Motorola, Flextronics in $US30B strategic alliance

Motorola has entered into a five-year, $US30 billion outsourcing agreement with contract electronics manufacturer Flextronics International, both companies said today in a statement.

With the pact, Motorola hopes to streamline its Communication Enterprise division's supply chain across several product lines, including wireless consumer devices, network equipment and set-top boxes, the companies said.

Singapore-based Flextronics will supply and manufacture components and units used in Motorola's wireless phones, two-way pagers and other communications devices. Flextronics will also provide Motorola's Communication Enterprise division with finished assemblies, plastics, backplanes, enclosures and engineering services.

As part of the agreement, Motorola will buy an equity instrument for an initial payment of $US100 million. The instrument will be convertible into 11 million shares of Flextronics stock.

Motorola has made similar outsourcing arrangements for other segments of its business as the company tries to improve supply chain efficiencies and meet product demand, the vendor said.

Production will take place at Flextronics facilities in North and South America, in Western and Eastern Europe, and in Asia.

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