DanBoehle: So between the data center generative AI improvements versus closure of last year’s closure of the facilities, is that what you asked?
William Stein: Yes. And any other changes that are more like company specific or operation specific as opposed to mix.
Thomas Edman: I think, well, In North America A&D, the integrated electronics business has expanded their margins quite a bit. You know, this is the first full year that we’ve had Telephonics in our business. We’ve worked hard on the supply chain there. We’ve also increased and improved our pricing on those products to get much better margins in the integrated electronics business. And that’s obviously a strategic focus to us, as Tom mentioned. And the earlier we can get involved and engaged in engineering and helping our customers, that’s more value-added work, right? So that’s been strong. I’d say we had across North America in our PCB business also just very good productivity this year, better productivity than we had last year.
So keeping good flow through the factories and getting efficiencies that way. And then on – we probably had – so those are probably the two largest drivers. So it’s more operational. We did have in the AP region, as you mentioned, good improvement from the generative AI product mix, but that – and that more than offset some of the softness in those commercial markets, the other commercial markets. But I’d say net-net, you know, that wasn’t the largest driver, but certainly a continued strength going forward. And then probably – and then the last bit of that was just the drag that we had from the three plants that we closed down that did improve this year in Q1 going to Q1 versus last year, probably about 5 million of improvements just from that.
William Stein: Thank you.
Thomas Edman: And just one additional highlight. You remember that Dan’s earlier answer to Jim’s question regarding Penang. So that – so we are seeing those improvements as we ramp Penang and take on additional headwinds.
William Stein: Great. Thank you.
Operator: Thank you. One moment for the next question. And our next question will be coming from Matt Sheerin of Stifel. Your line is open.
Matt Sheerin: Yes, thank you. Question regarding the expansion in Malaysia. Could you remind us what the revenue capacity will be as you ramp and then what look like fully ramped? And is that – or how much of that is incremental revenue versus some production shifting from China or other areas?
Thomas Edman: Sure. So we’re looking at full capacity, which we won’t reach until next year. We’re looking at somewhere between 180 million and 200 million. That depends on product mix, of course, in the facility. So of that, think about, you know, roughly 15% or so being at least as we plan this coming from a shift out of China into Penang. I would like to highlight that our China facilities are where we do the most advanced technology work. So the sooner we can get Penang up and running and shift that production, the better it is for us from the standpoint of serving that generative AI demand. So, we certainly are driving to get Penang up as soon as we can, but we have to make sure that – ensure that we have the right kind of quality performance and the right quality systems in place as we go through that ramp.
But that’s roughly the order of magnitude, Matt. And again, hitting full capacity, we’re going to be continuing that ramp as we go through the course of next year, but hitting that full capacity level by the end of next year.
Matt Sheerin: Okay, I’m sorry. Was That 15% or 50%?
Thomas Edman: 15%
Matt Sheerin: 15%. So there’s the rest would be new program wins?
Thomas Edman: That’s correct. Yes. So remember, the facility as designed, is targeted at 16 to 18 layers. That’s – that layer count is what we think of as standard technology. We don’t do all that much standard technology now in our China plant. So that’s what we’re opening up is a supply chain resiliency opportunity for our customers to move that product from other suppliers to our Penang facility. That’s the major goal. Now held to help with startup, that’s where that 15% piece comes in. They’re allowing us to move some product out of China into Penang. But it’s – the bulk of this is a combination of new programs and existing programs that may be that our customers are looking to move out of China into a non-China production facility.
Matt Sheerin: Got it. Okay. Thank you for that. And then regarding the plans to expand in Syracuse, you said that some of the expansion plans is contingent on stakeholders sort of buying in. And I’m not sure exactly what you mean by that. Does that mean that we need to have certain purchasing commitments or any co-investments? What do you mean by that?
Thomas Edman: So really, we’re looking – since primarily for us, the customer is very supportive, based on long-term agreements. We’re in good shape there. We just – as we look at that CapEx requirement, particularly as we look at potential government funding, we need to make sure that our time line is in sync with the potential for government funding. And that – and also that we make sure that we’re in sync with customer requirements in terms of ramp schedule. So that’s really what we’re talking about, Matt.
Matt Sheerin: Got it. Okay. All right, thanks very much.
Thomas Edman: Thank you.
Operator: Thank you. And we have a follow-up question coming in. There will be a follow-up question from Jim Ricchiuti of Needham & Company. Your line is open.
Jim Ricchiuti: Hi Tom, you referenced, I think, a sizable booking on the defense side. And I think you said it was really a restricted program. But I’m wondering, can you say or did you say whether that relates to the legacy TTM defense business? Or was that in relation to the Telephonics business? Can you say that?
