TE Connectivity Ltd.
TELFinancial Analysis · Updated May 27, 2026 · Coverage 2026-Q2
Financial Snapshot
Step 8: Revenue Breakdown & Growth Drivers
TE Connectivity (TEL)
Date: February 23, 2026
8A. Segment Structure Overview
TE Connectivity reorganized from 3 reportable segments to 2 beginning FY2025:
- Transportation Solutions (~54% of FY2025 revenue): Automotive, Commercial Transportation, Sensors
- Industrial Solutions (~46% of FY2025 revenue): Digital Data Networks, Automation & Connected Living, Aerospace/Defense/Marine, Energy, Medical
The former Communications Solutions segment was folded into Industrial Solutions.
8B. Full Revenue Breakdown by Segment (FY2022–FY2026E)
Old 3-Segment Structure (FY2022–FY2024)
| Segment | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Transportation Solutions | $9,219M | $9,588M | $9,398M |
| Industrial Solutions | $4,520M | $4,551M | $4,481M |
| Communications Solutions | $2,542M | $1,895M | $1,966M |
| Total | $16,281M | $16,034M | $15,845M |
New 2-Segment Structure (FY2024 Recast–FY2026E)
| Segment | FY2024 (recast) | FY2025 | Q1 FY2026 (ann.) | FY2026E |
|---|---|---|---|---|
| Transportation Solutions | $9,481M | $9,388M | ~$9,868M | ~$10,000M |
| Industrial Solutions | $6,364M | $7,874M | ~$8,808M | ~$9,400M |
| Total | $15,845M | $17,262M | ~$18,676M | $19,432M |
Mix Shift: Industrial Solutions grew from 40% of revenue (FY2024) to 46% (FY2025) and is on pace for ~48% in FY2026. This is a significant portfolio rebalancing driven by AI/DDN and Energy growth.
8C. Sub-Segment Revenue and Organic Growth Detail
FY2025 Full-Year Sub-Segment Performance
Transportation Solutions ($9,388M, -1.0% organic):
| Sub-Segment | FY2025 Revenue (est.) | YoY Organic Growth | Key Driver |
|---|---|---|---|
| Automotive | ~$7,200M | +0.2% | Content gains offset flat production |
| Commercial Transportation | ~$1,450M | -2.1% | Weakness in Class 8 trucks |
| Sensors | ~$738M | -7.6% | Inventory correction in industrial sensors |
Industrial Solutions ($7,874M, +17.6% organic):
| Sub-Segment | FY2025 Revenue (est.) | YoY Organic Growth | Key Driver |
|---|---|---|---|
| Digital Data Networks | ~$2,210M | +73.3% | AI/data center connector explosion |
| Automation & Connected Living | ~$2,140M | +7.7% | Factory automation recovery |
| Aerospace, Defense & Marine | ~$1,490M | +10.3% | Defense budgets + commercial aero |
| Energy | ~$1,345M | +46.2% | Grid modernization + Richards |
| Medical | ~$689M | -16.9% | Destocking in interventional devices |
Q1 FY2026 Sub-Segment Performance (Most Recent)
Transportation Solutions ($2,467M, +7% organic):
| Sub-Segment | Q1 FY2026 | YoY Reported | YoY Organic |
|---|---|---|---|
| Automotive | ~$1,880M | +9.5% | +6.5% |
| Commercial Transportation | ~$370M | +18.6% | +16.3% |
| Sensors | ~$217M | +1.4% | -2.3% |
Industrial Solutions ($2,202M, +26% organic):
| Sub-Segment | Q1 FY2026 | YoY Reported | YoY Organic |
|---|---|---|---|
| Digital Data Networks | ~$707M | +71.2% | +69.7% |
| Automation & Connected Living | ~$549M | +14.6% | +11.6% |
| Aerospace, Defense & Marine | ~$380M | +14.1% | +10.9% |
| Energy | ~$406M | +88.0% | +14.6% |
| Medical | ~$160M | +5.3% | +5.3% |
Key observation: Energy's 88% reported vs. 14.6% organic gap = ~$160M+ of inorganic contribution from the Richards Manufacturing acquisition in the quarter.
8D. 4-Year Organic Growth History by Sub-Segment
| Sub-Segment | FY2022 | FY2023 | FY2024 | FY2025 | Q1 FY2026 | Trend |
|---|---|---|---|---|---|---|
| Automotive | +8.1% | +10.2% | +3.0% | +0.2% | +6.5% | Recovery after 2-yr slowdown |
| Commercial Transport | +12.1% | -1.1% | -4.1% | -2.1% | +16.3% | Strong inflection |
| Sensors | +3.0% | +1.8% | -10.8% | -7.6% | -2.3% | Persistent weakness |
| Ind. Equipment/Automation | +28.5% | -8.1% | -24.9% | +7.7% | +11.6% | Recovery underway |
| Aero/Defense/Marine | +8.7% | +12.8% | +15.4% | +10.3% | +10.9% | Sustained strength |
| Energy | +16.0% | +9.6% | +4.9% | +46.2% | +14.6% | Secular tailwind + Richards |
| Medical | +4.2% | +13.1% | +6.5% | -16.9% | +5.3% | Recovering from destocking |
| Data & Devices/DDN | +29.6% | -27.2% | +10.2% | +73.3% | +69.7% | AI explosion |
8E. Geographic Revenue Breakdown
FY2025 Geographic Mix
| Region | % of Revenue | Revenue ($M) | Key Markets |
|---|---|---|---|
| Asia-Pacific | 38% | ~$6,560M | China (~$3.0–3.5B), Japan, South Korea |
| EMEA | 33% | ~$5,696M | Germany, UK, France |
| Americas | 29% | ~$5,006M | US, Mexico, Brazil |
| Total | 100% | $17,262M |
Geographic Shift (FY2024→FY2025)
| Region | FY2024 Mix | FY2025 Mix | Shift |
|---|---|---|---|
| Asia-Pacific | ~36% | 38% | +2 pts (China auto + AI supply chain) |
| EMEA | ~33% | 33% | Flat |
| Americas | ~31% | 29% | -2 pts (relative to faster APAC growth) |
China Exposure Deep Dive:
- Estimated ~$3.0–3.5B or ~18–20% of total revenue
- Concentrated in automotive (BEV content growth) and electronics
- BYD content grew from $5/vehicle to $50/vehicle — a 10x increase
- Risk: China EV price wars compressing OEM margins
- Offset: 800V architecture complexity and ADAS content expansion
Manufacturing Localization
| Metric | Value |
|---|---|
| In-region manufacturing | 76% |
| In-region supply chain sourcing | 90% |
| Automated factories globally | 120 |
| Countries of operation | ~130 |
This high localization ratio is a critical competitive advantage and tariff mitigant.
8F. Customer Concentration Analysis
| Metric | Value |
|---|---|
| Largest single customer | <10% of revenue (no customer exceeds 10%) |
| Sales channel: Direct | ~75% |
| Sales channel: Distributors | ~25% |
| Co-design product arrangements | 5,000+ (adding ~1,000 in 2026) |
| Key auto OEM relationships | Toyota, VW, GM, Ford, BYD, Hyundai, BMW, etc. |
| Key hyperscaler relationships | NVIDIA supply chain, Microsoft, Google, Amazon, Meta (implied) |
Customer diversification is excellent. No single customer exceeds 10%, and TEL serves virtually every major OEM globally across automotive, industrial, and data center end markets. The 5,000+ co-design arrangements create deep switching costs.
8G. Content-Per-Vehicle Analysis
Connector Content by Powertrain Type
| Vehicle Type | TE Content/Vehicle | vs. ICE Baseline | Driver |
|---|---|---|---|
| ICE (traditional) | ~$32 | 1.0x | Basic wiring, sensors |
| Hybrid Electric | ~$75 | 2.3x | Dual drivetrain + HV connectors |
| Battery Electric (BEV) | ~$75+ | 2.3x+ | HV systems, battery mgmt, chargers |
| 800V BEV Architecture | Higher (TBD) | >2.5x | Ultra-high-voltage connectors |
BYD Case Study (from 2025 Investor Day)
- TEL content grew from $5/vehicle to $50/vehicle — a 10x increase
- Driven by electrification, high-voltage systems, and data connectivity
- BYD is now one of TEL's fastest-growing auto customers
Content Growth in Other End Markets
| Product Category | Content Trend |
|---|---|
| Factory robots | $60 → $100/unit (+67%) |
| AI connectivity per chip | 5x increase over 3 years |
| Power density per rack | 50kW (H100) → 120kW (GB200) → 600kW (Rubin) → 1MW (2030) |
Blended Content Impact on Revenue
At current global EV penetration of ~25%, the blended connector content per vehicle is:
- Blended = (75% × $32) + (25% × $75) = $42.75
- vs. pure ICE of $32 = +34% content uplift from mix alone
By 2030 at 50% EV penetration:
- Blended = (50% × $32) + (50% × $75) = $53.50
- = +67% content uplift — this growth occurs regardless of total vehicle production volume
Management targets 4–6% annual growth above market through content gains in electrification and data connectivity.
8H. Segment-Level Margin Analysis
Adjusted Operating Margin Trends
| Segment | FY2022 | FY2023 | FY2024 | FY2025 | Q1 FY2026 | 3-Yr Δ |
|---|---|---|---|---|---|---|
| Transportation Solutions | 17.6% | 17.4% | 20.4% | 20.2% | 21.2% | +360 bps |
| Industrial Solutions | 15.9% | 15.7% | 15.2% | 19.1% | 23.3% | +740 bps |
| Total Company | 18.2% | 16.7% | 18.9% | 19.7% | 22.2% | +400 bps |
Margin Drivers by Segment
Transportation Solutions (21.2% adj. margin, Q1 FY2026):
- Mature, stable margin profile
- Operating leverage on content growth
- Incremental margins target: 30%+
- Risk: Auto cycle downturn compresses margins to 17–18%
Industrial Solutions (23.3% adj. margin, Q1 FY2026):
- Now the higher-margin segment — a major portfolio transformation
- DDN/AI revenue is very high-margin (estimated 28–32%)
- Richards Manufacturing adds mid-30% EBITDA margins
- A&D has traditionally strong margins (25%+)
- 520 bps YoY margin expansion in Q1 FY2026
Margin Accretive vs. Dilutive:
- Accretive: DDN/AI (est. 28–32%), A&D (25%+), Energy/Richards (mid-30s EBITDA)
- Neutral: Automotive (20–21%), Automation (18–20%)
- Dilutive: Sensors (15–17%), Medical (recovering)
8I. Revenue CAGR Analysis
10-Year Revenue CAGRs (FY2015→FY2025)
| Metric | FY2015 | FY2025 | 10-Year CAGR |
|---|---|---|---|
| Total Company Revenue | $12,233M | $17,262M | 3.5% |
| Adjusted EPS | $3.66 | $8.76 | 9.1% |
| Free Cash Flow | $1,347M | $3,214M | 9.1% |
5-Year Revenue CAGRs (FY2020→FY2025)
| Metric | FY2020 | FY2025 | 5-Year CAGR |
|---|---|---|---|
| Total Company Revenue | $12,174M | $17,262M | 7.2% |
| Adjusted EPS | $4.03 | $8.76 | 16.8% |
| Free Cash Flow | $1,600M | $3,214M | 15.0% |
Segment-Level CAGRs
| Segment | 3-Year CAGR (FY2022→FY2025) | Key Driver |
|---|---|---|
| Transportation Solutions | +0.6% | Auto cycle headwinds offset content growth |
| Industrial Solutions (combined) | +4.5% (estimated) | AI/DDN explosion + Energy |
| DDN/AI Specifically | ~55% CAGR (FY2020→FY2025) | Revenue grew 9x from ~$160M to ~$1.4B |
Forward Targets (November 2025 Investor Day)
| Metric | Target | Basis |
|---|---|---|
| Total Revenue Growth | 6–8% annually (through-cycle) | Secular tailwinds |
| AI/Cloud Revenue | $1.4B → $3.0B+ by FY2027 | ~45% CAGR |
| Adjusted EPS Growth | ≥10% annually | Revenue + margin + buybacks |
| Incremental Operating Margins | 30%+ | Operating leverage |
8J. Growth Drivers and Risks by Revenue Stream
Growth Drivers
| Driver | Revenue Impact | Confidence | Time Horizon |
|---|---|---|---|
| AI/Data Center (DDN) | +$1.6B by FY2027 (from $1.4B to $3.0B) | HIGH | 1–3 years |
| EV Content Growth | +$300–500M annually | HIGH | 3–10 years |
| Grid Modernization (Richards) | +$600–800M annually | MEDIUM-HIGH | 2–5 years |
| Defense Spending | +$100–200M annually | HIGH | 3–5 years |
| Industrial Automation Recovery | +$200–400M | MEDIUM | 1–2 years |
| 800V Architecture Adoption | +$200–300M annually | MEDIUM | 2–5 years |
| Medical Recovery | +$100M | MEDIUM | 1 year |
Revenue Risks
| Risk | Revenue Impact | Probability | Monitor |
|---|---|---|---|
| Auto Production Downturn | -$500–1,000M | MEDIUM | Global auto production data |
| AI Spending Plateau | -$300–500M vs. target | LOW-MEDIUM | Hyperscaler CapEx announcements |
| China Trade Escalation | -$500–700M | LOW-MEDIUM | US-China tariff policy |
| Sensor Segment Decline | -$100–200M | MEDIUM | Industrial production data |
| Copper Tariff Impact | -$100–200M (margin) | MEDIUM-HIGH | Section 232 decisions |
| Richards Integration Risk | -$50–100M (synergy shortfall) | LOW | Quarterly Energy segment data |
| EV Credit Rollback (US) | -$100–200M | MEDIUM | US policy announcements |
8K. Orders and Backlog Analysis
Record Orders Signal Forward Strength
| Quarter | Orders ($M) | YoY Growth | Book-to-Bill |
|---|---|---|---|
| Q4 FY2024 | ~$4,100 | — | ~1.00x |
| Q1 FY2025 | ~$3,900 | — | ~0.95x |
| Q3 FY2025 | ~$4,500 | — | ~1.05x |
| Q4 FY2025 | $4,700 | +22% | ~1.05x |
| Q1 FY2026 | $5,100 | +28% | 1.10x |
Backlog Composition (FY2025 Year-End)
| Segment | Backlog ($M) | % of Total | Revenue Coverage |
|---|---|---|---|
| Industrial Solutions | $3,910M | 63% | ~6 months of segment revenue |
| Transportation Solutions | $2,278M | 37% | ~3 months of segment revenue |
| Total | $6,188M | 100% | ~4.3 months of total revenue |
Key insight: Industrial backlog nearly doubled vs. prior year while Transportation normalized. The shift in backlog composition reflects the accelerating demand in AI/DDN and Energy, providing strong revenue visibility for Industrial Solutions through FY2026.
Book-to-Bill >1.0x — Forward Revenue Acceleration
A sustained book-to-bill ratio above 1.0x indicates forward revenue growth. At 1.10x in Q1 FY2026 with $5.1B in orders:
- Implied excess orders over shipments: ~$470M per quarter ($5.1B × 0.10)
- Annualized backlog build: ~$1.9B
- This supports the consensus FY2026 revenue estimate of $19.4B (+12.6% growth)
8L. Richards Manufacturing Deep Dive
| Attribute | Detail |
|---|---|
| Acquisition Price | $2.3 billion (all cash) |
| Annual Revenue | ~$400M |
| EBITDA Margin | Mid-30% range (~35%) |
| Implied EBITDA | ~$140M |
| EV/EBITDA Multiple | ~16.4x |
| Segment Classification | Industrial Solutions → Energy sub-segment |
| Close Date | April 1, 2025 |
| Products | Underground distribution equipment, medium-voltage cold-shrink cable accessories, network protector products |
| Historical Growth | Double-digit revenue growth over recent years |
| Expected ROIC | Mid-teens (after synergies) |
| Q1 FY2026 Contribution | ~$160M+ (estimated from organic/reported growth gap) |
| Annualized Revenue Run-Rate | ~$640–700M (including organic growth) |
Strategic Rationale: Positions TEL for the $100B+ US utility grid modernization cycle. Aging grid infrastructure, renewable energy integration, and grid hardening requirements create a multi-decade demand runway. Richards has leading market positions in niche, mission-critical products with high barriers to entry.
8M. AI / Digital Data Networks Revenue Trajectory
| Period | AI/Cloud Revenue | YoY Growth | % of Total Revenue |
|---|---|---|---|
| FY2019 | ~$160M | — | ~1.2% |
| FY2022 | ~$600M (est.) | — | ~3.7% |
| FY2024 | ~$900M (est.) | — | ~5.7% |
| FY2025 | ~$1,400M | +56% | ~8.1% |
| Q1 FY2026 (ann.) | ~$2,828M | +70% | ~15.1% |
| FY2027 Target | $3,000M+ | +45% CAGR | ~14–16% |
9x revenue increase from FY2019 to FY2025. AI/Cloud is transforming TEL's revenue profile from a traditional auto/industrial connector company into a high-growth technology infrastructure play.
TEL's AI Market Position:
- ~30% share in AI interconnect market
- Key products: 224G AdrenaLINE, 448G co-packaged copper, liquid-cooled busbars
- Power density driving massive content growth: 50kW/rack (H100) → 600kW (Rubin) → 1MW (2030)
- Content per AI chip has increased 5x over 3 years
Sources: TE Connectivity Q1 FY2026, Q4/FY2025, FY2024, FY2023, FY2022 earnings releases (PRNewswire); FY2025 10-K (SEC EDGAR); November 2025 Investor Day; MarketScreener consensus estimates; Manufacturing Dive (Richards acquisition); Fintool (orders analysis)
Deeper Financial Analysis
The fundamental tier adds 9 additional research dimensions for $TEL.
Revenue Breakdown
Segment revenue, geographic mix, product-line contribution margins, and cohort dynamics.
Financial Trends
Quarter-over-quarter momentum, leading indicators, and inflection point analysis.
Balance Sheet
Debt structure, liquidity runway, dilution risk, and working capital dynamics.
Capital Allocation
Buyback cadence, M&A appetite, dividend policy, and reinvestment priorities.
Returns on Capital (ROIC)
Multi-year ROIC vs. WACC, marginal returns on reinvestment, sales-to-invested-capital efficiency, and moat spread.
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