May 15^th, 2002 (12:00am) - Microsoft Corp., along with its manufacturing partner Flextronics Corp., today announced plans to establish a manufacturing and assembly operation for the Xbox(TM) video game system in China later this year. The companies also stated that the console manufacturing operation in Hungary would be relocated to Doumen, China. In addition to the Xbox operations at Flextronics’ Guadalajara, Mexico, facility and the new operations in China, Microsoft will add another facility in Asia in the future. Xbox."

"The Doumen facility will enable Flextronics to manufacture Xbox consoles under ideal production circumstances," said Todd Holmdahl, general manager of Xbox Hardware at Microsoft. "It is a large facility with a strong infrastructure and flexible production capacity that will result in significant cost efficiencies." Xbox."

According to Holmdahl, the cost savings associated with the Doumen facility are derived principally from reduced overhead costs and the facility’s location in the same region in which many of the Xbox components are manufactured. "Flextronics has been an excellent partner and has worked closely with us to meet production targets while keeping quality high and costs down," Holmdahl said. "We are extremely satisfied with our relationship with Flextronics." Xbox."

Michael Marks, chairman and CEO of Flextronics, said, "Our manufacturing facilities in the Far East are some of the best operations anywhere in the world, and we are confident that our industrial park in China will meet the production demands of Xbox moving forward. Further, we are confident that through the local supply base and our substantial buying power we can help Microsoft reduce product costs and assist in meeting the growing worldwide demand for Xbox."

In its Doumen facility, Flextronics will provide manufacturing services for Xbox that include printed circuit board fabrication, injection molding, sheet-metal stamping, circuit board assembly, final box build and testing.