September 18, 2001 – Armonk, NY – IBM Corp. is in the final stages of negotiations with SCI Systems Inc., a US electronics manufacturing services (EMS) firm, to sell its Japanese unit’s electronic parts factory, sources close to the matter said.

The move comes as the US computer giant is pushing ahead with the reorganization of its poorly performing manufacturing plants worldwide.

IBM intends to sell an electronic parts manufacturing division at a plant in Yasu, Shiga Prefecture, operated by IBM Japan Ltd. After selling the division to SCI, IBM plans to outsource the design and manufacturing of electronic circuit boards used for personal computers to SCI.

Over 100 employees at the division are expected to remain with IBM Japan and will be loaned to SCI.

The Yasu factory, IBM Japan’s largest domestic manufacturing plant, produces electronic parts, system chips, logic chips and LCDs. The plant’s semiconductor fabrication process has already been transferred to Seiko Epson Corp. The plant’s LCD operations were also transferred to a joint venture with a Taiwanese company.

“We will accelerate reducing development and production costs through a partnership strategy,” said an IBM Japan official.

If the deal goes through, SCI would own its first production base in Japan. The US firm, which started operations in 1961, is the oldest EMS company in the US, and owns about 50 factories in some 19 countries. It is one of the largest EMS firm in the world, following Solectron Corp., which last year acquired a Japanese plant from Sony Corp.

SCI employs 34,000 workers and posted group sales of 970 billion yen in 2000.