Flextronics, Casio Enter Into $1.5 Billion Manufacturing Deal

ByJohn S. McClenahen If their $1.5 billion deal works out as expected, Singapore-based Flextronics International Ltd., a leading contract manufacturer, will soon be making a variety of electronics products for Japan-based Casio Computer Co. Ltd. Said to be the first outsourcing deal between an electronics-manufacturing-services firm and a Japanese OEM, the transaction is expected to be finalized on July 31. The three-year agreement, which was signed May 14, calls for Flextronics to purchase a Casio production facility in Shah Alam, Malaysia. Also, Casio will sell its manufacturing operations -- although not the land and building -- in Aichi, Japan to Flextronics. The facility at Aichi is to serve as a site for repair, logistics, and distribution services -- as well as the launch point for new product introductions in Japan. The contract also includes Flextronics' acquisition of some equipment from Casio's factory in Kluang, Malaysia. In addition, Flextronics and Casio expect the strategic alliance to produce "strong collaboration" in new-product-development and design.