DALLAS, Oct. 04, 2022 (GLOBE NEWSWIRE) — DZS (NASDAQ:DZSI), a global leader in access and optical edge infrastructure and cloud software solutions, today announced that it has entered into a partnership agreement with Fabrinet (NYSE:FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services, enabling DZS to strategically shift to a contract manufacturing model.
Under this agreement, DZS will transition to Fabrinet its sourcing, procurement, order-fulfillment, manufacturing and Return Merchandise Authorization (RMA) activities in its Seminole, Florida facility by the end of calendar year 2022. The partnership will enable DZS to focus on advancing innovation across its access and optical edge platforms and cloud software solutions. The partnership is expected to improve profit margins, lower operational expenditures (OPEX) and improve working capital.
The new alliance is expected to enable DZS with the incremental scale to meet a growing pipeline of broadband access and optical edge infrastructure that has doubled since 2020, and to align with an anticipated decade long broadband upgrade cycle, Chinese cap & replacement projects and the more than $120 billion in global broadband stimulus. Increasingly, service providers are capitalizing on the unprecedented consumer demand for high-speed fixed and mobile broadband services fueled by interactive, low latency video and gaming, and IOT devices.
“Our newly forged partnership with Fabrinet will enable us to focus on doing what we do best, delivering innovative, differentiated broadband access, optical and cloud automation, orchestration, assurance and in-home WiFi software solutions,” said Charlie Vogt, CEO, DZS. “This new sourcing and manufacturing model will provide DZS with the scale, agility, state-of-the-art tools and world-class manufacturing capabilities required to meet customer demand and deliver on a growing backlog that has increased more than 300% since 2020.”
The transition to Fabrinet will begin in early October, with the goal of being fully operational by Jan. 1, 2023. Under the terms of the agreement, Fabrinet will provide turnkey procurement, manufacturing, testing, order fulfillment, and RMA services and systems integration from its state-of-the-art facilities. DZS will retain and continue to manage its supply chain relationships. Post transaction, the DZS Seminole, Florida-based operations, supply chain and manufacturing workforce will be reduced by approximately two-thirds and the remaining team will be relocated to an appropriately sized facility. For impacted employees, DZS will provide job placement support including onsite job fairs and internal transfer assistance.
Fabrinet has a global reputation as a trusted optical manufacturer that delivers state-of-the-art solutions and services to many of the most demanding technology companies in the world. Many of the DZS marquee customers are already very familiar with Fabrinet and trust its global capabilities.
“DZS continues to transform the service provider landscape through software, access and optical innovation, and we are committed to working closely together to promote our mutual success,” said Dr. Harpal Gill, President and COO, Fabrinet. “The overhead of a manufacturing facility, including maintenance and equipment costs, can severely impact an organization’s balance sheet and slow innovation and execution. This partnership allows us to leverage our purchasing power and advanced manufacturing expertise to drive efficiencies for DZS, enabling the company to focus its resources on advancing key strategic initiatives that differentiate DZS solutions in the marketplace.”
Fabrinet is a world leader in precision optical, electro-optical, sophisticated electronic PCBA and electro-mechanical process technologies for high-mix, any-volume production, and offers a full range of vertically designed optical products and services. In addition to being an award-winning organization, Fabrinet is dedicated to ensuring full compliance with all associated quality and regulatory system requirements for each market they serve. This includes TL 9000, ISO 9001, 14001, 13485, 18001, TS 16949, AS 9100 and OSHA.
“We are extremely grateful for the hard work and dedication the Seminole-based employees have shown DZS over the years, and the leadership team is committed to assisting them in their efforts to transition to other roles or find new employment once their tenure ends,” said Norman Foust, SVP, Global Supply Chain, DZS. “This strategic shift to contract manufacturing is necessary to give DZS the ability to scale to meet our growth targets in North America and Europe, Middle East and Africa (EMEA) over the next several years.”
To learn more about DZS, visit https://www.dzsi.com.
