So, we pick up a capability that’s got 400 gig, we’re developing 800 gig and then 1.6 T. So, the technical team that come along with that will help us really, really engage in that technical roadmap. What that does is, I think, it’s a competitive moat, because people do look for, can I minimize the number of suppliers and who can add more value. For sure, in the AI data centers, photonics is going to becoming more and more critical with power related. So, we see all of that as a positive. And, I think, that we have baked some of the revenues into our guide through 2024 into 2025. But I do think that as we develop the 1.6 T capability, then I think that you’ll see that become much, much more material and namely look for other areas of our business.
And we — that’s a big play, for example, in automotive, which we haven’t talked about, because this is focused on telco and data center. And automotive, there’s going to be a play there. And, I mean, I’d like to call out, Matt Crowley is driving that. But KW, who manages that for us out of Asia, is just an industry expert. So, we’re feeling — and the Intel team that are getting better than are selling in real well. So, we’re feeling pretty bullish about that in the longer term, Melissa. So, thanks for asking.
Melissa Fairbanks: Great. Thanks very much. That’s it for me, guys.
Kenny Wilson: Thank you.
Operator: Thank you. Next question is coming from Mark Delaney from Goldman Sachs. Your line is now live.
Mark Delaney: Good morning, and thanks very much for taking my questions. Question on regionalization, and are you still seeing customers looking to have more of their manufacturing done in North America in order to improve supply chain resiliency, or have changes in demand and component lead times meaningfully altered any of those customer plans?
Kenny Wilson: Hey Mark, it’s an interesting question. So I think it’s nuanced by end market. So for sure in renewables, we’re seeing a real push for — to get the benefit of the incentives into being and North America. That’s 100%. In fact, we’re active. And a relatively large scale in that discussion where you expect more from us in the next three to six months. So definitely in renewables. Outside of that, I think the pace is relatively consistent. We’re still seeing — I mean I think your point about regionalization. We are still being asked to can we build more EVs for North America and Mexico, can we build them in Europe for the European market and obviously, tariffs, et cetera, and Asia for Asia. So I don’t think that’s necessarily speed up any or slowed down other than in the renewables space, we’re definitely seeing a pickup and ask for us to be localized.
So let me also qualify that by saying — in the cloud space, the secure supply there becomes quite important, and we think that, that’s going to be a tailwind for us in the longer term. We talked earlier with Melissa on Photonics, which I think will be a player also — so I think cloud renewables and the rest of the business is relatively consistent.
Mark Delaney: My other question is on margins and recognizing the outlook the company has for improved margins and also the progress you’ve made over the last several years. I’m so hoping to better understand as you’re seeing lead times for components normalize as you’re seeing weaker demand, have you seen any change in your ability to pass through higher cost and negotiate with customers around pricing in light of those changing market conditions?
Kenny Wilson: I mean, I would — we talk about kind of — people talk about leverage with customers, and we don’t view it that way at all. As I mentioned, we’ve got a supplier summit right now for surely things are coming down. I mean we pass through — renegotiate a lot of — and our customers’ behalf, and then we pass that through to our customers and we engage with our suppliers. So — as we’ve not seen any pickup in our reduction in margins based on lead times being reduced and our business is — we write that up and down. And so no, we don’t see any real changes there.
Mark Delaney: Thank you and happy holidays.
Kenny Wilson: Thanks, Mark. All the best.
Operator: Thank you. We have reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any further closing comments.
Adam Berry: Thank you very much for joining our call today. We appreciate your interest in Jabil. Everyone here would like to wish all those a very happy holiday, a peaceful holiday, and we are looking forward to joining the S&P 500 tomorrow. So have a great holiday.
Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.
