And they need to have production volumes that drive additional acquisitions. It’s entirely possible that our competitor has a better view into the long-term needs in the wafer sort for some of those customers than we do. So – and it’s also possible that we have not seen the benefit in that part of the market. So, I am pretty confident in our – in that we have a good view of our memory business for 2024. I think there is an upside potential depending on how much capacity add is required as the memory inventories come down.
Brian Chin: Okay. Very helpful. Thanks Greg.
Operator: Our next question comes from the line of Samik Chatterjee with JPMorgan. Please proceed with your question.
Samik Chatterjee: Hi. Good morning and thanks for taking my questions. Maybe for the first one, if I can ask you in relation to the long-term model of the 2026 model, you are outlining strong growth in the Robotics segment, as you see a lot of opportunities for growth. How should we think about as you sort of invest towards that growth, what profitability can you drive to in that 2026 model for robotics? And I have a follow-up. Thank you.
Greg Smith: Hi Samik. So, in terms of the long-term model, our goals remain kind of consistent for our robotics group that our target performance is 20% to 30% growth and our target profit is 5% to 15%. What we have said previously and what we are still operating to is, as we are watching the growth develop in that market, if it appears that incremental investment is not yielding higher growth rates, then we will feather those back to try to increase the profit range. But as long as we believe that we are at this low penetration and there are fruitful investments that we can make, we would prefer to make those investments and continue to drive growth. The key thing that we are doing in operating that group is we are really focusing on maintaining high gross margins.
So, we are in excess of 60% gross margins for the group now and we are intent on keeping those gross margins at that level so that we have the option to sort of dial the profit that is appropriate to the growth rate we are achieving.
Samik Chatterjee: Got it. That’s helpful. And for my follow-up, just a question on gross margin for the year, I think for the full year 2024, you are guiding to 58% to 59% million with the starting point you have, that does imply, I think if I do the math that you would be at some point during the year crossing 60%. Am I sort of calculating that right? Is that sort of what you are implying? And what are the drivers to get to that 60% level during 2024 itself with the volume challenges that you are seeing right now in the test market? Thank you.
Sanjay Mehta: Yes. So, you are right. I think some of the quarters, we do anticipate to be higher than our model, really coming back with a stronger product mix. In various quarters, we have obviously higher volume. And then some of our higher product lines or some of our higher margin product lines do come back. So, it’s volume in the quarters, but mainly product mix and product line mix that are driving the improvement. I should add that there is also operational efficiencies that we are working on that we anticipate that will help margins as well in the back half.
Samik Chatterjee: Great. Thank you. Thanks for taking my questions.
Operator: The next questions are from the line of Toshiya Hari with Goldman Sachs. Please proceed with your question.
Toshiya Hari: Hi. Good morning. I had two as well. The first one on HBM, Greg, can you characterize your competitive position in this market, I guess number one. Number two, how big was HBM as a percentage of your memory business either in calendar ‘23 or Q4? And with your customers sort of expecting 50%, 60% growth on an annual basis over the next couple of years or several years, should we think about – should we think – should we assume the growth rate in your business to be in that ZIP code, or could there be retooling or parallel test that sort of deflates that number?
Greg Smith: Okay. So, you packed a lot of parts into that question. So, let me start unpacking it. So, first, in terms of competitive position, right now, we are roughly splitting the HBM test market with our competitors. So, if you look at overall share, that’s a positive to our share that there are multiple competitors in the overall memory space. But the HBM part of the market is pretty much a clean split between us and our competitor. In Q4, we think HBM represented more than 50% of our memory shipments. So, it was a huge factor in that quarter. And in terms of growth, we think that there is the potential for growth that there are new HBM competitors that are coming on the scene. So, there is both a unit volume growth.
I think that a lot of that – the capacity for a lot of that is in place now. But there are also standards changes, HBM3E and HBM4 that are coming, and those are driving retooling for performance tests. And we think that, that is going to be a potential driver for us in the back half of the year in memory.
Toshiya Hari: Got it. Thank you. And then as my follow-up on the robotics side, just wanted to get your thoughts on ‘24. You are guiding the business up 10% to 20%. You talked about obviously, the long-term value proposition, which makes sense. You are ramping the UR30, you talked about some of the initiatives you are doing from a channel distribution perspective. So, I am just curious, if you are guiding the long-term up 20% to 30%, why up 10% to 20% this year particularly given the fact that ‘23 was down close to 10%. What’s sort of weighing on growth this year? Thank you.
Greg Smith: Well, I think, the key thing that is limiting our optimism is that even though we had a really great Q4, we had a really great Q4 because we introduced basically a blockbuster product. 24% or so of our revenue in Q4 came from that product. Underlying that, there is still some fundamental weakness in the industrial end market. And there are predictions that, that is going to ease, that the demand is going to come back relatively strongly. But we are entering Q1 of 2024 with PMIs at a relatively low level and a fair amount of some regions that are quite quiet. So, we have optimism for continued growth through the year, both quarter-on-quarter through the year and each quarter in comparison to the year prior. But we are coming in with a relatively low Q1. So, we wanted to be careful in terms of where we set the bar for growth for the full year.
Toshiya Hari: Thanks Greg.
Andy Blanchard: Okay. And operator, we are out of time. So, folks that are still in the queue, I will get back to you later this morning. But thanks everyone for joining and we look forward to talking to you in the days and weeks ahead. Bye.
Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.
