That Was The Year That Was In Test

Looking back on the year about to end, one deal stands out, because it is in legal limbo – the proposed $580 million acquisition of Xcerra by Hubei Xinyan Equity Investment Partnership.

At this writing, the transaction has not been completed. Both parties said they planned to sew up the purchase by the end of 2017, so a few weeks remain to make that happen.

The deal is in the hands of the Committee on Foreign Investment in the United States (CFIUS), an interagency body of the federal government. Cohu, a company that competes with Xcerra in the test handler market, publicly opposes the deal on national security grounds and wants CFIUS to nix the acquisition. Xcerra says there are no national security issues involved, that it provides automatic test equipment for semiconductors, and does not have any access to the intellectual property behind the chips its ATE tests.

Despite the uncertainty surrounding the proposed acquisition, Xcerra is financially prospering this year. For its fiscal first quarter ended October 31, the company increased its quarterly sales by about 50% to $120.3 million, from $80.08 million a year earlier. Net income soared to $17.5 million, compared with $18,000 in the same period of the previous fiscal year. Its cash and cash equivalents were up slightly from the fiscal fourth quarter ended July 31, to $104.4 million.

Meanwhile, other vendors have benefited from a record year in semiconductor sales, mostly riding on much higher pricing for memory chips.

Teradyne has also posted strong financial results this year, especially for its Semiconductor Test segment, the company’s largest, by far. Semiconductor Test accounted for $397 million of the company’s $503 million in third-quarter revenue.

“Strong Semiconductor Test performance, with greater than expected image sensor test system shipments, drove Q3 revenue and earnings above the high end of our guidance,” Teradyne CEO and President Mark Jagiela said in a statement, adding, “On the demand front, Semiconductor Test achieved its highest third-quarter orders in over a decade driven mainly by record memory test orders.”

Advantest continued to expand its already comprehensive product line during 2017, updating and upgrading testers while introducing new models. It increased sales in its fiscal second quarter, ended September 30, by 16%, compared with a year ago.

“In this business environment, Advantest made an effort to increase our share in the high-demand memory semiconductor and automotive semiconductor test equipment markets to limit the impact of the decline in capital expenditure in smartphone-related semiconductors,” the company said in a statement.

System-level test became a hot-button topic, largely driven by Astronics Test Systems. Astronics Corp. reported the Test Systems segment had 2016 revenue of $99.1 million, of which semiconductor ATE accounted for about $37.9 million.

What will 2018 bring to the test equipment market? We shall see.