But we’re focused much more on what happens thereafter. And are we acquiring companies that become platforms of future organic growth for the company. And I would tell you, all these 10 companies that we acquired this year, the nearly 30 companies that we’ve acquired since 2019. To me, these companies all represent expanded platforms for future organic growth for the company which makes me feel confident that over time, we will have subject to all of the market dynamics that, for sure, we are not immune to that the company is positioned to have really great organic growth potential.
Operator: And our next caller is Andrew Buscaglia with BNP. You may go ahead.
Andrew Buscaglia: Hi, guys. I just wanted to ask on IT datacom, again, with AI, the past couple of quarters, you called out sequential — attributed sequential improvements to AI. What would you say the same thing took place in Q4? And then that plus your guidance, would you imply — is this — because we can’t see that AI piece in that business. Would you say it’s continuing to accelerate on a sequential basis?
Adam Norwitt: Thank you very much, Andrew. Yes, I think what I said in my remarks is that we saw growth in AI, and we saw also growth in the underlying business. So I think over the last couple of quarters, I’ve described that are all of our upside, all of our sequential growth really did come from AI. I think that this quarter, it’s some of each, which is actually really encouraging for us that we’ve seen maybe what 1 could call a bottoming of the underlying IT demand. Are we continuing to make progress in AI? Do we see continued acceleration opportunities? Yes, I wouldn’t say that every quarter, it’s going to accelerate in lockstep like it did over the course of Q2 and Q3 but for sure, we see opportunities long-term to be generating sales related to AI that are greater than we are today.
Operator: And our next caller is Mark Delaney with Goldman Sachs. You may go ahead.
Mark Delaney: Yes. Good afternoon. Thanks very much for taking my question and Happy New Year to all of you as well. Automotive has been a fast-growing market for the company. However, several auto OEMs have been seen EV sales and they said they’re going to rethink how fast they want to shift their production towards EVs. And so I’m hoping to better understand if you think that will create any meaningful near to intermediate-term challenges for Amphenol that could limit the company’s growth of market or perhaps lead to some inventory destocking? Thanks.
Adam Norwitt: Well, thank you very much, Mark, and Happy New Year to you as well. Look, we read all the same papers, and we hear about the sort of discussions about slowdowns in EV sales. And I think we shouldn’t forget that this is a fairly western dynamic. I don’t think we hear, for example, in Asia and specifically in the largest car market in the world, China, about folks turning their back on EVs and going back to internal combustion engine. But we do hear a little bit about that, I think, here and in Europe. And as I’ve described, I mean, we don’t care if a car has an EV drivetrain or not. What we care about, does a car have a lot of electronics in it and new electronic systems. Among those systems are certainly electrified drivetrains or hybrid electric drivetrains.
And I think that what we’ve seen in Asia, what we’ve seen in Europe, what we’ve seen in North America is that there is a real acceleration of the adoption of electronics in cars period. And some of that may actually be related to the fact that EVs tend to be a little more fancy electronically. And I think car companies are seeing that and upgrading their standard companies to incorporate more electronic functionality. And whenever you have electronic functionality in a car, regardless of the drivetrain, you’re going to have new interconnect solutions. You’re going to have new sensor solutions. You’re going to have new antenna solutions. And those are the three areas of our participation in the automotive market. For sure, if I go to like the largest EV market, China, for example, I mean, there continues to be unabated a real adoption.
And I would almost say that EVs in that market have kind of reached a sort of escape velocity, where they’re just really normal. I mean you see them all over the place. And I think our team there just did a fabulous job of getting a breadth of penetration across both domestic and international EV manufacturers, whereby we really are able to enjoy the benefits of that. And I think in Europe and in North America, we’ve done a great job, but we’ve also done a really great job on capitalizing upon some of these new electronics. And so, I wouldn’t put any dynamic here in the category of something that we view as a real near or medium-term challenge. I think quite the contrary, as car companies struggle to figure out how they can sell their products and make more money from doing it, they’re always going to fall back on electronics as the way to do that.
And that’s a good thing for Amphenol.
Operator: Our next caller is William Stein with Truist Securities. You may go ahead.
William Stein: Great. Thanks. Adam, I’m hoping you can comment on the aperture for M&A and products within it. I think historically, you’ve talked about not wanting to acquire system-level solutions. And I think at least one of the acquisitions you’ve done recently has such products. And I wonder if that could potentially be something you’ll grow into and expand or if we should see you perhaps shy way of that business going forward? Thank you.
Adam Norwitt: Well, thank you so much. I think what you’re alluding to is PCTEL and the fact that they have a very small test and measurement business and really wonderful people, wonderful products, but that’s not why we bought PCTEL. And just — you’ll recall, we’ve acquired companies in the past, some of which are not purely the things that we were looking to acquire. And we’re always very sensitive that we’re never going to put ourselves in a competitive situation with our customers. And really PCTEL is known for their antenna technologies, which are fabulous. Not to say a bad word about their team that works in test and measurement, but we’re not adopting a strategy to go after system-level products. In terms of our aperture for M&A, I mean we just see fabulous opportunities.
I mentioned it in my prepared remarks. I think we have demonstrated an ability to acquire companies really across the board from a size perspective. We’ve demonstrated the ability to acquire a lot of companies and to process those effectively. And our small little headquarters team here, they may have been a little bit busier than normal over the last year with these 10 acquisitions. But the beauty is because of our organizational structure now having 14 groups across three global divisions, we have the wherewithal to make sure that those acquisitions get really their due attention when they become part of Amphenol. And I think the near-term pipeline remains a very robust pipeline, and we look forward to taking advantage of that. We will always remain a very disciplined buyer as we have forever.
