Fabrinet (FN) Rosenblatt's 6th Annual Technology Summit: The Age of AI (Part II) summary

Telecom and DCI segment performance

• Communication infrastructure revenue grew 40% year-over-year, with data center interconnect (DCI) up 140% and now at a billion-dollar run rate.

• DCI growth is driven by industry trends like 400ZR and 800ZR, addressing power constraints in large data centers.

• DCI demand is robust and diversified across several leading customers, making the business sticky and sustainable for several years.

• Multi-rail production is in development with customers and expected to be a future growth driver.

• Low Earth orbit satellite products are a rapidly growing and significant segment within communications infrastructure.

Automotive and industrial segment trends

• Automotive growth is led by new program wins with existing customers, especially in EV charging and lidar.

• Lidar demand is ramping up as the market consolidates around a few strong players.

• Industrial laser segment is seeing increased outsourcing and strategic partnerships, leading to new growth.

• All product categories in auto and industrial are experiencing positive momentum.

Datacom and customer diversification

• Datacom segment is diversifying beyond its original major customer, with progress in merchant transceiver manufacturers and hyperscale direct customers.

• Initial Datacom growth was driven by a single customer, but now includes multiple customers, with a second merchant vendor starting production in the December quarter.

• The company remains a pure-play contract manufacturer, avoiding ODM status to maintain strong relationships with traditional customers.

• Datacom demand is strong, with new opportunities in high-performance and quantum computing customers.

• OCS and NPO/CPO product categories are expected to be significant future revenue and margin drivers, with NPO/CPO offering higher value-add and gross margins.