Teradyne is a wide-moat chip testing titan, but remains subject to cyclicality

Teradyne is a leading provider of automated semiconductor test equipment, boasting market-leading capabilities that span the entire chip spectrum. It is one of two companies worldwide that can produce testers for the most advanced semiconductors, thanks to robust engineering talent in hardware and software and a structural lead in organic investment. The company is a vital partner for chipmakers across the industry and has an impressively strong relationship with Apple and Taiwan Semiconductor. Teradyne’s market leadership manifests itself in industry-leading margins, strong returns on invested capital and superior market share. We give the company a broad economic rating.