Flextronics, one of the world’s biggest electronics contract manufacturers, is already deeply involved in the green technology supply chain, building everything from solar panels for SunPower and MEMC/SunEdison, inverters for Enphase and SolarEdge, and smart meters for Aclara and Sensus, to mention just a few of its named customers.
Now it’s staking its claim to a bigger piece of the greentech pie, along with its first foray into a new line of business: a portfolio of commercial and industrial LED lighting systems that includes sales, services and ongoing customer support.
Tuesday's announcement includes plans to expand Flextronics' role in helping energy and lighting technology partners move products from concept and design to customer delivery, as well as a new set of power electronics subsystems for technologies ranging from wind turbines and grid equipment to grid-scale batteries and fuel cells. The Singapore-based company already competes with other contract manufacturing giants like Jabil Circuit, Foxconn and Celestica in supplying both custom-built equipment and design and manufacturing expertise in these industries.
As for lighting, Flextronics is transitioning the commercial and industrial lighting product lines of LightWild, an LED company it bought last year, into Flextronics Lighting Solutions. The new business unit will provide lighting systems and controls for high- and low-bay lighting, offices and outdoor lighting, and “also includes a full set of lighting services that can be offered directly to customers or with their preferred partners" -- and that move will, in some ways, put the company in direct competition with its lighting OEM partners.
At the same time, it’s aimed at cutting significant costs out of the complicated lighting supply and distribution chain for end customers, which should be good for the LED lighting industry as a whole, Sanket Amberkar, senior director of strategic marketing for Flextronics’ energy division, said in a recent interview.
“We’ve taken that product, put it through design iterations, and brought the cost down,” he said. On the customer services side, “We can be the one throat to choke, if you will, for large customers, and because we have capabilities across the world, we don’t have to deal with smaller distribution partners.” The benefits of this kind of integration haven’t been lost on the broader LED lighting industry, of course, a fact which has led to quite a bit of consolidation over the past several years.
Flextronics’ push into downstream markets is likely to extend to green technology verticals beyond lighting, Amberkar added. Though he wouldn’t provide more details on which ones it plans to target next, Tuesday’s announcement noted that Flextronics is working on an unspecified but “select set of commercial and industrial products and services that complement our existing partner offerings” in the energy space.
“It’s a balancing act between our existing customers,” he said. “Traditionally, we would have simply taken the design from somebody and just made it. Now we’re getting far more involved.”
In many ways, moves like these reflect the transition of many green industries from technology innovators to commodity competitors. That shift, already clearly defined in the solar PV industry, is also putting pressure on smart meter and smart grid equipment vendors, particularly as they strive to move into more price-sensitive markets like China, India and Latin America, Amberkar noted.
Meanwhile, we’re seeing the same dynamics emerge in markets ranging from grid-scale energystorage to electric-vehicle charging infrastructure. Competing hardware vendors seeking to scale up production to meet increasing demand and expand into new markets may well find contract manufacturers like Flextronics an appealing option.
At the same time, Flextronics is itself under pressure to grow its green technology market share against its competitors. For example, Jabil makes solar panels for SunPower and smart meter components for Silver Spring Networks and Landis+Gyr. It also recently invested in PowerOasis, a startup providing off-grid battery backup and power generation equipment.
Likewise, Celestica is pushing into renewable energy fields including solar panels, inverters and fuel cells as it seeks to make up for the demise of its BlackBerry business. And Foxconn, which earns a majority of its revenues building Apple’s iPhones and other products, is both building solar panels for partners like SunEdison and mulling its own line of solar PV products.