Asyst, Solectron forge groundbreaking OEM deal
05/01/2003
Cleanroom automation maker moves production to Singapore
By Chris Anderson
SINGAPORE—The opening of a new 16,000-square-foot cleanroom by Solectron Corp. subsidiary Shinei International to serve its new client, Asyst Technologies Inc. (Fremont, Calif.), represents much more than just a standard OEM agreement between two companies.
The deal signals the start of a new path for integrated automation producer Asyst as it looks to recover from withering losses, and at the same time marks contract manufacturer Solectron's entrance into the semiconductor and microelectronics equipment markets.
Under the new agreement, Asyst will effectively cease manufacturing all of its products by the end of June, instead turning to Shinei and its new 16,000-square-foot ISO Class 7 and ISO Class 6 cleanrooms for that service.
"We needed to make this move from our old model of manufacturing the products ourselves, which has very high capital costs, to having the manufacturing done for us," says Steve Schwartz, chairman and CEO of Asyst.
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According to Schwartz, Solectron, with sales of roughly $200 million in 2002, has the manufacturing capability on site to quickly increase capacity and help Asyst in its goal of becoming a $1 billion company.
The brainchild behind the remaking of Asyst, Schwartz says, is Fred Tiso, who joined the company a little more than a year ago as senior vice president of manufacturing operations. "When I came to Asyst, it wasn't with this intention," says Tiso. "We wanted to find the best way possible to increase our efficiency and the quality of the product." Through that process, the company found the best way to turn around the company was to farm out the manufacturing.
"They [Solectron] have very strong engineering capability, high quality, and have familiarity with our two key commodities, which are precision machining and sheet metal," says Tiso. Also, Tiso notes, the vertical integration of Solectron will help Asyst shorten lead times and minimize inventory.
For Solectron, winning the Asyst deal is its first step into the semiconductor and related industries market. The company says that the cleanroom at Shinei is a substantial investment that the company hopes will pay dividends in time.
"We are a very strong player in the telecom industry," says Sharon Matthews, corporate vice president of Systems Solutions for Solectron. "We have wanted to move more aggressively into the semiconductor and industrial areas. When we began talking with the people from Asyst, we could see that it would be more of a partnership and not just a deal."
Areas where the companies will work closely include product engineering and design, and in developing Solectron's supply chain structure within the semiconductor industry. "Asyst has been having some tough times, but they are a good company and we will help them through this," says Matthews.
Solectron hopes to be able to attract other clients whose manufacturing requires the use of the cleanroom environment it built for Asyst. "We are actively talking to a number of other potential customers right now," says Matthews. "The supply chain management, mechanical work and cleanroom pieces are not unique to the semiconductor market, and we are trying to penetrate those other markets as well."