KYOTO, Japan-Kyocera Wireless Corp. will outsource the manufacture and delivery of its mobile phones to contract manufacturing giant Flextronics International Ltd. Although terms of the deal were not disclosed, Kyocera said it will sell “certain manufacturing equipment and inventory” to Flextronics, and it will cut between 150 and 200 jobs due to the agreement.
“As global competition is becoming more and more intensified in the mobile-phone market, it is essential to develop products that will meet the market needs of each country, as well as to enhance cost competitiveness of the entire business in order to maintain the Kyocera Group’s competitive superiority in its mobile handsets business,” the company said in a statement.
Kyocera said it will continue to conduct phone research and development, engineering, design, and sales and marketing. The company sells CDMA mobile phones mainly in North and South America but also in Japan, China, Australia and India. Kyocera sold around 13 million phones last year and predicts it will up that number to 15 million next year.
Flextronics is the world’s largest contract manufacturer and operates manufacturing facilities in China and elsewhere. The company builds phones for Sony Ericsson Mobile Communications, Siemens AG and others, and has previously built phones for Kyocera. Indeed, handsets accounted for fully 31 percent of Flextronics’ revenues in November, according to market research and consulting firm iSuppli Corp., ahead of other segments like computers at 26 percent and communications at 15 percent. Outsourcing the manufacture of phones is commonplace in the handset industry; however, few companies outsource their entire manufacturing operations.
Kyocera announced in January it would move its mobile-phone manufacturing operations to Tijuana, Mexico, from its headquarters in San Diego. The company cut 450 manufacturing jobs in San Diego due to the move. Kyocera spokesman John Chier said Kyocera would shut down its mobile phone manufacturing operations in Mexico due to its new agreement with Flextronics, but would continue to build other Kyocera-branded electronics products at the facility.
