More EMS Buys Surface

Electronic News, August 27, 2001 by Bernard Levine

Flextronics and Solectron continue acquisition trend

Leading contract manufacturers continue to make acquisitions to bolster their capabilities.

Two deals in the electronic manufacturing services (EMS) world surfaced last week: Singapore-based Flextronics International Ltd. said Thursday it plans to acquire Telcom Global Solutions Inc. of Irving, Texas, a provider of network planning, design and optimization services for telecommunications OEMs; and earlier last week, top-ranked contractor Solectron Corp., Milpitas, Calif., signed a definitive agreement to acquire Iphotonics Inc., Glen Burnie, Md., a provider of core optical manufacturing services.

No financial details were revealed on either deal.

In recent weeks, Solectron (nyse: SLR) also agreed to acquire C-MAC Industries Inc. of Montreal, while Sanmina Corp., San Jose, agreed to buy Huntsville, Ala.-based SCI Systems Inc. Those two multibillion-dollar blockbusters will result in more vertically integrated contracting superpowers.

In last week's developments, Telcom Global Solutions will become part of Flextronics Network Services, which provides network installation and commissioning services worldwide. The acquisition by Flextronics (nasdaq: FLEX) is expected to close around Aug.31.

Telcom Global Solutions is a global provider of wireless network and RF consulting services for the wireless telecommunications industry, serving many large carriers and equipment suppliers. Its engineering consultancy services include RF analysis, planning and optimization of wireless systems, including 3G networks, fixed network engineering and IP and data transport engineering. The company, with more than 225 employees, has performed work across four regional operating units: North America, Latin America, Europe/Middle East/Africa and Asia/Pacific/India.

Solectron said its acquisition of Iphotonics will significantly increase its optical services capabilities and enhance its total systems-solutions offering. The companies expect to complete the transaction by the end of November.

Under the agreement, Solectron will acquire Iphotonics' optical manufacturing services operations, including design, prototyping, full-scale manufacturing and testing for optical networking and optical subsystems companies.

Privately held Iphotonics has a design, prototyping and manufacturing facility in Glen Burnie, and an engineering and development center in Fremont, Calif. It offers advanced fiber handling, splicing packaging, termination and connectorization services as well as significant optical engineering and design expertise, Solectron said.

"Iphotonics has outstanding capabilities and a management team with extensive experience in optical technology," said Saeed Zohouri, senior vice president and chief operating officer at Solectron. "This acquisition fits well with Solectron's strategy of providing full-service solutions to become the global supply-chain contractor for our customers."

Following completion of the transaction, Iphotonics will become part of Solectron's existing optical technology unit. Solectron's current optical technology services span the entire product life cycle, including design, test development and execution, new product introduction, component engineering, module manufacturing and installation, splicing and fiber management, board-level assembly, systems integration, field installation and end-of-life warranty and repair work.