diff --git a/.gitlab/ci/test-win.yml b/.gitlab/ci/test-win.yml
index bf2a116e91..59f0166e5a 100644
--- a/.gitlab/ci/test-win.yml
+++ b/.gitlab/ci/test-win.yml
@@ -87,13 +87,13 @@ test_tools_win:
     - python "${SUBMODULE_FETCH_TOOL}" -s "all"
     - cd ${IDF_PATH}\tools\test_build_system
     - idf-ci gitlab download-known-failure-cases-file ${KNOWN_FAILURE_CASES_FILE_NAME}
-    - pytest --parallel-count ${CI_NODE_TOTAL} --parallel-index ${CI_NODE_INDEX} --junitxml=${CI_PROJECT_DIR}\XUNIT_RESULT.xml --ignore-result-files ${KNOWN_FAILURE_CASES_FILE_NAME}
+    - pytest --parallel-count ${CI_NODE_TOTAL} --parallel-index ${CI_NODE_INDEX} --junitxml=${CI_PROJECT_DIR}\XUNIT_RESULT.xml --ignore-result-files ${KNOWN_FAILURE_CASES_FILE_NAME} --durations=10
 
 pytest_build_system_win:
   extends:
     - .test_build_system_template_win
     - .rules:labels:windows_pytest_build_system
-  parallel: 6
+  parallel: 10
   needs:
     - job: manual_gate
       optional: true
@@ -111,6 +111,7 @@ pytest_build_system_win_minimal_cmake:
   extends:
     - .test_build_system_template_win
     - .rules:labels:windows_pytest_build_system
+  parallel: 2
   needs:
     - job: manual_gate
       optional: true
@@ -139,13 +140,13 @@ pytest_build_system_win_minimal_cmake:
     - python "${SUBMODULE_FETCH_TOOL}" -s "all"
     - cd ${IDF_PATH}\tools\test_build_system
     - idf-ci gitlab download-known-failure-cases-file ${KNOWN_FAILURE_CASES_FILE_NAME}
-    - pytest -k cmake --junitxml=${CI_PROJECT_DIR}\XUNIT_RESULT.xml --ignore-result-files ${KNOWN_FAILURE_CASES_FILE_NAME}
+    - pytest -k cmake --junitxml=${CI_PROJECT_DIR}\XUNIT_RESULT.xml --ignore-result-files ${KNOWN_FAILURE_CASES_FILE_NAME} --durations=10
 
 pytest_buildv2_system_win:
   extends:
     - .test_build_system_template_win
     - .rules:labels:buildv2
-  parallel: 2
+  parallel: 10
   needs:
     - job: manual_gate
       optional: true
diff --git a/tools/ci/exclude_check_tools_files.txt b/tools/ci/exclude_check_tools_files.txt
index 797a48c4a3..4541238259 100644
--- a/tools/ci/exclude_check_tools_files.txt
+++ b/tools/ci/exclude_check_tools_files.txt
@@ -55,4 +55,3 @@ tools/templates/sample_component/main.c
 tools/templates/sample_project/CMakeLists.txt
 tools/templates/sample_project/main/CMakeLists.txt
 tools/templates/sample_project/main/main.c
-tools/test_build_system/buildv2_test_app/main/KConfig.projbuild
diff --git a/tools/test_build_system/buildv2_test_app/main/KConfig.projbuild b/tools/test_build_system/buildv2_test_app/main/KConfig.projbuild
deleted file mode 100644
index 4c7e3fb244..0000000000
--- a/tools/test_build_system/buildv2_test_app/main/KConfig.projbuild
+++ /dev/null
@@ -1,4 +0,0 @@
-# Misspelled Kconfig file checks whether it is picked up by the build system
-config FROM_MISSPELLED_KCONFIG
-    bool "From misspelled Kconfig"
-    default y
diff --git a/tools/test_build_system/conftest.py b/tools/test_build_system/conftest.py
index d8d85ce0a0..1640e84774 100644
--- a/tools/test_build_system/conftest.py
+++ b/tools/test_build_system/conftest.py
@@ -21,6 +21,90 @@ from test_build_system_helpers import get_idf_build_env
 from test_build_system_helpers import run_idf_py
 
 
+def _get_git_submodule_paths(repo_path: Path) -> list[str]:
+    """Get list of submodule paths from .gitmodules file."""
+    gitmodules = repo_path / '.gitmodules'
+    if not gitmodules.exists():
+        return []
+
+    submodule_paths = []
+    with open(gitmodules, encoding='utf-8') as f:
+        for line in f:
+            line = line.strip()
+            if line.startswith('path = '):
+                submodule_paths.append(line[7:])  # Remove 'path = ' prefix
+    return submodule_paths
+
+
+def _create_idf_copy_via_worktree(path_from: Path, path_to: Path) -> str:
+    """
+    Create IDF copy using git worktree (fast) + copying submodule directories.
+
+    Git worktree creates a fast checkout of tracked files, but submodules
+    appear as empty directories. We copy submodule content from the source
+    repo (which has them already checked out) instead of running git submodule
+    update (which can fail due to auth issues on CI).
+    """
+    import uuid
+
+    timestamp = datetime.datetime.now().strftime('%H%M%S')
+    branch_name = f'test-worktree-{timestamp}-{uuid.uuid4().hex[:8]}'
+
+    logging.debug(f'creating git worktree at {path_to} (branch: {branch_name})')
+    subprocess.run(
+        ['git', 'worktree', 'add', '-b', branch_name, str(path_to)], cwd=path_from, capture_output=True, check=True
+    )
+
+    # Copy submodule directories from source (they're already checked out there)
+    submodule_paths = _get_git_submodule_paths(path_from)
+    for submodule_rel_path in submodule_paths:
+        src_submodule = path_from / submodule_rel_path
+        dst_submodule = path_to / submodule_rel_path
+
+        # Only copy if source submodule exists and has content
+        if src_submodule.exists() and any(src_submodule.iterdir()):
+            logging.debug(f'copying submodule {submodule_rel_path}')
+            # Remove the empty directory created by worktree
+            if dst_submodule.exists():
+                shutil.rmtree(dst_submodule, ignore_errors=True)
+            # Copy the submodule content
+            shutil.copytree(src_submodule, dst_submodule, symlinks=True, ignore=shutil.ignore_patterns('.git'))
+
+    return branch_name
+
+
+def _cleanup_worktree(path_from: Path, path_to: Path, branch_name: str) -> None:
+    """Remove git worktree and its temporary branch."""
+    logging.debug(f'removing git worktree at {path_to}')
+    # Remove the worktree
+    subprocess.run(
+        ['git', 'worktree', 'remove', '--force', str(path_to)],
+        cwd=path_from,
+        check=False,  # Don't fail if already removed
+    )
+    # Delete the temporary branch
+    subprocess.run(
+        ['git', 'branch', '-D', branch_name],
+        cwd=path_from,
+        check=False,  # Don't fail if branch doesn't exist
+    )
+
+
+def _create_idf_copy_via_shutil(path_from: Path, path_to: Path) -> None:
+    """Create IDF copy using shutil.copytree (slower but always works)."""
+    # if the new directory inside the original directory,
+    # make sure not to go into recursion.
+    ignore = shutil.ignore_patterns(
+        path_to.name,
+        # also ignore the build directories which may be quite large
+        # plus ignore .git since it is causing trouble when removing on Windows
+        '**/build',
+        '.git',
+    )
+    logging.debug(f'copying {path_from} to {path_to} (shutil.copytree)')
+    shutil.copytree(path_from, path_to, ignore=ignore, symlinks=True)
+
+
 # Pytest hook used to check if the test has passed or failed, from a fixture.
 # Based on https://docs.pytest.org/en/latest/example/simple.html#making-test-result-information-available-in-fixtures
 @pytest.hookimpl(tryfirst=True, hookwrapper=True)
@@ -199,23 +283,22 @@ def idf_copy(func_work_dir: Path, request: FixtureRequest) -> typing.Generator[P
     if mark:
         copy_to = mark.args[0]
 
-    path_from = EXT_IDF_PATH
+    path_from = Path(EXT_IDF_PATH)
     path_to = func_work_dir / copy_to
 
-    # if the new directory inside the original directory,
-    # make sure not to go into recursion.
-    ignore = shutil.ignore_patterns(
-        path_to.name,
-        # also ignore the build directories which may be quite large
-        # plus ignore .git since it is causing trouble when removing on Windows
-        '**/build',
-        '.git',
-    )
-
-    logging.debug(f'copying {path_from} to {path_to}')
-    shutil.copytree(path_from, path_to, ignore=ignore, symlinks=True)
-
     orig_idf_path = os.environ['IDF_PATH']
+    branch_name: str | None = None
+
+    # Try git worktree first (much faster), fall back to shutil.copytree
+    try:
+        branch_name = _create_idf_copy_via_worktree(path_from, path_to)
+    except (subprocess.CalledProcessError, FileNotFoundError, OSError) as e:
+        logging.debug(f'git worktree failed ({e}), falling back to shutil.copytree')
+        # Clean up any partial worktree before fallback
+        if path_to.exists():
+            shutil.rmtree(path_to, ignore_errors=True)
+        _create_idf_copy_via_shutil(path_from, path_to)
+
     os.environ['IDF_PATH'] = str(path_to)
 
     yield Path(path_to)
@@ -224,7 +307,10 @@ def idf_copy(func_work_dir: Path, request: FixtureRequest) -> typing.Generator[P
 
     if should_clean_test_dir(request):
         logging.debug(f'cleaning up work directory after a successful test: {path_to}')
-        shutil.rmtree(path_to, ignore_errors=True)
+        if branch_name:
+            _cleanup_worktree(path_from, path_to, branch_name)
+        else:
+            shutil.rmtree(path_to, ignore_errors=True)
 
 
 @pytest.fixture(name='default_idf_env')
diff --git a/tools/test_build_system/kconfig_test_app/CMakeLists.txt b/tools/test_build_system/kconfig_test_app/CMakeLists.txt
new file mode 100644
index 0000000000..0c1c3af87e
--- /dev/null
+++ b/tools/test_build_system/kconfig_test_app/CMakeLists.txt
@@ -0,0 +1,9 @@
+cmake_minimum_required(VERSION 3.22)
+
+# placeholder_before_include_project_cmake
+
+include($ENV{IDF_PATH}/tools/cmake/project.cmake)
+
+# placeholder_after_include_project_cmake
+
+project(kconfig_test_app)
diff --git a/tools/test_build_system/kconfig_test_app/README.md b/tools/test_build_system/kconfig_test_app/README.md
new file mode 100644
index 0000000000..bf64724893
--- /dev/null
+++ b/tools/test_build_system/kconfig_test_app/README.md
@@ -0,0 +1,3 @@
+Information about this test app can be found [here](../README.md#application-under-test).
+
+This is a 1:1 copy of build_test_app, but with a malformed KConfig.projbuild file.
diff --git a/tools/test_build_system/kconfig_test_app/main/CMakeLists.txt b/tools/test_build_system/kconfig_test_app/main/CMakeLists.txt
new file mode 100644
index 0000000000..084d3788c8
--- /dev/null
+++ b/tools/test_build_system/kconfig_test_app/main/CMakeLists.txt
@@ -0,0 +1,5 @@
+# placeholder_before_idf_component_register
+
+idf_component_register(SRCS "kconfig_test_app.c"
+                       # placeholder_inside_idf_component_register
+)
diff --git a/tools/test_build_system/build_test_app/main/KConfig.projbuild b/tools/test_build_system/kconfig_test_app/main/KConfig.projbuild
similarity index 100%
rename from tools/test_build_system/build_test_app/main/KConfig.projbuild
rename to tools/test_build_system/kconfig_test_app/main/KConfig.projbuild
diff --git a/tools/test_build_system/kconfig_test_app/main/kconfig_test_app.c b/tools/test_build_system/kconfig_test_app/main/kconfig_test_app.c
new file mode 100644
index 0000000000..89169f848a
--- /dev/null
+++ b/tools/test_build_system/kconfig_test_app/main/kconfig_test_app.c
@@ -0,0 +1,12 @@
+/*
+ * SPDX-FileCopyrightText: 2022 Espressif Systems (Shanghai) CO LTD
+ *
+ * SPDX-License-Identifier: Apache-2.0
+ */
+#include <stdio.h>
+// placeholder_before_main
+
+void app_main(void)
+{
+    // placeholder_inside_main
+}
diff --git a/tools/test_build_system/test_build.py b/tools/test_build_system/test_build.py
index 2f88c97f12..38aaba37c6 100644
--- a/tools/test_build_system/test_build.py
+++ b/tools/test_build_system/test_build.py
@@ -1,4 +1,4 @@
-# SPDX-FileCopyrightText: 2022-2025 Espressif Systems (Shanghai) CO LTD
+# SPDX-FileCopyrightText: 2022-2026 Espressif Systems (Shanghai) CO LTD
 # SPDX-License-Identifier: Apache-2.0
 import logging
 import os
@@ -17,6 +17,7 @@ from test_build_system_helpers import append_to_file
 from test_build_system_helpers import file_contains
 from test_build_system_helpers import get_idf_build_env
 from test_build_system_helpers import replace_in_file
+from test_build_system_helpers import run_cmake
 from test_build_system_helpers import run_cmake_and_build
 
 
@@ -28,23 +29,22 @@ def assert_built(paths: list[str] | list[Path]) -> None:
 def test_build_alternative_directories(idf_py: IdfPyFunc, func_work_dir: Path, test_app_copy: Path) -> None:
     logging.info('Moving BUILD_DIR_BASE out of tree')
     alt_build_dir = func_work_dir / 'alt_build'
-    try:
-        idf_py('-B', str(alt_build_dir), 'build')
-        assert os.listdir(alt_build_dir) != [], 'No files found in new build directory!'
-        default_build_dir = test_app_copy / 'build'
-        if default_build_dir.exists():
-            assert os.listdir(default_build_dir) == [], (
-                f'Some files were incorrectly put into the default build directory: {default_build_dir}'
-            )
-    except Exception:
-        raise
-    else:
-        shutil.rmtree(alt_build_dir)
+    # Use reconfigure instead of full build - we're testing directory placement, not compilation
+    idf_py('-B', str(alt_build_dir), 'reconfigure')
+    assert os.listdir(alt_build_dir) != [], 'No files found in new build directory!'
+    assert (alt_build_dir / 'CMakeCache.txt').exists(), 'CMakeCache.txt not found in alt build directory!'
+    default_build_dir = test_app_copy / 'build'
+    if default_build_dir.exists():
+        assert os.listdir(default_build_dir) == [], (
+            f'Some files were incorrectly put into the default build directory: {default_build_dir}'
+        )
+    shutil.rmtree(alt_build_dir)
 
     logging.info('BUILD_DIR_BASE inside default build directory')
     build_subdir_inside_build_dir = default_build_dir / 'subdirectory'
-    idf_py('-B', str(build_subdir_inside_build_dir), 'build')
+    idf_py('-B', str(build_subdir_inside_build_dir), 'reconfigure')
     assert os.listdir(build_subdir_inside_build_dir) != [], 'No files found in new build directory!'
+    assert (build_subdir_inside_build_dir / 'CMakeCache.txt').exists(), 'CMakeCache.txt not found in subdirectory!'
 
 
 @pytest.mark.usefixtures('test_app_copy')
@@ -84,30 +84,31 @@ def test_build_with_generator_makefile(idf_py: IdfPyFunc) -> None:
 
 
 def test_build_with_cmake_and_idf_path_unset(idf_py: IdfPyFunc, test_app_copy: Path) -> None:
+    # This test verifies CMake configuration works with various IDF_PATH setups.
+    # We use run_cmake (configure only) instead of full builds for speed.
     idf_path = Path(os.environ['IDF_PATH'])
     env = get_idf_build_env(idf_path)
     env.pop('IDF_PATH')
+    build_dir = test_app_copy / 'build'
 
-    logging.info('Can build with IDF_PATH set via cmake cache not environment')
+    logging.info('Can configure with IDF_PATH set via cmake cache not environment')
     replace_in_file('CMakeLists.txt', 'ENV{IDF_PATH}', '{IDF_PATH}')
-    run_cmake_and_build('-G', 'Ninja', '..', f'-DIDF_PATH={idf_path}', env=env)
-    assert_built(BOOTLOADER_BINS + APP_BINS + PARTITION_BIN)
-    idf_py('fullclean')
+    run_cmake('-G', 'Ninja', '..', f'-DIDF_PATH={idf_path}', env=env)
+    assert (build_dir / 'CMakeCache.txt').exists(), 'CMake configuration failed'
+    shutil.rmtree(build_dir)
 
-    logging.info('Can build with IDF_PATH unset and inferred by cmake when Kconfig needs it to be set')
-    # working with already changed CMakeLists.txt
+    logging.info('Can configure with IDF_PATH unset and inferred by cmake when Kconfig needs it to be set')
     kconfig_file = test_app_copy / 'main' / 'Kconfig.projbuild'
     kconfig_file.write_text('source "$IDF_PATH/examples/wifi/getting_started/station/main/Kconfig.projbuild"')
-    run_cmake_and_build('-G', 'Ninja', '..', f'-DIDF_PATH={idf_path}', env=env)
-    assert_built(BOOTLOADER_BINS + APP_BINS + PARTITION_BIN)
-    kconfig_file.unlink()  # remove file to not affect following sub-test
-    idf_py('fullclean')
+    run_cmake('-G', 'Ninja', '..', f'-DIDF_PATH={idf_path}', env=env)
+    assert (build_dir / 'CMakeCache.txt').exists(), 'CMake configuration failed'
+    kconfig_file.unlink()
+    shutil.rmtree(build_dir)
 
-    logging.info('Can build with IDF_PATH unset and inferred by build system')
-    # replacing {IDF_PATH} not ENV{IDF_PATH} since CMakeLists.txt was already changed in this test
+    logging.info('Can configure with IDF_PATH unset and inferred by build system')
     replace_in_file('CMakeLists.txt', '{IDF_PATH}', '{ci_idf_path}')
-    run_cmake_and_build('-G', 'Ninja', '-D', f'ci_idf_path={idf_path}', '..', env=env)
-    assert_built(BOOTLOADER_BINS + APP_BINS + PARTITION_BIN)
+    run_cmake('-G', 'Ninja', '-D', f'ci_idf_path={idf_path}', '..', env=env)
+    assert (build_dir / 'CMakeCache.txt').exists(), 'CMake configuration failed'
 
 
 def test_build_skdconfig_phy_init_data(idf_py: IdfPyFunc, test_app_copy: Path) -> None:
@@ -257,11 +258,13 @@ def test_build_cmake_executable_suffix(idf_py: IdfPyFunc, test_app_copy: Path) -
     assert 'Project build complete' in ret.stdout, 'Build with CMAKE_EXECUTABLE_SUFFIX set failed'
 
 
+@pytest.mark.test_app_copy('tools/test_build_system/kconfig_test_app')
 def test_build_with_misspelled_kconfig(idf_py: IdfPyFunc, test_app_copy: Path) -> None:
     logging.info('idf.py can build with misspelled Kconfig file')
     ret = idf_py('build')
     assert " file should be named 'Kconfig.projbuild'" in ret.stderr, 'Misspelled Kconfig file should be detected'
-    assert_built(BOOTLOADER_BINS + APP_BINS + PARTITION_BIN)
+    kconfig_app_bins = ['build/kconfig_test_app.elf', 'build/kconfig_test_app.bin']
+    assert_built(BOOTLOADER_BINS + kconfig_app_bins + PARTITION_BIN)
     with open(test_app_copy / 'sdkconfig') as f:
         sdkconfig = f.read()
         assert 'CONFIG_FROM_MISSPELLED_KCONFIG=y' in sdkconfig, (
diff --git a/tools/test_build_system/test_cmake.py b/tools/test_build_system/test_cmake.py
index 5c881c803c..2917babe40 100644
--- a/tools/test_build_system/test_cmake.py
+++ b/tools/test_build_system/test_cmake.py
@@ -19,11 +19,10 @@ from test_build_system_helpers import run_cmake_and_build
 from test_build_system_helpers import run_idf_py
 
 
-# This test checks multiple targets in one test function. It would be better to have each target
-# tested in a isolated test case, but that would mean doing idf_copy each time, and copying takes most of the time
+# This test verifies ESP-IDF can be used as a library in custom CMake projects.
+# We use cmake configure only (not full build) and test representative targets from each arch.
 @pytest.mark.usefixtures('idf_copy')
 def test_build_custom_cmake_project(test_app_copy: Path, request: pytest.FixtureRequest) -> None:
-    # Test is compatible with any target. Random targets in the list are selected for performance reasons
     idf_path = Path(os.environ['IDF_PATH'])
     is_buildv2 = request.config.getoption('buildv2', False)
     if is_buildv2:
@@ -35,9 +34,11 @@ def test_build_custom_cmake_project(test_app_copy: Path, request: pytest.Fixture
         base_cmake_args = ['-G', 'Ninja']
         target_var = 'TARGET'
 
-    for target in ['esp32', 'esp32c2', 'esp32c3', 'esp32c6', 'esp32h2', 'esp32p4', 'esp32s2', 'esp32s3']:
-        logging.info(f'Test build ESP-IDF as a library to a custom CMake projects for {target}')
-        run_cmake_and_build(
+    # Test representative targets: Xtensa (esp32), RISC-V (esp32c3), and newest (esp32p4)
+    for target in ['esp32', 'esp32c3', 'esp32p4']:
+        logging.info(f'Test CMake configuration of ESP-IDF as a library for {target}')
+        # Use run_cmake (configure only) - compile_commands.json is generated during configure
+        run_cmake(
             str(idf_as_lib_path),
             *base_cmake_args,
             '-DCMAKE_TOOLCHAIN_FILE={}'.format(idf_path / 'tools' / 'cmake' / f'toolchain-{target}.cmake'),
@@ -45,9 +46,9 @@ def test_build_custom_cmake_project(test_app_copy: Path, request: pytest.Fixture
         )
         assert file_contains((test_app_copy / 'build' / 'compile_commands.json'), '"command"')
         shutil.rmtree(test_app_copy / 'build')
-        sdkconfig_path = idf_as_lib_path / 'sdkconfig'
-        if sdkconfig_path.exists():
-            os.remove(sdkconfig_path)
+        sdkconfig = idf_as_lib_path / 'sdkconfig'
+        if sdkconfig.exists():
+            sdkconfig.unlink()
 
 
 @pytest.mark.skipif(
diff --git a/tools/test_build_system/test_partition.py b/tools/test_build_system/test_partition.py
index b8947cba92..83885d2f0e 100644
--- a/tools/test_build_system/test_partition.py
+++ b/tools/test_build_system/test_partition.py
@@ -1,4 +1,4 @@
-# SPDX-FileCopyrightText: 2022-2023 Espressif Systems (Shanghai) CO LTD
+# SPDX-FileCopyrightText: 2022-2026 Espressif Systems (Shanghai) CO LTD
 # SPDX-License-Identifier: Apache-2.0
 
 import logging
@@ -8,7 +8,10 @@ import shutil
 from pathlib import Path
 
 import pytest
-from test_build_system_helpers import EnvDict, IdfPyFunc, append_to_file, replace_in_file
+from test_build_system_helpers import EnvDict
+from test_build_system_helpers import IdfPyFunc
+from test_build_system_helpers import append_to_file
+from test_build_system_helpers import replace_in_file
 
 
 @pytest.mark.usefixtures('test_app_copy')
@@ -30,15 +33,21 @@ def test_partition_nearly_full_warning(idf_py: IdfPyFunc, test_app_copy: Path, d
     logging.info('Warning is given if smallest partition is nearly full')
     ret = idf_py('build')
     # Build a first time to get the binary size and to check that no warning is issued.
-    assert 'partition is nearly full' not in ret.stdout, 'Warning for nearly full smallest partition was given when the condition is not fulfilled'
+    assert 'partition is nearly full' not in ret.stdout, (
+        'Warning for nearly full smallest partition was given when the condition is not fulfilled'
+    )
     # Get the size of the binary, in KB. Convert it to next multiple of 4.
     # The goal is to create an app partition which is slightly bigger than the binary itself
     updated_file_size = int((os.stat(test_app_copy / 'build' / 'build_test_app.bin').st_size + 4095) / 4096) * 4
     idf_path = Path(default_idf_env['IDF_PATH'])
-    shutil.copy2(idf_path / 'components' / 'partition_table' / 'partitions_singleapp.csv', test_app_copy / 'partitions.csv')
-    replace_in_file(test_app_copy / 'partitions.csv',
-                    'factory,  app,  factory, ,        1M',
-                    f'factory,  app,  factory, ,        {updated_file_size}K')
-    (test_app_copy / 'sdkconfig').write_text('\n'.join(['CONFIG_PARTITION_TABLE_CUSTOM=y', 'CONFIG_FREERTOS_SMP=n']))
+    shutil.copy2(
+        idf_path / 'components' / 'partition_table' / 'partitions_singleapp.csv', test_app_copy / 'partitions.csv'
+    )
+    replace_in_file(
+        test_app_copy / 'partitions.csv',
+        'factory,  app,  factory, ,        1M',
+        f'factory,  app,  factory, ,        {updated_file_size}K',
+    )
+    append_to_file(test_app_copy / 'sdkconfig', '\n'.join(['CONFIG_PARTITION_TABLE_CUSTOM=y', 'CONFIG_FREERTOS_SMP=n']))
     ret = idf_py('build', check=False)
     assert 'partition is nearly full' in ret.stdout
diff --git a/tools/test_idf_py/test_idf_py.py b/tools/test_idf_py/test_idf_py.py
index 9f2ea22053..b8c145e7e1 100755
--- a/tools/test_idf_py/test_idf_py.py
+++ b/tools/test_idf_py/test_idf_py.py
@@ -1,6 +1,6 @@
 #!/usr/bin/env python
 #
-# SPDX-FileCopyrightText: 2019-2025 Espressif Systems (Shanghai) CO LTD
+# SPDX-FileCopyrightText: 2019-2026 Espressif Systems (Shanghai) CO LTD
 # SPDX-License-Identifier: Apache-2.0
 import json
 import os
@@ -50,48 +50,54 @@ class TestWithoutExtensions(TestCase):
 
 
 class TestExtensions(TestWithoutExtensions):
-    def test_extension_loading(self):
+    @classmethod
+    def setUpClass(cls):
+        super().setUpClass()
+        # Create symlink once for all tests in this class
+        # Handle race conditions with parallel test execution (pytest-xdist)
         try:
             os.symlink(extension_path, link_path)
-            os.environ['IDF_EXTRA_ACTIONS_PATH'] = os.path.join(current_dir, 'extra_path')
-            output = subprocess.check_output([sys.executable, idf_py_path, '--help'], env=os.environ).decode(
-                'utf-8', 'ignore'
-            )
+        except FileExistsError:
+            # Another worker already created it - that's fine
+            pass
+        os.environ['IDF_EXTRA_ACTIONS_PATH'] = os.path.join(current_dir, 'extra_path')
 
-            self.assertIn('--test-extension-option', output)
-            self.assertIn('test_subcommand', output)
-            self.assertIn('--some-extension-option', output)
-            self.assertIn('extra_subcommand', output)
-        finally:
+    @classmethod
+    def tearDownClass(cls):
+        # Clean up symlink after all tests complete
+        # Use try/except to handle race conditions with parallel execution
+        try:
             os.remove(link_path)
+        except FileNotFoundError:
+            # Another worker already removed it - that's fine
+            pass
+        super().tearDownClass()
+
+    def test_extension_loading(self):
+        output = subprocess.check_output([sys.executable, idf_py_path, '--help'], env=os.environ).decode(
+            'utf-8', 'ignore'
+        )
+        self.assertIn('--test-extension-option', output)
+        self.assertIn('test_subcommand', output)
+        self.assertIn('--some-extension-option', output)
+        self.assertIn('extra_subcommand', output)
 
     def test_extension_execution(self):
-        try:
-            os.symlink(extension_path, link_path)
-            os.environ['IDF_EXTRA_ACTIONS_PATH'] = ';'.join([os.path.join(current_dir, 'extra_path')])
-            output = subprocess.check_output(
-                [sys.executable, idf_py_path, '--some-extension-option=awesome', 'test_subcommand', 'extra_subcommand'],
-                env=os.environ,
-            ).decode('utf-8', 'ignore')
-            self.assertIn('!!! From some global callback: awesome', output)
-            self.assertIn('!!! From some subcommand', output)
-            self.assertIn('!!! From test global callback: test', output)
-            self.assertIn('!!! From some subcommand', output)
-        finally:
-            os.remove(link_path)
+        output = subprocess.check_output(
+            [sys.executable, idf_py_path, '--some-extension-option=awesome', 'test_subcommand', 'extra_subcommand'],
+            env=os.environ,
+        ).decode('utf-8', 'ignore')
+        self.assertIn('!!! From some global callback: awesome', output)
+        self.assertIn('!!! From some subcommand', output)
+        self.assertIn('!!! From test global callback: test', output)
+        self.assertIn('!!! From some subcommand', output)
 
     def test_hidden_commands(self):
-        try:
-            os.symlink(extension_path, link_path)
-            os.environ['IDF_EXTRA_ACTIONS_PATH'] = ';'.join([os.path.join(current_dir, 'extra_path')])
-            output = subprocess.check_output([sys.executable, idf_py_path, '--help'], env=os.environ).decode(
-                'utf-8', 'ignore'
-            )
-            self.assertIn('test_subcommand', output)
-            self.assertNotIn('hidden_one', output)
-
-        finally:
-            os.remove(link_path)
+        output = subprocess.check_output([sys.executable, idf_py_path, '--help'], env=os.environ).decode(
+            'utf-8', 'ignore'
+        )
+        self.assertIn('test_subcommand', output)
+        self.assertNotIn('hidden_one', output)
 
 
 class TestDependencyManagement(TestWithoutExtensions):