- Interconnect vendor Amphenol is on an acquisition spree
- Despite sizable competition, Amphenol’s advantage lies in its broad range of customers
- It’s also seeing revenue boom from AI demand
Amphenol is building up quite a resume in the vendor space. In the span of a few weeks, it acquired CommScope’s Connectivity and Cable Solutions (CCS) division for $10.5 billion and most recently inked another billion-dollar deal to buy cable assembly manufacturer Trexon.
Amphenol’s M&A moves, coupled with a diverse product portfolio, could potentially elevate its role in the telecom equipment market.
The company makes fiber optic connectors, cables, antenna systems and other interconnection products for broadband, wireless and other industry verticals. With CommScope’s cable biz in its arsenal, Amphenol is shaping up to become “a much bigger player in the overall fiber cabling and connector business,” Dell’Oro Group VP Jeff Heynen told Fierce.
He said Amphenol’s top competitors in the broadband space now are Corning and electronics company TE Connectivity, along with vendors such as Belden, Molex and Prysmian.
As for CommScope, which offloaded its outdoor wireless unit to Amphenol in addition to CCS due to its heavy debt load, Amphenol saw an opportunity to “grow its share and its global presence at the expense of one of its most formidable competitors,” Heynen added.
The company already has manufacturing facilities in nearly 40 countries. It also has a leg up over the competition due to its involvement across multiple sectors, according to Morningstar analyst William Kerwin.
“Amphenol competes against numerous competitors in the fragmented electrical component industry, but its broad array of end markets allows it to expand the top line even amid an individual market downturn,” he wrote in July.
What else doe Amphenol do?
Apart from broadband and mobile, Amphenol makes interconnect equipment for the automotive, industrial, aerospace and defense industries as well as the IT and datacom market.
Its acquisition appetite is similarly broad. the vendor recently closed a $300 million deal to buy Narda-MITEQ, which designs radiofrequency and microwave components and subsystems for military and commercial customers.
But datacom is where Amphenol is really seeing demand, which is no surprise as data center builds ramp in tandem with AI adoption.
On the company’s second quarter earnings call, Amphenol CEO Adam Norwitt noted AI demand made up around two-thirds of year-on-year IT datacom revenue growth, as shipments were higher than expected.
“We have a very broad business…there are some big folks who are spending on this,” he said, pointing out AI orders are coming from the likes of webscalers, chipmakers, original equipment manufacturers (OEMs) and more.
Amphenol rides the consolidation wave
Amphenol’s acquisition spree is but a drop in the overflowing bucket of telecom and tech M&A.
Heynen previously said large-scale operator mergers have historically resulted in consolidation among broadband equipment vendors. As it stands, the industry consists of “a lot of vendors chasing after a smaller number of large customers.”
“The combination of the broadband equipment market maturing and so much money chasing after AI and data centers suggests to me that we will see more vendor consolidation in the broadband equipment market,” he concluded.
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