Good afternoon, everyone. Welcome to Oppenheimer's 27th Annual Technology, Internet, and Communications Conference. Very pleased to welcome our next presentation from Avnet. We have Ken Jacobson, the CFO, and Joe Burke, the VP of Treasury and Investor Relations. The format today will be a presentation, but they will take some Q&A at the end. So if you'd like to submit those questions, on your screen, there's a little chat box in there. Send those over, and I'll ask those on your behalf. So without any further delay, Joe, I'll turn it to you to begin. Thank you.
All right. Thank you, Charles, and good day, everyone. My name's Joe Burke, as Charles mentioned, and we're gonna take you through some slides today. Some of those will be an intro to Avnet, but we'll also get further into current events and financials and whatnot. Before we do, I just wanna, you know, pause here at the Safe Harbor Statement that you'll see on the screen. Some of the things that we'll be talking today can contain, you know, forward-looking statements that contain, you know, there are some risks, uncertainties, and assumptions that are difficult to predict.
You know, these forward-looking statements that we have today are not the guarantee of performance, and you know, for certain of the factors that could cause differences in the risks that you see and the statements that you see in the results, please refer to our Form 10-Q and Form 10-K on file on our website and with the SEC, and you know, we will launch in. I would also mention that, you know, there will be a GAAP to non-GAAP reconciliation for some of the figures that we'll be mentioning in the presentation today. You know, let's start.
You know, taking a look at Avnet, just as in general, Avnet's a leading global technology distributor and solutions company that supports customers at every stage of the product life cycle, you know, from idea to design and from prototype to production. We have the unique position at the center of the technology supply chain that enables us to accelerate the design and supply stages of our customers, so they can realize their revenue faster. You know, we can help our customers navigate challenges anywhere around the world and help them get their products to market in complex markets. Some fun facts about Avnet: you know, we were founded in 1921 in New York City.
We've been in business for over 100 years, and we're headquartered today in Phoenix, Arizona, and we employ over 15,000 employees around the globe. You know, looking at us by the numbers, you can just see that, you know, we're supported by, again, the 15,000 employees, but 1,925 engineers around the world. We have well over 1 million customers served by Avnet and our operating group, Farnell, and we are well-positioned around the globe with a great global footprint of over 250 locations, administrative as well as operational locations around the world. And, you know, for fiscal year 2024, you can see the revenues that we just closed and reported last week at $23.8 billion.
Some of the key investment highlights that we'll be talking about today is about our position as a leader in the value-added components distribution supply chain with a long history of you know working with market trends, ups and downs, but what we do have is we've been riding the electronic cycles up and down, as I mentioned, and we're very optimistic about the proliferation of electronics in the future. You know, we have a great scale and scope to provide end-to-end offerings to our customers around the world with deep and diverse end markets. We have great supplier and customer relationships. We do not have any material concentration on our customer or supplier side.
And one of the investment theses that's good to note is our countercyclical balance sheet and cash flow dynamics, that as the market expands, we use our working capital or cash for our working capital expansion, and as the market contracts, we generate cash, and allows us to have a disciplined capital allocation with opportunities for significant shareholder return. So, you know, taking a look, you know, we've been in this business for over 100 years, and for over a century, we've been adapting to the ever-changing technologies in the supply chain. You know, from what you see here, radio parts, switches, fasteners, and today to where we provide end-to-end solution offerings to our customers.
We wouldn't be able to do this without building on a solid core of a foundation that's deep-rooted in supplier and customer relationships, and we've had the ability to adapt to wave after wave of change. And you know, as we look forward, we're very optimistic about the future of technology. You know, from 1921 to present, what holds the future and what gets us optimistic, we'll be talking about more in this presentation about the proliferation of electronics in almost everything we do throughout the supply chain and throughout the world. This slide here shows our global footprint.
You know, with our scale and scope today, that's been built through organic growth, some M&A, and just market share growth, we've been able to build a world-class leading footprint around the world, anchored by 10 primary distribution centers, as you can see where they are down at the lower left-hand side of this slide here. We have integration centers, 14 integration centers around the world, where we're providing services such as integration of programming, as well as software, as well as hardware on boards. On our device programming, where we're loading up software on certain types of chips and sending them out to our customers.
You know, if you take a look at this, we have great global reach to support our suppliers anywhere they want to go for market share, as well as our customers, and to be able to take them anywhere that they want to be around the world. On this slide here, we're taking a look at the four-pie chart that breaks us down in terms of the business region, product, and end markets. As you can see on the left-hand side of the chart here, Electronic Components makes up roughly 93% of our business, with Farnell 7%. Electronic Components is our high-value distributor. Farnell is our high-service distributor. We'll be talking a little bit more about that. From a regional perspective, you can take a look at our diversification.
Again, the key here is we're well diversified. So Asia makes up roughly 40% as of our end of our fiscal year 2024, EMEA, 35%, and the Americas is twenty-five percent. From the product side, you can see that, yeah, semiconductors makes up roughly 80% of our of our revenue. IP&E, or Interconnect, Passive and Electromechanical, makes up 16%, and then we have some other types of other products, computer products and things like that, test and measurement, that make up the remainder. And again, another key investment highlight for Avnet is we have a very diverse end markets, and we're very pleased with the markets that we serve. You can take a look at industrial, consumer, transportation, defense.
If I take a look at, you know, some of the, I'll say, industry analyst growth surveys for the CAGRs for the next few years, industrial, defense, and transportation and automotive are some of the key fastest-growing CAGRs that are projected, and we're happy to be part of that. So, you know, if you take a look at Avnet, you know that we're well diversified, have a great global footprint, and we can take our customers and suppliers anywhere they want around the world. You know, one of the things that Avnet has is Farnell. As a broadline distributor, there's not many broadline distributors that have a Farnell, which is high service.
So when you think about the core Avnet business, our large customers are coming in, providing us with high volume, and we provide service, but it's just not a high service. It's a lot of this work is done through host-to-host connections and you know, we're taking material resource planning forecasts into our into our ERP system and ordering from our suppliers in that fashion. That's the Avnet high-volume broadline business. Farnell is a high-service business, primarily dealing with smaller engineers and other hobbyists around the world. It's a high-service business. We provide you know, fast product, small quantities quickly to our customers overnight or same day, and for that, we command a higher margin.
We believe the combination of Farnell and Avnet together is a winning combination, and, you know, it's an unmatched offerings by almost any other distributor except a couple. So we'll move on to the next slide, please. When you think about our line card, you know, we're very proud of the line card that we have. You know, over 50 years of developing relationships with suppliers, you can take a look at how deep our line card is. You know, in terms of microcontrollers, passives, discretes, analogs, you know, we have it all. There may be a few that we don't have, but we have some great supplier relationships that provide, you know, good offerings in terms of analog and from all across the board.
You know, we have some very deep relationships. We're always looking to fill in gaps and overlaps in our line card, and, you know, we believe that this line card is a winning combination for Avnet. One of the investment theses also is we have a very strong management team that's been in place for a while and has significant industry experience, anchored by Phil Gallagher, a 42-year veteran in the industry at Avnet, in fact. So Phil's been our CEO for 4 years now. You can also take a look at some of the, you know, regional presidents and senior executives down below, and just to show you that, you know, there's significant experience in our management, and it's a long-tenured management.
One of the things that's key for Avnet is we have good succession planning to help us, you know, move through, you know, any types of changes that might occur down the line. One of the things we put a lot of time in, over the years is, succession planning, and we're very proud of that. You know, when we think about the market and where we're going from here, I've talked about the last 100 years, what makes us optimistic about the future? You know, even though the markets that we serve contracted in, 2023, we believe they'll recover in, 2024.
Led by the semiconductor recovery, we believe, based on industry sources that we tabulate, there's going to be a 7% CAGR over the next 3-4 years, and with the IP&E, there should be a 5% CAGR. Rolling all that up into the total market that we serve, which excludes, you know, DRAMs, flash, NPU, GPU, AI processors, you know, that's gonna expand roughly at a 6% CAGR. So that gives us optimism as to how we believe we're going to be, you know, growing over the future. So, you know, that's anchored by some of the business that we've put into serving AI data centers, and things like that.
So when you think about where we're leading, AI will not only go into the data centers, but to the edge, and we believe that we will be able to, you know, serve, our customers as they build their products out to the edge. Some of the top-end markets that you see here, wireless comm, data processing, but as we said before, as I just said, we'll be moving out to the edge on things that are, you know, smart homes, smart factories, et cetera. And again, if you take a look at where the market is today in terms of the supply chain, you know, we believe that the semiconductor has normalized at this point. Lead times are generally stable.
Pricing is generally in a normal range at this point, and we believe this sets us up well, that even though we're in a market correction or the final stages of a market correction now, we believe that we're well-positioned to, you know, to take advantage of the or to drive opportunities as the market recovers. So we'll next talk about some of the things that we're focused on to drive growth into the future. And, you know, if we take a look at our strategic priorities for growth, of course, it's anchored by, you know, great customer and supplier relationships, but some of the things that we're looking at that in terms of our partnerships and technical capabilities, I talked about our field application engineers. We have 1,900-2,000 field application engineers.
These provide, you know, technical capabilities for our customers who do not have such. We have a world-class supply chain competencies, which we'll be getting into. We have a best-in-class customer experience. We're constantly engaged with our customers to evaluate how they're doing from their customer experience, and we have an unmatched product and services portfolio. Of course, that's anchored by, you know, great, you know, systems and technology offerings that we have constantly building on our digital capabilities, and it's all anchored by, again, the 15,000 people in our field application engineers.
So this is the base for how we plan to grow into the future, and we'll just take a look now at some of the things that we've been talking about in terms of our profit and growth supporting capabilities, and one is demand creation. So taking a look at how does demand creation work, this is a situation where, as I mentioned, maybe our customers don't have the engineering capabilities. You have to remember that we deal with a long tail of customers who may not have engineers on staff. So what we do is we enter into a customer's sales process, and we evaluate what do they need.
Our account manager sees a need, brings an FA in to engage with the customer, and may perhaps we can help them identify a need and a design around what their next-generation product is. And if we are able to help them design a supplier chip into that product, we can register that, and we can claim that registration, and for that, we get a higher margin. Typically, those margins could be anywhere from, you know, 400 basis points higher than typical fulfillment business. So again, one of the key value providers or value drivers for Avnet is having engineers on staff to help our customers build products faster with better capabilities, depending upon what they want. You know, if they want speed, we can help them with that parameter.
If they want cost, we can help them with that. And so that helps us, that helps us with our sales. It also helps our our suppliers grow their, their reach and their market share. Another area that we find attractive is interconnect, passive, and electromechanical. That's where the majority of parts on a board today are IP&E, but the high-value ones and lower in numbers are the semis. So, IP&E has basically lower prices, but it's higher saturation on a board and we believe there's plenty of opportunities on the board and off for us to expand our IP&E business. Our IP&E business is roughly 16% today, as I mentioned on the prior pie chart slide. We're looking to expand that.
Generally, it's a higher profit business, and although the inventory turns a little slower than our semis, it's a higher returns, and it's as good or better return on capital. So we're always looking to grow this IP&E business to diversify our business model. You know, another area that we're improving is on our supply chain services. This is a very important offering for us. If we go back a few years, when supply chains were running fine, everything was run, and cost of capital was low, everything was run just in time.
But whether it was, you know, the COVID and lead times going out on, on products, whether it was perhaps a problem in the Suez Canal or lines down due to a frost and freeze in Texas, what our customers realized is, you know, the supply chain just-in-time practices of the past have to change to some extent. And so, you know, what we've done over the, especially recently, a nd this business has always been a part of our business, it's just that it's expanded since the COVID times. You know, for our customers, we help them to bring a little bit more continuity to their business. We help them ensure that there's supply, and we make sure that we can provide them with inventory and payment terms.
For our customers, that's, that's a value-providing service. For our suppliers, you know, we're able to give them better visibility of true demand, help them do better forecasting their revenues. And in some many cases, you know, we have suppliers asking us to come into a customer and help them with their supply chain. When a customer comes to our supplier, our suppliers may say, "That's not core to what we do. That's, that's core to what Avnet does. Let me introduce you to the experts." And so today, you know, we're very focused on providing these supply chain services to help our customers, you know, make sure that they have lines down are a thing of the past. Embedded is another product and value-added services that we provide.
When you think about Avnet, we're historically have sold, you know, IP&E and semiconductors, but increasingly our customers want to shift from microcontrollers to microprocessors and go from making a product to buying a product. It's all about getting from chip down to integrated solutions and helping our customers get to market faster. Therefore, we're adding value for our customer partners and for Avnet. You know, we reduce the development time, and you know, we recently announced within our embedded group the development of Tria, which is a focused business unit within our embedded group in this regard. You know, we're helping our suppliers also bring complex technology to the broader market. For customers who don't have the time or capability to do the make themselves, we're helping them to buy.
And again, this is a higher, higher margin business. This solution helps our customers with their production in the long run. And if you take a look at some of the applications for our embedded solutions, you can just take a look at whether it's transportation or industry automation, you know, smart factories, smart buildings, medical, and professional, you know, consumer. We're finding out that, you know, these embedded products help our customers get to market faster. I'll turn it over to Ken now to take you through the financial update and to take you through the rest of the deck. Ken?
Thanks, Joe. As we mentioned, the overall market we serve in the semiconductor and IP&E space is expected to grow, you know, over 6% over the next few years and really, beyond that with the secular trends of the proliferation of electronics. But if you really look at the last few years since Phil has taken over and our leadership team, you know, we've had a 15% sales growth CAGR prior to the downturn, from a revenue perspective. But more importantly, you know, our businesses want to scale, and as a global distributor, we can create meaningful operating leverage, you know, with that revenue growth.
And so you can kind of see the growth within the overall operating income, and operating income margin has expanded from 1.7% in fiscal 2020 to 4.6% in fiscal 2023 through that operating leverage. We believe, you know, that business model holds true into the future. We have a global footprint that allows us to scale without adding a lot of operating costs. And so that future growth we expect from the broader market, we're able to continue to leverage and create operating margin and operating income dollar expansion. From an overall shareholder return perspective, you know, we've been very consistent in terms of an increasing dividend over the past several years.
This is about a 15% increase on average over this timeframe, with our next expected increase to come here in the September quarter, subject to our board of directors' approval. In addition to share count, we've been buying back shares. Our shares have continued to be undervalued by the market, in our view, and have traded consistently below book value, and we've taken advantage of that by returning five percent reduction in share count on average over the last several years. If you go back even further than this, we've had a commitment to share buybacks. We believe that our shares continue to be a good use of our capital, and we wanna be consistent in that approach.
But over this whole timeframe, we have returned a significant amount of cash to shareholders, and, you know, we expect that trend to continue into the future. From an overall EPS standpoint, similar to operating income growth, you know, have been able to create operating leverage, and, you know, with further buybacks, would expect this trend to even continue further. Clearly, in the overall industry downturn here in FY 2024, the market's been challenged, but we are starting to see signs of recovery, which we'll talk about in a little bit. But, you know, from our overall standpoint, you know, we have higher margin type of sales opportunities that kind of overall keep balance in terms of our sales growth, right?
We'll have some lower margin sales growth, but with some of these higher margin opportunities that Joe talked about, we believe we can keep the gross margin generally healthy and then, you know, control our expenses to be able to create further leverage on EPS as we move forward. From a capital allocation standpoint, we've invested $1.9 billion. About $600 million of that has been through CapEx, including the construction of a new warehouse in EMEA that should fund our future growth for several years to come. That was about 30% of the overall capital allocation, but the remaining 70% has been returned to shareholders. In terms of dividends and buybacks, you can kind of see the.