TE CONNECTIVITY PLC earnings calls

power connectivity for next-gen data centers

Q (Scott Davis · Melius): He asked how content or value changes as designs move to 800 VDC, liquid cooling, solid-state transformers and other next-gen architectures. He also asked if they could size the opportunity or give subjective color.

A: Terrence said architecture is changing and TE sits at the center of data and power trade-offs. He said power connectivity is agnostic to data-path choices and that content is going up; DDN revenue is approximately 30% power connectivity and they expect power connectivity to grow faster than overall DDN.

"we do see customers that clearly are experimenting with 800-volt DC liquid cooling, but you do have customers that are different spots in there." — Terrence Curtin (CEO)

backlog trends and seasonality

Q (Wamsi Mohan · BofA): He asked for color on trends across segments and any seasonality to watch as they enter fiscal 2027 with a strong backlog and a preliminary outlook similar to fiscal 2026.

A: Terrence said the backlog is strong and up about 30% year-over-year, with about $8 billion of backlog. He said the biggest chunks of backlog growth are DDN and aerospace and defense, which combined are probably 60% of the backlog growth, and they expect to be above seasonal in the first quarter due to industrial strength.

"Both of those combined are probably 60% of our backlog growth." — Terrence Curtin (CEO)

copper versus optical in AI racks

Q (Amit Daryanani · Evercore): He asked how the move from copper to pluggable optics and CPO affects DDN revenue — what they keep, lose, or gain as optics move inside the rack.

A: Terrence said customers are working constraints on both power and data, and they expect both copper and optical connectivity in next-gen racks. He said the copper addressable market is expected to grow over 100%, power is about 30% of connectivity, and optical is an additional TAM they are building chip-to-fiber and other fiber solutions for.

"That is a constant discussion, and it builds on even Scott's question. When we look at that evolution of the architecture, including the adoption of optical at the switch level in the rack, it is an opportunity that we see our addressable market continuing to expand." — Terrence Curtin (CEO)

auto market outlook and drivers

Q (Will Stein · Truist): He asked what is driving recent outgrowth in automotive-related demand and what gives confidence in growth in FY 2027 despite elevated rates and higher gas prices.

A: Terrence said production is expected to be slightly down across most regions, but TE's global positioning is unique and Asia has been overperforming. He said Europe is picking up in EVs and contributed to strong Q4 content, North America remains challenged, and they see confidence in the 4%-6% range based on program momentum.

"You do have to go back to our global positioning, which is very unique across our China position, our European position, and where it is around the world." — Terrence Curtin (CEO)

humanoid robots and content per unit

Q (Joe Giordano · TD Cowen): He asked where TE stands in discussions with leading humanoid robot manufacturers and how much content they expect per robot.

A: Terrence said the wild card is unit volumes, but TE already has content on platforms and a strong China position. He said automotive customers are reusing automotive capabilities for robots, TE supplies connectivity, power, motors and actuators, and up to $500 could be content for a robot with heavy compute.

"That would be a robot with some pretty heavy compute in it." — Terrence Curtin (CEO)

timing of DDN revenue growth

Q (Joe Spak · UBS): He wanted clarification on DDN growth pacing — Terrence said over $1 billion for the year but the investor was trying to reconcile quarter shape and why growth is second-half weighted.

A: Terrence clarified he said over $1 billion of DDN growth. He described the shape: DDN sales up slightly from quarter four to quarter one, up a bit more in quarter two, and then a bigger step up in the second half as customer programs roll in.

"I did say over $1 billion, so I want to make sure that first element is clarified." — Terrence Curtin (CEO)

margins drivers and inflation

Q (Asiya Merchant · Citi): She asked whether the strong incrementals in the fourth quarter and guide imply sustained incremental margin expansion through the year and what the drivers are.

A: Heath said they are balancing reinvestment versus what makes it to the bottom line and margins came in where expected, giving a decent starting point for Q1. He warned there will be quarter noise, no relief from inflationary pressures on resins, metals and freight, productivity is strong, pricing is limited, and from a modeling perspective it looks consistent year-over-year with recent trends.

margins drivers and inflation (repeat)

Q (Asiya Merchant · Citi): She asked about sustainability of incremental margin expansion and the drivers, since fourth quarter incrementals were strong and the guide shows similar strength in December.

A: Heath said margins are balanced with reinvestment needs and they expect the Q1 jumping-off spot to continue, though there will be some quarter noise for investments. He reiterated no relief on inflationary inputs (resins, metals, freight), productivity is strong, pricing opportunity is limited, and modeling should assume consistency year-over-year.

"I think from a modeling perspective, you can assume that it looks consistent year-over-year with how we've been trending." — Heath Mitts (CFO)

fiber attached tech and RAM Photonics

Q (Mark Delaney · Goldman Sachs): He asked for more detail on fiber traction, the RAM Photonics engagement with hyperscalers, and the outlook for fiber-attached technology.

A: Terrence said the fiber-attached technology is cutting-edge, very high density, and they are in the middle of engineering validation with certain customers. He added not every customer has near-term fiber-to-chip roadmaps, but TE will continue to update as validations progress and scaling will be required.

"It is very high density, and we are in the middle of engineering validation with certain customers." — Terrence Curtin (CEO)

DDN backlog conversion timing

Q (Manmohanpreet Singh · JPMorgan): He asked why DDN orders grew ~70% while revenues grew ~43%, and when that backlog should convert to revenue and whether it could drive an inflection.

A: Terrence said the orders are largely from hyperscalers and expect similar growth drivers next year. He said the backlog converts with a slight increase Q4 to Q1, higher in Q2, and a bigger step-up in the second half; the backlog is spread over next year and a little into the year after.

"That backlog is spread out over next year, and a little bit into the year after, which is really good because their program wins and really locking in with the customers." — Terrence Curtin (CEO)

how to pass rising input costs

Q (Varun Govindaraj · Bernstein): He asked what levers TE has to pass higher input costs from order entry to delivery, and whether they can re-price backlog, specifically on the DDN side.

A: Terrence said pricing practices vary by unit and market; metal riders are common and helpful, resins require real-time discussions, and teams sometimes reprice backlog where they don't want to bear inflation risk. He said price is a partial offset to inflation alongside productivity, and they have had customer discussions and actions to manage these costs.

"there's even times we've repriced backlog in areas where we see backlog going out that we don't believe we should take the risk of inflation in." — Terrence Curtin (CEO)

AI connectivity mix breakdown

Q (Shreyas Patil · Wolfe): He asked to unpack the remaining ~60% of AI-related DDN content beyond the 30% power and ~10% optical, and what supports scale-up copper in the rack.

A: Terrence said it is a mix of many products: about 30% is power, and the rest includes edge/IoT and compute/data fabric that can be copper backplane, mid-board, flyover cables and IOs. He said the interconnects are complex, customers are experimenting, and copper will remain in many places even as optical is adopted into the rack.

"When you think about it, about 30% is power." — Terrence Curtin (CEO)