Flex Ltd. CEO Revathi Advaithi Discusses Data Center Strategy and Growth at Bank of America Global Technology Conference 2025

Key Takeaways

TL;DR: Flex is leveraging its unique end‐to‐end capabilities—integrating IT, power, cooling, and infrastructure design—to capture a growing data center mkt fueled by the AI infrastructure build-out. The call highlighted robust +35% growth in data centers, a strategic shift toward North American mfg accelerated by tariffs, detailed expansion within the Communications, Enterprise & Cloud (CEC) segment, margin improvement initiatives, and consistent shareholder return strategies.

• Data Center & Integrated Power Biz
  • Flex is uniquely positioned as one of the few suppliers offering both IT integration and power products.
  • CEO Revathi Advaithi highlighted that w/ AI driving “the world is going to see … compute hungry and power hungry” environments, Flex’s design and build capabilities—from embedded chip power to full data center infrastructure—are critical as hyperscalers upgrade from 30-kW to 1-MW racks.
  • Today’s data center lineup is a $5B biz growing at +35% this year (after +50% YoY last year), underscoring the accretive margin benefits of this integrated approach.
• AI & Macro Trends in Compute and Power
  • Revathi emphasized the macro impact of AI, stating, "we have barely touched the tip" of the potential demand driving higher power density and the need for integrated cooling solutions.
  • The long-term guidance remains conservative at +20% growth even as current trends outperform, reflecting disciplined forecasting in a rapidly evolving mkt.
• Tariffs and Mfg Footprint Shifts
  • The discussion underscored an accelerated migration of mfg from Asia to North America due to tariffs and supply chain resiliency concerns, w/ Flex increasing its North American footprint.
  • This transition is esp. evident in complex, high-value products where logistics and resilience are critical; Revathi noted that while consumer products face labor constraints, sectors involving “complex products” (e.g., data center components and power solutions) are seeing faster U.S. migration.
• CEC (Communications, Enterprise & Cloud) Biz Overview
  • Rob Campbell broke down the diverse segments:
    • Communications: Split between networking (optical/IP/fixed) and wireless (RAN and open RAN) w/ an emerging focus on satellite communications.
    • Enterprise: Focus on server storage, board-level products, and cybersecurity hardware for major silicon providers and cybersecurity firms.
    • Cloud: Deep engagements w/ all 4 U.S. hyperscalers evolving from board-level work up to full rack integration, including recent advances w/ liquid cooling (via the JetCool acquisition).
  • Rob stressed that Flex’s evolving vertical integration enables them to transition from providing just a server board to handling complete rack configurations, which translates directly into higher margins and deeper customer engagements.
• Margin Improvement & Product Complexity
  • Both executives reiterated the value of complex product offerings in driving improved margins, w/ Flex shifting customer mix and attaching high-margin svcs (e.g., direct fulfillment, commissioning, and repair).
  • Revathi contrasted the “reliability” versus “agility” segments: agility (driven largely by data center integration) has elevated margins, while reliability (like automotive) has inherent fixed cost pressures.
  • Rob added that added svcs and product finalization (e.g., branded products and turnkey solutions) are critical levers in achieving margin expansion.
• Consignment Rev. Model & Impact
  • Rob noted the growing consignment rev. segment, from around 11% two years ago to between 14%-20% today, emphasizing that even excl. consignment, strong growth figures (+50% last year, +35% this year) remain intact.
  • This flexible consignment approach is structured to meet varying customer needs without diluting overall rev. performance.
• Capital Allocation and Shareholder Returns
  • Revathi confirmed that Flex’s balanced approach between M&A, share buybacks, and organic CapEx investment has delivered consistent shareholder returns over the past 6 years.
  • The strategy remains unchanged, targeting a blend of strategic investments to underpin long-term growth while enhancing value for shareholders.

Overall, the call painted a picture of Flex as a tech leader w/ robust fundamentals in key high-growth areas, particularly driven by AI and integrated data center solutions, supported by strategic mfg shifts and disciplined margin expansion initiatives. Investors should note the clear emphasis on leveraging these differentiators to sustain long-term competitive advantage and value creation.

Call Q&A

• Ruplu Bhattacharya: What is your vision for the data center biz and Flex's strategy in this mkt?
  • Revathi Advaithi: Flex is uniquely positioned in the data center space by providing both IT integration and power products. We started w/ an embedded power biz, designing and building power for chips, and have grown to integrate IT infrastructure and cooling. Our biz is growing +35% this year, driven by the increasing power intensity in data centers.
• Ruplu Bhattacharya: What are the secular drivers in compute and power that will sustain high growth rates in these segments?
  • Revathi Advaithi: The growth is driven by the AI infrastructure build-out, which is compute and power hungry. We believe in the macro trend of AI's significant impact over the next decade. Our long-term guidance is +20% growth through the cycle, but we've achieved +50% last year and +35% this year.
• Ruplu Bhattacharya: Do you think power will outgrow cloud or vice versa in the long term?
  • Revathi Advaithi: Power growth is related to capacity additions. It could have grown significantly last year, but we were at capacity. This year, capacity additions are enabling growth. It's not one versus the other, and Rob's biz is larger, affecting growth rates.
• Ruplu Bhattacharya: What are your thoughts on tariffs and their impact on Flex's mfg footprint?
  • Revathi Advaithi: Tariffs have accelerated the transition of supply chain mfg towards North America. We've reduced our Asia footprint and increased North American presence. Tariffs create oppt'ys for us, and we focus on complex products w/ long-term stickiness.
• Ruplu Bhattacharya: How realistic is mfg in the U.S., and are customers moving there?
  • Revathi Advaithi: For complex products that are hard to transport, migration to the U.S. is happening. However, for labor-intensive consumer products, it's more hype than reality. Conversations around building out the U.S. footprint are ongoing.