integrated products ("VIPs").
Removed
Over the midterm, we expect the ramp of 3 nanometer and gate-all-around process technology, increasing multichip packaging, additional device complexity and unit growth will drive additional demand for Semiconductor Test. Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms, and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation.
Added
We have seen the benefits start to materialize in 2024 and expect them to continue through the mid-term. 2024 was a very weak industrial automation market resulting in a year-over-year decline in Robotics revenues while outperforming our peer group.
Removed
The market for our Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (“SMEs”) throughout the world.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeConcentrations of credit risk with respect to accounts receivable 36 Table of Contents are limited due to the large number of geographically dispersed customers. We perform ongoing credit evaluations of our customers’ financial condition and from time to time may require customers to provide a letter of credit from a bank to secure accounts receivable.
Biggest changeWe perform ongoing credit evaluations of our customers’ financial condition and from time to time may require customers to provide a letter of credit from a bank to secure accounts receivable. As of December 31, 2024, two customers of our Semiconductor Test segment, Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc, each accounted for 10% of our accounts receivable balance.
Market risk for the short and long-term marketable securities was estimated as the potential change in the fair value resulting from a hypothetical change in interest rates for securities contained in the investment portfolio. The potential change in the fair value from changes in interest rates is immaterial as of December 31, 2023 and 2022. 37 Table of Contents
Market risk for the short and long-term marketable securities was estimated as the potential change in the fair value resulting from a hypothetical change in interest rates for securities contained in the investment portfolio. The potential change in the fair value from changes in interest rates is immaterial as of December 31, 2024 and 2023. 35 Table of Contents
These contracts are used to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities. We also enter into foreign currency forward contracts to hedge the impact of exchange rates on our revenues in Japanese Yen and Taiwan Dollar. These contracts have maturities of less than one year.
These contracts are used to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities. We also enter into foreign currency forward contracts to hedge the impact of exchange rates on our revenues in Japanese Yen. These contracts have maturities of less than one year. We do not engage in currency speculation.
Our interest rate exposure is primarily related to short-term and long-term marketable securities. In order to estimate the potential loss due to interest rate risk, a fluctuation in interest rates of 25 basis points was assumed.
Interest Rate Risk Management We are exposed to potential losses due to changes in interest rates. Our interest rate exposure is primarily related to short-term and long-term marketable securities. In order to estimate the potential loss due to interest rate risk, a fluctuation in interest rates of 25 basis points was assumed.
Our fixed income available-for-sale marketable securities have a minimum rating of AA by one or more of the major credit rating agencies. We place forward currency contracts with high credit-quality financial institutions in order to minimize credit risk exposure.
Our fixed income available-for-sale marketable securities have a minimum rating of AA by one or more of the major credit rating agencies. We place forward currency contracts with high credit-quality financial institutions in order to minimize credit risk exposure. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of geographically dispersed customers.
As of December 31, 2023, a customer of our Semiconductor Test segment, Texas Instruments Inc., accounted for 18% of our accounts receivable balance. There were no customers who accounted for more than 10% of our accounts receivable balance as of December 31, 2022.
As of December 31, 2023, a customer of our Semiconductor Test segment, Texas Instruments Inc., accounted for 18% of our accounts receivable balance.
We do not engage in currency speculation. On November 7, 2023, in connection with our agreement to acquire 10% investment in Technoprobe S.p.A, we purchased a call option to buy 481.0 million Euros. The expiration date of the option is April 26, 2024.
On November 7, 2023, in connection with our agreement to acquire 10% investment in Technoprobe S.p.A, we purchased a call option to buy 481.0 million Euros, which expired in April 2024. On April 12, 2024, we entered into a forward to buy 481.0 million Euros, which expired on May 23, 2024.
As of December 31, 2023 and 2022, the analysis indicated that these hypothetical market movements would not have a material effect on our consolidated financial position, results of operations or cash flows. Interest Rate Risk Management We are exposed to potential losses due to changes in interest rates.
We performed a sensitivity analysis assuming a hypothetical 10% fluctuation in foreign exchange rates to the hedging contracts and the underlying exposures described above. As of December 31, 2024 and 2023, the analysis indicated that these hypothetical market movements would not have a material effect on our consolidated financial position, results of operations or cash flows.
Removed
Since the transaction price was agreed to in Euros, this option contract reduces the impact to the purchase price of changes in the Euro to U.S. Dollar exchange rate. We performed a sensitivity analysis assuming a hypothetical 10% fluctuation in foreign exchange rates to the hedging contracts and the underlying exposures described above.

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