On Wednesday, 14 May 2025, Flex Ltd (NASDAQ:FLEX) presented at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The company outlined its strategic positioning amid global uncertainties, including tariffs and potential recession impacts. While Flex highlighted strengths in its data center business and a robust EMS plus strategy, it also acknowledged challenges in the automotive sector and a cautious revenue outlook.
Key Takeaways
- Flex’s data center business remains a strong performer, driven by cloud and power product segments.
- The company is proactively addressing supply chain risks and building redundancy.
- Flex’s EMS plus strategy focuses on high-value, high-margin opportunities.
- Recent acquisitions, JetCool and Crown Technical Systems, aim to enhance data center capabilities.
- Flex maintains a positive outlook for long-term fundamentals in the automotive sector.
Financial Results
- Flex widened its revenue guidance due to potential tariff impacts, though margin guidance remains stable.
- The company experienced a 1% growth pull forward in Q4, primarily in Auto, Lifestyle, and Industrial sectors.
- The cloud business outpaced power in growth last year, but power is expected to grow faster in the coming year.
- Service revenue grew at low single digits, with Crown contributing $30 million, totaling $130 million for the year.
Operational Updates
- The data center business is a significant contributor, generating over $3 billion in revenue.
- Flex’s acquisition of JetCool enhances its chip-level liquid cooling capabilities.
- Crown Technical Systems acquisition bolsters Flex’s medium voltage switchgear offerings.
- Flex prioritizes power and heat solutions over optics, driven by customer demand.
Future Outlook
- Flex aims to increase value-added services penetration across all business units.
- In Health Solutions, emphasis will be on devices and the emerging drug delivery business.
- Long-term fundamentals remain strong for the automotive sector.
Q&A Highlights
- Automation is integral to Flex’s manufacturing strategy, balancing high-volume automation with flexible labor-intensive applications.
- The company sees opportunities across hyperscalers, colos, and silicon providers in the data center sector.
- Flex is focused on premium brands and maximizing product and service sales per customer.
Conclusion
For a detailed understanding of Flex’s strategic insights and financial performance, refer to the full transcript provided below.
Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:
Samik Chatterjee, Analyst, JPMorgan: morning, everyone. I’m Samik Chatterjee, and I cover the hardware and networking companies at JPMorgan. For the first session on day two, have the pleasure of hosting Flex. And with me are Michael Hutong, who is the Chief Commercial Officer and David Rubin from Investor Relations from the company. Thank you both for coming to the conference and thank you to the audience as well.
For both of you, we’ve been sort of generally asking our companies more about the macro start rate. It seems like that’s sort of what’s top of investor minds at this point. You did have to guide to the full year recently on your earnings call. We’re seeing a lot of macro sort of volatility at this point. So maybe just walk us through how did you look into sort of the how are you thinking about the macro at this point?
How are you incorporating that in your full year guide that you issued recently?
Michael Hutong, Chief Commercial Officer, Flex: Yeah, sure. So I’ll maybe talk about the macro and you can talk about the numbers. Yeah. So good morning everyone. I’d say that for the most part a lot of the themes that we’ve been talking about for the past few quarters are still in play today.
There’s the obvious ones where we’re continuing to see strength in anything related to data center. Just to remind you, our data center business is comprised of our cloud business inside of our CEC business unit. That’s about a 3,000,000,000 business, a little bit more than that, 3.5. It also is comprised of our power product business and our industrial business unit, which is in the neighborhood of that $1,300,000,000 of revenue. So anything data center remains very strong.
We haven’t seen any retrenchment. We read the same articles that everybody else does, and although we don’t get a vote in what the capital deployment plans are for our customers, we do get to interrogate their demand. And so far we’ve seen a lot of strong demand across the customer base for us in the data center space. I’d say on the other end of the spectrum we have our automotive business. And when you think about automotive, I don’t think it’s much of a surprise that in the near term there’s a lot of uncertainty.
It’s a pretty dynamic environment. And although the near term is a bit challenging, we do think that long term the fundamentals are still strong for that business. We are positioned well to take advantage of the technology transitions that are in play, whether it be EV, hybrid, combustion engine, the computing power platforms that we have in that business have a role to play in the increasing electronic content of every vehicle. So those are kind of the two ends of the spectrum. I’d say in between from a demand standpoint, we do see relatively similar patterns in our consumer related businesses, although we will get a little bit of a bump given some of the strategic partnerships we’ve announced in our lifestyle space.
I’d say the health solutions space continues to be steady. Devices, very strong. Equipment, a little bit more challenging. And then in the core industrial space, still a little bit soft from a renewable standpoint. But all of those things we’re taking into consideration in the guide, so feel really good about where we are and how we’re positioned to grow here in the near future.
Samik Chatterjee, Analyst, JPMorgan: And one of the concerns and maybe that’s moderated since yesterday a bit, but was of a recession. And given the feedback you’re getting from your customers, how likely do you think there is a significant slowdown in the back half of the year or we go into a recession? Is there a different way you’re planning for your business in terms of how you operate it just given those scenarios?
Michael Hutong, Chief Commercial Officer, Flex: Yeah, I’d say there’s probably two things that are happening right now that might seem opposed at first glance. I think the first one is what could the potential macro impacts be of an aggressive tariff policy? Certainly we’ve gotten some more encouraging news over the past couple of days, so hopefully the likelihood of that becomes diminished. But nevertheless, there’s a lot of scenario planning taking place for us and for our customers, so a lot of activity in that area. I’d say over the past five years we’ve been in these types of conversations.
It started with the first round of trade policy changes, followed by a global pandemic, followed by material constraints, real war breaks out. So we’ve been in a really dynamic situation for a long period of time preparing for any amount of scenarios with respect to the macro environment. I’d say the activity level is probably highest now than at any point that we’ve seen in the recent past because people, I think, are coming when I say people, companies are coming to grips with the fact that you can’t perfectly predict what policy will be. So you need to build in robustness into your supply chain by usually building redundant or compatible supply chains on top of what you already have. So a lot of conversations with customers to prepare for that possibility.
I would say that there isn’t any sort of macro impact from tariffs built into the guide. If there was something that happened drastically, like we said in our earnings call, we’re prepared for that, but it’s not something that we’ve taken into consideration on the outlook. Dave, don’t if you have anything to
David Rubin, Investor Relations, Flex: Yeah, mean just thinking about the revenue guidance this year, obviously beginning of the year, you want to set a prudent guidance, and when you think about revenue, we did a wider than normal range, and that was to take into account, as you said, we didn’t include direct tariff impacts. One reason, they’re pass through costs. The second reason is, as you pointed out, it’s changing weekly. And then you do take into account that there could be indirect impacts, which is, like you said, maybe the recessionary concerns. Again, a lot of different permutations, and so we wanted to try and understand and factor those in.
When you think about margins, that’s a different different story. Our margin guidance, it’s the same range that we normally would do. We feel very good about that, one, because the areas of strength that Michael described are very strong mix for us. It’s good for margins. And then the second reason, again, as he described, we’ve become a more resilient company.
And so as you think about how we’ve played out over the last five years, we’ve been through a variety of macro crazy, and so we’ve been able to manage our costs relative to demand and we’re able to change quickly, so we feel very good about that.
Samik Chatterjee, Analyst, JPMorgan: And staying on the topic of tariffs, you mentioned customer activity and building robustness of supply chain is at a peak, but maybe flesh that out a bit more, what is the typical conversation with a customer look like today? Are you seeing more concrete changes in the supply or the capacity needs already from your customers? And there’s obviously the overall sort of supply capacity planning on your front as well. What do you have in terms of flexible capacity to offer to new customers that might be looking for capacity in some of the lower tariff countries?
Michael Hutong, Chief Commercial Officer, Flex: Yeah. I’d say that it’s similar trends but at a heightened level is how I would characterize it. For many years now people have been looking to de risk their companies’ supply chains, and we’ve been helping them do that. Now I would say it’s at a heightened level. Our CEO would say the phone’s ringing off the hook from customers trying to figure out how to navigate these pretty difficult times.
I’d say two things are probably different this time around than last. First is the level of activity. It’s very broad based. Before, it seemed to be more targeted given a very focused trade policy. Certain markets, certain customers might have been more affected than others.
This seems to be more broad based. And so even industries that weren’t affected, say, in round one are now taking a serious look at what they need to do to mitigate the risk of their supply chain. So the number of calls and the breadth of the calls I think are very important. The other thing is that because of all the work we’ve done over the past three, four, five years for the very same reason, we have a really rigorous process in place to be proactive with our customers. We think that the footprint today is actually of high value in areas like Mexico, The United States, Southeast Asia, maybe Western Europe, certainly in The United States more recently than maybe for the past three or four or five years.
And so we really are spending a lot of time making sure that the right markets, the right customers that are of high value get aligned with the high value footprint. So it’s an opportunity for us to make sure we put the right business in the right footprint. And it’s also an opportunity for us to leverage the strategy that we have in place today. We talk a lot about our EMS plus products plus services strategy. So as we move customers from one location to another, or as we introduce new customers into the company, we’re able to provide them a broader portfolio of products and services as we go through this process.
Samik Chatterjee, Analyst, JPMorgan: Got it. Helpful. I’m just going to sort of carry on that topic for a bit more, matching high value customers to high value locations. And EMS companies, including Flex in general, have been on this path of margin improvement focusing on richer mix of business. Does this eventually become a margin opportunity as you match high value customers to high value footprint?
Does this become a margin opportunity for the company?
Michael Hutong, Chief Commercial Officer, Flex: Well, think it has been a margin opportunity for the past three, four, five years, and you’ve seen that in the results. As we’ve moved customers from one location to another, you’ve also seen the improvement in margins come along with that, and I would expect that to continue. When you think about the markets that we’re emphasizing, I think that’s been pretty consistent as well On the one end of the spectrum, again emphasizing most companies related to the data center, whether that be rack integration services, embedded power products, critical power products, or any of our value added services, Markets and customers that lend themselves to that strategy will be primary. And like you’ve seen for the past three, four, five years, we’ve also been deemphasizing some of our volatile lower margin consumer devices business. When you talk about the mix up opportunity, we’ve been practicing that as we’ve been moving customers for the past years, and I think you’ll continue to see that as we continue to do that for our customers.
Samik Chatterjee, Analyst, JPMorgan: Just the last part of that overall long theme, pull forwards in demand. Anything that you’re seeing on the consumer side or any other markets like automotive, you’re seeing sales is very high at this point, pre tariff sales are pretty high. So in terms of certain markets, are you seeing any markets sort of do a level of pull forward that might hold the second half?
Michael Hutong, Chief Commercial Officer, Flex: Yeah, sure. And I think we talked a little bit about that in the earnings call. Do want to speak to those numbers, Gabe?
David Rubin, Investor Relations, Flex: Yeah, I mean, we did in Q4. We saw a little bit. I think the math would be about one percentage point of the growth in Q4 came from pull forwards. That was split mostly between auto. We did see some lifestyle and industrial.
We’re not seeing that continue into Q1. There’s no indications of that. In fact, maybe in the auto space that pull forward might have contributed to some of the Q1 weakness. So I don’t think there’s anything anticipated in guidance for that.
Samik Chatterjee, Analyst, JPMorgan: Okay, great. Moving then changing gears here, the EMS plus product plus services strategy that you have, just give us a bit more of what does that strategy entail, what are the kind of services that you can typically attach to the products and manufacturing that you’re doing for your customers, and what are the typical sort of margins on a services attach look like?
Michael Hutong, Chief Commercial Officer, Flex: Sure. Yeah, so we’ve talked a lot recently about our EMS plus products plus services strategy, and I would think about it this way. Really simply put, that strategy is to sell as many of our products and services as possible into each opportunity to make sure we execute those products and services in market focused factories that are already operating at global scale in each of the major geographies. Very simple to articulate. What’s different about that is first think about the EMS part of that equation as being what we’ve done and built up over the past fifty plus years.
More of the advanced manufacturing system that’s in place. Much of the scale that we offer in the system today comes through that business, the 150,000 people, the over 100 factories, the over 25 countries. That’s the foundation of what we’ve been building over the past years. And it’s the foundation that enables us to scale into other products and services that are also linked to that strategy now as well. So what’s new is in the product space, we actually have been intentionally investing in very focused product opportunities where we cultivate and acquire Flex IP.
It ranges from our automotive business where we do mirror controls, and it also is prevalent in our data center business where we have a critical power infrastructure business and an embedded power business. In addition to the product businesses, we also have what we call our services business. And that ranges from things that we do to vertically integrate the business. Think sheet metal racks and enclosures that are used for IT integration in the data center as one example of vertical integration. It also includes our CoreWorks business.
And that is our branded electronic component and mechanical component business. And it also includes what we call our global services business. And in that business, once we manufacture a product, we have both a value added fulfillment capability for outbound and a circular economy suite of services to bring those same products back for repair, refurbishment, and recycling. So that’s the portfolio of what we offer. In terms of the margin profile, EMS operates at what you’ve seen in the EMS industry today.
The product businesses operate at product level margins, so definitely accretive to the average. And then all of our value added services also operate at margins that are higher than the company average as well. So if you think about what this means for Flex, one opportunity to mix up is by going from say markets and customers of lower value to markets and customers of higher value. But another aspect of that is if we continue to execute on an EMS plus products plus services strategy, the more products and services we can blend in with the overall portfolio naturally will improve margins over time.
Samik Chatterjee, Analyst, JPMorgan: And so the rank order for margins would be products of the highest services in between EMS?
Michael Hutong, Chief Commercial Officer, Flex: Yeah, think that’s a fair assumption.
Samik Chatterjee, Analyst, JPMorgan: I should know this, but David, have you quantified these services revenue?
David Rubin, Investor Relations, Flex: We’d said last year that it was about $1,000,000,000 Remember, it’s a blended number, it’s not a separate. So when you think of that cloud, some of that is blended together, same with Lifestyle where services reside.
Samik Chatterjee, Analyst, JPMorgan: Okay, so the primary services sit in cloud and then some bit of it in lifestyle.
David Rubin, Investor Relations, Flex: Yeah. It started in lifestyle is where we really did the proof of concept, then you took consumer like high end durable good programs, and instead of just doing traditional, maybe the electronics, we layered in these services to provide a fully vertical integrated solution. And so that is exactly where that whole layering in more products and services to create a higher value product. And then with that, we moved towards CEC, obviously cloud, some of networking.
Samik Chatterjee, Analyst, JPMorgan: And so the services revenue is growing faster than the company average given the alignment to CEC?
David Rubin, Investor Relations, Flex: Yeah. Yes. We’ve said it’s growing about low single digits this last year. And again, this is something you want to make sure that you’re growing this appropriately and connected to the right things. You want this to be a long term.
You don’t want to do one offs. Ultimately, our goal, our long term goal for value added services is to increase the penetration in every business unit. Obviously some of that will take a long time, so it’s that consistently building up services that are replicable that can apply to a broad range of opportunities.
Samik Chatterjee, Analyst, JPMorgan: Got it. Great. Moving to the data center business, maybe just start with giving us a rundown of the breadth of capabilities you have. And there’s, as you said, you don’t get a vote in the CapEx, but any early indications into 2026? Or given the pipeline that they’ve shared with you, are you getting any indications about 2026 CapEx looks like?
Michael Hutong, Chief Commercial Officer, Flex: Yeah. So let’s start by maybe framing up how we think about the data center through our strategy. So we’ve talked already about EMS plus products plus services. What’s unique about this strategy is we apply it differently to the individual business units, of which there are six in the company. For data center, this strategy is really focused on solving what we think are the biggest challenges in the data center of power, heat and scale.
And so that’s probably the easiest way to talk about the breadth of our capability. So from a power standpoint, again, no surprise that the power consumption of the data center continues to rise. It’s probably rising faster than maybe even we had predicted even a year ago. And so along with that rising power consumption, we have two different ways to help our customers solve for that first challenge. The first is around what we would call embedded power.
Embedded power are solutions that are modules. They’re board level solutions that go into a server, into that data center rack. They help customers optimize and regulate power consumption in the rack itself. So that’s the first way. When you think about our critical power business, that’s everything above and around the rack in the real estate itself, in the facility itself.
So it covers everything from low voltage switchgear to medium voltage switchgear. It includes power pods, which are essentially power solutions in a box that we can land in a container at a site for a quick, flexible delivery of power to make sure that data centers really come up to speed faster and cheaper than before. So power, we have both solutions, embedded and critical. I think over time you’re going to need a more integrated solution, but I’ll come back to that maybe at the end of the description here. From a heat perspective, as these racks start to consume more and more power, they also generate more and more heat.
Up to this point in time, air cooling technology has been adequate for the vast majority of the applications. That’s becoming a real limiting factor to scaling higher and higher computational requirements. And so now liquid cooling is the next phase of technology. And we’ve acquired a company called JetCool where we now have our own IP relative to delivering chip level liquid cooling on the board. And also now we’re launching a CDU product as well.
So we solve for power. Now we’re solving for heat that goes along with that. And then you come to scale. And from a scale standpoint, again think back to my earlier description of our EMS business. We’ve been building that scale for the past fifty years.
We operate with 150,000 people, over 100 different facilities, over 25 different countries. That’s the foundation for scaling our power business, the foundation for scaling our liquid cooling business. But also it’s foundational for our IT rack integration services where we do those for a number of different people. Now that portfolio of services solving for power, heat and scale, what’s also unique about that is that we have a really diverse customer base that’s fairly unique in the industry. So when you think about hyperscalers, we don’t have the problem of heavy concentration with one hyperscaler.
We provide multiple products, multiple services to multiple hyperscalers. We also have a category of customers in the colo space. Given our critical power products, we actually have a nice entree into the leading colos in the industry as well. When you think about the silicon providers that are servicing the data centers, through our embedded power business and also our IT rack integration services, we have multiple silicon provider relationships. So not only are we diversified across those three different categories of customers, we’re diversified within each one of those categories as well.
So we get a pretty good view on what demand is. Again, we don’t get a vote, but we get to interrogate a lot of different people at a lot of different times given some of the catalysts that you’ve all seen in the news and through other announcements as well. I would say we don’t see a lot of losers in that conversation. In fact, many of our customers seeing the same news we are are making sure to actually reiterate that their demand is real, to make sure that we continue to invest as they need to scale those applications consistent with their own business plans.
Samik Chatterjee, Analyst, JPMorgan: Maybe just then taking power and the cloud business in two separate areas, this year you had cloud growing modestly faster than the Power business, if I remember the numbers right. The guidance for the next year is slightly to sort of flip that around and Power growing faster. Is there a different sort of ramp behind power business that’s driving that outlook? Is it more just being mindful of the comps that you’re running into?
Michael Hutong, Chief Commercial Officer, Flex: Yeah, I think it’s a lot of large numbers catching up just a little bit. They’re both growing, and I think it’s just a matter of how fast they’re growing. So when you think about the IT rack integration business, that’s the largest part of our business, and so the comps get harder every year that you go out. On the power business, it’s been a smaller business as we’ve articulated earlier, and so it’s easier to grow large percentages. But I wouldn’t take that as any indication that either are slowing from an end market demand perspective.
It’s just the comps get a little bit more difficult over time. In fact, I would expect that both will continue to grow at similar rates over time as those businesses become more mature and of equal size. I would also say that given some of the conversations that I articulated on our strategy, I would also expect that growth to become more similar as customers more and more are looking for more integrated solutions so they can solve for power, heat and scale themselves as opposed to having isolated solutions. I think it’s more comps than anything. Strong demand in both.
Reductions are not being seen in either parts of the business.
David Rubin, Investor Relations, Flex: Just one thing to add to that. On the cloud side, as we said, it will be just a little bit below that mid-thirty percent growth. Remember, we’re also having an increase in the customer sourced inventory, and so those new contracts, you take out some inventory that used to be included in revenue, that comes out. So now you’re comping the new contracts that are lower revenue, same operating profit against the older ones that had more. So that’s part of the mechanics of why that number is lower.
As Michael said, very strong growth in both of those markets.
Samik Chatterjee, Analyst, JPMorgan: One of the questions that’s come up on that front is moving to a more consignment model and customers choosing to do that, does it imply that you’re doing more work on what would be a custom ASIC for the customer relative to traditional GPU based equipment. I don’t know if you can share anything on that front.
Michael Hutong, Chief Commercial Officer, Flex: Yeah, that’s a fair question. I would say first on the business model front, we have a wide variety of business models and always have, We’ve said over and over again that whatever our customers feel is most appropriate for their business, we have an ability to accommodate. In some cases that’s fully turnkey. In some cases there’s a heavy consignment. In other cases there’s some place in the middle.
So it depends on the particular application. I would also say that another theme that we’ve reiterated over and over again is that we prefer to play in the custom space. Our ability to play in that space provides us with the opportunity to create more value. Where in the other side of that spectrum you have standard platforms that lend themselves to maybe more platform type of opportunities, more ODM type of solutions, where in our opinion it tends to be an opportunity of lesser value and lower margin. We like those areas that require customization, and sometimes that does lead to the kinds of customers that you spoke to earlier.
We haven’t talked much about how much we spend in which area, but our preference to this point in time has been to play in those opportunities that require more customization.
Samik Chatterjee, Analyst, JPMorgan: Okay. Just two more questions on that front before I open it up to see if the audience has any questions. Revenues synergies from JetCool and Crown Technical Systems, how should we think about them contributing to the fiscal twenty six outlook?
Michael Hutong, Chief Commercial Officer, Flex: Yep. So I’ll get into the synergies and talk about the numbers. So first, again, think back to EMS plus products plus services, solving for power, heat and scale. I say that because our acquisition strategy is informed by solving for those challenges in the data center. And that’s either through adding capability or adding capacity within those confines.
In the case of both, we added capability, which I think is a really important part here. So starting with the jet cool piece, we talked about how increasing power consumption is generating more heat, needing liquid cooling solutions. We felt it was so important we wanted to acquire our own IP in a way that we could scale that with our IT rack integration business and our power business. So very consistent and synergistic with that strategy. Similarly with the Crown Technical acquisition.
In that acquisition we acquired medium voltage switchgear to add to our existing low voltage switchgear portfolio. We also added an ability to extend our PowerPod capability from primarily Europe now into North America and The United States. And the third thing is we’re getting more and more into utilities with the acquisition of that business as well. So again, solving for power through Crown Technical, solving for heat through JetCool, completely synergistic with that EMS plus products plus services strategy, solving for power, heat, and scale.
David Rubin, Investor Relations, Flex: Jet cool is pretty small right now, and that’s something we’re working to expand their capacity. It gave us very important capabilities, especially when you think of the AI rack integration piece in cloud, so that’s where that would fall under. With time, it will grow. Remember, that’s still kind of an early technology that’s slowly being adopted as racks get to 80 kilowatt and more. So over time, as that penetration goes, that will become very important.
Crown, I think last year for fiscal or fiscal ’twenty five, it contributed, I think it was $30,000,000 Their full year run rate was about I think it was around 130,000,000 We’re also this year, we’re expanding some of that capacity, doing some integration. As you said, it provided both medium voltage power capabilities, which goes into our power pods and then also that ability to move into grid modernization that’s going to be more of a longer term trend, a good contributor. So probably about the same for this year.
Samik Chatterjee, Analyst, JPMorgan: Got it. Great. The next question I had for you was optics. Some of your peers have shown interest in either doing EMS for optics or taking optics to the sort of product side. How do you think about optics as a capability for Flex?
I don’t think you have the same level of investment as some of your peers have yet.
Michael Hutong, Chief Commercial Officer, Flex: Sure, sure. Yeah, optical is one enabling technology that’s important in the business today. We manufacture for multiple leading optical companies today, and our customers in our portfolio seem to suggest that manufacturing is a solution that they’re looking for. It does come down to choices for sure. And the choices that we’ve made have been around power and heat as opposed to optical.
And that’s because many of our customers have stated that they need solutions to keep scale with where the industry is going. So it’s probably more of a priority and a choice than anything. But again, from an optical standpoint, we manufacture a lot of volume with leading companies in the optical space. We’ve just chosen to create IP in an area that our customers seem to value a little bit more, and that’s why we focused on critical power products, embedded power products, liquid cooling
Samik Chatterjee, Analyst, JPMorgan: solutions. Let me just open it up to the audience and see if anyone has a question. There’s a microphone coming.
Unidentified speaker: I’m sorry if this is a basic question, but as you get more into products, are you competing more with like industrial manufacturing companies like Vertiv or nVent? Maybe if you could just explain that.
Michael Hutong, Chief Commercial Officer, Flex: Yeah, it’s actually a great question. And so let me describe the competitive landscape again through our EMS plus products plus services strategy. When you think about Flex, people oftentimes think about us as exclusively an EMS player. While that’s still the vast majority of our business, it’s still foundational for our company, we’re very different than most EMS players, if not all. There’s no EMS player that provides power products, much less two different power product businesses.
So we would differentiate from EMS by providing power products and also in the area of value added services to the extent of our vertical integration with sheet metal, our private label components branded by CoreWorks, and our global services business. So pretty easy to distinguish when we’re competing against EMS and how we’re different. In power, for sure, we’re up against some of those traditional names that you mentioned just now the Vertivs, the Eatons, the Schneider’s, the ABB’s, those types of companies. Now we don’t necessarily yet operate at the same scale that those companies might, but we offer very similar portfolios. And what we think is a different portfolio when combined with not only our EMS capability and our services capability, but also when you consider that those companies typically focus in either the critical power side or the embedded power side, like the Deltas of the world.
We’re one of the only companies that provides both critical power solutions and embedded power solutions. So over time, we’ll begin to be in those conversations more and more and more as you think about traditional power companies in that space.
Unidentified speaker: Michael, first of I’m so glad you’re here as the Chief Commercial Officer because usually when we hear executives tell us about their organic growth opportunities amongst their clients, they’ll just tell us it’s really big. But I assume as the Chief Commercial Officer you probably have a level of granularity about really how much is tapped within those client, the existing client base. Is there some sort of sense of detail that you could share with us about what’s really lurking with inside the client base for growth opportunities?
Michael Hutong, Chief Commercial Officer, Flex: Well, I’ll start by reiterating that it’s really big. I’d say it varies by business unit, and maybe I’ll give a little more perspective on that, And starting with the easy one first when it comes to the data center. We think we’re just getting started in the data center. And you can tell by the numbers that we share versus the available market that’s out there. When you think about the available market in hyperscalers, in colos, in silicon providers, you bounce that against the numbers that we have in revenue.
Lots of opportunity in all three of those categories across the data center. I’d say when you start to migrate to some of the other businesses, networking has been a foundational business for us for a long, long time, and that’s actually one of the areas where we’re starting to grow again, and that’s largely through share gains. So even though that’s a smaller portfolio of accounts, we seem to be doing better and better with fewer accounts that are available to the marketplace. When you think about our lifestyle business, we’re really selective in consumer related opportunities. So it’s not like we want to be a broad based consumer company.
We’ve actually been deemphasizing our high volume, low margin business over the past three, four, five years. We’ll be very focused on what we would call premium brands and that’s why we did the deal that we announced recently with Husqvarna who’s one of the leading brands in Europe in the category that we acquired. And it also gave us a great amount of capability and capacity in The U. S. At the same time.
But I’d say a lot of headroom on the data center side in the agility business. When you think about reliability, again, lots of opportunity. If you talk about our health solutions business, I think where you’ll see a lot of our emphasis is in the devices business. That tends to be an area that’s growing faster than maybe the equipment business has been a little more challenged with the macro. And we’re just now getting started in the drug delivery business.
We made some announcements about some recent wins in that area, just scratching the surface. But as you know, in that industry sometimes it can take one, two, three years to start to realize revenue in new business wins. But lots of opportunity in devices and drug delivery and health solutions. In core industrial, continuing to build our power business. And automotive probably a tale of two stories.
Near term really dynamic, but long term positioned very well with our compute platforms and our power platforms whether it’s EV, hybrid, or combustion. Hopefully that gives you a little bit of breadth in what that next level of opportunity might be for us. But very excited about both the agility businesses and the reliability businesses to grow long term. Very big, really big.
Samik Chatterjee, Analyst, JPMorgan: To make it short, can you
Unidentified speaker: take a moment to just speak to the health of the labor market and how you guys think about automating versus not automating as we’re living in such a dynamic time?
Michael Hutong, Chief Commercial Officer, Flex: Yeah, sure. Automation is a key part of any manufacturer’s portfolio and certainly is a priority for us as well. There will be some choices that have to be made as we more globalize manufacturing because automation can be very valuable and in some cases not necessarily appropriate for the application. And for us it’s always a balance of how do we maintain our leadership from an advanced manufacturing standpoint in those areas of higher volume, lower flexibility where you can get a long term investment on automation versus those areas where we have to be massively flexible that might not lend themselves to a long term capital deployment strategy, that might be a little more labor intensive. I think the other thing that we’re working with is to fully realize the benefits of automation, to utilize AI in that sort of arena.
Data becomes hugely important. And what companies are finding is that the equipment sets that we utilize on the production floor don’t speak the same language yet either. So a lot of our investment is not only automating what we know today, making sure it’s appropriate for the application, but also doing a lot of work harmonizing data for that next level of automation where we can utilize AI to further optimize our factories. So it’ll play a big role. It’ll just be different depending on the application.
Samik Chatterjee, Analyst, JPMorgan: Thank you. I’ll wrap it up there. Thank you for coming to the conference.
Michael Hutong, Chief Commercial Officer, Flex: Thank you asking.
Samik Chatterjee, Analyst, JPMorgan: Thank you to the audience. Appreciate it. Thank you.
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