Through a series of bold mergers and acquisitions, Amphenol quickly emerged and became the second largest company in the connector industry. Amphenol CEO Adam Norwitt shared his views on the company's huge product portfolio, product strategy, and the Chinese market, explained his insights on the company's huge and diverse product portfolio, and explained in detail how its precise product strategy helps the company in To maintain a leading position in the fierce market competition.
Since January 2000, Amphenol has successfully expanded its business footprint through its aggressive acquisition strategy, acquiring more than 70 companies. During 2023, the company welcomed 10 new members. As the new year 2024 begins, "Amphenol" continues its expansion momentum, and its latest move is the acquisition of Carlisle's CIT business. Thanks to $600 million in sales from companies joining in 2023, and an additional $900 million from CIT, Amphenol not only outperformed the connector industry average in 2021, it also significantly outperformed the S&P 500 index. This achievement highlights the great success of the company's acquisition strategy and also reflects the important contribution of its solid organic growth to performance improvement.
At the forefront of the global electronic connector industry, Amphenol relies on the vision and vision of its leadership to continue to advance the company's development and growth. Since 2000, Amphenol has successfully built a large and diverse interconnect product portfolio through a carefully orchestrated acquisition and organic growth strategy that supports the rapid development of emerging technology areas such as artificial intelligence and quantum computing. , also meets the broad needs of the traditional electronics market, covering many key fields such as industrial equipment, automobiles, transportation, military, data communications, computers and peripherals, medical and consumer products.
Amphenol's business expansion is not limited to connector and cable assembly manufacturers. The company's strategic reach also extends to other high-tech fields, including manufacturers of antennas, sensors, microwave components, optical fibers and broadband-related products. This diverse product line and technical expertise positions Amphenol in leading positions in the high voltage, fiber optic, circular, PCB and RF interconnect markets.
Adam Norwitt joined the company as an intern in 1998 and worked on mergers and acquisitions in Taiwan and China. He then held various management positions, becoming president of Amphenol in 2007 and director and CEO of the company in 2009. Adam Norwitt holds a BA in International Politics from the School of Foreign Service at Georgetown University, an MBA from INSEAD in France, and a JD from the University of Michigan. He shared some insights into Amphenol's success.
Q&A
Q：Amphenol's 2023 financial results are down due to acquisitions. However, Amphenol actually outperformed its industry peers. How is it done?
A：The company's outperformance in 2023 was a result of granting management teams complete autonomy to run their operating units. Ground-level teams, those closest to customers, have absolute flexibility. We do not micromanage from headquarters (HQ). However, common sense dictates that operating units take advantage of Amphenol's scale. Amphenol's operating units are encouraged to collaborate in order to fully leverage the company's technology breadth and market position.
For example, many of our units manufacture cable assemblies. We do not insist that the connectors on the components must be Amphenol products. If they can get connectors at a lower price, they'll use a competitor's product. This is a great example of our commitment to management autonomy and business operating flexibility.
Q：How do you incorporate newly acquired companies into the mix?
A：We have three divisions, 14 groups and 135 operating units. The new company will not be merged into Amphenol and will have complete operational autonomy. These divisions are Harsh Environment Solutions, Communications Solutions, and Interconnect and Sensor Systems. Sets high standards for performance and rewards our team accordingly. For example, if sales grow by 7% and revenue grows by 11%, our managers can earn 100% of their target bonuses. I hope the team will work hard towards a common goal with high morale. Combining performance and reward is very effective.
Q：In addition to connectors and cable assemblies, Amphenol is also acquiring sensors and antennas. What other products does Amphenol have in the future?
A：We are fortunate to be in the rapidly growing and lucrative electronics industry. We plan to stick with our current strategy and do not expect to add non-interconnect related products. After all, the connector industry will be worth $84 billion by 2022, the cable assembly market will be worth $214 billion, and the sensor and antenna industry will be worth $100 billion. These large and growing markets provide us with substantial opportunities.
Q：What does Amphenol's future look like in 10 years? At the current compound annual growth rate of 10.8%, Amphenol's annual sales will reach approximately $28 billion in 2033.
A：Amphenol is well positioned in the growing electronics industry with a broad range of products and a good entrepreneurial attitude. It is expected that Amphenol's corporate culture will remain vibrant and will be able to continue our past success into the future.
Now, let's look at the data.
Amphenol's acquisition strategy, coupled with organic growth, has increased Amphenol's market capitalization from $1.3 billion on January 1, 2000, to approximately $65 billion today. The compound annual growth rate (CAGR) is 17.7%, compared with the S&P 500's 5.0% CAGR, which is nearly three times faster than the industry as a whole. Its connector and cable assembly sales are growing at a CAGR of 10.8%, compared with the industry's CAGR of 4.0%..
Amphenol's total sales are approximately $12.5 billion
More than $2.5 billion of this was in products that were not connectors or cable assemblies
The second largest company in the connector industry
In 2000, Amphenol was ranked the fifth largest connector company in the world. Now, Amphenol ranks second in size after TE Connectivity. The table below ranks the top 10 companies and shows how the rankings have changed since 2000..
In 2000, TE Connectivity's connector business was 6.7 times larger than Amphenol's. TE Connectivity is now 0.8x larger and has grown approximately $2.5 billion in connector and cable assembly sales. In 2000, TE's connector sales were approximately $7 billion greater than those of Amphenol. Obviously, if it continues to implement its acquisition strategy at the current pace, Amphenol will eventually threaten TE Connectivity's number one position.
China drives economic growth
The table below shows Amphenol's sales by global region and its growth rate in 2022.
Key points:
China drove Amphenol sales to grow at a compound annual growth rate of 29%.
China's share of Amphenol's total sales has grown from a minimum in 2000 to 27.3%.
Amphenol currently has approximately 250 manufacturing facilities, approximately 50 of which are in China.
Amphenol quadruples market share
Amphenol’s share of the connector market has grown from 2.9% in 2000 to 11.9% now
Amphenol market share
Since 2000, Amphenol's connector and cable assembly sales have grown by $8.9 billion.
Given the large number of mergers and acquisitions, it would be understandable if key financial benchmarks slipped. But that's not the case with Amphenol. Throughout its acquisitions and rapid organic growth, Amphenol's key financial metrics have outperformed its industry peers. (Author: Hong Xuejuan)
