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21 Aug 2024
Contract manufacturer of transceivers and other optical assemblies delivers record sales and profits as Nvidia business surges.
The boom in demand for high-speed optical data communications driven by AI-related computing needs has helped Fabrinet to post its highest-ever figures for annual earnings and profits.
The latest results and positive outlook also pushed the Thailand-based contract manufacturer’s NYSE-listed stock price to an all-time high, with CEO Seamus Grady describing the latest 12-month period as “remarkable”.
Chonburi expansion
Fabrinet, which produces optical transceivers for key photonics player Lumentum, among others, reported annual sales revenues of $2.88 billion, up 9 per cent on the previous year.
That translated to a pre-tax income of $311 million, up nearly 20 per cent on the total posted a year ago. For the latest three months, ending June 28, sales hit $753 million, with a pre-tax income of $85 million.
“[Fiscal] 2024 was quite a remarkable year for Fabrinet,” Grady told investors. “Datacom revenue grew over 120 per cent, while telecom revenue declined more than 20 per cent for the year, due to the protracted inventory digestion across the telecom industry.
“In datacom, 800 Gb/s products for AI and related applications remain the biggest revenue contributor.”
With the continued strong performance - Fabrinet has posted record sales and earnings per share in each of its last four quarters - the company is set for further expansion, aiming to break ground on a new 2 million square-foot building at its Chonburi campus in the coming months.
Known as “Building 10”, the latest facility is expected to cost around $110 million, and take 18 months to complete.
Nvidia and Ciena
Aside from optical transceivers and related components, Fabrinet is also contracted by third parties to produce lasers, lidar units, and other non-optical automotive products - with all its major product areas said to be in high demand.
Grady and his executive team are expecting sales revenues to rise to another record-breaking figure in the September quarter, to somewhere between $760 million and $780 million.
The firm’s latest annual report shows the impact of Nvidia’s investment in AI-related datacoms infrastructure, with the technology giant accounting for 35 per cent of Fabrinet’s sales revenues in the latest fiscal year - equivalent to just over $1 billion.
That figure rose from 12.5 per cent, or approximately $330 million, in the prior year, with Cisco Systems the only other customer to account for more than 10 per cent of Fabrinet’s latest annual sales.
Grady told investors that its telecom-related business with the networking firm Ciena Corporation was also set to grow quickly, with a ramp in production anticipated in around six months from now.
• Investors reacted positively to the latest update, with Fabrinet’s stock price rising in value by nearly 16 per cent to close at an all-time high of $268, equivalent to a market capitalization of $9.7 billion.
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