My name's Asiya Merchant. I cover tech hardware, tech supply chain here at Citi Research. Really happy to have the Amphenol management with us. Adam and Craig, CEO, CFO, Sherri, head of IR, is also here somewhere in the audience. And so, you know, Adam, Craig, thank you again for coming to the conference. I'm going to kick it off with a few comments. You know, these questions are open. It's a fireside. I don't believe there's anything prepared here, but there's fireside questions. If you do have questions, please raise your hand. We'll allow some time for investor Q&As, but we would like to bring the mic to you. So please bear with us as we do that. Adam, Amphenol has had a very busy summer. You guys have been acquisitive, you know, buying back good assets at extremely attractive multiples relative to where Amphenol shares are trading.
We'll get into the details of the acquisition, but you've had really strong organic growth as well. You know, this quarter, if I remember, 41% organic that you guys just reported. When we sit back here and now in calendar 3Q and just reflect on how demand has evolved, let's say from, let's say from the start of the year, about six months ago, you know, how would you look at end demand and think about how it's evolved, you know, relative to the kind of growth rates that you've posted for the first half of this year guided to the third quarter?
Thanks very much, Asiya, and thanks again for hosting us here today. It's always a great mark of the end of the summer that we come to the Hilton here with you at Citi. Look, there's no doubt about it that as we came into this year, compared to where we've come out of the first half of the year, we've certainly exceeded all of our expectations, in really every respect. When I think about Q2 in particular, yes, our IT Datacom business, I'm sure we'll have one or two questions about that. We had fabulous performance. Even if you take that away, the overall performance of the company in the second quarter and really in the first half has been spectacular.
I mean, we would have been saying, you know, if we didn't even have any of this IT business, we would have been saying this was a fantastic quarter, and I think it gets to the broad trends across really all of our end markets. These are not new trends, the proliferation of electronics, the expansion of the interconnect content across those electronics, but I think we saw here in the second quarter with essentially all of our end markets growing nearly in double digits. We had two end markets that grew by just 8% organically, and the rest of them grew in double digits on an organic basis. It's a real acceleration of all of those interesting pockets that we talk about for so many years across the electronics industry.
I think it's, in many ways, a reflection of, as we've grown the company, we've been able to preserve what is so special about us, which is that entrepreneurial culture that allows us to capitalize on these opportunities with the level of speed and agility that has served the company well through so many cycles. And so I think the overall demand environment is robust. The proliferation of electronics and the expansion of the content of interconnect products continues apace, and our ability to get a little bit more than our fair share of all of those opportunities has, if anything, strengthened it.
Since you brought the topic of IT Datacom, we'll jump just right in, because that's been like a great driver for Amphenol, but there are lots of moving pieces in that AI demand story, right? I mean, there is GPUs, there is ASICs, there is copper, there is fiber, and there's different cooling technologies, and there's a lot, so as you think about connectivity and the demand for that connectivity to grow, and the fact that, you know, you have copper, you've also made a sizable acquisition announcement. Just help us understand the demand outlook for connectivity for your core offerings, and then we can jump into the acquisition that you've just announced as well.
Yeah, so I mean, look, the beauty of this revolution of AI that we're now a couple of years into is that because of the nature of how these systems work, they're doing massive amounts of computation. The more you want the system to perform effectively, the number of computations goes up exponentially as you try to narrow these models into real accurate portrayals of whatever the users are trying to achieve, and because of that, you require more interconnect, because as you have faster and faster speeds, more and more computations, lower and lower latency requirements, higher density of chips, GPUs, and otherwise in racks, across racks, you just have a multiplicity of interconnect that's required for that.
I think without even getting into the topic of what format of interconnect, this immense rising tide of interconnect requirements, which is really part and parcel of the exponential growth of computation required in accelerated compute, I think that's something that's been a fabulous development for the industry, but in particular, it's been a great development for us because as the leader in high-speed technology, as the proven execution leader in the industry, the one who's able to pivot quickly, who's able to ramp up when customers need us in a way that is truly unique for a company of our scale, that has put us in a disproportionately favorable position across this market, and then, you know, I'll sort of take your lead and talk a little bit about the acquisition.
The beauty of the CCS acquisition is, in addition to exposing us, you know, really in a balanced fashion across data center, broadband, and building connectivity, it significantly expands both our capabilities, our, our capacities, and our competency in fiber optics, and while we've been in fiber optics for a long time, this is a real quantum leap for us in terms of the depth and the breadth of our fiber optic internet capabilities, which allows us to support customers in the here and now who are today using a wide array of optical solutions across the data centers at the same time as they use a wide array of our, of copper solutions in closer in, in the rack, rack to rack and the like.
So now we'll be able to go to customers, and we've already started to see the reactions very positively from our customers and offer them the total suite of interconnect solutions that they need inside a building for a data center. And I think that's a very unique position that we'll really be the only one who can offer that kind of A to Z interconnect solution, across this really exciting area with the increasing density of the requirements of the system.
Okay. And sort of when we talk AI, we also see a lot of lumpiness, right? I see that from some of the AI server OEMs that support or that sell to hyperscale cloud providers, hyperscalers. There's a lot of lumpiness in that market. How, you know, how has Amphenol worked through that lumpiness? And how have you, how are you navigating that as it relates to your own factories and managing the utilization levels in those factories just given the lumpiness?
I mean, look, our organizational approach is uniquely tailored for lumpiness. Let's put it that way. I mean, just think about, you know, the lumpiest of all markets that we've been successful in for a long time, which is the mobile devices market. I mean, how are we one of the only companies of our scale who's kind of stayed in that market is because of the agility that is so second nature to how we operate that allows us to flex up and down when necessary. Now, I look, I would say for us, the kind of quote unquote lumpiness of this market, I mean, we grew 133% year over year in IT Datacom in the second quarter.
That is an extraordinary effort by our teams around the world at doing like really hard things, like ramping up new automation machines, getting supply chains in order, getting materials in order, setting up new facilities, hiring thousands and thousands of people in a variety of countries and regions around the world. And I think, you know, it's maybe lost on the outside, like how non-trivial that is, like to more than double a business. It was already not such a small business in its own right. And I think the testament to that is really just the fortitude of our people being able to sort of break through barriers and make it happen.
And so, you know, when we think about lumpiness to the extent there is, and, you know, look, one day there will be. There's always going to be volatility in all these markets. We've always demonstrated as a company for my entire career in Amphenol, which is now, you know, I'm in my whatever 27th year in the company, or now I'm in my 28th year, I guess, that our ability to react quickly both to the upside and if there is a downside has been what's really distinguished us in the marketplace, and you see that in the crisis times of back in 2001, 2009, 2020, where we not only reacted faster, preserved our position better than our peers, but also preserved the financial performance of the company.
And, you know, having our like peak to trough margins down by just 300 basis points in each of those, in each of those crises. And not that we see a crisis or anything happening. We never predicted one of these crises. But, but what made us able to manage through that is still the very same organizational culture that we operate today, even though we're a much bigger company. And that gets to kind of my, my sort of primary role in this job that I've been so fortunate to have for nearly 17 years is to protect that culture of Amphenol and to make sure that we can scale the company amidst that culture. And I think we've done a great job of that so far.
Yep. I'm going to switch to Craig a little bit, ask about margins. Craig, Adam can have a drink of water here. You know, again, record operating margins just in the past quarter that you just reported. Maybe help investors understand what's driving that very strong margins. And you've talked about incremental margins now approaching 30% on a combined company basis, which obviously includes, you know, acquisitions that you've been doing. Even last year, you had a couple of big acquisitions that you just absorbed this year as well. So what are drivers that are enabling that higher incremental operating margins to come through? And how sustainable is this going forward?
Yeah, no, thanks. No, no, no doubt 25.6% in the latest quarter is certainly something that we're really proud of. I'm coming off of a quarter that wasn't so bad at, you know, 23.5%. I mean, we're really, you know, executing well as a company. I think the first thing I'd start with is I think that the expansion of margin that we've seen over not just the last couple of quarters, but over the last even year or so has really been, is driven by, you know, one thing, which is really that our products as a whole are really just adding more value, you know, to our customers and into the architectures that they're building.
I mean, interconnect products, you know, broadly speaking, are becoming a more and more important part of the functioning of the systems that we're, you know, architected into. And our ability to be able to deliver, you know, these high technology products and then, you know, on the execution of being able to ramp up across all of our markets is giving us the opportunity to share some of that continued added value in the form of margin and margin expansion. So we're certainly that's. I think that's part of the story of this, you know, increased margin that we've been seeing. You know, in addition to that, you know, we've been growing quite quickly. I mean, you know, growing 40% organically as a company is quite significant. And, you know, we're able to. We're executing strong actually on that growth.
That execution combined with that strong organic growth is really converting into, you know, strong margins for the company and, you know, in the place we should be. Now, I have mentioned before that there's certain, maybe certain costs that we're not adding quite as quick as, you know, as our revenue growth. When you're growing 40%, sometimes there's a few people that you can't hire fast enough. This is on the, you know, I would say moderate impact, not, not so significant. So, you know, we're really converting at, you know, well over 30% organically right now. And, you know, and certainly we, you know, we continue to expect, you know, good margins and conversion this year.
But I say as we kind of think about medium to longer term, we should think about that 30% conversion margin under a more normal growth pattern, under a more normal cost pattern. So I think this 25.6% is where we should be at these revenue levels. And I think as we continue to grow, we'll be able to expand those margins kind of at that 30% conversion margin. We talked about 25% for a very long time. And I think, you know, given the reasons I mentioned before, I think 30% is the right way to think about margin expansion at this point in time. And, you know, super proud of the execution of the business in terms of being able to reach these really, you know, industry leading profitability levels, you know, and continue to improve them from here.
Just remind us for the asset that, you know, you obviously made Trexon as an acquisition. You have now CCS. CCS is the bigger one.
Yeah.
Right. And it'll take probably a little bit longer to close as well, just because it's bigger.
Sure.
Like how should we think about the impact of such a big sizable acquisition on those margins then?
No, that's certainly a good question. I mean, I mean, certainly when I say 30%, that's going to be impacted by some acquisitions. I mean, CCS will come in in the, you know, high teens level after some amortization, you know, from the acquisition. So that's going to have some dilutive impact on the margin expansion. Certainly still be very accretive from an EPS perspective. And, and over time and, and Trexon is probably actually in that same range actually. So over time, both of those businesses I would expect to be able to improve profitability and, you know, closer to the company average profitability actually because, you know, these are two great businesses, great technology. There's no reason why they should be below the company average profitability and certainly they deserve to be at a higher profitability level.
That will happen over time as we've already seen progress on CIT. We've already seen good progress on Trexon in the short period of time that we've owned them.
Just, Adam, when you think about the AI data center versus, you know, data centers that were just built for cloud, when you think about the attach rate to these high performance GPUs or ASICs that are enabling these workloads, do you have like a, do you think about a TAM attach for connectors? Like, what's that ratio relative to a cloud data center?
We don't put like a specific number.
Okay.
But the Adam number is. It's a lot more. And I mean, what does a lot more mean? Is it two times, three times, four times? I don't know. I mean, it's hard to sort of pin that down. But there's no question there's a lot more, and that just has to do with the nature of the architecture. The fact that in an accelerated compute environment, the chips all have to talk to each other. Whereas in a traditional sort of trunk branch and leaf architecture, it's all about just finding the information in one place and then processing that and moving it out into the internet again. You know, I go on my phone and I Google a video of a funny corgi skating or something like that, and it finds it somewhere.
Whereas if I go on and I make a video of a corgi skating, that's a very different endeavor that things have to talk to each other and create that thing. And so that creating and talking to each other has to happen over something. And it happens over the interconnect. And that being able to enable that at ultra high speeds, at ultra low latency with a very reliable solution, it's something where we're creating real value for the customers. But, you know, is that content two times, three times, four times, five times? You know, I'm sure there are great experts hired by many in the room to figure that out. We haven't sort of wasted the time to figure out what that is. We know it's a lot and we know that it's really a great opportunity for Amphenol.
And then maybe just shifting on that with to Craig a little bit, how do you manage that against the need to invest, right? Because you're growing at these phenomenal growth rates organically. How do you then balance that with how much should I invest? What's the right amount to invest? I don't overinvest because if there's going to be lumpiness, it's going to affect utilization rates. How do you look at that and how do you project the CapEx intensity of the business?
It doesn't start with me actually. It starts with our general managers and our general managers determine kind of what they need based on talking to their customers on a very detailed level about their forecasts. They certainly risk weight that based on what they expect that actually they'll need. We certainly have a lot of conversations with our customers around that. Even in some cases, especially with certainly some of these IT Datacom AI applications where we're asking our customers to share in some of that investment, with them and to have some skin in the game, so to speak, or to give us purchase orders that go out a little bit longer. We talked about that last year a little bit more as we were really ramping.
So, you know, it's all done in the context of the programs we're on and the customer relationships we have and understanding kind of what's needed. There's no doubt there's a little bit more investment needed because of the automation that's needed for these types of, you know, these types of really high technology products and certainly capacity expansion. So we are a little bit higher than typical, slightly higher. I mean, not any meaningfully higher, but slightly higher than typical from a CapEx perspective. But, you know, we're doing it in a very thoughtful way with, you know, with conversations with our customers, having them ensure that they're actually also investing with us. And, you know, certainly we, you know, it's really proven out to be a, I think a good formula and driven good growth for the company.
We think it's going to ultimately have a great payback as we've already started to see.
Outside of AI, you guys obviously also participate in other markets. There's consumer electronics, there is industrial, there's autos, and there's mobile broadband and network infrastructure. Can we touch a little bit on each of those end markets and what you're seeing? We could start with mobile consumer electronics because that's always hot in the back to school and Christmas shopping season.
Yeah. I mean, look, as I mentioned earlier, we were really pleased with the performance of all of our end markets and mobile devices for sure. I mean, we came into the quarter with an expectation that that business would be down in the kind of high teens on a sequential basis. And in fact, it was up, I think 4% sequentially and 14% on a year-over-year basis. And that's just, again, you know, we've done this so many times in my recollection where we go in with a certain expectation, either customer demand is a bit more and our team flexes quickly for that, or maybe a competitor falls down a little bit and we get a little more than our original share expectations. But it all comes down to just execution of our team on that.
And, you know, the mobile devices market is an exciting market. It's not for the faint of heart. It never has been. It's always been our most volatile of markets. And it's always been one where that unique Amphenol approach has been a real tailor-made way for success. Our team is working on a lot of exciting things because the beauty of mobile devices is these things are proliferating. It's not just like a phone in our pocket or a tablet on our table. It's so many other things that are sort of becoming interwoven and interlinked. And, you know, I'm excited about the long term as we push kind of accelerated computing out to the edge. What does that mean for devices? And what does that mean for form factors? What does that mean for the type of things that are going to be enabled?
And I think mobile devices is going to be one of those places where we'll see some of the manifestations of that over the long term. And, you know, we're, as long as I've always said this, as long as the hardware has value to the end customers, I believe that that can be a good business for us and one where we can participate and we can help our customers to create that value. You know, over the years, there've always been questions about, well, is it just software and is it not? And every time those questions have come, there's then been a new innovation in hardware, which we've helped to drive.
I think we continue to see that in the long term, there will continue to be great places for our team to really push our products deeper and deeper into these exciting array of products. I'm, you know, we're only what, four months away from CES. That's always a fun time to start the year. And maybe I'll see some of you folks walking around the halls as I usually do. But, you know, that I always find it so fascinating, you know, the 90% of schlock and 10% of amazing new things that come about every year, things you never thought you needed. And all of a sudden now, you know, they're all over my couch at home.
Okay. Shifting to maybe the next end market, we could talk about the industrial end market. I know it's a little, it's fragmented. I mean, you have defense in there as well and air.
Not the, it's just industrial.
Industrial, and then there is defense.
Right.
Maybe we can talk a little bit first about industrial. That's a pretty sizable market.
Yeah. So industrial is a great market for us. It always has been. And it's really our most diverse of markets. And it's a market where you have one thing in common, which is its applications, which have a uniquely harsh environment. That can mean a really dirty offshore oil well. It can mean a down in a mine. It can mean in an operating room. It can mean in a semiconductor fab, you know, class 1000 clean room. All of those are very hostile environments into which our customers want to put more and more electronic content. The industrial market had, you know, a rough kind of, I don't know, seven, eight quarters leading into the middle of last year. And it was only really in Q3 of last year where we started to see that market leveling out.
We actually, that I think Q3 of last year, if my memory serves me, was the first quarter where we were sort of flat organically after seven quarters of declines, and then in the fourth quarter, we actually saw 6% organic growth, and again, in the first quarter, 6% organic growth, but still with weakness in particular in Europe, and in the second quarter, what we were really excited by is first of all, our organic growth, we reached organic growth of 12%, so it doubled what it was in the quarter before, and we saw growth in Europe, and so, you know, I'd been talking about green shoots of growth, maybe seeing some green shoots early in the year, and I think we certainly saw more than green shoots here in the second quarter.
And in addition to the regional breadth of the growth, we really saw that across a lot of the subsegments of the industrial market, you know, places like medical and factory automation, places like alternative energy and heavy equipment, you know, among the many, many segments that we track. And so look, we'll see, you know, how that looks in the second half. But at least the first half is a bit better than we would've anticipated coming into the year. And you know, at the same time, we'll continue to look for unique acquisitions. We've made, you know, some great acquisitions. The CIT acquisition, while a majority of that business was aerospace and defense, it also had this fabulous industrial business in particular around medical.
And then we layered onto that the acquisition of LifeSync earlier in the year, which is another wonderful company that has really positioned us as a leader in medical interconnect, which is part of that industrial segment.
Just to remind investors, so there is inventory normalization as well happening in some of that, in that industrial market where you talked about some of your distributors maybe coming back to replenish some of the inventory. Then you have end demand as well improving in that.
Yeah. I mean, I think there was definitely an inventory correction.
Yep.
Over those seven quarters in industrial, and I would say that, you know, traditionally our industrial business is more heavily distributed. I would say that over time it's become a little more balanced because as we've made new acquisitions, especially around value-add interconnect products, those don't tend to go through distribution. So a little bit less than historical of that industrial business is through distribution, albeit you know, it's still meaningful for the folks working there. I wouldn't say that today what we're seeing is a replenishment, meaning that distributors are buying stuff from us and just raising their inventories. I think it feels a little bit more end demand. And we see that in particular because a lot of our value-add businesses, which just sell direct to customers, they're also seeing that same strength.
Fair enough. And then the military, which has a military and defense, aerospace and defense has been a pretty strong market for you guys. Obviously there are spending dollars that are there. Unfortunately, there's warfare in the world that's affecting that. But in general, and then this recent acquisition that you made should help to bolster your offerings in there. So just help investors understand, you know, what's aside from increased dollar spending there, what's the higher value-added content, connector content that's going on in the military and aerospace.
Yeah. So look, starting first with defense, I mean, you know, defense is our birthright. We've been the leader in defense interconnect, in particular defense connectors, through the history of Amphenol. It's an area where we were on every major program and we're constantly trying to expand the range of our products. We've been very thoughtful about that, but also very aggressive in doing that. If you look this year or last year with the CIT acquisition, CIT brought us the cable and wire offering, that's coupled with our connector offering, enhanced our value-add products on the defense and as well doing that in aerospace. Earlier this year, we announced last quarter, we acquired a company called Narda-MITEQ, coupled with a couple of other really unique RF acquisitions, now brings us into the active RF interconnect.
And then very recently we announced the acquisition of Trexon, which is a fabulous company, a really wonderful business, a very diversified business in terms of its programs, its exposure, but with one thing in common, which is a high, a very high technology value-add interconnect offering. And we really see that, especially in defense, where you have more and more products being put into these systems, whether it's a military vehicle, a rocket, an airplane or the like communication systems, that getting all those things to operate with each other requires just a higher intensity and a higher reliability and a higher technology complex interconnect assembly. And that's what Trexon does best. So we've known this company for a long time. In fact, we acquired from the same shareholder the TPC business, which was our industrial cable.
This was the defense business kind of in many ways as a sister company. They weren't at the time ready to sell this business. You know, now, now they were. It's a fabulous business. We're really excited about how that will bring us to an even more important position with customers across the defense market. Another piece of that is what we, you know, it's not necessarily defense per se, but space. I think we've made a concerted effort in the last, you know, call it half a decade to broaden our position on the non-traditional space players. This again takes us, you know, another step forward in having a much stronger breadth of products, deeper relationship on these next generation space applications.
And, you know, those aren't necessarily defense, even if we put that in our defense, that's how we classify it.
Yeah.
It's a really interesting space as well. Then the third piece is on the new defense contractors. You know, there's this whole world of kind of high velocity, more techy defense players. And as we broaden our product offering, you know, we now have very strategic relationships with those companies as well. And those companies wanna work with a nimble supply base. They don't wanna work with the sort of a traditional approach to the military 'cause a lot of the folks who are there, they're like black t-shirt wearing, you know, Birkenstocks and dogs in the office kind of folks, as opposed to the traditional military primes who, you know, you gotta wear a tie like I do at an investor conference to go there.
All right.
That's a big difference.
A little bit on your guide maybe for calendar 3Q investors, you know, we're wondering why is it given just the growth that we're seeing in AI now, why is it a sub-seasonal guide for calendar 3Q? Maybe you can just highlight like a couple of things that were factored into your guide and why you don't think that AI will continue, you know, why the sub-seasonal guide is unlikely perhaps to continue as we look beyond 3Q.
Yeah. Well, I mean, look, I'm not gonna try to give guidance for beyond 3 Q. It's hard enough to give guidance in the next 90 days. And I think we talked a lot on the call about the fact that in particular in IT Datacom, our team just out executed our original expectations as we went into the quarter. And that resulted in, call it a week of extra shipments that our customers hadn't expected and we hadn't expected, frankly, going into the quarter. And so when you think about the IT Datacom market from Q2 to Q3, you kind of have to factor in this, this kind of, call it 3% of sales or a week of production, that, that we overperformed on.
And that overperformance is in many ways a reflection of just so many folks in Amphenol just doing their job a little bit better in the quarter, getting machines ramped up in a faster time than we expected, you know, getting the cable to be run at a faster rate than we thought that we could do, having our yields go up, efficiencies go up, like all these little building blocks that ultimately meant that we shipped more than everybody expected. And so that I think was the main thing that we obviously talked about on the call. Look, I think we feel good about the overall environment. I think we've given a strong guidance overall for the company.
And as always, we're gonna try to fight as hard as we can to capitalize on any opportunities that there may be to perform incrementally to that.
We have a few more minutes here. I wanted to ask, see if there is a question. There's actually two. If we can just get the mic to them very quickly so that they can.
Thanks, guys. I know your regional manufacturing is a really big advantage for you from a support perspective and from being in country. You know, you're treated as a local supplier. There's been some recent press, maybe not as applicable to you guys about some import tariffs as regard to optical fiber. And a couple of U.S. companies were named for that, but there was some specificity in there about talking about U.S. imports as opposed to things that were made domestically. So can you speak to your potential regulatory exposure where it comes to when you manufacture something in country? Like, do you guys have a not only an advantage from being in country just for customers, but are you guys somewhat insulated from potential regulatory impacts of things that would be technically imported, but you guys actually manage manufacture in country?
Yeah, look, I mean, very broadly speaking, one of the reasons we operate across 45 countries, irregardless of trade wars and the like, you know, without debating the merits of those trade wars, it is that we try to be close to our customers and we try to have a flexible and nimble approach to manufacturing, which has served us well for a very long time through a lot of cycles. You go back to the tariff environment of the kind of 2017, 2018, 2019. I think we demonstrated a really excellent ability to navigate that just as we've done again this year. We're paying tariffs right now on a variety of things. But you can tell that, you know, we're still realizing the margins that Asiya and Craig talked about earlier.
In terms of supporting our customers with local production, there's no doubt that we have an advantage because of our very fragmented global footprint to be able to navigate this for customers. And whether that's dealing with tariffs here by having manufacturing here, whether that's dealing with conflicts that various countries have, again, for a variety of reasons. I think being able to navigate geopolitics is a real excellent advantage that we have. You know, specific to fiber, you know, it's not been something that's been as big of an issue for us, but you can imagine that the CommScope CCS team navigates that and they're really well positioned with their footprint. And I'll say that they have fabulous domestic capabilities here. They also have capabilities offshore where necessary.
They're capitalized on some of the regulatory requirements that go with some of the funding programs associated with that. That's not trade as much as it is the sort of infrastructure funding and the regulations around that infrastructure funding. I mean, they talked about that publicly in the past. I'm not saying anything they haven't ever said, and I think their footprint and their competencies and capabilities position them well for however that evolves in the future.
Hi. Thank you. You mentioned the GPU interconnectivity on networking. I was wondering if you could comment about the copper versus the optical debate. Do you think copper is going to be here to stay? And in fact, when the bandwidth gets wider, do you think that copper might become even more relevant or irrelevant? Any insights there or potential further upside optimization opportunity? Thank you.
Yeah. Yeah. Yeah. Well, look, yeah, I let me say this, and I know I only have a short amount of time for a longer topic. Today in an AI data center, there's a lot of optics and there's a lot of copper, and they all serve different purposes. But the one thing that is for certain is customers want the lowest latency, lowest power, highest reliability solution, and that's given a length. And so if the customers can use copper, which is lower latency, which is lower power, and which is higher reliability, they're gonna use it. And then it's up to us to make sure that we can continue to push the performance of copper to the levels that they need.
I actually view this more as an opportunity than a threat because for Amphenol, to the extent that we can solve that problem for our customers, which we've demonstrated the wherewithal to do so far, and we have a great roadmap in the future, that actually allows us to create even more incremental value for our customers, and in my experience over these, you know, 27 or so years, if you can create value for your customers, they're willing to share one or two crumbs with you, and that's good business.
Great.
Thanks so much. Thanks everybody. Appreciate it.