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October 18, 2000
Sony and Solectron Announce Cooperation in Electronics Manufacturing
TOKYO, Oct. 18 - Sony Corporation and Solectron Corporation (NYSE: SLR) today announced a cooperation agreement whereby Solectron will provide Sony with a range of electronics manufacturing services (EMS).
- The main points of the agreement:
- Solectron will acquire certain assets associated with two Sony manufacturing facilities: Sony Nakaniida Corporation in Miyagi, Japan, and Sony Industries Taiwan in Kaohsiung, Taiwan. Sony will outsource EMS from these facilities. These facilities currently produce high-end consumer products such as automobile satellite navigation systems, car audio systems and lithium-ion battery packs. Combined, the facilities have about 490,000 square feet of manufacturing space.
- Solectron will integrate the two facilities into its global network and offer employment to all affected Sony employees under essentially the same salary and working conditions. Currently, about 1,300 people work at the Sony Nakaniida facility and about 750 people work at the Sony Industries Taiwan facility.
- Solectron will provide electronics manufacturing services to Sony and other customers at the Nakaniida and Kaohsiung sites.
Through this joint cooperation, Sony aims to respond sensitively to fluctuations in demand and product cycles by outsourcing part of its production process. This will help create a group manufacturing system that can speedily and flexibly adjust production mix and product volume to the most suitable levels in total. It will also complement Sony's own Engineering, Manufacturing and Customer Services (EMCS) system which will realize several benefits: improved efficiency, cost reductions, enhanced quality, advanced production technology and customer satisfaction.
For Solectron, the cooperation agreement helps the company establish a strong, full-service presence in Japan and Taiwan, two important regions in the world's electronics industry. For example, more than a third of the world's electronics products are manufactured in Japan. In addition, it gives Solectron a foothold into the high-end consumer electronics products market.
"In order to strengthen Sony's core electronics business in the broadband era, we must regenerate our business processes and concentrate our resources and efforts for maximum benefit," commented Kunitake Ando, president and chief operating officer of Sony Corporation. "As part of the reform of business processes in the production area, we are delighted to cooperate with Solectron, the EMS industry leader. This will help us build a production system that preserves the high quality expected of Sony products while responding flexibly to changes in market demand."
Said Koichi Nishimura, chairman, president and chief executive officer of Solectron: "We are pleased to begin working with Sony - a globally recognized consumer electronics brand name - on what we believe will be a mutually successful, long-term relationship. This initial cooperation represents a significant decision by a major Japanese company to utilize the EMS industry in Japan. It also represents an important strategic step in further strengthening both our Asia/Pacific presence and our ability to provide customers with a full range of manufacturing and supply-chain services around the globe."
In creating the joint cooperation, the two companies have signed a series of agreements. The companies, which did not disclose the financial terms of the agreements, anticipate that the transaction will be closed as soon as possible after all applicable regulatory requirements have been completed in Japan, Taiwan and the United States.
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, based on current expectations that involve a number of risks and uncertainties. In particular, while the companies have signed a definitive agreement, there is no assurance that the parties will complete the transaction. In the event that the companies do not receive the necessary approvals or fail to satisfy conditions for closing, the transaction will terminate. Other potential risks that could cause actual events to differ materially are included in Securities and Exchange Commission filings, including Form 10-K and Form 10-Q for Solectron Corporation.
Sony Corporation is a leading manufacturer of audio, video, game, communications and information technology products for the consumer and professional markets. With its music, pictures, computer entertainment and on-line businesses, Sony is uniquely positioned to be a leading broadband entertainment company in the world. Sony recorded consolidated annual sales of more than US$63 billion for the fiscal year ended March 31, 2000.
Sony's home page URL:http://www.sony.netAbout Solectron
Solectron, the world's leading supply-chain facilitator, provides a full range of manufacturing and supply-chain management services to the world's premier high-tech electronics companies. Solectron's offerings include new product design and introduction services, materials management, high-tech product manufacturing, and product warranty and end-of-life support. The company, based in Milpitas, Calif., and founded in 1977, employs more than 65,000 people in 57 locations worldwide. In fiscal 2000, the company generated sales of US$14.1 billion. Solectron was the first two-time winner of the Malcolm Baldrige National Quality Award for manufacturing.
Solectron established a presence in Japan in 1992 and today operates a program office, a New Product Introduction center and a Force Computers facility, part of Solectron's Technology Solutions unit. The company's Asia/Pacific regional headquarters is in Taipei.