Solectron to make NEC gear

Solectron and NEC have signed a letter of intent for NEC to transfer the manufacturing business of NEC Ibaraki to Solectron.

The letter of intent outlines the establishment of a new company by NEC that will transfer the manufacturing business of its server, workstation and system file products, including about 500 people currently employed by NEC Ibaraki, to Selectron.

Solectron would then purchase all the shares of the new company. Solectron expects to lease production space at NEC Ibaraki, as well.

Business operations currently managed by NEC Ibaraki other than manufacturing, such as product development and out-sourcing centres, would not be transferred to Solectron and will remain in NEC Ibaraki.

The agreement will enable Solectron to provide build-to-order/configure-to-order manufacturing, final test and fulfillment services for NEC and other customers in the server, workstation and storage product segments throughout Asia. Combined with its existing enclosure, design and PCBA capabilities, Solectron will then offer a complete one-stop solution for servers within the Asia/Pacific region.

The companies will now begin negotiating the details of the final agreement. The process is expected to conclude in the first quarter of calendar 2002.