Telit Communications
Telit Communications (Wireless Solutions) is an internationally leading specialist in wireless machine-to-machine (M2M) technology. Telit is the only company worldwide to offer communications modules for all of the various wireless technologies: it develops, produces and markets modules for GSM/GPRS, UMTS/WEDGE/HSDPA, CDMA/EVDO and Short-Range RF applications. M2M applications rationalise business processes by enabling machines, equipment and vehicles to communicate with each other via mobile networks.
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Telit Communications to shift manufacturing to China
Telit Communications PLC (AIM: TCM) said its current manufacturing agreement with SEM, the Milan-based manufacturing arm of global electronics service provider BAMES, has been converted to be non-exclusive, and it is shifting the bulk of the manufacturing to China.
Telit has begun parallel manufacturing with a new, unspecified manufacturer in China and expects that a majority of its products will be manufactured in China starting from 2010.
The agreement provided for SEM to produce all of Telit's m2m (machine-to-machine) mudules with some exceptions for a five year period starting from March 12, 2007. As a result of the cancellation of the exclusivity, SEM is entitled to a compensation of €2.75-3.50 million.
In addition, manufacturing costs will remain fixed through the end of the year. Telit and SEM will continue to cooperate in various projects and SEM will continue to provide specific manufacturing services to Telit, such as manufacturing of prototypes, on a non-exclusive basis.
Commenting on the announcement, Telit CEO Oozi Cats said: "Telit's relationship with SEM has been a fruitful one and we look forward to continued cooperation in the future, on a case-by-case basis, capitalizing on SEM's expertise and its seasoned workforce.
"However, in order to maintain its market position and remain competitive, Telit must move a majority of its production to China, taking advantage of the more competitive cost structure and economy of scale which are now matched by high quality and operational efficiency," he added.
