Molex Gearing Up for Growth in Automotive, Medical Markets

Molex, the world’s third-largest maker of connectors in electronic devices, is preparing for strong growth in automotive, medical and cloud computing markets.

“Some of the technology that we would typically sell on a mobile device is now going into vehicles,” Molex CEO Joe Nelligan told EE Times in an exclusive interview. “We’ve never really seen it before.”

The company is capturing demand inside the clusters of mini servers in electrified cars, he said. Molex is leveraging tiny, fine-pitch products for automobiles that historically were developed for consumer and mobile applications.

“There’s so much disruption in the vehicle—with not only the electrification of the drivetrain but also the connectivity for different levels of autonomous driving,” Nelligan said.

The company’s recent purchase of Laird Vehicle Connection Systems brings to Molex key technologies for the automotive business in wireless communications.

“When you look at the shark fins on cars, that’s Molex,” Nelligan said of today’s sleek antennae. “That’s important technology, obviously, for communications: vehicle-to-vehicle and vehicle-to-infrastructure. Then you have wired and wireless charging. We make those modules. If you’re charging a phone wirelessly, we make those, and if you’re charging a phone where you’re plugging in your cable into the module in your console, we make those, as well.”

The company’s participation in automobiles is broader now than it would have been 10 years ago because of its comprehensive capability in terms of wireless connectivity, Nelligan said.

One of the unique characteristics of Molex is its customer focus, according to Ron Bishop, the founder of market research firm Bishop & Associates. Bishop has worked as a consultant to Molex and other connector manufacturers.

“They’ve got a great product base, and they’ve got a solid engineering focus,” Bishop told EE Times in an exclusive interview. “If a customer has a problem, [Molex says,] ‘Here’s an opportunity for us to fix it and show the customer we really value them’.”

Strong growth

The connector industry has had a compound annual growth rate of about 7% over the last 30 years, Bishop said. Profitability has consistently been in double digits.

Connectors typically account for a small percentage in the bill of materials of an electronic system. As a result, there’s not as much pressure on the price of connectors as there is on semiconductors, Bishop noted.

“Over the past 10 years, connector prices have held up really well, and in fact have increased a bit,” he said.

In recent years, private equity investors like KKR have targeted connector manufacturers like Amphenol for acquisition, according to Bishop. About 10 years ago, Koch Industries bought 100% of Molex. Since that time, Molex has doubled the size of its business.

“Koch has been a great owner for Molex and has been really committed to investing for the long term, helping us build capability, either organically or through acquisitions, to make sure we can best serve our customers,” Nelligan said.

Koch has helped Molex with recent manufacturing expansions in Poland, India, Vietnam and Mexico, as well as key tech acquisitions like Laird, he added.

“We want to outperform the market,” Nelligan said. “That’s what our expectation is. We’re not as much focused ‘are we the biggest’?’ It’s ‘are we doing the right things to manage our business and our customers?’”

AI, healthcare

AI and data centers are new growth drivers for Molex.

“You have the GPUs from the leading silicon suppliers, and you have to connect all that, both on the board and then between the boards,” Nelligan said. “High-speed optics and copper connectivity is really important to support all the infrastructure buildout for AI. It’s a big opportunity for us.”

Molex developed one of its differentiating capabilities years ago, in Japan and South Korea, for micro-miniature connectors in PCs, laptops and cameras.

“What we’re seeing, though, is that technology is getting combined with the high-speed technology that we have traditionally had in our data center customers,” Nelligan said. “Think of telecom applications, server applications, storage applications, networking. You get this convergence in the way we leverage data. We need all this high-speed performance, but we need this micro-miniature size because density is so important.”

Molex is also targeting healthcare as a new business.

Through its recent acquisition of Philips-Medisize, Molex has become one of the world’s largest manufacturers of insulin pens.

“If someone has a new insulin pen, we’ll consult on the design and give them feedback on design for manufacturing, design for assembly, to optimize the manufacturing process, and we’ll make it for them,” Nelligan noted.

In the past, pharma companies designed their own devices. Now, they are handing off the design work to Molex.

“We’re more than happy to invest in our own products so we can provide that product to our customers when they need a new delivery device,” he said. “They can customize it, but we have a core design that they can start with.”

Molex typically works with leading-edge customers on products for their applications. The company later uses that design or a modification of it for other customers.

“It’s really important to be working with the leaders that are driving the technology, because there’s this big trickle-down effect where what you do for them, you can typically do for other customers in that same market,” Nelligan said.

Molex participates with leaders in many end markets, including mobile devices, data communications, automotive and industrial. In the medical space, the leading pharma medtech and diagnostic companies are on the company’s customer list.

Nelligan said about half of Molex’s business is devoted to transportation and data telecommunications. “The remaining half is split relatively evenly between medical, industrial and consumer and mobile,” he added.

From intern to CEO

Nelligan, an electronics engineer, started with Molex as an intern nearly 40 years ago.

“I’ve been fortunate to have worked in a lot of different roles in the company,” he said. I got a good view of how the company operates from a lot of different perspectives.”

Founded in Chicago, Molex is marking its 86^th year in business.

“More than half of our business is outside the U.S.,” Nelligan observed. “We were early in establishing operations in Europe and Asia. We just celebrated 50 years of operation in several Asian countries, so we’ve been global for a long time.”