Flextronics woos startups with Silicon Valley tech center

MILPITAS, California Fri Feb 15, 2013 12:47am IST

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MILPITAS, California (Reuters) - Moving ideas from sketches on napkins to factory floors is often the toughest stage for a startup entrepreneur. Flextronics International Ltd (FLEX.O) thinks it can help with that.

The contract manufacturer, which produces the Xbox game console for Microsoft Corp (MSFT.O) and smartphones for Google Inc (GOOG.O), as well as networking equipment and other electronics gear, has upgraded its campus in Milpitas, California, with equipment aimed at creating product prototypes for customers in a hurry.

China has become the world's factory floor over the past decade as incentives, low wages and entry into the World Trade Organization made it a highly efficient workshop for everything from shoes to electronics.

But Silicon Valley companies as small as startups and as large as Google are increasingly looking to local contract manufacturers for help with design and early production of new electronics products, experts say. This reflects a nascent trend of "reshoring" manufacturing operations to the United States.

Flextronics and rival contract manufacturers like Foxconn and Jabil Circuit Inc (JBL.N) already offer customers "value-added" help designing their products, advice on what components to use and whom to buy them from, and other value-added services.

Singapore-based Flextronics said it spent $12 million on the Milpitas upgrade, with plans to spend another $20 million in coming months. The idea is to meet growing demand from companies in Silicon Valley that want to get products to market faster, site manager Zahid Hussain told Reuters this week.

"Technology is changing. Time to market is critical right now," Hussain said. "We're providing turnaround time. We're providing end-to-end solutions."

Flextronics' campus includes labs with metal detectors, guards and strict security procedures to protect the confidentiality of clients whose engineers are designing new products and producing prototypes.

Inside are cutting-edge machines that "pick and place" components on circuitboards, as well as 3D printers and X-ray and testing gear that Flextronics can use to turn a proof of concept into a prototype product in 72 hours or less, Hussain said.

Last year, Google looked to a local contract manufacturer that its engineers could visit conveniently instead of an Asian manufacturer when it wanted to design and produce its Nexus Q home entertainment device fast.

The Flextronics facility and others like it can be particularly attractive to small Silicon Valley companies facing tight deadlines to produce their first products, said Thomas Dinges, an analyst at IHS.

"You've got all these companies coming out with new stuff that's totally different, and they realize they need a couple hundred or a thousand units, and if they don't hit that, their company is dead," Dinges said. "I'm going to use someone who is local who I know has done this before." (Editing by Matthew Lewis)

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