A type of analog chip has unexpectedly gone viral.

The boom of AI chips is spreading to the analog chip market, which used to be a little-noticed niche segment in the past.

On August 27, analog chip vendor Diodes Incorporated announced that it had officially completed the acquisition of ElevATE Semiconductor, with the entire transaction settled in cash for a total consideration of 250 million US dollars.

Judging by size alone, this is not a particularly large semiconductor merger and acquisition. ElevATE is expected to generate approximately 50 million US dollars in revenue in the first 12 months after the transaction is completed. A simple calculation based on this figure shows that the price Diodes paid is equivalent to about 5 times its projected revenue for the next 12 months. However, Diodes also predicts that ElevATE's compound annual revenue growth rate will exceed 20% in the next four years, and its gross margin will be significantly higher than the average level of Diodes.

ElevATE is no ordinary analog chip company. It has long focused on analog and mixed-signal chips used inside Automatic Test Equipment (ATE), including products such as Pin Electronics, PPMU, and DPS. More specifically, it manufactures "the chips that sit inside the machines used to test other chips".

This is a niche market that does not have a huge overall market size, has a limited number of players, but boasts extremely high technical barriers. With the rapid development of AI, HPC, high-performance storage and advanced packaging, this once-overlooked analog chip business is regaining its strategic importance.

The "Golden Age" for Two Leading ATE Equipment Makers

The changes are first reflected in the financial reports of ATE equipment manufacturers.

Over the past two years, the most high-profile equipment companies in the AI computing power industrial chain have usually been front-end equipment giants such as ASML, Applied Materials, and Lam Research. However, as AI chips enter large-scale mass production, the industry prosperity is rapidly transmitting to the back-end testing segment.

Japan's Advantest is one of the most obvious beneficiaries.

In the first quarter of fiscal year 2026, Advantest recorded revenue of 367.5 billion yen, a year-on-year increase of 39.3%; operating profit reached 190 billion yen, up 53.3% year on year; net profit hit 174.8 billion yen, nearly doubling year on year. What is more remarkable is that the company's quarterly operating profit margin has reached 51.7%.

In its latest forecast, Advantest has sharply raised its full-year revenue expectation for fiscal 2026 from the previous 1.42 trillion yen to 1.714 trillion yen, and raised its operating profit forecast from 627.5 billion yen to 846 billion yen.

Advantest pointed out in its financial report that the output of AI-related semiconductors has increased, while the complexity of chips continues to rise. In particular, the testing demand for AI inference chips is significantly higher than the company's forecast in April this year. Therefore, the company expects that the global semiconductor tester market size in 2026 is expected to hit a record high.

The growth of US-based Teradyne is even more explosive.

In the second quarter of 2026, Teradyne's revenue reached 1.329 billion US dollars, a year-on-year increase of 104%, setting a new company revenue record for the second consecutive quarter. Among this figure, revenue from the semiconductor testing business reached 1.122 billion US dollars, up 128.1% year on year, also hitting an all-time high for the second consecutive quarter. The company explicitly stated that the growth mainly comes from AI-related computing and storage markets.

If we look at the performance across the first half of the year, this trend becomes even more obvious.

In the first six months of 2026, Teradyne's semiconductor testing revenue has reached 2.233 billion US dollars, up 115.8% year on year; while the full-year revenue of this business in 2025 was only 2.524 billion US dollars. That means, in just the first half of 2026, Teradyne's semiconductor testing business has reached about 88% of its full-year performance in the previous year.

And this is exactly the dividend brought by AI. Teradyne has clearly stated in its 2025 annual report that in the second half of 2025, demand from AI-related customers has contributed the majority of the company's revenue; after entering 2026, markets including AI computing, HBM, and DRAM have further become the core driving force for the growth of its testing business.

ATE is becoming an increasingly critical link in the AI semiconductor industrial chain. The complexity of traditional chips is relatively limited, and testing is mostly used to verify whether a single Die can work normally. But in the AI era, a high-performance processor is equipped with far more transistors, higher Pin Count, more complex high-speed interfaces, greater power consumption, and a much larger volume of Scan Data. At the same time, HBM, Chiplet and advanced packaging have further increased the complexity of the system.

The new testing challenges listed by Advantest when introducing the V93000 EXA Scale include: rapidly expanding Scan Data, extremely high power requirements, high Pin Count, and high Multisite parallel testing demands.

This means that the growth that AI chips bring to the testing industry does not only come from one variable: the shipment volume of chips is increasing, and the testing resources that need to be invested in each chip are also rising. As a result, the testing intensity has increased significantly.

High-barrier Chips Hidden Inside ATE Equipment

However, as Advantest and Teradyne sell more and more testing machines, the beneficiaries are obviously not limited to these two ATE equipment manufacturers.

If you disassemble an ATE machine, you will find that it itself is a highly complex electronic system. The tester needs to send high-speed digital signals to the chip under test, accurately judge whether the output of the chip is 0 or 1, provide different voltages and currents to the chip, and precisely measure tiny leakage current, voltage changes and various DC parameters.

These functions do not come out of nowhere. A large number of specially designed analog and mixed-signal chips are required behind them. The most core categories include: Pin Electronics (PE), which is responsible for direct interaction with the pins of the DUT (Device Under Test), and usually contains circuits such as Driver, Comparator and Active Load inside; PMU/PPMU (Parameter Measurement Unit), which is responsible for Force Voltage, Force Current, Measure Voltage and Measure Current, and is used for precise testing of the DC parameters of chips; DPS (Device Power Supply), which is responsible for providing high-precision, dynamically adjustable power supply to the chip under test.

At first glance, they seem to have no big difference from ordinary drivers, power supplies or ADC/DAC. However, the real difficulty lies in that ATE almost concentrates many conflicting indicators in analog chip design. It requires both high speed and high precision; it needs extremely low leakage and noise, and may also need to withstand relatively high voltage and current; it expects a single channel to provide more and more complete functions, while the power consumption must be controlled at a low level.

More importantly, mass production testing prioritizes efficiency. The number of chips that an ATE testing device can test at one time and the number of channels it can configure directly affect the testing cost. Therefore, ATE manufacturers are constantly pursuing higher channel density and multi-site capability, which in turn requires PE (Pin Electronics), PMU (Parameter Measurement Unit) and DPS (Device Power Supply) to continuously evolve towards higher integration and lower single-channel power consumption.

ElevATE's flagship product Rainier is a typical representative of this trend. This single system-on-chip integrates the analog and digital support functions required by 8 independent pin channels, including pin electronics, digital-to-analog converters, pin parameter measurement units and phase skew correction, with a maximum rate of 1.6 GB per second (1.6 Gbps). When the driver and comparator are running at full speed, the power consumption per channel is about 500 milliwatts.

Therefore, a very special analog chip market has always been hidden inside ATE equipment. The advent of AI is making several indicators that this market has long pursued — speed, precision, power, channel density and Parallelism — increasingly important.

From this perspective, the logic behind Diodes' acquisition of ElevATE becomes much clearer. What Diodes bought is essentially a ticket to enter the ATE market.

Diodes originally has a very wide portfolio of analog, power and discrete devices, but ATE-specific analog chips are not a market that can be easily entered by simply adding a few SKUs. It requires long-term accumulation in analog design, and more importantly, building customer relationships with ATE manufacturers, completing verification and getting access to their Tester platforms.

ElevATE already has exactly these resources. When announcing the transaction, Diodes particularly emphasized that ElevATE's strengths lie in low-power and high-density ATE ICs, and the acquisition is expected to help the company increase its "dollar content" in ATE equipment, that is, to raise the value of chips that can be sold into a single device.

Therefore, the 250 million US dollar purchase consideration is not just for the 50 million US dollars in revenue. More importantly, it covers a full set of ATE-specific analog/mixed-signal IP, a professional design team, existing customer relationships, and the entry ticket to this high-barrier market. This is why Diodes is willing to pay such a price for a not-so-large Fabless company.

As AI begins to drive up ATE capital expenditures significantly, the strategic value of upstream ATE ICs is also on the rise.

Two Types of Players Dividing the ATE Chip Market

This "analog business" of ATE test chips has actually existed for decades. ADI, Intersil and ATE equipment manufacturers have been cultivating in this field for many years. Since it needs to balance ultra-high voltage dynamic range, ultra-high frequency switching response, extremely low power consumption and high channel density, the technical barrier is extremely high, forming a very special competitive landscape.

The first category is commercial chip players, mainly some established analog chip giants.

Judging from public product portfolios, ADI is currently one of the manufacturers with the most complete layout. After acquiring Maxim, ADI almost dominates half of the high-end ATE analog chip market. Its Pin Electronics chips are regarded as the "industry standard" by the industry in terms of conversion rate, electrostatic protection and power consumption control.

ADI has been operating in the ATE market for more than 25 years. Its products cover Pin Electronics, DPS, PMU, as well as a large number of general-purpose and special analog devices including ADC, DAC, MEMS Switch, RF Transceiver that can be deployed in test systems, covering applications such as Digital SoC, Memory, Wafer, RF/mmWave, high-voltage devices and System Level Test.

For example, ADI's current ATE product line includes the 2.3GHz ADATE334 with integrated PPMU, and the 3Gbps 8-channel MAX32007 and other Pin Electronics products, as well as dedicated DPS products such as AD5560.

In comparison, ElevATE is smaller in scale but more focused. It has almost devoted all its R&D resources to the ATE market, with its core selling points being lower power consumption, higher channel density and higher Parallelism. Therefore, after Diodes acquires ElevATE, it is not facing a new market with no strong competitors, but established manufacturers like ADI that have long been engaged in precision analog and ATE-specific chips.

TI has also entered some segments of ATE-specific chip field. Its TSMU818A030 is a very typical ATE PMU: a single chip integrates 8 independent channels, with 18-bit resolution, supports 30V Force Voltage Span and a maximum current range of ±100mA, and can complete four-quadrant Force-and-Measure functions such as FV, FI, MV and MI. This is different from the traditional solution of building test boards with general-purpose op-amps, DAC, ADC, switches and sampling resistors, and highly integrates the entire parameter measurement function directly into a dedicated IC.

Renesas also retains related products. For example, ISL55100A is a 4-channel 18V Pin Driver/Window Comparator, which is clearly designed for Burn-in ATE, Wafer Level Flash Test and low-cost ATE applications.

In general, judging from the breadth of publicly available products, ADI and ElevATE have made more systematic investments in ATE-specific ICs, while TI and Renesas are more focused on some specific categories and niche applications. This also reflects the particularity of this market: it is not like the ordinary power management or signal chain market that has a large number of players. The market itself is relatively niche, the number of customers is highly concentrated, and the technical indicators are extremely demanding. As a result, there are not many companies that are willing to invest in a complete product portfolio for a long time.

The other category is self-developing test equipment manufacturers.

Different from other electronics industries that purchase general-purpose chips, leading ATE equipment giants themselves are extremely powerful chip designers. In order to widen the performance gap and protect core testing algorithms, Advantest and Teradyne have long adopted a large number of self-developed dedicated ASICs and custom analog chips in their flagship test machines.

Advantest's V93000 EXA Scale adopts the Xtreme Link communication architecture specially developed for ATE, while the new generation test card uses Advantest's self-developed Test Processor; in the RF test system, the company also explicitly disclosed that it uses Custom RF IC. Its Pin Scale 5000 digital card and XPS256 power card both support 256 channels to improve system integration and Multisite capability.

Teradyne follows a similar path. The UltraPin series of UltraFLEX adopts Teradyne proprietary hardware; the UltraPin2200 of the new generation UltraFLEXplus has achieved 512 digital channels per Instrument, and adopts the company's own hardware-based Protocol Aware technology. Its ETS analog test platform has long adopted the proprietary SmartPin architecture.

In the DRAM testing field, Teradyne has even moved Pin Electronics closer to the DUT. Magnum EPIC adopts the Near DUT Test architecture, which directly connects the Signal Instrument to the Device Specific Adapter, so as to reduce the impact of traditional long-distance connections on high-speed signal integrity.

There has long been a clear and subtle industrial watershed in the ATE chip market: on one side are commercial analog giants such as ADI, ElevATE and TI, which are deeply engaged in the market with standard components and high-integration solutions; on the other side are leading ATE equipment manufacturers such as Advantest and Teradyne, who have built technical moats through a large number of self-developed dedicated ASICs.

Looking at the domestic market in China, the wave of localization in the semiconductor test equipment sector has achieved fruitful results in the past few years. Especially in the analog, mixed-signal and power semiconductor testing tracks, local leading enterprises represented by Huafeng Test & Control and Changchuan Technology have built mature product portfolios, and are advancing towards the high ground of digital SoC testing with higher technical barriers.

However, even if domestic ATE machines have achieved full independence in software algorithms, system architecture, test head and board design, if the most high-end analog chips such as core PE and DPS are still highly dependent on overseas supply chains, the performance iteration, supply chain security and cost bargaining power of the equipment when moving towards high-end segments will still face severe "strangulation" hidden risks.

Local leading enterprises have been aware of this strategic pain point. Huafeng Test & Control clearly stated in its 2025 annual report that it will continue to increase R&D investment in dedicated chips for test systems, independent core modules, key boards and software platforms, and promote supply chain reconstruction and localization substitution to reduce the dependence of key links on single-source and high-risk materials.

Closing Remarks

In general, after decades of steady evolution, the ATE test chip analog business is being endowed with entirely new growth space by AI.

In the past few years, AI first changed the demand for GPU and HBM, followed by advanced process, advanced packaging and high-speed interconnection. From 2025 to 2026, another change is becoming increasingly obvious: when these chips enter larger-scale mass production, how to test them has also become a fast-growing business.

This analog business revitalized by AI has just kicked off its most magnificent second half.

This article is from the WeChat official account "Semiconductor Industry Observation" (ID: icbank), written by Du Qin DQ, and is authorized for release by 36Kr.