Electronics Production | June 16, 2010

Flextronics to push further into CleanTech

The EMS-provider Flextronics sees clear advantages in moving further into CleanTech. Evertiq spoke to Flextronics’ Vice President Shammy Khan, about the current development in his area.

• Everybody is going for CleanTech. What are the benefits for an establish EMS-provider like yourself?
There are a number of EMS-providers that support this market. I had the opportunity to participate in a number of events where companies speak about their activities relating to this growing sector. However, what we see today is that most of the competitors are mainly focused on renewable energy, such as Solar. It is therefore important for your readers to understand what Clean Tech actually means for Flextronics.

We have devolved a clear strategy that is focussed on providing solutions and services across a wide product portfolio within the Clean Tech market. This includes everything from solar modules, smart grid products, solar inverter products, electric hybrid charging stations, we even make capital equipment that is used in the actual solar cell manufacturing process itself.

The main benefits for Flextronics? We continue to diversify our customer portfolio, while at same time also further engaging with established clients, who are now targeting Clean Tech as growth areas. For example, many of the OEM’s in the networking industry are developing new technologies that help connect the smart grid. In addition, environmental legislation continues to drive new products that are more energy efficient. Clean Tech allows Flextronics to expand to our core capabilities, which in turn allows us to support customer requirements across several regions.

• Is the Malaysian operation already fully operational?
Yes. The operations are currently in ramping-up the capacity following our news announcement regarding PTP. So we are exited that it is going so well and the project pipeline is strong.

• You also announced other deals—such as with Germany-based Q-Cells. That would be manufactured in Malaysia?
Yes, we are building solar modules for Q-Cells in Malaysia. That is correct.

• Are there any plans to spread out the CleanTech operations & production to other Flextronics facilities?
Absolutely. The reason we decided to dedicate the PTP site to Clean Tech was driven by several factors. Malaysia is fast becoming a manufacturing hub for Clean Tech products. In particular, we find a growing supply base there focused on solar cell and module production. Secondly, Malaysia offers a very competitive environment, so we can provide scalable lower cost solutions. Moreover, the PTP site is located in the port and so logistics solutions are world class.

That being said, it is also important to clarify that Flextronics is actively engaged with clients across many other regions, including Israel, Denmark, UK and Germany to name but a few and in most cases, these products are produced locally within region.

One of the main advantages that a company like Flextronics can bring to the market is its global footprint and regional manufacturing capabilities. You may have seen for example that we were chosen by SunPower in the USA to establish a module manufacturing site in California. As governments are driving legislation around the whole renewable energy markets, there is often special incentives or grants offered to the OEMs to encourage region manufacturing. We see this a lot; it happens in USA, Canada, Germany and other parts of Europe.

• Any new investments planned in the segment in 2010?
It is difficult to quantify investment as such. We continue to expand our technical and engineering expertise in this sector and invest in the latest equipment as required to support our customers’ needs. Again, it is important to consider that one of the main reasons why OEMs are now looking to outsource is that they don’t want to build factories or set up multiple manufacturing sites across various regions. This is where the EMS model is a perfect fit. We are already located where they need us to be, we have the people and the skills required.

• Will Europe - and its manufacturing locations - benefit from Flextronics entering CleanTech? (if yes, how?, where?, when?)
Definitely. Europe has some of the largest OEMs involved in the Clean Tech Market and so we are very excited about the opportunities this creates at local level. We are already supporting many OEMs from our Western European sites and we expect this will continue, particularly as new products and technologies come to the market. Today, we are very focused on the market in Scandinavia and Germany, where some of the largest Solar and Wind Energy companies are based. But to be honest I would not single out any particular region, as we are truly seeing opportunities all across Europe.

• How big is CleanTech within Flextronics organisation (employees, turnover - percentage, etc. roughly)?
The business division CleanTech is fairly new. It is actually part of our Industrial business segment and today we don’t break out the revenues into sub sectors. However, our Industrial business is growing very fast and Clean Tech is obviously one of the key drivers behind this. In terms of head-count, it is really difficult to say just how many people we have working on this globally.

• You are also doing ODM work in the notebook manufacturing area. Is this something that you would also consider for CleanTech?
Flextronics has the advantage of operating a dedicated R&D team worldwide across many sectors and so we have huge breadth of experience and so we are ready to assist with product design as required It is probably too early to predict whether there is a need for ODM products at this time. If this is something that our customers wanted us to do, we would certainly evaluate and consider. But for now we are focused on providing end to end manufacturing and logistics services.

• So you do not plan to enter the market with your own products?
It is not our strategy to compete with our customers so I would respond NO.

Thank you for the interview.
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