There’s not as much activity here in terms of rightsizing our footprint within Communications. That has been largely behind us. but there is some volume dependency within that. And then the other thing, keep in mind, and this just builds off what Terrence just talked about, the three businesses that are hitting the destocking, which is our Data and Devices and Appliances, which are within the Communications segment as well as our Industrial Equipment business, where that destocking has happened is not with our direct customers, just with our distribution channel partners. That’s also some of our most profitable business. And so as you start to see in your modeling out the year, as you start to see some of those things normalize and some of the destocking go away, you would expect that mix of profitability to help us as we work our way through the second half of the year as well.
Sujal Shah: Thank you, Amit. Can we have the next question, please?
Operator: We’ll move next to Samik Chatterjee at JPMorgan.
Joe Cardoso: Hey, good morning and thanks for the question. This is Joe Cardoso on for Samik Chatterjee. As it relates to your AI opportunity, and maybe this is more of a medium-term question in nature, but there has been increasing discussions or debates around the various architectures these cloud providers can take beyond just GPUs or underlying switch fabrics as it relates to TEL’s business and where you participate in these AI deployments I was hoping if you could just touch on that topic and discuss the breadth of the company’s portfolio? And whether you see yourself agnostic to whatever route your customers decide to take on their future architectural decisions there? And if there’s any areas of the portfolio that you think you could bolster or are you looking to bolster going forward? Thank you.
Terrence Curtin: Thanks for the question. And one of the things that’s great about the space we play in is when somebody makes an architectural decision as they’re building an AI cluster, that’s where connectivity comes in and is very important depending upon what is that architectural decision. And that creates a lot of customization. So, as everybody is trying to figure out how to get the compute power, also the thermal elements and maximize the design. Really, the things you just highlighted are things we really get excited about. And it’s where companies like ourselves, we really need to be playing with both the semi players as well as the cloud architects as well to really say, as they make these happen and certainly bring them to market at pace.
So, when you think about all the accelerators that you hear on every semiconductor call, really, they are the things that we get excited about and even in our quarter we just had, you saw earlier ramps than even we expected. And I think, if anything, we’re probably going to be more pleasantly surprised and negatively surprised as we go forward. The other thing that’s nice, like even that we see on that, I know last quarter, we talked about $1 billion of pipeline wins even in just where we’ve gone to up to $1.3 billion in just three months. And their programs are going to be out over three, four years, and that will ramp but everything when you think about how are you moving in these clusters data around, that has a need for connectivity and that connectivity and what we do is very high speed because if you have latency around that connectivity, that is a problem for an AI cluster.
So, I feel really good with the traction and where our teams are playing to get these wins. And I think it’s going to be one of the drivers as we move off from destocking as we get CS back on the growth here, will be something that we’re going to continue to talk to you about.
Sujal Shah: Thank you, Joe. Can we have the next question, please?
Operator: We’ll go next to Joe Giordano at TD Cowen.
Joe Giordano: Hey, good morning guys.
Terrence Curtin: Hey, good morning Joe.
Joe Giordano: Yes, I just want to follow-up on the AI discussion there. One, can you just let us know how revenue in this quarter in AI specifically looked relative to last quarter? And then just more broadly, how do you think about AI cannibalization of business you otherwise would have had on a more standard offering? Like if there’s — I’m guessing this is a mix positive for you like on a content standpoint, but if your customers have a finite dollar spend available to them? How much — is this like a transition of spending rather than like an increase in total spending?
Terrence Curtin: Well, certainly, you’re going to have — there’s only so many dollars when you win a CapEx budget. It’s pointed here. And what’s really nice is the content elements incremental. You still need a lot of servers and stuff to make an AI cluster work from a compute side. So, yes, there is some cannibalization, but is a net-net positive, Joe, when you look at it. And really, when you look at I know when we guided, we probably said we would have thought the segment and Communications would have been flat with the quarter before. All the upside in the quarter was due to AI application and ramps. So, when you look at that build is very important, probably as we start the new year, we’ll have a little bit of lumpiness just due to how the calendar works. But I think through 2024, you’re going to continue to see that AI number work up and ramp as we continue to ramp for our customers.
Sujal Shah: Okay. Thank you, Joe. Can we have the next question, please?
Operator: We’ll move next to Luke Junk at Baird.
Luke Junk: Good morning. Thanks for taking the question. Terrence, just wondering if you could put a finer point on how you’re thinking about our growth potential in auto in 2024. I guess I’m especially thinking about EV-related impacts amid maybe some flattening overall in adoption but set against what has been generally rising content for you, maybe even a little upside versus that 2x multiple? And maybe more importantly, just your overall breadth and auto and EV that could limit your impact to any one customer? Thank you.
Terrence Curtin: Yes. So, you have a lot of questions in that question. So, I’m going to try to do my best there. So, thanks for the question. I think the first thing is let’s talk about 2023 out growth. I think that’s important that we all get aligned about it. Our auto business grew over 12% in 2023 versus auto production of 3%. So, you saw 900 basis points of outperformance. And I think you got to take that into two buckets. Two-thirds of that 9% were content, one-third was the pricing that we did. So, I do want to make sure we’re all just baselined on that. As we look forward, we feel very good about the 4% to 6% over production. And I think to the point you said you never hear us talk about one OEM or one platform other over another.
