Sanmina's Q2 2025: Unraveling Contradictions on Inventory, Investments, and Demand Dynamics

Inventory correction in communications segment, investments in capacity and technology, tariff and manufacturing impact on demand, demand trends and inventory correction, capacity investments and strategic focus are the key contradictions discussed in Sanmina's latest 2025Q2 earnings call.



Revenue and Earnings Growth:
- Sanmina Corporation reported solid revenue of $1.98 billion for the second quarter of fiscal 2025, with a non-GAAP EPS of $1.41 per share.
- The growth was driven by increases in revenue across a majority of end markets, particularly in Communication Networks and Cloud Infrastructure.

Operational Efficiency and Margin Expansion:
- The company achieved a non-GAAP gross margin of 9.1%, exceeding the outlook, and a non-GAAP operating margin of 5.6%.
- This was due to favorable mix and operational efficiencies, which improved the company's financial performance.

Inventory Management and Cash Flow:
- Inventory, net of customer advances, decreased by 8% compared to the same period a year ago, with inventory turns improving to 5.9 times.
- This improvement was attributed to disciplined working capital management and strong cash flow from operations, which totaled $157 million for the quarter.

Capacity and Technology Investments:
- Sanmina plans to make targeted investments in capacity and technology across the U.S., India, and Mexico, with capital expenditures expected to be approximately 2% of revenue on a full-year basis.
- These investments are aimed at supporting long-term growth and responding to increased demand, particularly in data center and high-technology sectors.