The company’s Q3 earnings show AI boom pushing up demand for semiconductor test equipment
In sum — what to know:
Strong Q3 showing: Advantest posts record quarterly sales amid soaring AI chip demand
AI drives growth: The company says strong market demand for AI chips and memory is pushing up orders for chip and memory testers.
Capacity expansion ahead: The company plans to ramp production from 3,000 to 5,000 test units in 2026 to keep pace with peaking demand.
Money pouring into AI infrastructure continues to boost the fortunes of test suppliers. Japanese semiconductor test giant, Advantest, is one of the recent beneficiaries. This week, the Tokyo-based company reported robust financial results for Q3 2025 (U.K. fiscal year, not to be confused with U.S. fiscal year)
The Nvidia supplier clocked a profit of 78.7 billion yen ($515 million) in three months to Dec, 31.
“We are pleased to report that our Q3 results exceeded our internal projections set in October, delivering a new record for quarterly sales,” Douglas Lefever, chief executive officer, said on the earnings call.
Between October and December, the company booked sales of 273.8 billion yen ($1.86 billion) — up almost 11% — outperforming both Q1 results and internal estimates.
Unsurprisingly, the Test System business segment saw the strongest growth in the past nine months. From 478.7 billion yen ($3.26 billion) in 2024, net sales hit 723.1 billion yen ($4.92 billion) in 2025, reflecting a 51.1% surge.
Operating profit too rose by an impressive 64% year on year reaching 113.6 billion yen ($741.8 million).
The company credits growing demand for system-on-chip (SoC) testers for HPC and AI applications — a side effect of the rapid AI infrastructure buildout — for the performance. It also cited continued demand for high-performance DRAM testers as another key driver.
“While uncertainty lingers due to ongoing geopolitical risks and the possible risk of sharp exchange rate fluctuations, AI applications continue to be the main growth driver of the semiconductor market amid a rapidly and dynamically evolving AI market,” Lefever noted.
The company said a demand problem it anticipated in 2025 did not come to pass.
“Thanks to demand pull-in for SoC and memory test systems serving AI-related applications, the temporary digestion we had anticipated did not occur, resulting in stronger than expected top-line performance.”
Banking on the past nine months’ run and a sustained demand in the AI sector, the company revised its guidance upward for fiscal year to March 31, 2027. Sales is now forecasted at 1.07 trillion yen ($7.28 billion) and net income at 328.5 billion yen ($2.23 billion) — both higher than prior projections. Full-year operating profit is hiked up as well to 454 billion yen ($3.09 billion), a 21.4% rise.
“Looking ahead, with AI-related demand remaining strong, we anticipate sustained growth in the tester market in calendar year 2026,” Lefever said, adding that business in China remains “quite healthy around 20%-25% of the overall revenue”.
Capacity Expansion
Advantest is betting big on its AI-fuelled dollars. The chip testing equipment maker also said that it is aiming to raise capacity from 3,000 test units in July, 2025, to 5,000 in 2026.
“A lot of the customers have, as you know, talked about being sold out all the way through this year and into next year. So that bodes well for the test capacity that they’ll need. Coupling that with increasing complexity, you know, year after year, that also bodes well for twenty-seven,” Lefever noted.
The ramp-up is expected to continue through the next few years. In its midterm plan, Advantest had revealed that it will speed up capacity to 7,500 systems within a couple of years, and to 10,000 in the following phase.
“We’re definitely on track for [the 5,000 unit capacity] and actually now are looking at expanding that even further because of some of the demand that we showed in the TAM [Total Addressable Market]. So we may be in the position to have to accelerate that build out faster than we had originally planned,” he said. “We have the scalability to go beyond that certainly,” he added.
Analysts remain cautiously optimistic. Semiconductor is a cyclical market sector where demand rises and falls, making it a high-risk market. And with all the talks of the AI bubble and circular economy, variability is the name of the game.
Shares jumped 14% on Thursday after the company posted its results. The upward swing comes amid a steady track of high stock valuation. In recent times, both Advantest and rival company, Teradyne with which it holds a duopoly in the semi testing equipment sector, have traded at extremely high valuations. The success has been linked to explosive market demand driven by the AI and HPC boom. Semiconductors and high-bandwidth memory (HBM) remain critical components for supporting AI workloads. As their architectures shrink and grow more complex, there is a growing demand for advanced test solutions to test and validate them.
Advantest’s growing stock value and market share (58% in 2024) is reflective of its dominant market position in a niche that is growing at an astounding clip.
