24th Jul 2009 10:17
Telit Communications Plc ("Telit" or "the Company")
Update on Manufacturing Agreement with SEM
Telit Communications plc (AIM: TCM), the global wireless communications developer and distributor, announces that its current manufacturing agreement with SEM, the Vimercate, Milan based manufacturing arm of BAMES, a leading global electronics service provider, has been converted to be non-exclusive.
The agreement provided for SEM to produce all of Telit's m2m modules (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.
Telit has begun parallel manufacturing with a new, leading, manufacturer in China and expects that a majority of its products will be manufactured in China starting from 2010. The new manufacturing arrangements will allow Telit to improve its competitive position within the m2m market.
Commenting on the announcement, Oozi Cats, CEO of Telit Communications plc, 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".
Enquiries:
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Telit Communications Plc |
Tel: 00 972 3 791 40 40 |
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Michael Galai, Finance Director |
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Seymour Pierce Ltd |
Tel: 00 44 207 107 8000 |
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Chris Howard / Christopher Wren |
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