Flex Exiting Huawei Contract Manufacturing in China Amid Trade Tension, CEO Says
Flex is terminating its "Huawei-dedicated" contract-manufacturing operations in China after the Trump administration's trade blacklist crimped demand for the telecom-equipment maker's products, said CEO Revathi Advaithi on a fiscal Q1 call. That, plus the decision phasing out unprofitable consumer tech…
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businesses worldwide, will cost up to $1.6 billion annually in lost revenue and boost margins, said Advaithi, who was hired as CEO in February. Flex closed up 13 percent Friday to $11.26. The “well-publicized action by the U.S. government” caused Huawei “significant geopolitical uncertainty” that was “beyond our control,” reducing demand “for products we assemble for them in China,” said Advaithi Thursday. “Flex and Huawei have had a longstanding and successful partnership. We have worked with them to find an agreeable solution. This change is unfortunate.” China will remain a “very important center of production” for Flex, where it has “a significant presence, including tens of thousands of employees,” she said.