IBM Signs Agreement with Sanmina-SCI to Manufacture its NetVista Desktop PCs in US and Europe

Partnership Strengthens Competitiveness of IBM's PC business

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SOMERS, N.Y - 08 Jan 2002: IBM and Sanmina-SCI Corporation (NASDAQ: SANM), a global electronics manufacturing service (EMS) provider, today announced an agreement under which IBM will outsource a significant portion of its desktop personal computer manufacturing needs to Sanmina-SCI, and Sanmina-SCI will acquire IBM's NetVista desktop manufacturing operations in the US and Europe.

"Today's announcement will allow us to further lower our costs, while we continue to develop and deliver a full line of PC products and services for our customers," said Bob Moffat, general manager of IBM's Personal & Printing Systems Group. "PCs are an important part of IBM's e-business infrastructure offerings. We've been executing a strategy to make this business even more competitive. This agreement supports that strategy, which is to leverage the skills of the industry where it makes sense to improve our costs, and focus more of our own investments on areas that deliver the highest value to our customers."

IBM today manufacturers its NetVista desktop computers in Research Triangle Park (RTP), North Carolina for customers in the US and Canada, and has this product line manufactured on its behalf in Greenock, Scotland and mainland Europe for customers in Europe, the Middle East and Africa.

IBM will continue to design and market the NetVista line of desktops, and has signed a three-year, $5 billion outsourcing agreement with Sanmina-SCI to provide desktop manufacturing services for these markets.

Sanmina-SCI intends to use the existing locations in RTP and Scotland to fulfill IBM's desktop manufacturing needs, and as part of the agreement will acquire IBM buildings and equipment related to desktop manufacturing in RTP, and take over the management of IBM's existing outsourced manufacturing contract and acquire IBM manufacturing equipment in Scotland. The agreement also includes the transfer of 900 employees in RTP and 80 employees in Scotland. All transferring employees will be offered positions with Sanmina-SCI at the same salary. The terms of the sale were not disclosed.

Jure Sola, Chairman and CEO of Sanmina-SCI, said, "We are excited to further our relationship with IBM. For quite some time, the company has been a valued customer in the computer technology sector, one of our key target markets. We look forward to continuing to meet IBM's demands for quality products and services. We are also very pleased to expand our advanced manufacturing capabilities in North Carolina and Scotland and to bring on board IBM's highly trained workforce. The acquisition of these two state-of-the-art, ISO-certified facilities further enhances our global, end-to-end manufacturing solutions capabilities, including direct order fulfillment.

In addition, by combining the capabilities of these facilities with our current operations in North Carolina and Scotland, we will expand our business opportunities in both of these fast-growing geographic regions. And, finally, we believe this transaction, which reflects the industry's continuing trend towards outsourcing, also represents a key element in our growth strategy of forming long-term partnerships with our customers and providing them with end-to-end advanced manufacturing solutions."

"Sanmina-SCI is one of the largest contract manufacturers in the industry with a proven track record for delivering high-quality, on-time service," Moffat said. "Partnering with them to provide manufacturing services for our desktop products will make our business stronger and give us greater flexibility to focus our investments more on the technologies and services our customers look to IBM to deliver."

This agreement covers only NetVista desktop PCs, and does not include the manufacturing operations for IBM ThinkPad notebooks, or any other IBM hardware. It also does not affect any of IBM's existing desktop manufacturing operations worldwide other than those in RTP and Scotland, and eventually IBM's NetVista desktop manufacturing requirements for Mexico and Latin America, which are now handled out of IBM's plant in Guadalajara, Mexico.

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