Teradyne, Inc. (TER): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Teradyne, Inc.'s business segments, and the BCG Matrix is defintely the right tool to map where capital should flow right now. Honestly, the picture is sharp: the AI-driven System-on-a-Chip test business is a clear Star, fueled by High-Bandwidth Memory sales that jumped 110% sequentially in Q3 2025, while the core Automated Test Equipment business remains a rock-solid Cash Cow, bringing in $606 million or 78.8% of revenue. But where do you put the Industrial Automation segment, which saw a 17% year-over-year decline recently, and the small Product Test Group? Let's map out exactly where Teradyne, Inc. needs to invest its capital to maximize returns from these distinct units.

Background of Teradyne, Inc. (TER)

You're looking at Teradyne, Inc. (TER) as of late 2025, and the story right now is all about semiconductors fueled by artificial intelligence. Teradyne, Inc. is a key player in automated test equipment and industrial robotics, operating in an industry where they share a combined market share of about 80% with one major competitor in the automated test equipment space. This high barrier to entry, driven by necessary R&D investments, helps define their market position.

Looking at the most recent full quarter, the third quarter of 2025, Teradyne, Inc. reported total revenue of $769 million, which was a 4% increase compared to the third quarter of 2024. The GAAP net income for that period came in at $119.6 million, resulting in a GAAP Earnings Per Share (EPS) of $0.75; on a non-GAAP basis, the EPS was $0.85.

The engine driving this recent performance is clearly the Semiconductor Test Group. In Q3 2025, this segment generated $606 million in revenue. Specifically, System-on-a-Chip (SOC) solutions for AI applications were a major catalyst, contributing $440 million to that total. Furthermore, the Memory test revenue was particularly strong, more than doubling sequentially to $128 million in the quarter, largely due to demand for High Bandwidth Memory (HBM) and AI-related testing.

Now, the other divisions show a different picture. The Product Test segment brought in $88 million in Q3 2025, showing modest sequential growth. However, the Robotics segment revenue was $75 million, which was flat quarter-over-quarter and actually down year-over-year. Management noted persistent weakness in the core indirect distribution channel for the robotics business, even as they push for AI-driven work cell applications.

Management's confidence in the near term is high, as they guided Q4 2025 revenue to be between $920 million and $1,000 million, representing a sequential increase of 25%. Strategically, Teradyne, Inc. is focusing on deepening its AI compute capabilities and restructuring the Robotics division to target higher-margin automation opportunities.

Teradyne, Inc. (TER) - BCG Matrix: Stars

You're looking at the engine room of Teradyne, Inc. (TER) right now-the Stars quadrant. These are the business units that dominate a fast-growing market, but honestly, they demand serious capital to keep that growth engine running hot. If Teradyne maintains its lead here, these units are definitely set to transition into the Cash Cows we'll discuss later, once the market growth naturally cools off.

The primary Star for Teradyne is clearly the AI-driven System-on-a-Chip (SOC) Test solutions, which cover both compute and networking devices. This segment is where the action is, as AI infrastructure build-out requires increasingly complex testing capabilities. To give you a sense of scale, AI-related revenue composition for Teradyne rose to approximately 50% in Q3 2025 and management is looking for that to hit around 60% in the Q4 outlook. That's a massive shift toward a high-growth area.

Let's drill down into the memory side of this Star, specifically High-Bandwidth Memory (HBM) and DRAM test. The numbers here are striking, showing just how fast this sub-segment is accelerating. For the third quarter of 2025, memory test sales hit $128 million, which was a massive jump, up 110% sequentially. That kind of sequential growth doesn't happen unless you have a market leader position, which Teradyne seems to hold in key areas like HBM performance test with its Magnum7H product.

Here's the quick math on that Q3 memory revenue:

Also powering this Star category is the Titan HP SLT platform, which is Teradyne's system-level test solution purpose-built for AI and cloud customers. This platform is designed to handle the thermal and power demands of next-generation devices, supporting up to two kilowatts currently, with a roadmap for four kilowatts. This focus on the leading edge is what underpins the market's confidence in its future growth trajectory.

The market is pricing in this continued dominance. Analysts are projecting a 20% CAGR for Teradyne's overall test revenue from 2025 through 2027, reflecting the secular nature of the AI build-out. This momentum is directly translating into the near-term forecast. This sub-segment is capturing that high-growth AI market, driving the strong Q4 2025 revenue guidance for the entire company, which is projected to be up to $1.0 billion.

To be fair, keeping this Star fed requires heavy investment, which is why cash flow might look tight, but the potential payoff is huge. You can see the expected acceleration in the guidance metrics:

• Q3 2025 Semiconductor Test Revenue: $606 million
• Q4 2025 Revenue Guidance Midpoint: $960 million
• Sequential Revenue Growth Implied (Q3 to Q4 Midpoint): 25%
• Year-over-Year Revenue Growth Implied (Q4\'25 vs Q4\'24 Midpoint): 27%

Finance: draft 13-week cash view by Friday.

Teradyne, Inc. (TER) - BCG Matrix: Cash Cows

You're analyzing the core engine of Teradyne, Inc. (TER), the segment that reliably funds the rest of the company's ambitions. This is the Cash Cow quadrant, characterized by high market share in a mature space, meaning it demands less aggressive spending but spits out significant capital.

The Semiconductor Test Group (STG) business is the definitive Cash Cow for Teradyne, Inc. This group represented a massive 78.8% of the total revenue in the third quarter of 2025, translating to $606 million out of the total $769 million reported for that period. This dominance in a mature segment is precisely what defines a Cash Cow; it's the market leader in Automated Test Equipment (ATE) for established areas like mobility and consumer electronics chips.

The profitability of this segment is key to its Cash Cow status. For instance, in the first quarter of 2025, Teradyne, Inc. reported non-GAAP Gross Margins hitting 60.6%. While the Q3 2025 non-GAAP Gross Margin settled at 58.5%, both figures demonstrate the high-margin nature of this business, which provides the necessary capital to fund the company's higher-growth, higher-risk Star and Question Mark segments, as well as R&D.

Here's a quick look at the segment's financial weight based on the latest reported quarters:

Because these are stable, high-volume test systems, they generally require less incremental capital investment compared to developing entirely new technology platforms, which is where the Star segment needs its funding. The goal here is efficiency and milking the gains passively, though Teradyne, Inc. still invests to maintain its edge.

The cash generation capability is evident when you look at the cash flow figures, even if the cash balance fluctuates due to deployment elsewhere, like share repurchases. For example, in Q1 2025, the company generated $98 million in Free Cash Flow. By the end of Q3 2025, cash and marketable securities stood at $297.7 million, while net cash provided by operating activities for that quarter was $49 million. This consistent inflow from the STG business helps cover corporate overhead and services debt, freeing up management to focus on the future.

The characteristics that cement STG as a Cash Cow include:

• Market leadership in established ATE for mobility and consumer electronics chips.
• High non-GAAP Gross Margins, such as the 60.6% achieved in Q1 2025.
• Consistent revenue contribution, making up 78.8% of Q3 2025 sales.
• Generating positive cash flow, like the $98 million in Free Cash Flow in Q1 2025.

You want to maintain this segment's productivity, ensuring its infrastructure is efficient enough to keep those margins high without overspending on growth that the market simply doesn't offer anymore. Finance: draft the Q4 2025 cash flow projection, isolating STG contribution by Friday.

Teradyne, Inc. (TER) - BCG Matrix: Dogs

You're looking at the parts of Teradyne, Inc. that aren't riding the AI wave, and that's okay; every portfolio needs its anchors, even if they aren't soaring. The segment we're slotting into the Dogs quadrant is the Product Test Group (PTG), which posted Q3 2025 revenue of $88 million.

This figure represents just 11.4% of the total Q3 2025 revenue of $769 million. That puts it firmly in the smaller category compared to the Semiconductor Test Group, which brought in $606 million, or 78.8% of the total. This PTG, along with related operations like Legacy System Test and Defense/Aerospace applications, operates in markets that aren't seeing the explosive growth you see elsewhere in the business.

Here's a quick look at how the Q3 2025 revenue pie was sliced, showing you where the focus-and capital-is clearly going:

These Dog-like units provide stable but non-strategic revenue, not benefiting from the massive trends like AI that are projected to drive total company revenue up sequentially by 25% in Q4 2025, with guidance between $920 million and $1,000 million. When you see that kind of forward momentum in the core business, it tells you where management's attention is directed.

For these lower-growth areas, the strategy is typically about minimizing commitment. You'll notice that the capital allocation reflects this reality. Major investment is being funneled toward the Stars and Question Marks, not here. The data suggests this segment is a low-priority for significant capital expenditure or major Research and Development focus because expensive turn-around plans rarely pay off in these mature niches.

The cash flow picture reinforces this avoidance strategy. While the segment may break even, tying up working capital in a low-return unit is inefficient when the rest of the company is scaling rapidly. Consider the balance sheet as of September 28, 2025: cash and equivalents stood at $297.7 million, down from $367.9 million in June 2025, and net cash provided by operating activities for the quarter was only $49 million. You want that cash working hard, not sitting in a segment with low market share and low growth prospects.

Here are the characteristics we see aligning with the Dog profile for this part of Teradyne, Inc.:

• Revenue contribution in Q3 2025 was $88 million.
• Market share is inherently low relative to the Semiconductor Test segment.
• It does not benefit from the primary growth driver (AI-related SOC testing).
• It represents a candidate for divestiture to free up capital.

Finance: draft the 13-week cash view by Friday, focusing on cash burn in non-core areas.

Teradyne, Inc. (TER) - BCG Matrix: Question Marks

You're looking at Teradyne, Inc.'s Industrial Automation segment, which houses Universal Robots (UR) and Mobile Industrial Robots (MiR). Honestly, this is the classic Question Mark quadrant for Teradyne, Inc. (TER) right now. These units operate in markets that are definitely growing fast-collaborative and mobile robotics-but Teradyne, Inc. (TER) hasn't captured the dominant share yet. They consume cash to fuel that growth potential, but the returns aren't there yet.

The near-term picture shows some headwinds. We saw a 17% year-over-year decline in revenue for the second quarter of 2025, signaling cautious capital spending from buyers. This weakness contrasts sharply with the underlying market's long-term trajectory. For the third quarter of 2025, this segment was the smallest contributor, bringing in only $75 million in revenue.

Here's a quick look at the segment's current financial snapshot, which helps frame why it's a Question Mark:

To shift these products from Question Marks to Stars, heavy investment is required to rapidly gain market share. Teradyne, Inc. (TER) is putting money into R&D to make that happen. For example, they are working on things like the new AI Accelerator toolkit with NVIDIA. That's the kind of investment needed to convert potential into real market gains.

The strategic imperative for these units is clear, and it involves significant capital allocation decisions:

• Invest heavily to capture market share quickly.
• Develop new product capabilities, like AI integration.
• Avoid becoming a Dog through stagnation.
• Focus marketing spend on driving adoption.
• These units currently lose the company money.

If the investment doesn't yield rapid share gains, the alternative is divestiture, but for now, the high-growth prospects keep the heavy investment option on the table. The market for collaborative and mobile automation is expanding, so the upside is substantial if Teradyne, Inc. (TER) can execute its strategy effectively. Finance: draft 13-week cash view by Friday.