SAN JOSE – Flex will take up to $265 million in charges over the next three quarters in part related to layoffs of an unspecified number of workers.
That's in addition to the $56 million in restructuring charges it booked in its fiscal first quarter ended Jun. 28. With potential additional costs in the range of $145 million to $265 million over the next nine months, the total restructuring charges could top $320 million in its current fiscal year.
Flex is making the moves in part due to the expected loss of Huawei as a customer. Huawei, which made up roughly 5% of Flex's quarterly revenue, was reportedly outraged when the EMS company held back shipments and raw materials to comply with US government edicts.
On a conference call with analysts, Flex CEO Revathi Advaithi acknowledged the company expects a “reduction in demand” from Huawei. "[A] well-publicized action by the US government and significant geopolitical uncertainty impacted our customer Huawei. These actions ... led to a reduction in demand for products we assemble for them in China. And as a result of this, we’re scaling down our Huawei-dedicated operations in China."