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RNS Number:8829X
Ericsson(L.M.)(Telefonaktiebolaget)
26 January 2001


Ericsson to team up with partners - mobile phones production to be transferred
completely

* Strategic alliance with Flextronics will provide economies of scale,
higher capital efficiency and better volume flexibility

* Fundamentally new setup in times of changed market dynamics

* Additional agreement with Taiwanese electronic manufacturer GVC to
complement Arima cooperation

Ericsson has decided to team up with Flextronics and transfer its complete
supply chain for mobile phones. Ericsson has signed a Memorandum of
Understanding with Flextronics which establishes a strategic alliance,
leading to a rapid improvement of economies of scale, a much smaller
capital exposure and reduced risk.

Effective April 1 and subject to final agreements, Flextronics will take
over all related Ericsson facilities in Brazil, Malaysia, Sweden
(Linkoping and Pilangen). UK (Carlton and Scunthorpe) and parts of the US
plant in Lynchburg/Virginia. Our Joint Ventures in China will not be
affected.

4 200 employees will join Flextronics. In Linkoping and Lund there is a
redundancy of 600 employees, who will be offered support in developing new
careers outside Ericsson. Ericsson has made restructuring provisions that
will be reflected in the financial accounts 2000.
Ericsson will focus on R&D, development, design and sales and marketing.

R&D will be concentrated in Lund and Kista (Sweden), Raleigh (US) and
Basingstoke (UK). In Basingstoke we have a redundancy of less than 100
employees. By the end of this year, the Consumer Products Division will
employ approximately 7,000 employees compared to 16,800 end of last year.
"In light of a significant change in the world market for mobile phones
we have decided to fundamentally change the setup of our business," said
Jan Wareby, Executive Vice President, Ericsson Consumer Products Division.
"The alliance with Flextronics will enable us to achieve economies of
scale and volume flexibility."
"We are committed to remain a top player in mobile phones," said Jan
Wareby. "With this new set-up, we respond to a much tougher business
environment, and we create a sound basis for long-term profitability."
Ericsson expects the world mobile phone market to reach a volume of around
500 to 540 million units this year after 405 to 415 million units in 2000.

Taiwanese manufacturer GVC selected to complement Arima agreement
In addition to the Flextronics agreement, Ericsson signed an agreement
with the Taiwanese electronic manufacturer GVC, complementing the
partnership with Arima. This cooperation includes outsourcing of product
development and production (ODM).
Ericsson is the leading communications supplier, combining innovation in
mobility and Internet in creating the new era of mobile Internet. Ericsson
provides total solutions covering everything from systems and applications
to mobile phones and other communications tools. With more than 100,000
employees in 140 countries, Ericsson simplifies communications for
customers all over the world.

Read more at http://www.ericsson.com/pressroom

FOR FURTHER INFORMATION, PLEASE CONTACT
Pia Gideon, Vice President, External Relations
Phone: +46 8 719 2864, E-mail: pia.gideon@lme.ericsson.se
Mads Madsen, Director, Corporate Public Relations
Phone: +46 8 719 0626, E-mail: mads.madsen@lme.ericsson.se
Nina Eldh, Press Relations Manager
Phone: +46 8 58532560, E-mail: nina.eldh@ecs.ericsson.se

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