21 March 2012

Oclaro’s Shenzhen assembly & test operations to transition to Venture Malaysia over three years

Optical communications and laser component, module and subsystem maker Oclaro Inc of San Jose, CA, USA has signed and closed a definitive agreement to transfer its final assembly & test operations in Shenzhen, China to the Malaysia facility of Singapore-based Venture Corporation Ltd (a global provider of technology services, products and solutions with more than 12,000 staff) in a phased and gradual transfer of products over the next three years.

During the three-year transition period and in order to continue to provide quality and delivery performance to its customers, Oclaro will retain control of the facility, and employees will remain employed by the firm. Several of Venture’s operational personnel will relocate to Shenzhen to provide support to Oclaro, oversee the transfer, and ensure that products transitioned to Venture’s Malaysia facility are fully qualified by customers before the products are phased out of the Shenzhen plant.

Over the transition period, the outsourcing is expected to free up in excess of $35m net of transition and employee retention costs. The two companies have also signed a five-year supply agreement.

“Today’s announcement is a significant milestone in Oclaro’s strategy to adopt an outsourced back-end manufacturing model, focus on our core competencies and position the company to scale,” says Oclaro’s chairman & CEO Alain Couder. “A key factor in choosing our contract manufacturing partner was to ensure we would be able to control and manage a smooth transition for our customers. Our agreement with Venture is expected to provide this seamless transition, while strengthening our balance sheet, and providing a financing source to fuel continued innovation,” he adds. “Complementing our existing outsourced manufacturing relationship with Fabrinet, this move further simplifies our manufacturing model, enabling us to create a world-class supply-chain management capability, and will offer our customers greater responsiveness and flexibility.”

Venture is a strategic partner for global companies, providing a fully integrated range of original design manufacturing, electronics manufacturing services and e-fulfilment services. It has been engaged in the manufacture of optical products since 1992 and is a preferred partner to global firms in the industry for datacoms, telecoms and adjacent applications. Its expertise covers low-level through final system assembly across technologies including fixed- and tunable-wavelength devices, transceivers and transponders. Venture says that, with complementary engineering capabilities, operational synergy, real-time infrastructure interfaces and faster time-to-market, it can effectively manage the value chain for electronics companies.

“We will aim to deliver a seamless product transition,” says Venture’s chairman & CEO Wong Ngit Liong. “We see great opportunity to share our expertise with the Oclaro product development team to drive product quality and supply chain efficiency, as well as enhance our Center of Excellence for optical communications,” he adds.

Manufacturing staff in Shenzhen will continue to be employed by Oclaro during the transition period. Beyond the transition period, Oclaro intends to maintain a long-term customer support, new-product introduction, and R&D presence close to customers and the significant talent pool in Shenzhen.

Oclaro is currently marketing its Shenzhen building with plans to sell the building to a third party and lease back the facility. Any potential proceeds from its sale would be incremental to the net cash proceeds of the Venture agreement.

Tags: Oclaro

Visit: www.oclaro.com

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