Celestica Inc.

HPS programs are single-sourced and require 12-24 month qualification processes, providing above-average forward visibility versus commodity EMS peers; management described awarded backlog as the strongest in company history after Q1 2026. Revenue is driven by hyperscaler capital spending programs rather than subscription contracts, so visibility is elevated but not contractually anchored.

CCS, driven by hyperscaler AI infrastructure, has become the dominant revenue contributor as the ATS segment (Aerospace, Defense, Industrial, HealthTech) declined in FY2025. The top 10 customers represented 79% of FY2025 revenue, with two customers individually exceeding 10% of FY2024 revenue, reflecting concentrated end-market exposure.

Celestica's manufacturing footprint is concentrated in Asia (approximately 70% of production as of FY2024), and revenue is predominantly generated from US-based hyperscaler customers who anchor the CCS segment. Both the manufacturing base and the customer base lack meaningful spread across multiple independent geographies.

The HPS pivot has produced a margin inflection at the gross level, with gross margin holding in the 11-13% range across FY2023-FY2025, above peers focused on commodity assembly. The business still requires substantial capex (targeting $1B in 2026) to expand capacity, limiting operating leverage relative to asset-light models.

HPS projects are mission-critical components for hyperscaler AI infrastructure, with qualification requirements creating meaningful multi-year program repeat dynamics. Revenue is not subscription-based, but the single-sourced nature of programs and deep integration of design services places quality above transactional EMS manufacturing.