Google, which officially acquired Motorola Mobility in May of this year, has just announced that Flextronics will acquire Motorola's factory Tianjin, China. Flextronics will also “assume the management and operation” of Motorola's factory in Jaguariuna, Brazil. Who exactly is Flextronics? You know how Foxconn is the largest company that spits out consumer electronics? Flextronics is the second largest. Assuming both companies get all the required approvals, this deal will close during the first half of 2013. Financial terms were not disclosed, though we expect them to be leaked rather quickly.
What should you make of all this? Let's look at Apple. They design the iPhone, but then pay Foxconn to do all the dirty work. Let's also look at Nokia, who used to have massive factories in Germany and Romania, but then they closed them because it was cheaper to rely on Chinese labor. When put in that context, Google getting rid of Motorola's factories makes a lot of sense. Why have dedicated factories when you could just outsource? Here's what Mark Randall, Senior Vice President or Supply-Chain and Operations at Motorola Mobility had to say about the deal:
“The agreement with Flextronics is an important step forward for us in transforming our overall supply chain into a competitive advantage for Motorola Mobility. 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.”
When will we see what Google has in store for Motorola? Again, we can't stress this enough, the acquisition closed in late May. That's barely half a year ago. It takes time to think up, design, and then mass produce new devices. We're hoping to see Motorola's first “Google Phone” during the second half of 2013, but if we don't then we're not going to be surprised.
Update: Motorola's factory in Chennai, India to be closed; 76 people impacted.