TE’s Acquisition of Linx Technologies and IoT Market Strategy
TE Connectivity, the world’s leading connector manufacturer, announced its acquisition of Linx Technologies, an RF component supplier, in July of last year. This move aims to strengthen TE’s position in the wireless and antenna sectors of the Internet of Things (IoT). Following the acquisition of Laird’s antenna business in 2021, this latest acquisition demonstrates TE’s commitment to IoT communications and its continuous strategic approach. TE plans to integrate these acquisitions with its existing high-speed data and wireless connectivity offerings to enhance IoT devices and edge computing capabilities.
Global Industry Trends: Smart Manufacturing and Industrial Internet
While the Chinese industrial sector has been abuzz with discussions about smart manufacturing and the industrial Internet, focusing heavily on data analysis, global industry leaders have been quietly consolidating their positions. These companies have been establishing physical connections—such as communication ports, connectors, and cables—at the edge. TE’s acquisition of the Swiss connector brand ERNI further solidifies this trend, highlighting the increasing consolidation in the connector industry.
TE’s Acquisition Strategy and Financial Performance
TE’s acquisition strategy reflects the connector industry’s characteristics of frequent combinations and patience. Despite a seemingly modest increase in sales revenue from $14 billion in fiscal 2014 to $14.9 billion in fiscal 2021, TE has maintained a balanced approach of organic growth, strategic acquisitions, and divestitures. Notable acquisitions include ADC in 2010 and Deutsch in 2011, while divestitures include the circuit protection business in 2015 and the SubCom undersea cable business in 2018.
The Role of Investment Funds in Industrial Sector Vitality
The scenario described paints a picture of a capital transfer station, where investment funds play a crucial role in maintaining the vibrancy of the industrial sector. These funds act as value assessors and opportunity seekers, providing a lubricant for sustaining the vitality of American manufacturing. This model serves as a lesson for the Chinese investment sector, highlighting the need for a collaborative alliance between capital and manufacturing to maintain industrial vigor.
Amphenol’s Rapid Growth and Acquisition Strategy
In contrast to TE’s steady growth, Amphenol has demonstrated remarkable expansion, surpassing the $10 billion revenue mark in fiscal 2021. This growth can be attributed to an aggressive acquisition strategy, with 30 acquisitions over ten years. Amphenol’s success stems from management’s expertise in leveraged acquisitions and strategic consolidation in niche connector segments, allowing for product expansion across various sectors.
Amphenol’s Success in the Chinese Market
Amphenol’s rapid expansion has been significantly fueled by its success in the Chinese market. From 2008 to 2017, Amphenol’s revenue in China grew from $560 million to $2.1 billion, averaging an impressive 16% annual growth. The company has capitalized on rapidly growing sectors in China, such as consumer electronics, automotive, and data center connectors. Amphenol’s strategy of acquiring various connector brands and establishing factories in China has been key to its success in the region.