Google-owned Motorola Mobility is shedding its manufacturing operations in Tianjin, China, and Jaguariuna, Brazil — with long-time manufacturing partner Flextronics agreeing to acquire the factories and take on management and operation. The pair said employees and assets at both locations will transfer to Flextronics after the transaction closes — expected to complete by the first half of next year. Financial terms of the deal were not disclosed.
Mark Randall, senior vice president, supply chain and operations for Motorola Mobility LLC, described the deal as an “important step” for the company to transform its supply chain and boost competitive advantage. ”Flextronics has been our partner for many years, and their expertise and experience in manufacturing will enable us to focus on other areas of the supply chain where we can add the most value,” he added in a statement.
The mobile industry has become fiercely competitive in recent years — with device update cycles shortening and mobile makers under pressure to innovate faster than ever. Outsourcing manufacturing to a dedicated electronics maker is a strategy most companies have adopted — including most recently Nokia, and of course Apple which outsources device assembly to Foxconn — allowing them to speed up time to market while also freeing the business to concentrate resources on other areas, such as design and software.
Google has been slimming Motorola’s operations since completing its $12.5 billion acquisition of the company back in May. In October it emerged that Mountain View cut 1,058 jobs during Q3. While in August Google confirmed it would be making 4,000 Moto staff redundant.
Earlier this year, an SEC filing detailed Google’s reasons for buying Motorola — which included patents and developed technology; cash acquired; goodwill; customer relationships; plus “other net assets”.