NEC and Celestica enter $2.5 billion strategic alliance

NEC and Celestica today announced that they have entered into an agreement regarding a strategic outsourcing relationship under which the companies will commence a five-year supply agreement, with total estimated revenue of US$2.5 billion.

NEC Corporation and Celestica today announced that they have entered into an agreement regarding a strategic outsourcing relationship under which the companies will, on closing, commence a five-year supply agreement, with total estimated revenue of approximately US$2.5 billion.

As part of the transaction, Celestica will assume supply chain management, sub-assembly, final assembly, integration and testing for a broad range of NEC’s optical backbone and broadband access equipment.

Under the terms of the agreement, Celestica will expand its operations in Japan by acquiring certain of NEC’s advanced manufacturing facilities in Miyagi and Yamanashi, Japan.

NEC’s Miyagi and Yamanashi facilities are engaged in the development and manufacturing of advanced optical transmission systems, including wavelength division multiplexing system (WDM) and SONET/SDH, as well as access network systems such as xDSL (DSLAM).

Approximately 1,200 highly skilled manufacturing specialists and related support staff, including 800 from NEC’s Miyagi operation and 400 from NEC’s Yamanashi operation, will join Celestica.

The transaction is expected to close by March 31, 2002, subject to normal closing conditions, including regulatory approvals. Further details of the deal were not disclosed.

The design and development functions currently performed by NEC Miyagi will remain with NEC and NEC Miyagi will continue as a developer of optical transmission systems. The development and manufacturing operation of NEC Yamanashi’s Otsuki Plant, that is involved in manufacturing optical devices and optical submarine cable systems, will also remain with NEC.