Calix boosts US equipment manufacturing for BEAD

Calix has forged a partnership with Jabil to shift more manufacturing of broadband network equipment to the US as part of a broader effort to help the supplier and its service provider customers meet the "Build America, Buy America" (BABA) requirements of the $42.45 billion Broadband Equity Access and Deployment (BEAD) program.

That commitment includes an expanded manufacturing services agreement with Jabil at its facility in Auburn Hills, Michigan.

UPDATE: Beyond its five-year partnership with Jabil, Calix also has an eight-year partnership with Gemtek and a 10-year partnership with Hisense Broadband. Under those deals, Jabil will produce optical network terminals (ONTs) and optical line terminals (OLTs) in Michigan, Gemtek will produce ONTs at its California facility, and Hisense Broadband will produce optical modules at its New Jersey facility.

Calix said it will back the effort with an initial investment of $4 million to $6 million, and an ongoing spend for operations in the range of $10 million to $15 million per year.

Speaking at a press event detailing Calix's commitment, company President and CEO Michael Weening stressed that Calix's investments will rise "substantially" as the company's customers proceed with BEAD projects. "We think of it as a seed fund for us," he said of Calix's initial outlay on the project.

Related:CommScope bulks up fiber optic cable production to aid rural rollouts

Calix said these projects are expected to create more than 100 US-based jobs, with more to come as Calix customers, which are largely based in rural areas, participate in the BEAD program over the next five to ten years.

Among other benefits, Weening said the addition of more US-based manufacturing will enable Calix to return "to that just-in-time mindset" and ensure that product isn't "sitting for months on a boat."

'Investing in the future'

Calix's amplified commitment to US manufacturing and its relationship to the BEAD program is about "investing in the future," Calix Chairman Carl Russo said. "Broadband is increasingly the core and central infrastructure of our lives. It bridges the digital divide but it also enables other infrastructure investments to be optimized."

Calix's announcement arrives roughly a month after the NTIA released proposed rules and a "limited and targeted waiver" for BABA requirements for BEAD. Under that proposal, the majority of fiber broadband equipment will need to be made in the US, including optical fiber, fiber optic cable, "key electronics" and enclosures.

Alan Davidson, administrator at the NTIA, reiterated during Calix's press event that the draft waiver, currently in the comment process, will ensure that nearly 90% of BEAD funding spent on equipment for the program will be spent on equipment made in the US.

Related:'Buy America' restrictions could bog down BEAD

Davidson acknowledged that it's been clear from the start that there would be "huge challenges" in bringing the manufacturing of some components, such as semiconductors, to the US for the purpose of BEAD. But the draft rule still establishes a "high bar" for the BABA requirements, he said.

"I think we're seeing the results of that approach here today with companies like Calix stepping up to increasing manufacturing domestically," Davidson said.

Davidson said such efforts are critical to BEAD's success.

"It is amazing that we're here in 2023 in America and there's still millions of homes that do not have that basic capability to access this broadband infrastructure. That is something that needs to change and is about to change," Davidson said. "From the beginning, the president has also said this is not just about connectivity; this is also about creating jobs and bringing manufacturing back home."

Calix and several other suppliers, including CommScope, Nokia and ATX Networks, have been ramping up domestic manufacturing as the BEAD program pushes ahead. State-by-state BEAD allocations were announced in June.

Related:AT&T, Charter have biggest BEAD opportunity – studies

Calix and Jabil are set to shed more light on their updated partnership later today at an event at Jabil's Auburn Hills facility. In addition to Russo and Davidson, others expected to be on hand include Gerald "JJ" Creadon, EVP of operations at Jabil, and Bob Hance, president and CEO of Midwest Energy and Communications, which is one of Calix's service provider customers.

Editor's note: This story was updated to clarify Calix's manufacturing relationships with Jabil, Gemtek and Hisense Broadband.