管理層發言
Good afternoon, ladies and gentlemen, and welcome to the Sanmina's Third Quarter Fiscal 2025 Earnings Conference Call. This call is being recorded on Monday, July 28, 2025. I would now like to turn the conference over to Paige Melching, Senior Vice President of Investor Communications. Please go ahead.
Thank you, Chloe. Good afternoon, ladies and gentlemen, and welcome to Sanmina's Third Quarter Fiscal Year 2025 Earnings Call. A copy of our press release and slides for today's discussion are available on our website at sanmina.com in the Investor Relations section. Joining me on today's call is Jure Sola, Chairman and Chief Executive Officer. And Jon Faust, Executive Vice President and Chief Financial Officer. Before I turn the call over to Jure, let me remind everyone that today's call is being webcasted and recorded and will be available on our website. You can follow along with our prepared remarks in the slides provided on our website. Please turn to Slide 3 of our presentation and take note of our safe harbor statement. During this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company.
We caution you that such statements are just projections. The company's actual results could differ materially from those projected in these statements as a result of factors set forth in the safe harbor statement. The company is under no obligation to and expressly disclaims any such obligation to update or alter any of the forward-looking statements made in this earnings release, the earnings presentation, the conference call or the Investor Relations section of our website whether as a result of new information, future events or otherwise, unless otherwise required by law. Included in our press release and slides issued today, we have provided you with statements of operations for the third quarter ended June 28, 2025, on a GAAP basis as well as certain non-GAAP financial information. A reconciliation between the GAAP and non-GAAP financial information is also provided in the press release and slides posted on our website.
In general, our non-GAAP information excludes restructuring costs, acquisition and integration costs, noncash stock-based compensation expense, amortization expense and other unusual or infrequent items. Any comments we make on this call as it relates to the income statement measures will be directed at our non-GAAP financial results. Accordingly, unless otherwise stated in this conference call, when we refer to gross profit, gross margin, operating income, operating margin, taxes, net income and earnings per share, we are referring to our non-GAAP information. I'd now like to turn the call over to Jure.
Thanks, Paige. Good afternoon, ladies and gentlemen. Welcome, and thank you all for being here with us today. First, I would like to take this opportunity to recognize Sanmina's leadership team and our employees for doing a great job. So to you, Sanmina's team, thank you for your dedication, hard work and, most importantly, for delivering excellent service to our customers. For the third quarter fiscal year 2025, you delivered solid revenue of $2.04 billion and non-GAAP EPS of $1.53 per share. Again, thank you to Sanmina employees, let's keep it up. This is hard work, and I know that. Now let's go to our agenda for today's call. We have Jon, our CFO, to review the details of the results for you. I will follow up with additional comments about Sanmina's results and future goals. Then Jon and I will open for questions and answers. And now I'd like to turn this call over to Jon. Jon?
Great. Thank you, Jure, and good afternoon, ladies and gentlemen. We appreciate your participation in today's earnings call. Before I discuss our third quarter performance, I would like to thank the entire Sanmina team for their dedication, diligent execution and support. In a highly dynamic environment, the team has demonstrated exceptional agility in meeting our customers' evolving needs. Jure and I, along with the entire Sanmina management team, commend these efforts, which have resulted in a solid third quarter and year-to-date fiscal 2025 performance. Now please turn to Slide 5, where I'll speak to the financial highlights. We're very pleased to report that our fiscal third quarter results either met or exceeded our previously communicated outlook. More specifically, our revenue of $2.04 billion, non-GAAP gross margin of 9.1% and our non-GAAP diluted earnings per share of $1.53 all exceeded our outlook.
Furthermore, our non-GAAP operating margin of 5.7% was at the high end of our outlook. These strong results, along with our Q1 and Q2 performance have established a solid foundation for the fiscal year and have positioned us well to achieve our long-term financial goals of driving growth and expanding margins. Now please turn to Slide 6, where I'll speak to our P&L performance for the third quarter. As previously noted, we generated revenue of $2.04 billion, which represents an increase of 10.9% year-over-year. This growth was primarily driven by broad-based demand across all of our end markets with particular strength in the communications networks and cloud infrastructure end markets, which Jure will speak to in more detail in his prepared remarks. Non-GAAP gross profit was $186 million, representing 9.1% of revenue and a 60 basis point improvement versus the same period last year. This expansion in our gross margin was a result of favorable product mix and ongoing operational efficiencies.
Non-GAAP operating expenses totaled $70.3 million, slightly above our outlook, reflecting our continued strategic investments aimed at driving future growth. Non-GAAP operating income was $115.7 million or 5.7% of revenue, representing a 40 basis point improvement versus the same period last year. This improvement was driven by a combination of revenue growth, favorable mix and disciplined execution. It is important to note that our non-GAAP operating margin consistently remains within our previously communicated short-term target range of 5% to 6%. Non-GAAP other income and expense resulted in a net expense of $4.5 million, which was slightly favorable to our guidance, largely due to our strong cash flow generation. Finally, non-GAAP diluted earnings per share was $1.53 based on approximately 54.5 million shares outstanding, representing a 22.8% increase versus the same period last year.
Now please turn to Slide 7, where I'll speak to our P&L performance for the 9 months of fiscal year 2025 as compared to the same period last year. Revenue for the 9 months increased by 8.7% year-over-year. This growth was driven by a solid performance across all end markets with notable improvements in the communications networks and cloud infrastructure end markets. Non-GAAP diluted earnings per share for the 9 months increased by 13.5% year-over-year. As communicated at the start of the year and in our earnings call since then, we anticipated fiscal 2025 to be a growth year for both revenue and profitability and our 9 months results put us on the right trajectory to achieve this objective. Now please turn to Slide 8, where I'll speak to our segment results. IMS revenue came in at $1.65 billion, up 11.6% year-over-year. This was driven by growth across all end markets with particular strength in the communications networks and cloud infrastructure end markets.
IMS non-GAAP gross margin was 7.5%, down 10 basis points versus the same period last year. CPS revenue came in at $422 million, up 8.8% year-over-year, driven by increased demand across all end markets. CPS non-GAAP gross margin was 14.7%, an impressive 320 basis point improvement year-over-year. This performance was driven by higher revenue, favorable mix and ongoing operational efficiencies. While we're pleased with the performance of both the IMS and CPS businesses this quarter, we recognize the ongoing opportunity for further improvement in both revenue growth and margin expansion, which will remain key focus areas going forward. Now please turn to Slide 9, where I'll speak to the balance sheet highlights. For many years, Sanmina has had one of the strongest balance sheets in the industry, and we continue to add to that strong foundation this quarter. Cash and cash equivalents were $798 million.
At quarter end, we had no outstanding borrowings on our $800 million revolver, leaving us with substantial liquidity of approximately $1.7 billion. We ended the quarter with inventory net of customer advances of $1.2 billion, representing a 12% decrease in absolute dollar terms versus the same period a year ago. Inventory turns net of customer advances improved to 6.3x for the quarter as compared to 5.1x in the same period a year ago. While we're pleased with these results, we still see room for further optimization. Our non-GAAP pretax ROIC for the quarter was 24.8%, well above our weighted average cost of capital and an improvement from 21.1% in the same period a year ago. The company continues to be in a net cash position and our gross leverage ratio was 0.38x. This robust financial profile enables us to effectively execute on our strategic initiatives while still navigating macroeconomic uncertainties.
Now please turn to Slide 10, where I'll speak to the cash flow highlights. As a direct result of our team's disciplined working capital management, cash flow from operations for the third quarter was a strong $201 million and $422 million for the 9 months of the fiscal year. Capital expenditures for the quarter were $33 million, which was lower than our outlook driven by the timing of receipts and totaled $80 million for the 9 months of the fiscal year. As previously communicated, we remain committed to making strategic investments in the capabilities and technologies necessary to strengthen our market position and support our long-term financial objectives. To that end, we anticipate ongoing targeted investments in both capacity and technology across our operations in the U.S., India and Mexico. Based on our spend for the first 9 months and our fourth quarter projections, we now expect full year capital expenditures to be about 1.8% of revenue.
Free cash flow for the quarter was $168 million, bringing the 9 months total to $341 million. During the quarter, we repurchased 0.2 million shares for approximately $13 million, and year-to-date, we have repurchased 1.4 million shares for $114 million. As of June 28, 2025, we have $239 million remaining under our authorized share repurchase program. Our strong cash flow performance has provided us with the financial flexibility to allow continued investments in the business while also returning capital to shareholders, all within a disciplined and balanced capital allocation framework. Now please turn to Slide 11, where I'll cover our outlook for the fourth quarter. Our guidance is based on current customer forecasts and incorporates market uncertainties stemming from tariffs and the geopolitical landscape. Our fourth quarter outlook is as follows: we expect revenue between $2.0 billion to $2.1 billion.
At the midpoint of $2.05 billion, that would put us up 6.8% on a full year basis, in line with our prior outlook. Non-GAAP gross margin is projected to be between 8.7% and 9.2%, subject to mix considerations. Operating expenses of $64 million to $68 million; non-GAAP operating margin of 5.5% to 6.0%. We expect other income and expense to be a net expense of approximately $4 million, an effective tax rate of 20% to 22%. We estimate an approximate $4 million noncash reduction to our net income to reflect our India JV partners' equity interest. Non-GAAP diluted earnings per share is projected to be in the range of $1.52 to $1.62 based on approximately 54 million fully diluted shares outstanding. At the midpoint of $1.57, that would put us up 9.8% as compared to the same period a year ago and up 12.9% on a full year basis. Capital expenditures are expected to be around $65 million. And finally, depreciation of approximately $30 million.
In summary, we are very pleased with our Q3 performance despite the uncertainty around tariffs and the geopolitical landscape and we're confident in our ability to deliver solid revenue and profitability growth in Q4 and beyond.
Thank you, Jon. Ladies and gentlemen, let me add a few more comments about our results for the third quarter and the rest of the fiscal year '25. As you heard from Jon, our team delivered solid execution and excellent service to our customers. Revenue, non-GAAP gross margin and non-GAAP EPS exceeded our outlook. We delivered a non-GAAP operating margin of 5.7%. And long term, we expect to improve our operating margin to greater than 6-plus percent. We generated strong cash flow for the quarter, and we expect to continue to generate positive cash flow from operations to drive future growth. We delivered year-over-year growth for all end markets. So I can tell you that our customers are still positive about their future. And we are starting to see a strong pipeline of new opportunities. So overall, a good quarter, but there's still room, as you heard from Jon, for improvements. To talk more about it, please turn to Slide 15.
Let's look at revenue by end market for the third quarter. Industrial, energy, medical, defense, aerospace and automotive segment came in at $1.256 billion. Growth of 6.2% year-over-year, very strong overall segment. For communication networks and cloud infrastructure that came in at $786 million, growth of 19.1% year-over-year. For the third quarter, total revenue of $2.04 billion, we delivered another solid quarter up 11% year-over-year. Top 10 customers for the quarter accounted for 52.8% of our revenue. Bookings continued to see solid demand overall, book-to-bill came around 1:1. As you can see, we are a well-diversified company. We continue to see positive trends for fiscal year '25 and beyond. For industrial and energy, we have a very solid customer base that is doing well. We have some great opportunities and a pipeline around energy and safety equipment. We see exciting new projects in our pipeline that should drive the growth in fiscal year '26.
For medical, we see stable demand driven by medical devices and digital health. Again, we have a strong customer base of customers, well diversified within the market. We also see a good pipeline of new opportunities for the future fiscal year '26 and '27. For defense and aerospace segments, we continue to see solid demand from critical defense projects. Our advanced printed circuit board fabrication business in this segment is doing well. We are growing and expanding defense and aerospace segment and other capabilities of Sanmina. Overall, we expect this segment to continue to grow nicely from technology components all the way to full systems. For automotive and transportation segment, short term, we've seen some softness in this market overall slower demand. For this segment long term, we have some good opportunities in pipeline that we expect to grow again in fiscal year '26. For communication networks and cloud infrastructure, we see very positive trends.
Solid demand for high-performance routers and switches, optical network systems, optical advanced packaging and enterprise storage. We're also starting to see some positive signs about our mobile 5G business driven both by cloud and service providers. For this segment, Sanmina is well positioned and we should continue nice growth in '26 and beyond. Let me talk a little bit more about fourth quarter and fiscal year '25 outlook. As you heard from Jon, we are pleased with our performance for the first 9 months of fiscal year '25. As revenue was up 8.7% compared to the same period a year ago. We have grown non-GAAP EPS for the first 9 months to 13.5% and we generated strong cash flow from operations. Based on our results for the first 9 months and the outlook for the fourth quarter at the midpoint, this puts us on track to deliver nice growth in fiscal year '25, we expect to see a growth of 6% to 8%.
While we continue to manage through a very dynamic environment, we remain focused on operational execution, customer satisfaction, cost management, and consistently delivering value to our customers. Please turn to Slide 16. Now let me talk to you about our strategic acquisition of ZT Systems from AMD. Let me add a few more comments to Jon's comments. This acquisition advances Sanmina's strategic data center AI strategy. It positions Sanmina to capitalize on our long-term growth trends in data center, AI infrastructure spend. If you look at the chart, the forecast is that next year, the global data center investments will be over $500 billion. As we go into '28, that number could be over $800 billion, potentially over $1 trillion. So there's plenty of opportunity for us. I can tell you that we are getting a lot of great interest in our new capabilities both from existing and new potential customers.
We do expect to expand our relationship with hyperscalers and OEM customers across all platforms and technologies in the industry. This strategic acquisition brings industry-leading manufacturing capabilities and capacity here in the U.S. and Europe, reinforcing Sanmina's existing footprint. This complements Sanmina well-established vertical integration strategy, our strategy is to provide an end-to-end solution for data center, AI end market. So please turn to Slide 17. I can tell you more about our end-to-end capabilities for data center AI. On this slide, you can see Sanmina's end-to-end solution for data center AI end markets. Data center AI requirements continue to evolve at a rapid pace and is driving technology advancement. Sanmina has been investing and expanding our capabilities to meet this present and future demand. We expanded and grew our high-technology printed circuit boards.
We've been assembling the most advanced systems that are available out there, continue to fabricate and invest in mechanical racks and enclosures, we are expanding our liquid cooling rack systems. We're investing in cooling manifolds and racks, busbars for racks. We're growing our ODM services and storage business, custom memory, and custom optical modules. With this strategic acquisition, our strategy now provides industry-leading capabilities from design to full system end-to-end solution for data center AI infrastructure end market. These strategic acquisitions from AMD complement Sanmina's advanced data center AID technology and give us the ability to do full system integration at scale. I can also tell you that we'll continue to invest in this market to drive future growth. Please turn to Slide 18. In summary, we are executing well in this dynamic environment. Third quarter results were in line or exceeded our outlook.
We delivered strong year-to-date and year-to-year performance across the majority of our end markets. Fourth quarter '25 outlook aligns with achieving our fiscal year '25 growth and profitability objectives. As you heard both from Jon and I, the third quarter was a busy time for us. We signed a definitive agreement with AMD to acquire ZT Systems. It's a strategic transaction for us, and very exciting. This fits well with Sanmina's strategic growth priorities. We feel good about our future, new program wins, and we expect demand improvements to drive the growth in fiscal year '26. Sanmina is well positioned to be a bigger and stronger company in the future, and I'm personally excited about opportunities ahead. So ladies and gentlemen, now I would like to thank you all for your time and support. Operator, we're now ready to open the lines for question and answers. Again, thank you.
分析師問答
Our first question comes from Ruplu Bhattacharya from BofA.
On Slide 12, you provided an update on the ZT Systems acquisition, noting a net revenue run rate of $5 billion to $6 billion. Are you still expecting this range for annual revenue? Is the revenue for this business still declining, or has it stabilized? Jure, could you also discuss your strategy for turning this business around? Will you need to hire a sales team to pursue hyperscale customers, and since AMD retained the design engineers, are you planning to hire engineers to focus on rack configurations? Please share your current view on the annual revenue run rate and your strategy for expanding this business.
It's a great question, and I will give you a lot of information. As you know, we're not the owners of this organization yet, so I have to be careful what I can say. But first of all, Ruplu, we are very excited today. We announced this deal on May 19, and personally, I am more excited today than I was then. And the reason I am more excited today is as we talk to basically the critical customers out there with hyperscalers and critical OEM potential customers, we're finding that there's a lot of interest. Also, we found out a lot more about ZT Systems itself. We believe they have some advanced capabilities and some great people. In this business, it's all about people. I believe they got some great people, and when I look at what's the potential, it's a great potential. When AMD acquired this business, their goal was to eventually find the right partner and separate engineering from manufacturing.
I would say that we are fortunate that we're becoming a critical partner to AMD and taking over this operation. We believe that working together will give us a lot of opportunities. I see it today; all these key capabilities that we have are what the industry really needs—capacity and capabilities that we have. So I'll be honest with you; I'm not worried about revenue, and Jon can comment later on that. I think there are plenty of opportunities at ZT Systems. They have some older products that they've been doing for a long time; this place was profitable, it is profitable today, and we expect it to continue to be profitable in the future, but opportunities are bigger for the future than the past. Let me leave it at that. Today, we are already selling Sanmina plus ZT to our critical partners. That's going on every day across all our critical people. We are adding some technical support to add more value to our customers.
We know exactly what that is. But we're also bringing in a lot of great people from ZT. They have a lot of network people in manufacturing and also around testing and so on. This is a very strong team. I think partnering with AMD is very critical. They have a lot of exciting technology that is coming up. Again, I believe that we can help them get that product to market at a faster rate with the technology that is required for hyperscalers and OEM customers. We are definitely investing in sales. As you can see, our SG&A is a little bit higher because of that. I don't know what else to say except to tell you I'm excited. I think there is a lot of opportunity there. As I said before in my prepared statement, I think we're ready to build a much bigger Sanmina from a very strong position. We have a strong foundation. So give us some time here, at least for the next 6 to 12 months to give you some good results. So with that, Jon, do you want to add comments to that?
Yes. Just one point, Jure, I'll add. Ruplu, just to help answer the question around revenue. Back at the time of the announcement on May 19, we said that we expected revenue run rate, the net revenue run rate to be about $5 billion to $6 billion at the time of the close. We don't intend to change that forecast. As Jure mentioned, we'll come out with a lot more details when we close the transaction, but that's still the case. The business has a very stable foundation of general-purpose compute and storage. It's the accelerated compute component that's going through a transition, as we had mentioned, but we've got full confidence in what's happening on that part of the business too. But more to come when we close the deal.
Ruplu, just let me add to that. I didn't answer the question. We are adding—at Viking, we have a very strong core engineering team that can do the same or similar thing that all ZT engineering could have; now ZT had a bigger scale—but we're expanding our team. We currently have a core engineering team specifically for this data center that can do the job today, and we will grow and expand that team.
I appreciate all the details. For my follow-up, can I ask—you had very strong growth in fiscal Q3. I mean, you reported 11% year-on-year growth. When we look at the guide for fiscal Q4, there seems to be somewhat of a meaningful slowdown. I think the midpoint of the guidance implies 1.6% year-on-year growth. Can you just talk about if any markets are weaker than you expected? And then like you said, Jure, if you look at the full year, you're going to be growing revenues in fiscal '25 at 7% almost year-on-year. Can you give us your early thoughts into fiscal '26? I mean, let's say, even without ZT Systems, do you think the base business can continue the 7% year-on-year growth? So just any thoughts you have on fiscal '26.
First of all, the comparison from this fourth quarter to last year—you're right, it's not huge growth, but the business is not slowing down. I would say the business is expanding. If you look at last year, we were kind of coming out of inventory. It was choppy; it was a transition year. So it was really difficult for most of our competitors too. It just happened to be a poor quarter last year, better than what it was the third than second. Today, the business is a lot more stable. Yes, we have some uncertainties out there with the geopolitical issues, tariffs and so on. It looks like that temperature is coming down. So we feel a little bit more comfortable and can predict the future better. Our customers are a lot more positive about the future. If I look at customer forecasts, they look very positive. We are currently kind of discounting those. So for us to forecast '26, we would like to wait probably another 90 days, but I can tell you right now, what I said earlier in the prepared statements—we're excited. We expect to grow our core business at the same or faster rate next year. Unless something really falls off the cliff that is completely out of our control, we expect to have a great year next year.
Okay. If I can just put in one more quick question. Jon, CPS margins were up 320 bps sequentially. Was there any one-time items that can be discontinued?
No, it's primarily driven just by the business mix, Ruplu. As you know, CPS margins in that profile, that's an area that we've been focused on for a long time. We've been making a lot of investments there. So we're very pleased with the results from one quarter to the next; you can see some ups and downs just because of the nature of that business. There are many different components within it. But pretty much across the board, we've been looking to improve the margin profile of each individual division. Thus, what I believe that we're seeing now is the result of some of those investments coming through to fruition. So very happy with the results; nothing one-time in nature that I'd want to call out, and as far as the future goes, we're going to continue to drive that profile. Both Jure and I have said before that we expect that business to be above 15%, and we're getting very close to that number already today.
Our next question comes from the line of Steven Fox from Fox Advisors.
First of all, just – I had another question on the ZT deal now that you've had a little bit more time with it. Can you just talk about the risk on the inventory side, Jon? I know it's a big piece of the valuation. Do you guys get a last look at valuing the inventories before you close? And I guess my bigger concern is like anything that you might inherit that could be sort of lagging generation on the GPU side that you might have write-downs on. Can you just sort of talk about that risk? Then I had a follow-up.
Yes. Absolutely, Steve. Thanks for the question. So yes, we do have a working capital target of about $2 billion as a part of the transaction. We talked about that when we announced the deal back on May 19. You can think of that as primarily related to inventory. There's also property, plant and equipment too of $250 million, but the $2 billion is primarily around inventory. As part of the deal, we spent a lot of time evaluating that inventory position, having many discussions with AMD and ZT. We will make sure, just like we always do in this business and our business around manufacturing, to ensure that this inventory is supported by customer demand and forecasts. There are always some risks there, but our intent is to fully evaluate that, and both AMD and ZT are committed to that as well.
Great. That's helpful. And then on the legacy business, Jure, I know you just mentioned what you've been doing on the CPS side. I was wondering if you could start—because I'm looking—it looks like that was like a record CPS margin. So I was wondering if you can maybe sort of help us step back a little bit more, talk about how CPS is sort of helping your business by served markets a little bit? Like it seems like it must be helping growth, not just margin. Any help there would be useful.
Yes, Steve. First of all, yes, we— not everything is perfect at CPS today, but we believe, as Jon mentioned, our target is higher than 15 right now because we know there's more opportunity. We still have some softness in some bits of the semiconductor business that we typically have, but we also have some great opportunities in the defense business. If you look at our advanced printed circuit boards here in North America, that's mainly high-technology products for defense. That business is doing well. We are expanding that business, and we expect to continue to have at least a few great years in that segment when it comes to demand. Our mechanical business is doing well, especially around the data center. As I mentioned earlier, we are expanding and investing in liquid cooling racks. Demand for racks is very strong. It’s all around data centers, and we expect that this business will actually increase now with the position of ZT.
So we see a lot of positive things there. We are also expanding our precision machining into the military side of the business. We are investing a fair amount and hopefully, we'll get a lot of returns on optical modules specifically pluggables, custom memory around the military for jet fighters and so on. So there are a lot of exciting things that we have in our segment of what we call components technology group with a lot of upside potential and a lot of growth opportunities. We are very comfortable with our core business, and we're still pushing those plants that we talked about a year ago. We need to grow our core business at a higher rate, and we believe we are currently positioned to start seeing that nice growth in '26 and beyond.
Our next question comes from Anja Soderstrom from Sidoti.
Congrats on a nice performance here in the third quarter. With the additional revenue that you expect from the ZT acquisition and doubling the revenue in three years, where do you expect the operating margins to be?
Well, definitely first of all, we are improving our margin across existing business, and we believe that the end-to-end solution that we will be providing for data center AI market is adding a lot of value to our customers. It will allow us to deliver better margins than historical. So I'm saying today, higher than 6%, but I believe there's an upside to that. We would like to talk to you more about it 90 days from now. Hopefully, we will be in control of ZT by that time, so we'll talk more. But we are excited about what's in front of us. Like I said, we have some great people at ZT. We are committed to investing, and we've been investing a fair amount of money in these critical components that go for data centers. I believe that with now capabilities for full system integration at scale, we should be able to continue improving our margins going forward.
Okay. And for the Indian joint venture, how is that progressing? It seems like you had a little bit higher payout to them or actually it was in line with what you had expected. But you didn't really give a guidance for us for the fourth quarter, either I think, or maybe I just missed it.
Yes. On that point, Anja, we always guide on the adjustment to our net income to reflect their equity interest, but the joint venture overall has done very well. I mean, we're very pleased. It's coming up on almost three years now that we've had the joint venture in place. But India is a very important market to us. We expect to see a lot of growth in that market. As far as the business goes, we're looking to expand the different end markets that we serve. It's an area that we're investing in as well. I mentioned that from a CapEx perspective, and Jure might want to comment on that as well. We see a lot of opportunity in that area.
Yes. India is a very exciting project for us. The first couple of years of a joint venture take time to get to know each other and understand our goals, but I believe Reliance and Sanmina are on the same page. We're going to build something big in India. We are expanding, and we'll also make more comments on that at the end of this year, but there are a lot of opportunities in India across all our markets, from industrial, medical, India's defense, automotive in India, transportation, definitely for data center AI opportunities that we believe will be, and we are positioned to play across all of those key markets. So it was a great decision on our part to go with the joint venture with Reliance. We still run that thing 100%, but I think having a good partner in a market like this is very critical, and I believe we have a great partner.
Okay. And just one last one in terms of the tariffs. What are you seeing in terms of the tariffs and potential headwinds from that?
I'll give that to Jon.
Yes. There's still a very dynamic environment out there when you think about tariffs and percentages, changes and things of that nature. So our approach has been the same as it's been since all of this started. We stay very close to our customers, understand what they're trying to achieve. Based on the footprint that we have, we can certainly move programs around, but it's up to them at the end of the day. Typically, what we're seeing is that current programs are staying in place, but there's a lot of discussion and an evaluation for new programs because we think supply chain, on a broad basis, is becoming more regionalized. We have the right footprint to enable that and support that. Our single ERP and single shop floor system with 42Q enables us to support our customers regardless of where they want to do manufacturing. Just as a reminder, from a business model perspective, these costs are borne by our customers, hence we are essentially a pass-through from that point of view. Our objective at the end of the day is to help them make those decisions, and decide where to manufacture and what makes the most sense for their business.
Do you see any customers having sort of a wait-and-see approach, looking for new programs, I guess?
Yes. At this point, we haven't seen any current programs shift on a material basis because that does take time and investment to do that. But certainly, for new programs, there's a lot of evaluation and discussion going on. Our goal is to make sure that we understand the rules and regulations as they're changing, and partner closely with our customers to help them do that analysis and decide what makes the most sense for them.
Yes. But Anja, just to add to that, I think the model is that we are going more in this geopolitical world in the future, we're going more to a regional type of manufacturing. Definitely, there will be more business manufactured here in North America, but it's not going to happen overnight because it takes time to bring the technology up to date and so on. Our customers are trying to balance. They look at their global market strategies in Asia, India, Europe, and what we're doing in North America. Then we're trying to help them balance those requirements not just for the short term, but also long term. A lot of discussions are about long-term strategy. We had a customer visiting a couple of days ago. They're looking at how they are going to supply and service their customers in the future. A lot of work, but I think it will be positive for us. It's just the way we are structured. We've got a very good global structure. I believe that structure is lean and state-of-the-art, and we think we'll be fine.
There are no further questions at this time. I would like to turn the conference back to Jure. Please go ahead, sir.
Well, ladies and gentlemen, again, thanks for your time that you spend with us today. Looking forward to talking to you. If you have any questions, give us a call. Otherwise, we'll be talking to you 90 days from now. Hopefully, we'll continue to deliver some great news for you. Thanks a lot.
Thank you, everyone.
Bye-bye.
This concludes today's conference call. Thank you for participating. You may now disconnect.