IBM Outsourcing to Solectron, Sanmina-SCI

IBM is expanding its outsourcing for global electronics
manufacturing through two separate deals with Solectron and
Sanmina-SCI .

IBM says the reason for doing these manufacturing deals with Sanmina-SCI and
Solectron is because it wants to “optimize its supply chain for e-business on demand.”

IBM’s deal with Sanmina-SCI is a three year contract worth $3.6 billion,
while Solectron inked a $120 million, three year deal. The two deals are
expected to close in February.

IBM will be specifically outsourcing the manufacturing of what it calls a
“significant portion of its low and midrange eServer xSeries systems and
IntelliStation workstations for customers in the Americans, mainland Europe,
the Middle East and Africa.”

As part of the outsourcing deal, Sanmina-SCI will also acquire IBM
manufacturing operations in Mexico and Scotland for some desktop and laptop
computer manufacturing. However, IBM will continue to make the bulk of its
ThinkPad notebooks worldwide in Shenzhen, China.

In its deal with IBM, Solectron is taking over most of the manufacturing
operations for IBM’s Global Asset Recovery Services, which restores
end-of-lease PCs and other IT equipment for resale. Solectron will acquire
IBM’s refurbishing center in Research Triangle Park, N.C.

The deal marks Solectron expansion into what it calls “post-manufacturing
services.” By taking over IBM’s asset recovery unit, Solectron now will be
involved in “de-manufacturing, remanufacturing, refurbishment, recycling and
disposal services.” The North Carolina facility will integrate Solectron’s
existing worldwide network of 47 post-manufacturing facilities.

In the past year, in a bid to improve efficiency and profitability, IBM has
slashed $5 billion from its supply chain business through a variety of
deals. The IBM deals with Sanmina-SCI and Solectron now means that more than two-thirds of IBM’s Intel-based product manufacturing has been outsourced.

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