Flex Pitches AI Data Center Spin-Off as Power and Cooling Growth Accelerates

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Flex (NASDAQ:FLEX) executives utilized a J.P. Morgan fireside chat to outline the rationale for the company’s latest planned spin-off, picture the maturation expectations for the concern being separated and framework the remaining Flex arsenic a large, diversified manufacturing and services platform.

Revathi Advaithi, Flex’s main enforcement officer, said the company’s portfolio strategy implicit the past 7 years has focused connected improving concern mix, productivity and fiscal returns. She pointed to Flex’s exit from respective user extremity markets, the earlier spin-off of Nextracker and reinvestment successful areas tied to compute, powerfulness and information halfway infrastructure.

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Advaithi said the latest spin-off reflects the standard and maturation illustration of the company’s CPI segment, which she described arsenic requiring a antithetic superior model than the remainder of Flex.

“We cognize however to bash spins. We’ve done it well,” Advaithi said, noting that Nextracker has reached a marketplace capitalization of astir $17 billion.

SpinCo to Focus connected Data Center Power, Cooling and Electrical Infrastructure

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Advaithi said the caller company, referred to during the treatment arsenic SpinCo, volition beryllium positioned arsenic an concern institution with a absorption connected information halfway thermal architecture, electrical infrastructure and cooling infrastructure. She said Flex began investing successful the country earlier the caller surge successful artificial quality demand, gathering from a powerfulness concern acquired from Ericsson and combining it with compute integration capabilities.

She said customers are progressively seeking integrated solutions crossed compute, powerfulness and cooling, alternatively than treating those areas separately. Flex is targeting hyperscalers, colocation providers, neoclouds and silicon providers with products including mechanical components, compute integration, cooling organisation units, acold plates, powerfulness pods, customized power, switchgear and integrated pods.

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Advaithi said the company’s differentiation is its quality to code the afloat “thermal architecture envelope” astatine standard and speed. She besides said SpinCo’s absorption volition beryllium connected diversifying wrong electrical and utility-related infrastructure alternatively than pursuing different spin-off.

Executives Reiterate Strong Growth Targets

Flex executives said the institution has assurance successful its CPI maturation outlook due to the fact that a ample information of the expected gross is already tied to awarded programs. The institution expects CPI maturation of 65% to 75% successful fiscal 2027 and 80% oregon much successful fiscal 2028. A institution talker said astir 90% of fiscal 2027 expected gross is booked, portion Flex has enactment of show to astir 70% of fiscal 2028 gross done awarded programs and lawsuit request visibility.