Jure Sola: Well, Steve, I think we are working to improve the mix of our business driven by the some of the technologies that we’re offering to our customers and creating a lot more value, especially in the new market with some of the leading technology that are coming out. Sanmina’s goal is not to sell just a price but to sell the value that we provide to our customers. And I believe that what we’re providing all the way from our high-technology premium circuit boards, if you look at AI market here and ML, it requires some more advanced printed circuit boards. It requires mechanical rocks cooling and so on that goes around the integration of server storage. So that’s the area that we’re moving to. An area I mentioned earlier talking about optical — expanding our optical business.
We always were very strong in optical networks optical systems. But now we’re starting to — we’ve been investing into optical components and optical modules to basically — there’s a huge demand going to be going on in the next few years. And I believe that we’ll be able to participate in that and drive the margin up. We also focus on expanding our defense and aerospace business. Demand for that business continue to be strong, and we want to expand that all the way from high-technology printed circuit boards to the board assembly to the system assembly and so on. Renewable energy, that’s another area that fits our model, providing end-to-end from mechanical, electronics, heavy power and so on because especially around AI — upgrade the cloud.
It requires a lot of the technology and capabilities that we deliver. Industrial business for us has been solid. I think we are investing the right things there, too. So overall, I would say the margin will be driven by the capabilities that we’re providing to our customers, number one, and providing more end-to-end solution for our customers in the markets that we have competitive advantage that I said more mission-critical type of products. And then tuning things internally. I think — as we went through this morning I call it, transition year, we invested a lot in ’23 for a growth, and we positioned the company for growth. Unfortunately, demand went down because of inventory correction, what we meant because of COVID and then slower demand.
Combination of those two things is a transition year. What you do in this type of environment? You basically look at your company and try to tune things up. So that allows us to do a better job as the market comes back and also most importantly is to take care of our customers better and deliver the better results for our shareholders. So that — combining all of that, Jon, I don’t know if you have anything else to add?
Jon Faust : I think you said it very well here. I think the only thing I would add on top, Steve, to add to what Jure said, which is all about driving value for our customers within the businesses and driving better segment or mix results. But as we return to growth, we should get some natural operating leverage as well, right? So, if you add that on top of everything that Jure was saying, that’s why we still believe that there’s margin upside in both segments and for the company overall.
Steven Fox: That’s an awesome explanation. I appreciate the color. I’ll take my other questions offline.
Operator: Your next question is from Anja Soderstrom from Sidoti. Please ask your question.
Anja Soderstrom : I’m just curious, you came in on the lower end of — sort of the lower end of the guidance range for revenue this quarter and do you expect sequential improvement next quarter. What gives you confidence in that? Is that due to those shipments that were pushed out in communications? Or are there other things driving that growth as well?
Jure Sola: Well, first of all, Anja, thanks for the question, yes, we had a little bit extra. We could have shipped our revenue would have looked a little bit better than what we delivered. But confidence is really what we are seeing from our customers, what they’re telling us right now based on today’s information. As we said, we will take one quarter a time in this environment. I believe that what we’ve seen through [indiscernible] visibility is getting better. I think — burn down with a lot of our key customers. A lot of our customers are telling you the second half of the calendar year will get better and the forecasts are looking better. So, combination of all of those things and some of the new programs that we have coming up should allow us to move in the right direction. Jon, anything else?
Jon Faust : Yes, I would just add, Jure — Anja to Jure’s point, that the market is still pretty dynamic with customers and end markets to his point, turning the corner on demand and inventory absorption. But if you look at our guide for Q3 and the midpoint, we are expecting to see some modest sequential improvement. So, we’re staying close with our customers on that and looking on delivering as much as we can.
Anja Soderstrom: Okay. And the joint venture in India, how is that trending? It seems like you had a lower payment for that this quarter?
Jure Sola: Yes. Let me just give you from the business point of view and Jon, you can make a comment on that. First of all, India, joint venture is going well. We run in the same way as we run it every before. We have a lot of interest from our customers, and we expect a lot of growth in India. So, from that point of view, I’m very happy where we had and more happy about the future. Jon, any comments?
Jon Faust : Yes. I think it’s executing well to Jure’s point. And if you look at what we guided, Anja, right, we said about $3 million in the distribution, and we did just shy of that. So pretty much right on target, right where we want it to be.
Jure Sola: A lot of upside potential, especially if you look at the next 12 months or 18 months.
Operator: Your last question is from Christian Schwab from Craig-Hallum Capital Group. Please ask your question.
Christian Schwab : Jure, I just have one quick question that hasn’t been asked. On the AI machine, products that you laid out, if you — what percentage of total revenue is all of that?
