TE Connectivity, a global leader in connectors, is experiencing steady growth, with AI and the premiumization of the automotive industry driving value enhancement.
According to TF Securities Research, TE Connectivity, a leading global supplier of connectivity and sensors, recently announced its FY2025 results, demonstrating robust structural growth resilience. Its industrial solutions business became the core growth engine, particularly driven by explosive growth in demand for AI server interconnects, which significantly boosted the company's product mix and profit margins, leading to improved market valuation expectations.
The FY25 results validate structural resilience, with growth quality outperforming simple cyclical rebounds. Industrial solutions net sales reached $7.874 billion, a significant year-on-year increase of 23.7%, with operating profit margin improving to 17.7%, becoming the company's main source of incremental growth and elasticity. The transportation solutions business remained stable at $9.388 billion, serving as the foundation of performance, with only slight fluctuations in profit margins.
Price increases reflect pricing resilience under cost transmission and supply-demand mismatch, with the leading company's bargaining power marginally strengthened. The company announced a 5%–12% price increase for some products starting in January 2026. This price increase is mainly based on two conditions: 1. Rising material cost pressures; 2. Short-term supply elasticity is weak due to constraints in high-end interconnect capacity and verification, making price adjustments easier to implement. While automobiles remain a crucial part of transportation solutions, growth has shifted from quantity to per-vehicle value and high-voltage/high-speed penetration. The company follows a path of increasing per-vehicle value, projecting it to rise from approximately $60 in 2019 to approximately $80 in 2025, and further to approximately $105 by 2030. Subsequent growth will primarily come from: 1. Upgrades to 800V/high-voltage platforms; 2. The expansion of high-speed interconnects and related products driven by intelligent driving.
AI server interconnects have become the strongest marginal variable in the industrial sector, driving product structure shifts and value increases. The company's data center business saw a 73.3% year-over-year surge in net sales, primarily driven by expanding demand for high-speed data center interconnects and product specification upgrades resulting from platform iterations.
Robotics opportunities lie more in platform-based penetration across the automation chain than in a single system cycle. FY25 automation-related net sales reached $2.147 billion, representing approximately 27% of industrial business revenue. The company's business covers robotics and motion control, sensing and controllers, and other fields. It penetrates the market through platform-based penetration by providing a combination of products such as connectors, wire harness assemblies, and industrial networks. These products have high replacement costs and long lifecycles after introduction.
The valuation premium stems from the structural growth expectations following breakthroughs in its AI business. Benefiting from the increased proportion of high-value-added AI-related businesses and upward revisions to profit elasticity expectations, the market's valuation (PE) for the company has risen from 15-20 times to approximately 35 times.
