SAN FRANCISCO, July 20 (Reuters) - Shares of Teradyne Inc. (TER,Trade) jumped nearly 18 percent on Wednesday to their highest level this year after the maker of semiconductor test equipment posted better than expected results and investors speculated that the slumping industry might have hit bottom.

"Business conditions are clearly looking up," wrote Gerald Fleming, an analyst with WR Hambrecht & Co. in a research note, while cautioning that he still remained concerned about the ongoing charges the company is taking and overall challenges facing the chip equipment industry.

The chip equipment industry is forecast to decline 12 percent this year and the so-called back-end, or testing and packaging segment, of that market is expected to decline about twice as much, according to estimates.

Teradyne on Tuesday posted a quarterly loss compared with a year-earlier profit, reflecting a share decline in demand for its semiconductor test equipment.

The Boston-based company posted a loss of $45.5 million, or 23 cents per share, for the second quarter, compared with a year-earlier profit of $80.5 million, or 39 cents per share.

Revenue fell to $320.2 million from $526.5 million.

Excluding items Teradyne said it had a loss of 18 cents per share.

Analysts polled by Reuters Estimate had expected Teradyne to post a loss, on average, of 20 cents per share, on revenue of $308 million.

Teradyne is one of the three top players in the testing segment of the market, which accounts for 15 percent of a market forecast to decline to $32.6 billion in sales in 2005.

Shares of Teradyne rose $2.40, or 17.5 percent, to $16.11 on the New York Stock Exchange. Earlier they rose as high as $16.46.