Teradyne makes machines that test other machines. Its main business is building automated test equipment that checks whether semiconductors, circuit boards, wireless devices, and data storage components actually work before they ship. When a chip factory needs to verify that millions of processors meet quality standards, it often uses a Teradyne system to do it. The company also makes collaborative robotic arms under the Universal Robots brand and self-driving warehouse robots under the Mobile Industrial Robots brand, sold to factories and logistics companies around the world. Teradyne earns money by selling these systems outright and by providing ongoing service contracts. The diagram below traces where the money goes.

Five years of financial data tell a clear story: this is a business that swings hard with industry cycles. Revenue peaked at $3.7 billion in 2021, then fell steadily to $2.7 billion in 2023 as semiconductor demand cooled and robotics sales weakened. The recovery began in 2024 and continued into 2025, when revenue climbed back to $3.2 billion. The engine of that recovery was artificial intelligence. Chip makers building AI hardware needed more and more testing capacity, and Teradyne's UltraFLEXplus platform was positioned to serve that demand. By the second half of 2025, AI-related customer demand was driving the majority of Semiconductor Test revenue.

Gross margins have stayed remarkably stable through all of this. They sat at roughly 59% in 2021 and remained close to 58% in 2025. That consistency means that when revenue rises, profits tend to rise with it, and when revenue falls, cash generation shrinks but the underlying business structure does not break. Free cash flow followed the same pattern: $1.0 billion in 2021, down to $0.4 billion in 2022 and 2023, then recovering to $0.5 billion in both 2024 and 2025. The company carries no net debt. As of 2025, it had more cash and marketable securities than debt outstanding.

The Semiconductor Test segment is by far the largest piece of the business. It generated $2.52 billion in revenue in 2025, which was 79% of total company revenue. The Robotics segment, which was once seen as a growth engine, generated just $308.3 million in 2025, down 15.5% from the year before. The robotics business has now lost money for multiple years running, posting a loss of $99.4 million in 2025. Teradyne cut roughly 400 robotics jobs during 2025 to reduce costs. The Product Test segment, a newer division covering defense, wireless, and photonics testing, contributed $358.0 million and remained profitable.

Teradyne has been expanding through acquisitions to chase the AI data center opportunity. In January 2025, it acquired a test equipment team from Infineon for $18.3 million. In May 2025, it paid $127.2 million for Quantifi Photonics, a maker of test solutions for photonic integrated circuits, which are the light-based chips used in high-speed data connections. Then in January 2026, Teradyne announced a joint venture called MultiLane Test Products, investing approximately $157 million for a 75% stake. That venture is specifically aimed at testing the high-speed connections inside AI data centers.

The risk picture has three sharp edges. The first is customer concentration. In 2025, the five largest customers accounted for 44% of total revenue, up from 36% in 2024 and 32% in 2023. One single customer accounted for 19% of all revenues. That concentration has been growing, not shrinking. If one of those big customers slows its chip buildout, cuts spending, or switches to a competitor, the revenue impact would be immediate and large.

The second risk is export controls. The US government restricts what Teradyne can sell to certain Chinese semiconductor companies. China represented 14% of Teradyne's revenue in 2025. The company has said these restrictions have already reduced sales to affected customers and may continue to do so. Teradyne also noted that some competitors are not subject to the same restrictions, which puts it at a disadvantage in certain parts of the Chinese market. Tariffs add a second layer of trade risk: Teradyne's manufacturing for test products runs through contract manufacturers in Malaysia and Thailand, meaning tariff changes could raise costs without warning.

The third risk is manufacturing dependence. Teradyne relies on three outside manufacturers, Flex, Plexus, and SAM Meerkat, to build key product lines from facilities in Malaysia and Thailand. Teradyne does not own these factories. If any of those manufacturers has production problems, Teradyne could miss customer orders with no quick alternative. This is a structural vulnerability that cannot be fixed overnight.