HP Inks $1.4B Deal with Solectron

Hewlett-Packard Monday said it has signed a five-year manufacturing and supply agreement with Solectron Corp. , valued at $1.4 billion.

Under the agreement, Milpitas, Calif.-based Solectron will produce printed circuit boards and memory modules for HP’s mid- and high-end enterprise servers, as well as other products. Representatives with the Palo Alto, Calif.-based computer and printer maker were not immediately available to confirm which product lines would be impacted by the deal.

“HP is one of our oldest customers and this agreement strengthens our relationship with them,” said Solectron spokesperson Matt Roszell. “HP/Compaq attributed to 11.7 percent of our sales in our last earnings statement.”

In its last fiscal year, Solectron reported sales of $12.3 billion.

Solectron said it would provide the services through its facilities in Puerto Rico, one in Aguada and the other in Aguadilla.

“For this deal we will be leasing a site in Mayaguez from the Puerto Rican government specifically for this agreement,” Roszell told internetnews.com. “Puerto Rico is a good place to work because the costs are cheaper and the infrastructure is on par with Canada and the United States.”

This is the second major outsourcing deal Solectron has signed this year. Back in January, Solectron inked a $120 million, three year deal with IBM for its Global Asset Recovery Services, which restores end-of-lease PCs and other IT equipment for resale. Solectron is also acquiring IBM’s refurbishing center in Research Triangle Park, N.C.

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