Front-running the AI and HBM test boom to record profit (2024)

Will the supercycle turn into steady growth?

The heart of this decision was not a rebuild from financial crisis but the way the top-ranked tester maker in the world answered an opportunity that arrived from outside — the testing demand for AI chips — by running its capacity and its research and development ahead of it. Advantest’s results have long swung sharply, subordinate to its customers’ capital-spending cycles. The post-Lehman loss and the three straight years of losses were both born of the same structural problem: that it cannot control demand itself. The surge in demand that generative AI brought reversed that passive structure, for these few years at least, onto the side of a tailwind. It was precisely because it held the top rank in the world that it could take in the welling demand in bulk.

Still, the structure itself — that tester demand is set by chipmakers’ investment — has not changed. When the AI-driven investment will run its course, and when the next reversal will come, is decided outside Advantest. Even the figure of a third straight record in the year to March 2027 rests on the premise that demand continues. How far a tester business of such wide amplitude can turn the generative-AI supercycle into steady growth — whether today’s results, setting record after record, are a conquest of that structure or merely partway up a peak that has only widened the swing — cannot, at the time of writing, be told.