{"schemaVersion":1,"research":true,"symbol":"ter","name":"Teradyne","topic":"moat","path":"/stock/ter/moat","status":"stale","version":9,"updatedAt":"2026-10-19T20:38:42.213Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"uncertain","summary":"Teradyne demonstrates competitive success through memory-test share gains and sustained demand across its businesses. Proprietary testing technology provides current differentiation, while UR+ offers potential ecosystem benefits. The passages do not establish durable technological exclusion, material switching costs or reinforcing network effects. Pricing power remains unproven: attempted price increases lack disclosed realized outcomes, and recent margin improvement primarily reflects volume and mix. This is insufficient evidence of a durable moat, rather than an established weak competitive position.","advantages":[{"mechanism":"intangible_assets","claim":"Proprietary hardware and software, including SmartPin technology, support product differentiation. Memory-test share gains demonstrate competitive success, but the passages do not establish that proprietary technology caused those gains or creates a durable barrier.","durability":"Requires continued innovation and customer acceptance. Neither the duration of technological leadership nor sustained superiority over named rivals is established.","risks":"Competitors have introduced or announced products with some equal or superior characteristics; customers also develop internal supply. Export restrictions already limit competitiveness in certain regions. Acquisition-related differentiation remains partly prospective.","invalidation":"The proposed technological advantage would be undermined by sustained losses of HBM and DRAM final-test share, replacement of Teradyne platforms by competitors or internal customer solutions, or demonstrated equivalent throughput and ownership costs without proprietary Teradyne technology.","competitors":["Advantest Corporation","SPEA S.p.A.","Cohu, Inc."],"evidenceIds":["e1","e2","e3","e4"],"counterEvidenceIds":["e5","e6","e7","e8"]},{"mechanism":"network_effects","claim":"UR+ supplies complementary components, kits and solutions around Teradyne's cobots. This establishes an ecosystem, but increasing customer value with ecosystem participation and defensible network effects remain potential advantages.","durability":"The passages provide no partner exclusivity, participation trends, customer dependence or evidence that competitors cannot reproduce comparable ecosystems.","risks":"Numerous traditional, collaborative and mobile robotics competitors are identified. Robotics experienced a revenue decline in 2024 and substantial restructuring in 2025, followed by a recovery.","invalidation":"The network-effect hypothesis would be undermined if partners routinely supported competing platforms on equivalent terms, ecosystem breadth failed to improve adoption or repeat demand, or customers migrated without material integration losses.","competitors":["KUKA Robotics Corporation","ABB","FANUC","Staubli","Yaskawa Electric Corporation","Techman","Doosan","Jaka","AUBO Robotics","Omron","Rockwell Automation","Junion","HikRobot","Agilox","KION"],"evidenceIds":["e9","e10","e11"],"counterEvidenceIds":["e12","e13"]}],"evidence":[{"id":"e1","sourceId":"filing-1","location":"Business—Intellectual Property and Licenses","excerpt":"Intellectual Property and Licenses\nThe development of our products, both hardware and software, is based in significant part on proprietary information, our brands and technology."},{"id":"e2","sourceId":"filing-1","location":"Business—Semiconductor Test products; SmartPin technology","excerpt":"Our proprietary SmartPin™ technology enables high efficiency multi-site testing on an individual test system permitting greater test throughput."},{"id":"e3","sourceId":"filing-1","location":"Business overview—2025 memory-test revenue and share gains","excerpt":"Memory test revenue remained stable despite a smaller overall market, supported by share gains in high bandwidth memory (“HBM”) and DRAM final test applications."},{"id":"e4","sourceId":"filing-1","location":"Business—Competition; Semiconductor Test","excerpt":"Competitors in the Semiconductor Test segment include, among others, Advantest Corporation, SPEA S.p.A., and Cohu, Inc."},{"id":"e5","sourceId":"filing-1","location":"Business—Competition; competing product characteristics","excerpt":"Some of our competitors have introduced or announced new products with certain performance characteristics which may be considered equal or superior to those we currently offer."},{"id":"e6","sourceId":"filing-1","location":"Business—Competition; emerging companies and internal customer supply","excerpt":"We also face competition from emerging Asian companies and from internal supply at several of our customers."},{"id":"e7","sourceId":"filing-1","location":"Risk Factors—Realized regional competitive limitations from export controls","excerpt":"As further described below, we cannot quantify the impact that the export controls and economic sanctions has had on our sales, however, compliance with these laws has limited our ability to compete in certain regions, and could continue to limit them in the future."},{"id":"e8","sourceId":"filing-1","location":"Business overview—Prospective Quantifi integration and differentiation","excerpt":"Over time, we also intend to leverage Quantifi's engineering expertise and technology to enhance functionality and create additional differentiation in our Semiconductor Test business, specifically with integration into our UltraFlexplus platform."},{"id":"e9","sourceId":"filing-1","location":"Business—Robotics; UR+ ecosystem","excerpt":"An extensive ecosystem (“UR+”) 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 numerous applications."},{"id":"e10","sourceId":"filing-1","location":"Business—Competition; Robotics","excerpt":"Competitors in our Robotics segment include manufacturers of traditional industrial robots such as KUKA Robotics Corporation, ABB, FANUC, Staubli and Yaskawa Electric Corporation, companies with emerging collaborative robot offerings such as Techman, Doosan, Jaka, and AUBO Robotics, and manufacturers of autonomous mobile robots in the material handling space such as Omron, Rockwell Automation, Junion, HikRobot, Agilox, and KION."},{"id":"e11","sourceId":"filing-2","location":"MD&A—Robotics revenue and consecutive sequential growth","excerpt":"Strong Robotics revenue of $100 million, marked the fifth consecutive quarter of sequential growth, driven primarily by demand from electronics manufacturing and semiconductor customers, which has become the segment's largest end-market."},{"id":"e12","sourceId":"filing-4","location":"Business overview—2024 Robotics revenue decline and issuer peer comparison","excerpt":"2024 was a very weak industrial automation market resulting in a year-over-year decline in Robotics revenues while outperforming our peer group."},{"id":"e13","sourceId":"filing-3","location":"Appendix A—2025 Robotics restructuring and employee severance","excerpt":"Teradyne Inc. | 2026 Notice of Annual Meeting & Proxy Statement | Page A-1\n Employee severance (a)\n 29.4\n 5.2\n Asset impairment\n 4.9\n Acquisition and divestiture related expenses\n 2.2\n 2.1\n 6.8\n (a) For the twelve months ended December 31, 2025, employee severance relates primarily to Robotics restructuring which impacted approximately 400 employees."},{"id":"e14","sourceId":"filing-4","location":"Risk Factors—Attempts to offset inflation through product price increases","excerpt":"We also have been, and may continue to attempt to, offset the effect of these inflationary pressures by increasing the prices of our products."},{"id":"e15","sourceId":"filing-1","location":"Risk Factors—Potential limitations on passing costs to customers","excerpt":"We may also 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."},{"id":"e16","sourceId":"filing-2","location":"MD&A—Three consecutive quarters of memory-test revenue above $200 million","excerpt":"In memory, revenue exceeded $200 million for the third consecutive quarter, reflecting strong demand for high bandwidth memory (“HBM”) and DRAM test solutions supporting AI compute deployments, as well as renewed demand for NAND final test applications."},{"id":"e17","sourceId":"filing-2","location":"Notes—Product warranty accruals and extended-warranty revenue deferrals","excerpt":"As of June 28, 2026, and December 31, 2025, Teradyne had a product warranty accrual of $25.7 million and $19.2 million, respectively, included in other accrued liabilities and revenue deferrals related to extended warranties of $78.1 million and $55.9 million, respectively, included in short and long-term deferred revenue and customer advances."},{"id":"e18","sourceId":"filing-1","location":"Business—Backlog; customer delay and cancellation rights","excerpt":"See also “Item 1A: Risk Factors.”\nBacklog\nOur backlog at any particular date is not necessarily indicative of the actual sales for any succeeding period because our customers may delay delivery of products or cancel orders without advanced notice, subject to possible cancellation penalties."},{"id":"e19","sourceId":"filing-1","location":"Revenue recognition—No customer returns or refunds","excerpt":"Teradyne does not allow customer returns or provide refunds to customers for any products or services."},{"id":"e20","sourceId":"filing-3","location":"Appendix A—2025 and 2024 GAAP gross profit and reconciliation","excerpt":"Such items are excluded as we believe they do not contribute to a meaningful evaluation of the Company’s future profitability or comparisons to the Company’s past profitability for purposes of determining executive compensation Twelve Months Ended December 31, 2025 % of Net Revenues December 31, 2024 % of Net Revenues Net Revenues $ 3,190.0 $ 2,819.9 Gross profit - GAAP 1,857.3 58.2 % 1,648.9 58.5 % Inventory step-up 1.3 0.0 % — — Legal settlement (1) — — 3.6 0.1 % Gross profit - non-GAAP $ 1,858.6 58.3 % $ 1,652.5 58.6 % Inventory step-up 650.1 20.4 % 593.8 21.1 % Legal settlement (1) 38.6 1.2 % 15.6 0.6 % Gross profit - non-GAAP 15.3 0.5 % 18.8 0.7 % ERP related expenses (3) 4.8 0.2 % — — Inventory step-up 1.3 0.0 % — — Legal settlement (1) — — 3.6 0.1 % Equity modification charge (4) — — 1.7 0.1 % Loss (gain) on sale of business (5) — — (57.1 ) -2.0 % Income from operations - non-GAAP $ 710.1 22.3 % $ 576.3 20.4 % The notes related to these numerical ticks can be found above."},{"id":"e21","sourceId":"filing-2","location":"MD&A—First-half 2026 gross profit and volume attribution","excerpt":"Gross Profit Our gross profit was as follows: For the Six Months Ended June 28, 2026 June 29, 2025 Dollar/Point Change (in millions) Gross profit $ 1,575.6 $ 788.3 $ 787.3 Percent of total revenues 60.3 % 58.9 % 1.4 Gross profit as a percent of revenue increased by 1.4 points, primarily due to higher sales volume in Semiconductor Test."},{"id":"e22","sourceId":"filing-2","location":"MD&A—Second-quarter 2026 gross profit and sales/mix attribution","excerpt":"Gross Profit Our gross profit was as follows: For the Three Months Ended June 28, 2026 June 29, 2025 Dollar/Point Change (in millions) Gross profit $ 794.6 $ 373.0 $ 421.6 Percent of total revenues 59.8 % 57.2 % 2.6 Gross profit as a percent of revenue increased by 2.6 points, primarily due to higher sales and product mix in Semiconductor Test."},{"id":"e23","sourceId":"filing-2","location":"MD&A—First-half 2026 operating cash generation","excerpt":"Net cash (used for) provided by:\n Operating activities\n 734.3\n 343.7\n 390.6\n Investing activities\n (338.6\n (240.2\n (98.4\n (341.0\n (313.6\n (27.4\n Effects of exchange rate changes on cash and cash equivalents\n (4.0\n Net increase (decrease) in cash and cash equivalents\n 55.8\n (214.1\n 269.9\n Net change in operating assets and liabilities, net of businesses acquired\n (142.1\n 61.7\n (203.8\n Operating Activities\nOperating activities during the six months ended June 28, 2026, provided cash of $734.3 million."},{"id":"e24","sourceId":"filing-2","location":"MD&A—First-half 2026 capital expenditure, acquisitions and investments","excerpt":"Investing Activities\nInvesting activities during the six months ended June 28, 2026, included $165.6 million used for the acquisition of businesses, $155.4 million used for the purchases of property, plant, and equipment, $48.2 million used for the purchases of marketable securities, and $10.0 million used for the purchase of investment in a business, partially offset by $29.6 million in proceeds from sales of marketable securities and $11.0 million in proceeds from maturities of marketable securities."},{"id":"e25","sourceId":"filing-2","location":"MD&A—First-half 2026 net debt repayment, distributions and equity-plan cash flows","excerpt":"Financing Activities\nFinancing activities during the six months ended June 28, 2026, included $200.0 million in net repayments of borrowings on the revolving credit facility, $74.2 million used for the repurchase of common stock, $41.1 million used for payment related to net settlements of employee stock compensation awards, and $40.7 million utilized for dividend payments, partially offset by $15.1 million from the issuance of common stock under employee stock purchase and stock option plans."},{"id":"e26","sourceId":"filing-3","location":"Compensation Discussion and Analysis—2025 cash generation and shareholder distributions","excerpt":"Teradyne generated $674.4 million in operating cash flow and $450 million in free cash flow(1) in 2025 and returned $785 million, or 116% of operating cash flow or 174% of free cash flow, to our shareholders through share repurchases and dividends."},{"id":"e27","sourceId":"filing-2","location":"Commitments and Contingencies—June 2026 purchase commitments","excerpt":"The purchase commitments covered by the agreements aggregate to approximately $1,781.4 million, of which $1,558.8 million is for less than one year."},{"id":"e28","sourceId":"filing-3","location":"Executive Compensation—Existing cash and equity compensation structure","excerpt":"| 2026 Notice of Annual Meeting & Proxy Statement | Page 41 Executive Compensation 2025 Executive Compensation Core Compensation Element Purpose Key Characteristics Base Salary • Compensates our executive officers for expected levels of day-‍to-‍day performance • Reflects expertise and scope of responsibilities in a competitive market for executive talent Annual Variable Cash Opportunity • Aligns executive officer performance with near-term financial and organizational objectives • Multiple measurable performance metrics: ▪ Including financial and organizational performance metrics • Requires significant levels of achievement before payments are earned Annual Profit Bonus Award Opportunity • Allows eligible employees to participate in our growth by encouraging performance that increases profit • Payout is based on the annual PBIT percentage (non-GAAP profit before interest and taxes) for the combined Semiconductor Test and Product Test (excluding Wireless Test) results measured against peer profitability targets • Each division excluded from the Profit Bonus Plan, including Robotics, is eligible to receive a profit-sharing or growth plan cash incentive based on certain specified financial goals Annual Performance-based RSUs • Aligns interests of executive officers with long-term shareholder interests through incentivizing PBIT and relative stock price growth over a multi-year performance period • Modifier helps align payouts with shareholder experience • Encourages retention • 50% of the performance-based RSUs vest based upon the determination of Teradyne’s TSR performance relative to the New York Stock Exchange Composite Index over a three-year performance period • 50% of the performance-based RSUs vest based on three-year cumulative PBIT Annual Time-based RSUs • Aligns interests of executive officers with long-term shareholder interests as their value is tied to stock price growth • Encourages retention • Four-year vesting subject to continued employment Stock Options • Aligns interests of executive officers with long-term shareholder interests through incentivizing long-term stock price growth as stock options only become valuable if the stock price increases from the grant date • Encourages retention • Four-year vesting subject to continued employment • Expire seven years after the applicable grant date Base Salary To align cash compensation with the competitive market, the Compensation Committee, and the independent members of the Board in the case of the Chief Executive Officer, approved increases in the 2025 base salaries for Messrs."},{"id":"e29","sourceId":"filing-3","location":"Executive Compensation—Actual 2023 performance-award achievement determined in January 2026","excerpt":"| 2026 Notice of Annual Meeting & Proxy Statement | Page 53 Executive Compensation In January 2026, the Compensation Committee reviewed performance against the 2023 performance-based RSU targets and determined actual achievement against those targets as described below: Metric Actual Performance % of Target Achievement TSR Teradyne’s TSR percentage point gain (104.69%) minus that of the NYA Index (40.60%) was determined at the end of fiscal 2025, resulting in 64.09% 200% PBIT(1) 21.08% 73.42% Total Final Achievement 136.71% (1) See Appendix A of this proxy statement for additional information regarding the non-GAAP financial measures discussed in this Compensation Discussion and Analysis section and reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures."},{"id":"e30","sourceId":"filing-3","location":"Executive Compensation—Variable compensation metrics and undisclosed Vital Goal targets","excerpt":"Variable Compensation Goal Description Weighting Threshold Goal Target Goal Maximum Goal Revenue Growth Two-year rolling revenue growth rate 30% -12% 2% 12% PBIT PBIT is a non-GAAP financial measure equal to GAAP income from operations excluding restructuring and other; amortization of acquired intangible assets; acquisition and divestiture related charges or credits; pension actuarial gains and losses; non-cash convertible debt interest expense; and certain other gains and charges 20% 10% 21% 36% Vital Goals(1) Predetermined, objective, measurable, and auditable metrics which include strategic design-ins, market share gains and expansion, gross margin and bookings goals, new product introductions, releases and adoptions, engineering project milestones, cost controls and growth targets 50% N/A N/A N/A (1) Teradyne is not disclosing the specific performance target levels for these goals in this Compensation Discussion and Analysis section because they represent confidential, commercially sensitive information that Teradyne does not disclose to the public and it believes, if disclosed, would cause competitive harm."},{"id":"e31","sourceId":"filing-3","location":"Executive Compensation—Adopted continued retirement vesting provisions","excerpt":"| 2026 Notice of Annual Meeting & Proxy Statement | Page 56 Executive Compensation NAME OF PLAN MATERIAL FEATURES RATIONALE Continued Retirement Vesting • If a named executive officer retires (or otherwise terminates due to death or a termination without cause) after at least 10 years of service and having reached the age of 60, then performance-based RSUs will vest on the third anniversary of the date of grant based on actual performance at the end of the performance period (provided any performance-based RSUs awarded less than 365 days prior to the date of termination will be prorated based on the number of days the named executive officer was employed by Teradyne during the 365 day period) • Pursuant to an Executive Retirement Policy adopted by the Board in January 2024 (the “Executive Retirement Policy”), if a named executive officer retires after reaching the age of 65 and has at least 10 years of service to Teradyne, then unvested time-based RSUs and unvested stock options granted will continue to vest (provided any time-based awards awarded less than 365 days prior to the date of termination will be prorated based on the number of days the named executive officer was employed by Teradyne during the 365 day period) and any vested stock options (including those that become vested pursuant to the Executive Retirement Policy) may be exercised for the remainder of the generally applicable term of such option, which in all cases is no later than 7 years from the date of grant • Continued vesting following retirement or termination, other than for cause, is subject to the named executive officer’s continued compliance with any post-employment obligations to Teradyne • Preserves morale and productivity and encourages long-term retention of our executive officers • Retirement vesting is consistent with competitive market practice • Performance awards only pay out based on actual performance, consistent with governance best practices Other Benefits TYPE OF PLAN MATERIAL FEATURES RATIONALE 401(k) Plan In the U.S., Teradyne maintains the Teradyne, Inc."},{"id":"e32","sourceId":"filing-2","location":"MD&A—Second consecutive Semiconductor Test revenue record and AI demand attribution","excerpt":"For the second consecutive quarter, our Semiconductor Test segment revenue, driven primarily by sustained demand in Artificial Intelligence (“AI”) applications across both compute and memory markets, hit a new record high."},{"id":"e33","sourceId":"filing-2","location":"MD&A—Product Test year-over-year and sequential revenue growth","excerpt":"Within Product Test Group, revenue increased 26% year over year and 33% sequentially, reflecting broad-based growth across multiple markets and applications."},{"id":"e34","sourceId":"filing-3","location":"Corporate Governance—Eight independent directors and independent chair","excerpt":"Eight out of nine directors on Teradyne's Board are independent, including the Board Chair, under Nasdaq and SEC standards."},{"id":"e35","sourceId":"filing-3","location":"Corporate Governance—Actual 2025 board and committee meeting attendance","excerpt":"2025 Average Board and Committee Meeting Attendance 97.78% Teradyne, Inc."},{"id":"e36","sourceId":"filing-3","location":"Related Party Transactions—Adopted Audit Committee review policy","excerpt":"Our Board has adopted a written Related‑Party Transactions Policy that requires the Audit Committee to review and approve or ratify any transaction in which the Company participates and a “Related Person” has a direct or indirect material interest, as defined under Item 404(a) of Regulation S‑K (generally transactions exceeding $120,000)."},{"id":"e37","sourceId":"filing-3","location":"Principal Accountant Fees—Actual Audit Committee approval of non-audit services","excerpt":"Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm All audit-related fees, tax fees and all other fees, as described in the table above, were approved by the Audit Committee."},{"id":"e38","sourceId":"filing-3","location":"Audit Oversight—Independent auditor tenure","excerpt":"PwC, or its predecessor Coopers & Lybrand L.L.P., has served as Teradyne’s independent registered public accounting firm since 1968."},{"id":"e39","sourceId":"filing-2","location":"Acquisitions—Completed April 2026 MLTP transaction","excerpt":"D. ACQUISITIONS MultiLane Test Products On April 8, 2026, Teradyne and HTP Holding SAL (“MultiLane”) formed a joint venture, MultiLane Test Products Holding LLP (“MLTP”), in which Teradyne holds a controlling 75% ownership interest, with the remaining 25% attributable to noncontrolling interests, for a total purchase price of $157.8 million, subject to customary post-closing adjustments."},{"id":"e40","sourceId":"filing-2","location":"Acquisitions—Expected MLTP market opportunity","excerpt":"MLTP is expected to serve the growing demand from the AI Data Center equipment market by accelerating the development of test solutions for critical high speed data connections."}],"changes":["The verdict remains uncertain after re-examining current catalog evidence; all four moat criteria remain null.","Named Semiconductor Test and Robotics competitors are now explicitly linked to the candidate mechanisms; their inclusion does not establish comparative performance.","Previously assessed retention, margin resilience, contractual freedom, capital discipline, incentive alignment, execution and governance grades remain supported by current catalog citations.","Realized pricing remains null: the disclosed price-increase efforts establish intent and activity, but no observed pricing outcome.","MLTP's formation is confirmed as completed in April 2026; its expected strategic benefits remain prospective."],"limitations":["The evidence consists primarily of issuer filings. Reported operating results and contractual terms support assessments, but product superiority, ecosystem benefits and causal explanations remain issuer assertions unless demonstrated by disclosed outcomes.","No quantified customer switching costs, platform migration losses, sustained comparative technology benchmarks, partner exclusivity or reinforcing ecosystem participation effects are supplied.","Competitors are named, but comparative evidence for Advantest and other Semiconductor Test rivals is absent. The Rockwell Automation filing covers a broader automation portfolio and cannot establish Teradyne-specific pricing, retention or relative AMR performance.","Pricing realization, discounts, price elasticity and unilateral repricing rights are undisclosed. Margin resilience does not by itself establish pricing power.","Retention and execution are assessed partly from indirect operating evidence; no same-customer retention or renewal rates are disclosed.","The proxy provides actual compensation structures, award outcomes and governance practices, but the supplied passages do not establish executive ownership levels or full Vital Goal targets.","All supplied source dates have dateKind filed; they are treated as filing dates, with financial periods, transaction dates and prospective statements distinguished from those dates.","A stronger moat case would require sustained competitive wins linked to defensible technology or demonstrated switching friction. Continued growth driven by market demand alone would not resolve the uncertainty."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":null,"rationale":"Proprietary technology, memory-test share gains and UR+ establish differentiation and competitive success, but do not establish a durable structural barrier.","evidenceIds":["e1","e2","e3","e9"]},{"criterion":"durability","grade":null,"rationale":"The passages do not establish how long technological differentiation or ecosystem benefits persist against products with equal or superior characteristics. Prospective acquisition benefits cannot fill that gap.","evidenceIds":["e5","e8","e40"]},{"criterion":"customer_dependency","grade":null,"rationale":"Continuing demand and extended-warranty deferrals indicate engagement, but do not demonstrate costly platform dependence. Customer cancellation rights and internal supply further limit inference.","evidenceIds":["e6","e16","e17","e18"]},{"criterion":"erosion_resilience","grade":null,"rationale":"Share gains and the Robotics recovery coexist with actual regional competitive restrictions and restructuring. These outcomes do not establish the resilience of an identified durable moat.","evidenceIds":["e3","e7","e11","e13"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":null,"rationale":"Management disclosed efforts to raise product prices to offset inflation, but no realized price changes, discount trends or achieved pass-through. Potential inability to pass costs through is a risk, not evidence of realized pricing weakness.","evidenceIds":["e14","e15"]},{"criterion":"retention","grade":2,"rationale":"Three consecutive quarters of memory-test revenue above $200 million, five quarters of sequential Robotics growth and rising extended-warranty deferrals support continuing demand and engagement indirectly. They do not establish same-customer retention, and orders remain cancellable.","evidenceIds":["e11","e16","e17","e18"]},{"criterion":"margin_resilience","grade":2,"rationale":"GAAP gross margin was broadly stable at 58.2% in 2025 versus 58.5% in 2024, and improved to 60.3% in first-half 2026 versus 58.9%. This demonstrates some resilience, but recent improvement primarily reflects volume and product mix, without establishing pricing protection through a downturn.","evidenceIds":["e20","e21","e22"]},{"criterion":"contractual_freedom","grade":2,"rationale":"The absence of customer returns or refunds provides favorable post-sale terms. Customers can delay delivery or cancel orders subject to possible penalties. These are mixed contractual protections; unilateral repricing rights are undisclosed.","evidenceIds":["e18","e19"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"First-half 2026 operating cash flow of $734.3 million supported $155.4 million of capital expenditure, $165.6 million of acquisitions, shareholder distributions and $200 million of net debt repayment. However, 2025 distributions exceeded free cash flow, purchase commitments reached $1.78 billion, and acquisition returns remain unestablished.","evidenceIds":["e23","e24","e25","e26","e27","e39"]},{"criterion":"incentive_alignment","grade":3,"rationale":"Existing multiyear awards link payouts to relative TSR and PBIT. Actual 2023 award results differentiated maximum TSR achievement from below-target PBIT achievement. Retirement vesting provisions, non-GAAP metrics and undisclosed Vital Goal targets limit the assessment; executive ownership levels are unavailable.","evidenceIds":["e28","e29","e30","e31"]},{"criterion":"execution","grade":3,"rationale":"Memory-test share gains, consecutive Semiconductor Test revenue records, five quarters of sequential Robotics growth and broad Product Test growth demonstrate successful execution through reported outcomes. Attribution to management is indirect because AI demand contributed materially; substantial Robotics restructuring limits durability claims.","evidenceIds":["e3","e11","e13","e32","e33"]},{"criterion":"governance","grade":3,"rationale":"Eight of nine directors and the chair were independent as disclosed in the March 2026 proxy, actual 2025 meeting attendance was 97.78%, a related-party review policy was adopted, and non-audit services received Audit Committee approval. These support functioning oversight practices. 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