Electronics Production | July 27, 2007
They will become Flextronics<br>new OEM customers
Alcatel-Lucent, IBM, Teradyne are all examples of major customers of Solectron. Looking ahead of the Flextronics purchase of Solectron, which customers are overlapping and which are the new customers for Flextronics?
Today Solectron has 50 manufacturing plants worldwide. Flextronics CEO Mike McNamara estimated that the Flextronics has “maybe 100". The purchase of Solectron gives Flextronics the opportunity to diversify business with existing customers while adding new customers to its product portfolio. Computing will increase from 10% to 19% of Flextronics revenue, while infrastructure will increase from 23% to 30%. Mobile segment will drop from 31% to 19% of sale. The consumer digital segment is expected to decrease from 24% to 20%. The two companies together share some customers however there are some customers that are overlapping and there is possibility of product overlapping within some of the same customers. During a conference call McNamara explained the four common customers with respect to overlap. Flextronics believes that Cisco will benefit from the deal, because the new company will be able to provide Cisco with a complete service from low-end to high-end products. Flextronics will gain significant exposure to IBM, Alactel-Lucent and HP's medium and large –end servers. Flextronics has earlier been depended on the mobile segment, now Solectron will help Flextronics to get deeper into segments such as communications, high-end computing and network equipment. Overlap in HP's products almost does not exist. Almost all of Flextronics' business with HP is in printers while Solectron is working for other areas. Nortel will see no overlap in the production areas. Solectron today handles wireline products, while Flextronics works on optical and wireless.There is however some overlapping in the Ericsson products.