Teradyne, Inc.

Company Overview

Business Model: Teradyne, Inc. is a leading global provider of automated test equipment and robotics solutions. Its automated test systems are used to test semiconductors, wireless products, data storage, silicon photonics, and complex electronics systems across various industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense. The robotics product offerings consist primarily of collaborative robotic arms and autonomous mobile robots, utilized by global manufacturing, logistics, and industrial customers to enhance quality, increase manufacturing and material handling efficiency, and reduce costs.

Market Position: Teradyne, Inc. operates in markets characterized by a concentration of significant customers, with a limited number of major customers driving substantial demand for its test products, both directly and through their supply partners. In 2025, the five largest direct customers collectively accounted for 44% of consolidated revenues. The Semiconductor Test segment experienced considerable growth in 2025, driven by robust demand from Artificial Intelligence applications in networking and vertically integrated producer compute solutions, with AI-related customer demand representing the majority of revenue in the second half of 2025. The Robotics segment achieved its third consecutive quarter of sequential revenue growth in the fourth quarter of 2025, focusing on strategic partnerships in high-growth verticals such as ecommerce, logistics, semiconductor, and electronics.

Recent Strategic Developments:

• Joint Venture Formation (January 2026): Teradyne, Inc. announced an agreement with MultiLane to form MultiLane Test Products, a joint venture aimed at accelerating the development of test solutions for high-speed data connections in the AI Data Center equipment market. Teradyne, Inc. will invest approximately $157 million for a 75% ownership stake, with the transaction expected to close in the first half of 2026.
• Quantifi Photonics Acquisition (May 2025): Acquired privately held Quantifi Photonics for $127.2 million to enhance its photonic integrated circuit test solutions, integrated into the Product Test segment. This acquisition is also intended to leverage engineering expertise and technology to differentiate the Semiconductor Test business, specifically with integration into the UltraFlexplus platform.
• Infineon Technologies AG's AET Acquisition (January 2025): Acquired Infineon Technologies AG's automated test equipment technology and associated development team (AET) for $18.3 million (17.6 million Euros), adding resources and expertise to the Semiconductor Test segment and strengthening customer relationships.
• Product Test Segment Creation (March 2025): Created the Product Test division as a new segment by identifying operational synergies among production board test, defense and aerospace, and wireless test businesses.
• Technoprobe S.p.A. Investment (May 2024): Acquired 10% of the equity in Technoprobe S.p.A. for $524.1 million (483.1 million Euros), also receiving a board seat. This investment is accounted for using the equity method.

Geographic Footprint: Teradyne, Inc. has a significant international presence, with sales to customers outside the United States accounting for 89% of consolidated revenues in 2025. Sales are attributed to geographic areas based on the location of the customer site. Key revenue-generating regions include Taiwan (36% of total revenue), China (14%), and Korea (14%). The company maintains sales and service offices across North America, Central America, Asia, and Europe. Manufacturing activities for test businesses are primarily conducted through subcontractors and outsourced contract manufacturers, with significant operations in Malaysia. Robotics manufacturing is primarily in production facilities in Denmark and the U.S.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 58.2%
• Operating Margin: 20.4%
• Net Margin: 17.4%

Investment in Growth:

• R&D Expenditure: $504.6 million (15.8% of revenue)
• Capital Expenditures: $224.0 million
• Strategic Investments:
  • Acquisition of Quantifi Photonics for $127.2 million (May 2025).
  • Acquisition of Infineon Technologies AG's AET for $18.3 million (January 2025).
  • Planned investment of approximately $157 million for a 75% ownership in the MultiLane Test Products joint venture (expected H1 2026).
  • Investment of $524.1 million for a 10% equity stake in Technoprobe S.p.A. (May 2024).

Business Segment Analysis

Semiconductor Test

Financial Performance:

• Revenue: $2,523.7 million (+18.8% YoY)
• Operating Income (before taxes): $700.7 million
• Key Growth Drivers: Robust demand from Artificial Intelligence applications in networking and with vertically integrated producer compute solutions. Memory test revenue remained stable despite a smaller overall market, supported by share gains in high bandwidth memory and DRAM final test applications. AI-related customer demand drove the majority of revenue in the second half of 2025.

Product Portfolio:

• Designs, manufactures, sells, and supports Semiconductor, Hard Disk Drive, and Solid State Disk test systems and related services.
• Products include FLEX Test Platform (e.g., UltraFLEXplus for complex compute devices, driven by data centers and AI), J750™ test system (for high volume semiconductor devices like microcontrollers and image sensors), Magnum platform (for mass production test of flash, DRAM, and HBM memory), and ETS platform (for analog/mixed signal markets, including Silicon Carbide and Gallium Nitride power devices).
• Integrated System Test group includes system level test (SLT) testers and HDD/SSD testers.

Market Dynamics:

• Serves integrated device manufacturers, "Fabless" companies, "Foundries," and semiconductor assembly and test providers.
• Multi-site testing is a key economic driver for customers.
• Strategic shift toward AI-driven semiconductor testing.

Sub-segment Breakdown:

• System-on-a-chip: $1,889.7 million revenue (2025)
• Memory: $504.9 million revenue (2025)
• Integrated System Test (IST): $129.2 million revenue (2025)

Robotics

Financial Performance:

• Revenue: $308.3 million (-15.5% YoY)
• Operating Loss (before taxes): $(99.4) million
• Key Growth Drivers: Fourth quarter of 2025 represented the third consecutive quarter of sequential revenue growth. Strategic partnerships with original equipment manufacturers, systems integrators, and large enterprise accounts, focusing on high-growth verticals such as ecommerce, logistics, semiconductor, and electronics. Cost reductions through restructuring activities.

Product Portfolio:

• Collaborative Robotic Arms: Under Universal Robots branding (e.g., UR8 Long, UR15, UR18, UR20, UR30, UR3e, UR7e, UR12e, UR16e). Over 110,000 cobots sold worldwide. Features include straightforward programming (PolyScope software), high return on investment (12-18 months payback), versatile deployment, and collaborative-capable safety functions. Supported by an extensive ecosystem (UR+).
• Autonomous Mobile Robots (AMRs): Under Mobile Industrial Robots branding (e.g., MiR250, MiR600, MiR1350, MiR1200 Pallet Jack). Over 11,000 AMRs sold globally. Differentiated by ease of use and speed of deployment, safe operations (360 safety coverage), reliable autonomous navigation, and short payback period (12-24 months).

Market Dynamics:

• Used by global manufacturing, logistics, and industrial customers to improve quality, increase efficiency, and reduce costs.
• Majority of revenue is denominated in foreign currencies, making it susceptible to U.S. dollar strengthening.

Product Test

Financial Performance:

• Revenue: $358.0 million (+8.1% YoY)
• Operating Income (before taxes): $60.7 million
• Key Growth Drivers: Bolstered primarily by strength in defense and aerospace applications. Acquisition of Quantifi Photonics in May 2025 for photonic integrated circuit test solutions.

Product Portfolio:

• Test equipment and service offerings for high performance electronic and photonic assemblies, sub-assemblies, modules, and components.
• Includes circuit-board test and inspection systems, wireless test systems, photonic integrated circuit test solutions, and defense and aerospace test instrumentation and systems.

Market Dynamics:

• Customers include companies in high performance computing and data center, automotive/industrial, defense/aerospace, and consumer electronics industries.
• Solutions aid customers in the development, verification, and scaling of next-generation technologies.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $702.1 million (6.3 million shares) in 2025. Cumulative repurchases under the January 2023 program were $1,297.3 million (12.0 million shares) as of December 31, 2025.
• Dividend Payments: $76.3 million in 2025 ($0.12 per share quarterly).
• Future Capital Return Commitments: Board of Directors declared a quarterly cash dividend of $0.13 per share to be paid on March 13, 2026. The $2.0 billion common stock repurchase program, approved in January 2023, remains active until terminated or all authorized shares are repurchased.

Balance Sheet Position:

• Cash and Equivalents: $293.8 million
• Total Debt: $200.0 million (short-term debt from revolving credit facility)
• Net Cash Position: $93.8 million
• Credit Rating: Not disclosed.
• Debt Maturity Profile: The $750.0 million senior secured revolving credit facility matures on December 10, 2026. As of February 19, 2026, Teradyne, Inc. was in compliance with all covenants.

Cash Flow Generation:

• Operating Cash Flow: $674.4 million
• Free Cash Flow: $450.4 million (Operating Cash Flow of $674.4 million minus Capital Expenditures of $224.0 million)
• Cash Conversion Metrics: Not explicitly detailed.

Operational Excellence

Production & Service Model: Teradyne, Inc.'s manufacturing activities for its test businesses are primarily conducted through subcontractors and outsourced contract manufacturers, with significant operations in Malaysia. For its Robotics businesses, manufacturing is primarily done in production facilities in Denmark and the U.S. The company has significantly invested in its internal manufacturing for FLEX products at its Cebu, Philippines site. Service offerings include extended warranties, training and application support, service agreements, post contract customer support, and replacement parts.

Supply Chain Architecture: Key Suppliers & Partners:

• Contract Manufacturers: Flex Ltd. (manufactures FLEX and J750 family products from Malaysia facility), Plexus Corp. (manufactures FLEX and Magnum products from Malaysia and Thailand facilities, and ETS family products from Malaysia facility), SAM Meerkat (manufactures storage test family products from Malaysia and Thailand facilities).
• Component Suppliers: Relies on a wide range of suppliers for electronic and mechanical components, some standard, others manufactured to specifications. Certain items are obtained from sole sources.

Facility Network:

• Manufacturing: Significant operations in Malaysia (via subcontractors), Denmark (Robotics), U.S. (Robotics), and Cebu, Philippines (Semiconductor Test production, with a 290,000 sq ft building purchased in 2025).
• Research & Development: R&D centers are implied through engineering and development activities and acquisitions (e.g., AET team in Regensburg, Germany).
• Distribution: Not explicitly detailed beyond sales and service offices.

Operational Metrics:

• Inventory provision of $25.8 million in 2025, primarily due to downward revisions to forecasted demand for certain products ($17.5 million Semiconductor Test, $6.0 million Robotics, $2.2 million Product Test).
• Scrapped $11.8 million of inventory in 2025.
• Sold $3.6 million of previously written-down or written-off inventory in 2025.
• As of December 31, 2025, inventory related reserves totaled $151.8 million.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Predominantly through a direct sales force for test businesses in North America, Central America, Asia, and Europe.
• Channel Partners: Robotics products are sold principally through distributors and original equipment manufacturers.
• Digital Platforms: Not explicitly detailed.

Customer Portfolio: Enterprise Customers:

• Customer Concentration: The market for test products is concentrated. In 2025, the five largest direct customers in aggregate accounted for 44% of consolidated revenues.
• Strategic Partnerships: In 2025, two specifying customers (both Semiconductor Test and Product Test segments) drove 12% and 10% of consolidated revenues, respectively. One additional direct customer (Semiconductor Test segment) accounted for 19% of consolidated revenues.
• Robotics Segment: Aims at strategic partnerships with original equipment manufacturers, systems integrators, and large enterprise accounts, concentrating on high-growth verticals such as ecommerce, logistics, semiconductor, and electronics.

Geographic Revenue Distribution:

• Taiwan: 36% of total revenue
• China: 14% of total revenue
• Korea: 14% of total revenue
• United States: 11% of total revenue
• Europe: 7% of total revenue
• Malaysia: 3% of total revenue
• Singapore: 3% of total revenue
• Philippines: 3% of total revenue
• Thailand: 2% of total revenue
• Japan: 2% of total revenue
• Rest of the World: 4% of total revenue

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics:

• Test Equipment Market: Concentrated with a limited number of significant customers. Products are often replaced by more technologically advanced substitutes.
• Robotics Market: Includes traditional industrial robots and emerging collaborative robot offerings, as well as autonomous mobile robots in material handling.
• AI-Driven Demand: Semiconductor Test segment experienced robust demand from Artificial Intelligence applications, driving the majority of revenue in the second half of 2025.
• Consolidation: The semiconductor industry has experienced significant consolidation.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Semiconductor Test: Advantest Corporation, SPEA S.p.A., Cohu, Inc.
• Robotics: KUKA Robotics Corporation, ABB, FANUC, Staubli, Yaskawa Electric Corporation (traditional industrial robots); Techman, Doosan, Jaka, AUBO Robotics (collaborative robots); Omron, Rockwell Automation, Junion, HikRobot, Agilox, KION (autonomous mobile robots).
• Product Test: Keysight Technologies, Test Research, Inc., Rohde & Schwarz GmbH & Co. KG, Anritsu Company, National Instruments Corporation, Welzek, iTest.

Emerging Competitive Threats:

• Emerging Asian companies and internal development at several customers.
• Competitors are expected to continue improving current products and introducing new products/technologies with improved cost of ownership and performance.

Competitive Response Strategy:

• Corporate strategy is to profitably grow revenue and market share through the introduction of differentiated products targeting expanding markets and customer needs.
• Focused investments in Artificial Intelligence applications and vertically integrated producer customers.
• Leveraging acquisitions (e.g., Quantifi Photonics technology into UltraFlexplus platform) to enhance functionality and create differentiation.
• Cost reductions through restructuring activities in Robotics.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Global and Industry-Specific Economic Cycles: Business is impacted by unpredictable global and industry-specific economic cycles (electronics, semiconductor, robotics), which can lead to slowdowns, over-supply, reduced capital expenditures, increased price competition, and higher operating costs.
• Technology Disruption: Rapidly evolving markets mean products are often replaced by more technologically advanced substitutes, leading to falling demand and prices for older technology. Failure to develop or acquire new technologies or achieve market acceptance for new products could adversely affect revenues.
• Customer Concentration: High customer concentration (44% of consolidated revenues from five largest direct customers in 2025) poses a risk if a significant customer is lost or reduces demand. Customer consolidation could also increase pricing pressure.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on a wide range of suppliers, including sole sources, for electronic and mechanical components. Delays or cessation of delivery from suppliers, especially sole sources, could impact manufacturing and customer deliveries.
• Contract Manufacturer Dependency: Dependence on Flex Ltd., Plexus Corp., SAM Meerkat, and other contract manufacturers for product manufacturing and testing. Failure to perform by these subcontractors could lead to substantial expense and business disruption.
• Global Supply Shortages & Inflation: Global supply shortages of electrical components (e.g., semiconductor chips) and inflationary cost increases (materials, wages) can lead to increased lead times, higher costs, and delays in customer orders. Incurring higher costs for supply chain resiliency or extended purchase commitments introduces inventory risk.
• Geographic Concentration: Manufacturing and supply sources in foreign locations (e.g., Malaysia, Denmark) and devices tested in Asia (Taiwan, China, Korea) expose operations to political, health, or financial instability in these regions.
• Capacity Constraints: Difficulty for certain suppliers to meet delivery requirements during periods of rapid growth.

Financial & Regulatory Risks

Market & Financial Risks:

• Foreign Exchange: Majority of Robotics revenue is in foreign currencies; strengthening of the U.S. dollar negatively affects Robotics revenue. Currency fluctuations can impact liquidity and financial condition.
• Indebtedness: Incurred $200.0 million in short-term debt from the revolving credit facility in 2025. Additional indebtedness could make payments difficult, limit future financing, and increase vulnerability to adverse economic conditions. Restrictive covenants in the credit agreement may limit business strategies.
• Tax Liabilities: Exposure to higher tax rates than expected due to changes in tax laws (e.g., Pillar Two), regulations, or adverse rulings. Failure to qualify for foreign tax incentives (e.g., Singapore tax holiday) could increase effective tax rate.
• Guarantees & Indemnification: Significant guarantees to customers (delivery, price, performance), indemnification to officers/directors, and customer confidentiality obligations could result in material liabilities if breached.

Regulatory & Compliance Risks:

• Trade Regulations & Export Controls: Subject to U.S. and foreign laws limiting and restricting export of products/services and transactions with certain customers/partners (e.g., U.S. Department of Commerce export control regulations restricting transactions with certain Chinese semiconductor companies). Compliance has limited sales and competitiveness, and changes in policy could reduce competitiveness.
• Environmental Regulations: Subject to domestic and international environmental regulations (e.g., RoHS Directive, WEEE Directive) relating to the use, storage, discharge, site cleanup, and disposal of hazardous chemicals. Non-compliance or required site remediation could incur significant costs, penalties, or production suspension.
• Product Recalls & Liability: Risk of design/manufacturing defects leading to product recalls, warranty, and product liability claims, resulting in significant costs, shipment delays, and reputational damage.

Geopolitical & External Risks

Geopolitical Exposure:

• International Operations Risks: Subject to risks from operating internationally, including unexpected changes in legal/regulatory requirements, inflation, tariffs, foreign currency exchange rates, social/political/economic instability, acts of terrorism, international conflicts, health pandemics, and difficulties in protecting intellectual property.
• Doing Business in China: Specific risks include adverse changes in Chinese political/economic conditions, uncertainties in the Chinese legal system, and controls on Renminbi convertibility. Ongoing geopolitical tensions between the U.S. and China, including export restrictions, may cause increased costs and decreased demand.
• Natural Catastrophic Events: Operations and those of customers/suppliers are subject to disruption from natural disasters, severe weather, health epidemics, acts of war, and terrorist attacks, potentially leading to order cancellations, delivery delays, or lost business.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Artificial Intelligence (AI): Focused investments in AI applications, driving significant revenue growth in the Semiconductor Test segment. Joint venture MultiLane Test Products is being created to serve the AI Data Center equipment market.
• High-Performance Computing & Networking: Developing test solutions for critical high-speed data connections.
• Photonic Integrated Circuit (PIC) Test Solutions: Enhanced capabilities through the acquisition of Quantifi Photonics.
• Semiconductor Test Platforms: Continuous investment in FLEX Test Platform (UltraFLEXplus with PACETM architecture), J750™ platform (new instrument releases), Magnum platform (Magnum 7, Magnum EPIC), and ETS platform (ETS-88 for Silicon Carbide/Gallium Nitride power devices, ETS-800 for high complexity power devices).
• Robotics: Developing collaborative robotic arms (Universal Robots) and autonomous mobile robots (Mobile Industrial Robots) with features like intuitive software (PolyScope), safety functions, and reliable autonomous navigation.

Innovation Pipeline:

• Accelerating the development of test solutions for critical high-speed data connections for the AI Data Center equipment market through the MultiLane Test Products joint venture.
• Leveraging Quantifi Photonics' engineering expertise and technology to enhance functionality and create additional differentiation in the Semiconductor Test business, specifically with integration into the UltraFlexplus platform.
• Continued investment in J750™ platform with new instrument releases to expand to new devices including high-end microcontrollers and latest generation image sensors.

Intellectual Property Portfolio:

• Patent Strategy: Protects rights in proprietary information, brands, and technology through patents, copyrights, trademarks, trade secrets, and contractual agreements.
• Licensing Programs: Not explicitly detailed.
• IP Litigation: Has been sued for patent infringement in the past and receives notifications of potential violations. Litigation can be costly and may require licenses or product alterations.

Technology Partnerships:

• Strategic Alliances: Forming a joint venture, MultiLane Test Products, with MultiLane to serve the AI Data Center equipment market.
• Research Collaborations: Not explicitly detailed.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Board of Directors enacted the Executive Retirement Policy for Restricted Stock Unit and Option Vesting on January 22, 2024, for executive officers meeting specific age and service criteria.

Board Composition: The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks. Senior leadership, including the Chief Information Security Officer, brief the Audit Committee quarterly and the full Board at least annually on cybersecurity posture.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 6,600 employees as of December 31, 2025.
• Geographic Distribution: Approximately 2,200 employees in the United States. Largest non-U.S. employee populations are in the Philippines (19%), Denmark (10%), Costa Rica (7%), China (7%), and Taiwan (5%).
• Skill Mix: Leverages approximately 600 contractors globally.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Committed to attracting, developing, and retaining a high-performance workforce. Intense competition for skilled employees in the high technology industry is expected to continue in 2026.
• Retention Metrics: Not explicitly detailed.
• Employee Value Proposition: Provides competitive compensation and benefits, linking a meaningful portion of compensation to company and business unit performance. Offers stock purchase program, equity compensation, bonus plans, paid time off, parental leave, health insurance, flexible work arrangements, retirement savings contributions, and employee assistance programs.

Diversity & Development:

• Diversity Metrics: Committed to equality through nondiscrimination, harassment prevention, and pay equity policies.
• Development Programs: Provides continual development focused on job skills and competencies (e.g., new manager competencies, software development tools, project management). Employees receive annual performance reviews and set development goals. Supports Science, Technology, Engineering and Mathematics (STEM) education through paid internships, entry-level positions, co-op programs, and educational course reimbursement. Offers a scholarship program for employees' college-age children, step-children, and grandchildren.
• Culture & Engagement: Fosters a positive work environment with core values of honesty, integrity, collaboration, and customer partnership. Conducts regular employee surveys. CEO and executives hold frequent exchange meetings and quarterly webcasts. Offers global affinity groups (e.g., New Employees to Teradyne, Woman’s Affinity Group, Veterans, Blue and Green, Runner’s affinity group, LGBTQ+ advocates).

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Not explicitly detailed.
• Carbon Neutrality: Not explicitly detailed.
• Renewable Energy: Not explicitly detailed.

Supply Chain Sustainability:

• Supplier Engagement: Not explicitly detailed.
• Responsible Sourcing: Not explicitly detailed.

Social Impact Initiatives:

• Community Investment: Talent Community initiatives foster opportunity and innovation. Established "Teradyne Gives" matching gift program (up to $1,000 per year per employee).
• Product Impact: Not explicitly detailed.
• STEM Education: Committed to increasing the number of STEM graduates worldwide through support of STEM programs at middle, high school, and collegiate levels. Donates test equipment and robots to colleges, universities, and vocational programs.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Not explicitly detailed.
• Economic Sensitivity: Business is impacted by global and industry-specific economic cycles, which can be driven by broad changes to Semiconductor buying patterns or specific markets within the Semiconductor industry. These cycles have historically resulted in periods of over-supply.
• Industry Cycles: Capital equipment providers in electronics, semiconductor, and robotics industries have been negatively impacted by sudden slowdowns and recurring cyclicality.

Planning & Forecasting:

• Inventory valuation is based on assumptions about future demand, product mix, and possible alternative uses, obtained from sales and marketing groups and incorporating backlog and future revenues.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• International Trade: Subject to U.S. and foreign laws and regulations relating to international trade, business conduct, export controls, technology transfer restrictions, tariffs, trade sanctions, trade barriers, and trade embargoes.
• Environmental Regulations: Subject to domestic and international environmental regulations (e.g., RoHS Directive, WEEE Directive) relating to the use, storage, discharge, site cleanup, and disposal of hazardous chemicals.
• Data Privacy: Compliance with data privacy regulations is a risk, with evolving laws and regulations potentially leading to costly compliance or legal liabilities.

Trade & Export Controls:

• Export Restrictions: Subject to U.S. Department of Commerce export control regulations restricting transactions with certain customers in China (e.g., Entity List, Foreign Direct Product Rule, military end user rule). Compliance has limited sales and may continue to do so.
• Sanctions Compliance: Must comply with export restrictions and laws imposed by other countries affecting trade and investments.
• Chinese Laws: The Chinese government has passed new laws, including blocking legislation, in response to U.S. regulations, which may impact business activities in China.

Legal Proceedings:

• Subject to legal proceedings, claims, and investigations in the ordinary course of business (patent, employment, commercial, environmental matters). Believes potential losses are unlikely to have a material adverse effect.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 12.1% in 2025 (vs 9.8% in 2024 and 14.6% in 2023).
• Geographic Tax Planning: Qualifies for a tax holiday in Singapore, extended until December 31, 2035, under substantially similar terms. Tax savings from this holiday were $21.6 million ($0.14 per diluted share) in 2025.
• Tax Reform Impact: The One Big Beautiful Bill Act (OBBBA, P.L. 119-21) enacted in July 2025, introducing changes to U.S. federal income tax law (e.g., 100% bonus depreciation, immediate research and experimental expenditures expensing, modifications to business interest expense deduction, reduced foreign income/export sales deduction rates). OBBBA did not have a material impact on 2025 financial statements.
• Pillar Two GloBE Rules: The Organisation for Economic Co-operation and Development (OECD/G20) Inclusive Framework released a 'side-by-side' arrangement in January 2026, providing a safe harbor for U.S.-headquartered multinationals, effectively recognizing the U.S. tax system as complying with Pillar Two GloBE rules for fiscal years beginning on or after January 1, 2026. Teradyne, Inc. does not anticipate material top-up taxes under the Income Inclusion Rule and Undertaxed Profits Rule due to this agreement, but monitors Qualified Domestic Minimum Top-up Taxes (QDMTTs).

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains directors’ and officers’ liability insurance coverage. Insurance policy may be insufficient to cover losses from natural catastrophic events, severe weather, widespread health epidemics, acts of war, terrorist attacks.
• Risk Transfer Mechanisms: Regularly enters into foreign currency forward contracts to hedge the value of monetary assets and liabilities and to hedge the impact of exchange rates on revenues. Does not engage in currency speculation.

Cybersecurity

Governance:

• The Board of Directors oversees management’s processes for identifying and mitigating cybersecurity risks.
• Senior leadership, including the Chief Information Security Officer (CISO), brief the Audit Committee quarterly and the full Board at least annually on cybersecurity posture.
• The CISO chairs management’s Cybersecurity Steering Committee, which reviews cyber threats, program performance, and risk mitigations.
• Cyber risks are included in the enterprise risk management processes and evaluated by the Board.
• Detailed incident response playbooks are in place for significant incidents, including escalation to senior leadership and the Board.

Risk management and strategy:

• Global information security organization, led by an experienced CISO (25+ years experience), is responsible for overall information security strategy, policy, engineering, operations, and threat detection/response.
• Aligned to the NIST Cybersecurity Framework and integrated into enterprise risk management.
• Global cyber operations team focuses on protection, detection, and response.
• Corporate-wide insider Artificial Intelligence-enabled threat detection program.
• Comprehensive training and awareness curriculum for employees.
• Annual tabletop exercises and regular penetration testing to validate and improve incident response.
• Engages third-party services for 24x7x365 monitoring, escalation, and response, and for independent evaluations of security controls.
• Shares and receives threat intelligence with industry peers and vendors.
• Assesses third-party and supply chain cybersecurity controls through risk monitoring services.
• For defense and aerospace sector support, complies with Defense Federal Acquisition Regulation Supplement (DFARS) requirements for safeguarding controlled unclassified information and reporting incidents to the Department of Defense. Pursuing Cybersecurity Maturity Model Certification (CMMC).