Teradyne (TER), a semiconductor test equipment manufacturer, is telegraphing a pause in spending for 2022. It’s largest customer, Taiwan Semiconductor (TSM), accounted for 12% of Teradyne’s sales in 2021 and is in the midst of ramping 3 nanometer (nm) node production. With Apple’s (AAPL) next iPhone not expected to utilize Taiwan Semi’s 3nm chips, Teradyne issued the following in its latest 10-K:

“In 2022, we expect lower demand in our Semiconductor Test business due to a slower technology transition in one of our largest end-markets. We expect this demand to accelerate in 2023 as a result of the expected ramp in volume production of semiconductor devices using 3 nanometer manufacturing technology.”

The slack in demand resulted in Teradyne taking a $15.5 million dollar inventory charge—which is included n the company’s cost of revenue— of which semiconductor test equipment inventory accounts for 43.2%:

“Of the $15.5 million of total excess and obsolete provisions, $6.7 million was related to Semiconductor Test, $6.4 million was related to Industrial Automation, $1.8 million was related to Wireless Test, and $0.6 million was related to System Test.”