SunPower’s pact to create a Silicon Valley factory with contract manufacturer Flextronics International is more than just a deal to better supply West Coast solar installers.
It is a sign that just like the computer industry before it, the solar business is increasingly turning to outsourcing for panel assembly and other production.
Flextronics, one of the world’s largest contract manufacturer, will produce 75 MW of panels annually for California-based SunPower. The opening of the plant in Milpitas should create 100 jobs. It isn’t the first outsourcer SunPower has hired. The company last year hired Jabil Circuit also for panel assembly.
Solar panel outsourcing should quadruple in two years, says iSuppli.
Outsourcing has taken root elsewhere in the industry. Enphase Energy of Petaluma, CA, also employs Flextronics, of Singapore, to make solar investers, and Evergreen Solar uses China-based Jiawel to make panels. BP Solar backed away from its internal panel production last year.
According to market researchers iSuppli, the SunPower-Flextronics deal represents the early stage of a boom in solar panel contract manufacturing. It is the beginning of a trend that will parallel the electronics market outsourcing of the 1990s, says Chief Research officer Greg Sheppard.
Contract manufacturers will make 1.1 GW of solar panels this year, up 200 percent from 2009, projects iSuppli. The output will nearly quadruple to 4.1GW by 2012.
This expansion will follow the growth of the solar market. “Solar panel makers now are running their factories at 90 percent of capacity, straining their capability to meet demand,” says Sheppard.
SunPower, which makes premium-priced, high efficiency polysilicon solar cells, says the Milpitas factory will help it to more cost effectively distribute in the western U.S., one of its biggest markets. It is a time to market decision.
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Great Post! The deal with Flextronics International will definitely help to better supply West Coast solar installers. Here it is interesting to see that like software firms the solar companies increasingly turning to outsourcing for their growth. Now the outsourcing companies in this particular industry will probably see better growth rate in the recent years.