UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549
                                 FORM 10-Q


X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 29, 1998.

__  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO 
_________________

COMMISSION FILE NUMBER 1-11098

                           SOLECTRON CORPORATION
           (Exact Name of Registrant as specified in its Charter)


                 Delaware                        94-2447045
      (State or other jurisdiction             (IRS Employer 
    of Incorporation or Organization)       Identification Number)


             777 Gibraltar Drive, Milpitas, California 95035
           (Address of principal executive offices and Zip Code)

Registrant's telephone number, including area code:   (408) 957-8500



Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange 
Act of 1934 during the preceding 12 months (or for such shorter period 
that the registrant was required to file such reports), and (2) has been 
subject to such filing requirements for the past 90 days.

Yes   X        No    


Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of the latest practicable date.

At June 30, 1998, 117,081,797 shares of Common Stock of the Registrant 
were outstanding.

<PAGE>
                         SOLECTRON CORPORATION

INDEX TO FORM 10-Q


PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets at
         May 31, 1998 and August 31, 1997                         3

         Condensed Consolidated Statements of Income for
         for the three months and nine months ended 
         May 31, 1998 and 1997                                    4 
 
         Condensed Consolidated Statements of Cash Flows 
         for the nine months ended May 31, 1998 
         and 1997                                               5 - 6

         Notes to Condensed Consolidated Financial
         Statements                                             7 - 9

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                   10 - 22

Item 3.  Quantitative and Qualitative Disclosures About
         Market Risk                                              23



PART II. OTHER INFORMATION


Item 1.  Legal Proceedings                                        24

Item 2.  Changes in Securities                                    24

Item 3.  Defaults Upon Senior Securities                          24

Item 4.  Submission of Matters to a Vote of Security Holders      24 

Item 5.  Other Information                                        24

Item 6.  Exhibits and Reports on Form 8-K                         24

Signature                                                         25

                                   2

<PAGE>
ITEM 1.     FINANCIAL STATEMENTS 
<TABLE>
                SOLECTRON CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                             (In thousands)
<CAPTION>
                                          May 31,           August 31,
                                           1998                1997
                                        -----------        -----------
<S>                                     <C>                <C>
ASSETS 
Current assets:
   Cash, cash equivalents and 
     short-term investments              $  352,133         $  482,902
   Accounts receivable, net                 563,993            418,682
   Inventories                              734,715            494,622
   Prepaid expenses and other
     current assets                          96,226             79,426
                                         ----------         ----------
     Total current assets                 1,747,067          1,475,632 
Net property and equipment                  406,272            326,361
Other assets                                 50,844             50,426
                                         ----------         ----------
     Total assets                        $2,204,183         $1,852,419
                                         ==========         ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt     $       --         $    1,464
   Accounts payable                         581,341            415,896
   Accrued employee compensation             50,148             56,218
   Accrued expenses                          15,794             24,787
   Other current liabilities                 74,164             45,577
                                         ----------         ----------
     Total current liabilities              721,447            543,942
Long-term debt                              386,542            385,850
Other long-term liabilities                  10,195              3,558
                                         ----------         ----------
     Total liabilities                    1,118,184            933,350
                                         ----------         ----------
Commitments
Stockholders' equity:      
     Common stock                               116                115
     Additional paid-in capital             473,323            451,093
     Retained earnings                      621,520            478,612
     Cumulative translation adjustment       (8,960)           (10,751)
                                         ----------         ----------
     Total stockholders' equity           1,085,999            919,069
                                         ----------         ----------
Total liabilities and 
 stockholders' equity                    $2,204,183         $1,852,419
                                         ==========         ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
                                   3
<PAGE>
<TABLE>
                   SOLECTRON CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share data)
<CAPTION>
                            Three Months Ended      Nine Months Ended
                                  May 31,                May 31,
                           --------------------    --------------------
                              1998       1997         1998       1997   
                           ---------  ---------    ---------  ---------
<S>                       <C>        <C>          <C>        <C>
Net sales                 $1,278,167 $  983,222   $3,601,818 $2,649,645 
Cost of sales              1,145,044    867,345    3,218,775  2,345,422
                           ---------  ---------    ---------  ---------
     Gross profit            133,123    115,877      383,043    304,223

Operating expenses:
   Selling, general
    & administrative          55,374     48,546      155,296    123,730
   Research &
    development                5,378      4,712       14,706     10,025
   Acquisition costs              -          -            -       4,000
                           ---------  ---------    ---------  ---------
     Operating income         72,371     62,619      213,041    166,468

Interest income                6,526      7,102       19,645     20,851
Interest expense              (4,945)    (6,787)     (17,784)   (19,781)
                           ---------  ---------    ---------  ---------
     Income before 
      income taxes            73,952     62,934      214,902    167,538

Income tax expense            24,774     21,397       71,994     56,961                                
                           ---------  ---------    ---------  ---------
     Net income           $   49,178 $   41,537   $  142,908 $  110,577
                           =========  =========    =========  =========
Net income per share:
     Basic                $    0.42  $    0.37    $    1.24  $    1.00
                           =========  =========    =========  =========
     Diluted              $    0.41  $    0.36    $    1.19  $    0.97
                           =========  =========    =========  =========
Shares used to compute
  net income per share:
     Basic                   116,027    113,356      115,425    110,646
                           =========  =========    =========  =========
     Diluted                 126,835    123,347      126,470    114,135
                           =========  =========    =========  =========

</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                   4
<PAGE>
<TABLE>
                   SOLECTRON CORPORATION AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)
<CAPTION>
                                                  Nine Months Ended
                                                       May 31,
                                               ------------------------
                                                  1998          1997
                                               ----------    ----------             
<S>                                            <C>           <C>
Cash flows from operating activities:
  Net income                                   $  142,908    $  110,577
  Adjustments to reconcile net income
   to net cash provided by operating 
   activities:
     Depreciation and amortization                 90,560        79,627
     Tax benefit associated with the 
      exercise of stock options                     2,681         5,265 
     Other                                         19,646           (37)
     Changes in operating assets and 
      liabilities:
      Accounts receivable                        (144,021)      (47,885)
      Inventories                                (159,839)     (104,722)
      Prepaid expenses and other 
       current assets                             (19,397)       (7,111)
      Accounts payable                            152,788       174,526
      Accrued expenses and other 
       current liabilities                          5,256            68
                                               ----------    ----------
     Net cash provided by operating 
     activities                                    90,582       210,308
                                               ----------    ----------
Cash flows from investing activities:
  Sales and maturities of short-term 
   investments                                    256,300      123,245
  Purchases of short-term investments            (164,882)    (226,216)
  Capital expenditures                           (186,868)    (110,827)
  Acquisition of facilities                       (79,465)
  Proceeds from leasing transactions               25,528           --
  Other                                            (2,078)       8,444
                                               ----------   ----------
     Net cash used in investing 
     activities                                  (151,465)    (205,354)
                                               ----------   ----------


                               (continued on next page)
</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                   5
<PAGE>
<TABLE>
                  SOLECTRON CORPORATION AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                            (In thousands)
<CAPTION>
                                                 Nine Months Ended
                                                      May 31,
                                              ------------------------
                                                 1998          1997
                                              ----------    ----------            
<S>                                           <C>           <C>
Cash flows from financing activities:
  Repayments of long-term debt                    (1,619)       (2,343)
  Net proceeds from sale of common stock          22,231        29,619
  Other                                             (108)       (1,727)                                                            
                                              ----------    ----------
     Net cash provided by financing 
     activities                                   20,504        25,549
                                              ----------    ----------
Effect of exchange rate changes on 
 cash and cash equivalents                         1,027        (2,279)
                                              ----------    ----------
Net (decrease) increase in cash and 
 cash equivalents                                (39,352)       28,224
   
Cash and cash equivalents at 
 beginning of period                             225,073       228,830
                                              ----------    ----------
Cash and cash equivalents at 
 end of period                                $  185,721    $  257,054
                                              ==========    ==========


SUPPLEMENTAL DISCLOSURES

Cash paid during the period:
   Income taxes                               $    55,509   $   64,493
   Interest                                   $    12,487   $   25,572
  
Non-cash investing and financing
activities:
   Issuance of common stock for
     business combination                     $       --    $   18,335

</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                   6
<PAGE>
SOLECTRON CORPORATION AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - Basis of Presentation

The accompanying condensed consolidated balance sheets as of May 31, 
1998 (unaudited) and August 31, 1997, the unaudited condensed 
consolidated statements of income for the three- and nine-month periods 
ended May 31, 1998 and 1997, and the unaudited condensed consolidated 
statements of cash flows for the nine months ended May 31, 1998 and 1997 
have been prepared on substantially the same basis as the annual 
consolidated financial statements.  Management believes the financial 
statements reflect all adjustments, consisting only of normal recurring 
adjustments, necessary for the fair presentation of the Company's 
financial position, operating results and cash flows for the periods 
presented.  The results of operations for the three- and nine-month 
periods ended May 31, 1998 are not necessarily indicative of results to 
be expected for the entire year.  These condensed consolidated financial 
statements should be read in conjunction with the consolidated financial 
statements and notes thereto for the year ended August 31, 1997 included 
in the Company's Annual Report to Stockholders.

For clarity of presentation, the Company has indicated its third fiscal 
quarter as ending on May 31, and its fiscal year as ending on August 31, 
whereas in fact, the Company's third quarter of fiscal 1998 ended on May 
29, 1998, its third quarter of fiscal 1997 ended on May 30, 1997 and its 
1997 fiscal year ended on August 29, 1997.

NOTE 2 - Inventories

Inventories consisted of (in thousands):
<TABLE>
<CAPTION>
                                    May 31,          August 31,
                                     1998               1997   
                                 -----------        -----------
          <S>                    <C>                <C>
          Raw materials           $  523,426        $  365,630
          Work-in-process            211,289           128,992
                                 -----------        -----------
          Total                   $  734,715        $  494,622
                                 ===========        ===========
</TABLE>

NOTE 3 - Net Income Per Share

Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings 
per Share," replaced the previously reported primary and fully diluted 
net income per share with basic and diluted net income per share. Basic 
net income per share is calculated using the weighted average number of 
common shares outstanding during the period. Diluted net income per 
share is calculated using the weighted average number of common shares 
plus dilutive common equivalent shares outstanding during the period. 
Common equivalent shares consist of stock options that are computed 
using the treasury stock method and shares issuable upon conversion of 
the Company's outstanding convertible notes.

                                   7
<PAGE>
All net income per share amounts for all periods have been presented, 
and where necessary, restated to conform to the requirements of SFAS No. 
128.

The following table sets forth the computation of basic and diluted 
income per share for the three- and nine-month periods ended May 31, 
1998 and 1997.
<TABLE>
<CAPTION>
                                Three Months Ended     Nine Months Ended
                                      May 31,               May 31,
                                ------------------    ------------------
                                  1998       1997       1998      1997
                                --------  --------    --------  --------
<S>                             <C>       <C>         <C>       <C>
Net income - basic              $ 49,178  $ 41,537    $142,908  $110,577

 Interest expense from 
  convertible subordinated 
  notes, net of taxes              2,398     2,380       7,194       --
                                --------  --------    --------  --------
Net income - diluted            $ 51,576  $ 43,917    $150,102  $110,577
                                ========  ========    ========  ========

Shares used to compute
 net income per share:

Basic:
 Weighted average shares         116,027   113,356     115,425   110,646
                                ========  ========    ========  ========
Diluted:
 Weighted average shares         116,027   113,356     115,425   110,646
 Common stock equivalents -
  stock options                    4,004     3,187       4,241     3,489
 Common shares issuable
  upon assumed conversion 
  of convertible subordinated
  notes                            6,804     6,804       6,804        --
                                --------  --------    --------  --------
    Total diluted shares         126,835   123,347     126,470   114,135          
                                ========  ========    ========  ========

Net income per share - basic     $ 0.42    $ 0.37      $ 1.24    $ 1.00
                                ========  ========    ========  ========

Net income per share - diluted   $ 0.41    $ 0.36      $ 1.19    $ 0.97
                                ========  ========    ========  ========
</TABLE>
For the three- and nine-month periods ended May 31, 1998, options to 
purchase 1.7 million shares of common stock with exercise prices greater 
than the average fair market value of the Company's stock for the period 
of $42.52 and $41.41, respectively, are not included in the calculation 
because the effect would have been antidilutive. For the three- and 
nine-month periods ended May 31, 1997, options to purchase 1.3 million 
shares of common stock with exercise prices greater than the average 
fair market value of the Company's stock for the period of $27.17 and 
$26.97, respectively, are not included in the calculation because the 
effect would have been antidilutive. In addition, the calculation for 
the nine-month period ended May 31, 1997 does not include the 6.8 
million common shares issuable upon conversion of the convertible 
subordinated notes as they would also have been antidilutive.

                                   8
<PAGE>
NOTE 4 - Asset Securitization Arrangement

In September 1997, the Company entered into an asset securitization 
arrangement with a bank under which it may sell up to $120 million of 
eligible accounts receivable. The arrangement is subject to certain 
financial covenants and management representations. No transaction has 
occurred under this arrangement.

NOTE 5 - Commitments

The Company leases various facilities under operating lease agreements.  
These leases expire at various dates through the year 2014.  
Substantially all leases require the Company to pay property taxes, 
insurance, and normal maintenance costs.  All of the Company's leases 
have fixed minimum lease payments except the lease for certain 
facilities in Milpitas, California.  Payments under this lease are 
periodically adjusted based on LIBOR rates.  This lease provides the 
Company with the option at the end of the lease of either acquiring the 
property at its original cost or arranging for the property to be 
acquired. The Company is contingently liable under a first loss clause 
for a decline in the market value of the property of up to $52.1 million 
in the event that the Company does not purchase the property at the end 
of the lease term.  The Company must also maintain compliance with 
financial covenants similar to its credit facilities.  Future minimum 
lease payments related to lease obligations are approximately $17.0 
million, $11.8 million, $9.0 million, $6.5 million and $4.2 million in 
each of the years in the five year period ending August 31, 2002 and an 
aggregate $1.1 million for periods after that date.

NOTE 6 - Acquisition of NCR Operations

On April 27, 1998, the Company acquired NCR Corporation's (NCR) 
manufacturing assets in three cities for a purchase price of 
approximately $79.5 million, subject to adjustment. The acquisition has 
been accounted for as a purchase of assets and the purchase price has 
been allocated to the assets acquired based on the relative fair values 
of the assets at the date of acquisition. Under the terms of the 
agreement, NCR will outsource the manufacturing of certain of its 
computer components to Solectron for at least five years and Solectron 
has hired approximately 1,200 NCR manufacturing and related support 
employees. 

NOTE 7 - Subsequent Event

On June 1, 1998, the Company acquired International Business Machine 
Corporation's (IBM) electronic card assembly and test (ECAT) operations 
in Charlotte, North Carolina for a purchase price of approximately $95.4 
million, subject to adjustment. The acquisition has been accounted for 
as a business combination and the purchase price has been allocated to 
the assets acquired based on the fair market value of the assets at the 
date of acquisition. Under the terms of the agreement, Solectron has 
hired approximately 700 IBM manufacturing and related support employees 
and the Company will provide printed circuit board assembly services to 
IBM in North America for the next three years. In addition, IBM will 
make available to Solectron 115 patents and 51 disclosures covering a 
wide spectrum of technologies and capabilities. IBM will also provide to 
Solectron failure analysis and characterization tools for process 
development and manufacturing, including fault detection and isolation.

                                   9
<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in the following Management's Discussion 
and Analysis of Financial Condition and Results of Operations, 
including, without limitation, statements containing the words 
"believes," "anticipates," "estimates," "expects," and words of similar 
import, constitute forward-looking statements which involve risks and 
uncertainties. Solectron's actual results could differ materially from 
those anticipated in these forward looking statements as a result of 
certain factors, including those factors set forth under "Trends and 
Uncertainties" below.

General

Solectron's net sales are derived from sales to electronics systems 
original equipment manufacturers (OEMs). The majority of Solectron's 
customers compete in the networking, data and voice communications, 
workstation, personal computer and computer peripheral segments of the 
electronics industry. The Company uses advanced manufacturing 
technologies in assembly and manufacturing management of complex printed 
circuit boards and electronics systems. Solectron also provides pre-
manufacturing and post-manufacturing services. A discussion of some of 
the potential fluctuations in operating results is included under 
"Trends and Uncertainties".

The Company has manufacturing operations in locations throughout the 
world, including North America, Europe, the Asia/Pacific region and 
Brazil. Solectron also has its Asia/Pacific headquarters office in 
Taipei, Taiwan and a program office located in Japan. The Company's 
Force Computers and Fine Pitch Technologies subsidiaries are both 
headquartered in San Jose, California.  Force's European headquarters 
and a significant portion of its operations are located in Munich, 
Germany.  In addition to its headquarters locations, Force has sales 
support offices in various locations in the United States and 
internationally. Fine Pitch has operations in California and in 
Massachusetts.

During 1997, the Company established a strategic, global manufacturing 
partnership with Ericsson Telecom AB's Business Area Infocom Systems 
(Ericsson). The Company has established a New Product Introduction 
center in Norrkoping and Stockholm, Sweden, and production from certain 
Ericsson plants worldwide has been transferred to Solectron 
manufacturing sites around the world. In October 1997, Solectron 
acquired certain assets, primarily equipment and inventory, of 
Ericsson's printed circuit board assembly operation located in Sao 
Paolo, Brazil. In addition, Solectron's subsidiary, Solectron Brasil 
Ltda., hired approximately 370 persons formerly employed by Ericsson 
Telecomunicacoes S.A. in Brazil.

In April 1998, the Company acquired NCR Corporation's (NCR) 
manufacturing assets in three cities for a purchase price of 
approximately $79.5 million, subject to adjustment. The acquisition has 
been accounted for as a purchase of assets and the purchase price has 
been allocated to the assets acquired based on the relative fair values 
of the assets at the date of acquisition. Under the terms of the 
agreement, NCR will outsource the manufacturing of certain of its 
computer components to Solectron for at least five years and Solectron 
has hired approximately 1,200 NCR manufacturing and related support 
employees. 

                                   10
<PAGE>
In June 1998, the Company acquired International Business Machine 
Corporation's (IBM) electronic card assembly and test (ECAT) operations 
in Charlotte, North Carolina for a purchase price of approximately $95.4 
million, subject to adjustment. The acquisition has been accounted for 
as a business combination and the purchase price has been allocated to 
the assets acquired based on the fair market value of the assets at the 
date of acquisition. Under the terms of the agreement, Solectron has 
hired approximately 700 IBM manufacturing and related support employees 
and the Company will provide printed circuit board assembly services to 
IBM in North America for the next three years. In addition, IBM will 
make available to Solectron 115 patents and 51 disclosures covering a 
wide spectrum of technologies and capabilities. IBM will also provide to 
Solectron failure analysis and characterization tools for process 
development and manufacturing, including fault detection and isolation.

In June 1998, the Company also announced that it intended to enter into 
a strategic alliance with Ingram Micro Inc. to provide global build-to-
order and configure-to-order assembly services for personal computers, 
servers and related products in the United States, Canada, Europe, Asia 
and Latin America. The alliance will be managed by both companies under 
a joint management matrix that will include a sales and marketing staff, 
program management, information technology resources and test and 
process engineers and will, in most part, utilize existing facilities, 
systems and personnel. The agreement between the companies is subject to 
negotiation of definitive agreements. The agreement is expected to be 
completed by the end of calendar 1998.

Results of Operations

The electronics industry is subject to rapid technological change, 
product obsolescence and price competition. These and other factors 
affecting the electronics industry, or any of Solectron's major 
customers in particular, could have an adverse material effect on 
Solectron's results of operations. See "Trends and Uncertainties -- 
Potential Fluctuations in Operating Results" and "Competition" for 
further discussion of potential fluctuations in operating results.

                                   11
<PAGE>
The following table sets forth, for the periods indicated, certain items 
in the Condensed Consolidated Statements of Income as a percentage of 
net sales. The financial information and the discussion below should be 
read in conjunction with the Condensed Consolidated Financial Statements 
and Notes thereto.
<TABLE>
<CAPTION>
                              Three Months Ended      Nine Months Ended
                                    May 31,                May 31,
                                1998       1997        1998       1997
                              -------    -------     -------    -------
   <S>                        <C>        <C>         <C>        <C>
   Net sales                    100.0%     100.0%      100.0%     100.0%
   Cost of sales                 89.6       88.2        89.4       88.5                                        
                              -------    -------     -------    -------
         Gross profit            10.4       11.8        10.6       11.5
   Operating expenses:
     Selling, general & 
      administrative              4.3        4.9         4.3        4.7        
     Research & development        .4         .5          .4         .4
     Acquisition costs              -          -           -         .1
                              -------    -------     -------    -------
         Operating income         5.7        6.4         5.9        6.3        
    Interest (income)  
       expense, net               (.1)         -         (.1)         -                                      
                              -------    -------     -------    -------
         Income before 
          income taxes            5.8        6.4         6.0        6.3
   Income taxes                   1.9        2.2         2.0        2.1
                              -------    -------     -------    -------
   Net income                     3.9%       4.2%        4.0%       4.2%
                              =======    =======     =======    =======
</TABLE>
Net Sales

Net sales for the three- and nine-month periods of fiscal 1998 grew to 
$1.3 billion and $3.6 billion, respectively, increases of 30.0% and 
35.9%, respectively, over the same periods in fiscal 1997. The sales 
growth is attributable to significant increases in sales volume from 
both existing and new customers worldwide, including the completion of 
the transfer of production from certain Ericsson plants to various 
Solectron locations around the world and the acquisition of the three 
NCR sites, which contributed one month of revenue to the 1998 periods.

Within the Americas, sites that benefited most from start up and major 
new programs had substantial increases in net sales for the fiscal 1998 
periods compared to the fiscal 1997 periods. Sales growth at the Texas 
site was particularly strong as a result of these factors. In addition, 
the new sites in Mexico and Brazil, as well as the newly-acquired sites 
from NCR, contributed incremental net sales to the fiscal 1998 periods. 
Sales related to printed circuit board assembly at the Milpitas, 
California site decreased in the three- and nine-month periods of fiscal 
1998 compared to the same periods of fiscal 1997 primarily due to 
deliberate management actions initiated in the fourth quarter of fiscal 
1997 to achieve improved global load balancing and specific product 
program transitioning; however, sales related to systems assembly at the 
Milpitas site increased in both fiscal 1998 periods compared to the 
fiscal 1997 periods. Sales in all of the Company's European and Asian 
locations, except for the program office in Japan, increased in the 
fiscal 1998 periods over the comparable periods of fiscal 1997 primarily 
as a result of core business growth and new accounts. Sales growth in 
the Company's location in Scotland was particularly strong due to the 

                                   12
<PAGE>
ramp up of major customers' printed circuit board assembly activities in 
that operation. Although the Company does not currently anticipate any 
future decline in sales, to lessen the potential impact of any possible 
future declines to customers within any particular region or market 
segment, the Company is committed to seeking diversification of its 
customer base among many countries, market segments and product lines 
within market segments.

Several of the Company's customers accounted for more than 10% of the 
Company's net sales in the three- and nine-month periods of fiscal 1998 
and 1997. The following table details these customers and the percentage 
of net sales attributed to them.
<TABLE>
<CAPTION>
                              Three Months Ended      Nine Months Ended
                                    May 31,                May 31,
                                1998       1997        1998       1997
                              -------    -------     -------    -------
<S>                           <C>        <C>         <C>        <C>
Hewlett-Packard Company (HP)    13.8%      12.0%       14.3%      13.3%
Cisco Systems, Inc.             12.8%      11.0%       11.2%        *
Sun Microsystems, Inc.          11.0%        *         11.1%        *
Bay Networks, Inc.                *        10.2%         *        10.8%
-------------
* Less than 10%
</TABLE>
No other customer accounted for more than 10% of net sales during any of 
the periods presented.

Solectron's top ten customers accounted for 66.8% and 65.7% of 
consolidated net sales in the first nine months of fiscal 1998 and 1997, 
respectively. Solectron is still dependent upon continued revenues from 
HP and the rest of its top ten customers and there can be no guarantee 
that these or any other customers will not increase or decrease as a 
percentage of consolidated net sales either individually or as a group. 
Consequently, any material decrease in sales to these or other customers 
could have an adverse material effect on Solectron's results of 
operations.

In the first nine months of fiscal 1998, international locations 
contributed 34.1% of consolidated net sales compared to 25.8% in the 
same period of fiscal 1997. In addition to the sales growth factors for 
Europe and Asia noted above, the Company's international sales also 
benefited from the addition in fiscal 1998 of the sites in Mexico and 
Brazil and the acquisition of the site in Ireland from NCR in April 
1998. The rate of international versus domestic sales, as well as 
international sales versus domestic sales as a percentage of the 
Company's overall sales can fluctuate significantly over time.

As a result of Solectron's international sales and facilities, 
Solectron's operations are subject to risks of doing business abroad. 
While to date these dynamics have not had an adverse material effect on 
Solectron's results of operations, there can be no assurance that there 
will not be such an impact in the future. See "Trends and Uncertainties 
-- International Operations" for a further discussion of potential 
fluctuations in operating results associated with the risks of doing 
business abroad.

Solectron's operations in Milpitas, California contributed a substantial 
portion of Solectron's net sales and operating income during the first 
nine months of fiscal 1998 and fiscal 1997. In recent quarters, 
management has undertaken deliberate actions to achieve improved global 

                                  13
<PAGE>
load balancing by transferring certain projects from the Milpitas site 
to other sites worldwide. However, the performance of the Milpitas 
operation is expected to continue as a significant factor in the overall 
financial performance of Solectron. Any adverse material change to the 
customer base, product mix, efficiency, or other attributes of this site 
could have an adverse material effect on Solectron's consolidated 
results of operations.

Solectron believes that its ability to continue to achieve growth will 
depend upon growth in sales to existing customers for their current and 
future product generations, successful marketing to new customers and 
future geographic expansion. Customer contracts can be canceled and 
volume levels can be changed or delayed. The timely replacement of 
delayed, canceled or reduced orders with new business cannot be assured. 
In addition, there can be no assurance that any of Solectron's current 
customers will continue to utilize Solectron's services. Because of 
these factors, there can be no assurance that Solectron's historical 
revenue growth rate will continue. See "Trends and Uncertainties" for a 
discussion of certain factors affecting the management of growth, 
geographic expansion and potential fluctuations in sales and results of 
operations.

Gross Profit

The gross margin percentage decreased to 10.6% for the first nine months 
of fiscal 1998 period from 11.5% for the same period of fiscal 1997. The 
decrease was due primarily to start-up costs associated with the 
Company's operations in China and Mexico, as well as a shift toward 
higher volume projects and system build projects that typically have 
lower margins. In addition, gross margins of the newly-acquired NCR 
operations are lower than the overall average margins of the rest of the 
Company primarily due to the fact that the majority of its net sales are 
derived from system integration activities, which normally generate 
lower gross margins than printed circuit board assembly.

For the foreseeable future, Solectron's gross margin is expected to 
depend primarily on product mix, production efficiencies, utilization of 
manufacturing capacity, start-up and integration costs of new and 
acquired businesses, the percentage of sales derived from system build 
projects, pricing within the electronics industry and the cost structure 
at individual sites. Over time, gross margins at the individual sites 
and for the Company as a whole may continue to fluctuate. Printed 
circuit board assembly projects typically have higher gross margin 
percentages than system build projects. Increases in system build 
business, additional costs associated with new projects and price 
erosion within the electronics industry could adversely affect the 
Company's gross margin.  Additionally, changes in product mix could 
cause the Company's gross margin to fluctuate. Also, while the 
availability of raw materials appears adequate to meet the Company's 
current revenue projections for the foreseeable future, component 
availability is still subject to lead time and other constraints that 
could possibly limit the Company's revenue growth. Because of these 
factors and others discussed under "Trends and Uncertainties" below, 
there can be no assurance that the Company's gross margin will not 
fluctuate or decrease in future periods.

Selling, General and Administrative Expenses

In absolute dollars, selling, general and administrative (SG&A) expenses 
increased 14.1% and 25.5%, respectively, for the three- and nine-month 
periods of fiscal 1998 over the same periods in fiscal 1997. For the

                                   14
<PAGE> 
third quarter of fiscal 1998, the increase is due to growth within the 
Company's Force Computers subsidiary plus the addition of new sites in 
China, Mexico, Brazil and Sweden and the NCR sites, partially offset by 
cost-containment measures in established locations. In addition to the 
increases related to these new sites and the inclusion of Force for the 
full fiscal 1998 period, the increase for the nine-month period of 
fiscal 1998 resulted from investment in infrastructure such as personnel 
and related departmental expenses at all manufacturing locations as well 
as continuing investment in information systems to support the increased 
size and complexity of the Company's business. As a percentage of net 
sales, SG&A expenses were 4.3% in each of the fiscal 1998 periods and 
4.9% and 4.7%, respectively, in the three- and nine-month periods of 
fiscal 1997. The most significant reason for the fiscal 1998 decrease in 
SG&A expenses as a percentage of net sales is the significant increase 
in the sales base partially offset by the inclusion of Force, which has 
a more sales-intensive operating structure, and the costs associated 
with starting up new sites and investments in the Company's information 
systems.  The Company anticipates SG&A expenses will continue to 
increase in terms of absolute dollars in the future, and may possibly 
increase as a percentage of revenue, as the Company continues to invest 
in the infrastructure necessary to support its current and prospective 
business.

Research and Development Expenses

With the exception of its Force Computers operation, the Company's 
research and development (R&D) activities have been focused primarily on 
the development of prototype and engineering design capabilities, fine 
pitch interconnecting technologies (which include ball-grid array, tape-
automated bonding, multichip modules, chip-on-flex, chip-on-board and 
flip chip), high reliability environmental stress test technology and 
the implementation of environmentally-friendly assembly processes, such 
as VOC-free and no-clean.  Force's R&D efforts are concentrated on new 
product development and improvement of product designs through 
improvements in functionality and the use of micro-processors in 
embedded applications.  Research and development expenses, as a 
percentage of net sales, were 0.4% in both the three- and nine-month 
periods of fiscal 1998 and 0.5% and 0.4%, respectively, in the fiscal 
1997 periods. The increase in R&D expenses in the first nine months of 
fiscal 1998 compared to the first nine months of fiscal 1997 is due to 
the acquisition of Force in November 1996. The Company expects that R&D 
expenses will increase in absolute dollars in the future and may 
increase as a percentage of net sales as Force and the newly-acquired 
NCR and IBM sites continue to invest in their R&D efforts. In addition, 
certain new R&D projects will be undertaken at some of the Company's 
Asian sites, particularly at the Malaysia sites in connection with the 
tax holiday. (See "Income Taxes.")

Acquisition Costs

A one time charge for acquisition costs of approximately $4.0 million 
was incurred in fiscal 1997 as a result of the acquisition of Force 
Computers during the quarter ended November 30, 1996.  

Net Interest Income (Expense)

Net interest income was $1.6 million and $1.9 million, respectively, for 
the three- and nine-month periods of fiscal 1998 compared to $0.3 
million and $1.1 million, respectively, for the fiscal 1997 periods. 
Interest expense on the Company's long-term debt is approximately $6.2 
million per quarter and has been offset by interest earned on undeployed 

                                   15
<PAGE>
cash and short-term investments. In the first nine months of fiscal 
1998, the Company capitalized approximately $1.7 million of interest 
expense related to the construction of its new facilities in Mexico and 
China. Solectron used a portion of its cash and short-term investments 
to fund its acquisitions from NCR and IBM. The Company expects to 
utilize more of the undeployed cash during future periods in order to 
fund anticipated future growth. See "Trends and Uncertainties -- 
Management of Growth," and "Potential Fluctuations in Operating 
Results."

Income Taxes

Income taxes increased to $72.0 million in the first nine months of 
fiscal 1998 from $57.0 million in the fiscal 1997 period primarily due 
to increased income before income taxes. Solectron's effective income 
tax rate decreased slightly to 33.5% in the fiscal 1998 period from 34% 
in the first nine months of fiscal 1997.

In general, the effective income tax rate is largely a function of the 
balance between income from domestic and international operations. 
Solectron's international operations, taken as a whole, have been taxed 
at a lower rate than in the United States, primarily due to the tax 
holiday granted to the Company's Malaysia sites. The Malaysian tax 
holiday is effective through January 31, 2002, subject to certain 
conditions. The Company has also been granted various tax holidays in 
China, which are effective for various terms and are subject to certain 
conditions.

Liquidity and Capital Resources

Working capital was $1.0 billion at May 31, 1998 compared to $932 
million at the end of fiscal 1997. A major component of working capital 
at May 31, 1998 continues to be undeployed cash from the proceeds of the 
two debt offerings during fiscal 1996. In the third quarter of fiscal 
1998, the Company used approximately $79.5 million of its cash and 
short-term investments to fund its acquisition of NCR's manufacturing 
assets. In June 1998, the Company used an additional $95.4 million to 
fund its acquisition IBM's ECAT business. As Solectron continues to 
grow, it is expected that the Company will require greater amounts of 
working capital to support its operations. The Company believes that its 
current level of working capital together with cash generated from 
operations and the Company's available credit facilities will provide 
adequate working capital for the foreseeable future.

Inventory levels fluctuate directly with the volume of the Company's 
manufacturing. Changes or significant fluctuations in product market 
demands can cause fluctuations in inventory levels which may result in 
changes in levels of inventory turns and liquidity. Historically, the 
Company has been able to manage its inventory levels in response to 
these fluctuations. However, should material fluctuations occur in 
product demand, the Company could experience slower turns and reduced 
liquidity. 

In the first nine months of fiscal 1998, the Company invested 
approximately $187 million in capital expenditures. A large portion of 
these expenditures related to the purchase of new equipment, primarily 
surface mount assembly and test equipment, to meet current and expected 
production levels, as well as to replace or upgrade older equipment that 
was retired or sold. Significant expenditures were also made for the 
acquisition of land and buildings for the Company's new manufacturing 
sites, principally in China, Mexico and Brazil. The Company expects 

                                 16
<PAGE>
total capital expenditures in fiscal 1998 to be in the range of $200 
million to $225 million. In the second quarter of fiscal 1998, the 
Company entered into an arrangement with a third-party leasing company 
under which certain of the Company's fixed assets have been sold to the 
leasing company and leased back. The Company is accounting for these as 
operating leases.

In addition to working capital as of May 31, 1998, which includes cash 
and cash equivalents of $186 million and short-term investments of $166 
million less $95.4 million used in June to acquire the IBM ECAT 
business, the Company has available a $100 million unsecured 
multicurrency revolving credit facility and a $120 million asset 
securitization arrangement. Both of these facilities are subject to 
financial covenants. The Company also has approximately $89.4 million in 
available foreign credit facilities.

Trends and Uncertainties

Customer Concentration; Dependence on the Electronics Industry

In the first nine months of fiscal 1998 and for the full years of fiscal 
1997, 1996 and 1995, the Company's ten largest customers accounted for 
at least 64% of consolidated net sales.  The Company is dependent upon 
continued revenues from its top ten customers.  Any material delay, 
cancellation or reduction of orders from these or other significant 
customers could have an adverse material effect on the Company's results 
of operations. During the first nine months of fiscal 1998, HP accounted 
for 14.3% of net sales compared to 13.3% during the same period of 
fiscal 1997.  There can be no assurance that the Company will continue 
to do business with HP or any other customer.

The percentage of the Company's sales to its major customers may 
fluctuate from period to period.  Significant reductions in sales to any 
of these customers would have an adverse material effect on the 
Company's results of operations.  The Company has no firm long-term 
volume purchase commitments from its customers, and over the past few 
years has experienced reduced lead-times in customer orders. In 
addition, customer contracts can be canceled and volume levels can be 
changed or delayed.  The timely replacement of canceled, delayed or 
reduced contracts with new business cannot be assured.  These risks are 
increased because a majority of the Company's sales are to customers in 
the electronics industry, which is subject to rapid technological change 
and product obsolescence.  The factors affecting the electronics 
industry in general, or any of the Company's major customers in 
particular, could have an adverse material effect on the Company's 
results of operations.

There can be no assurance that sales to customers within any particular 
market segment will not experience decreases which could have an adverse 
effect on the Company's sales.

Management of Growth; Geographic Expansion

The Company has experienced substantial growth over the last five fiscal 
years, with net sales increasing from $836 million in fiscal 1993 to 
$3.7 billion in fiscal year 1997.  In recent years, the Company has 
acquired or established facilities in many locations. In the first 
quarter of fiscal 1998, the Company announced the opening of its 
Asia/Pacific headquarters office in Taipei, Taiwan; began operations in 
Guadalajara, Mexico; and, as further discussed in "Partnership with 
Ericsson and Related Transactions," established a manufacturing facility 

                                   17
<PAGE>
near Sao Paulo, Brazil, and opened a New Product Introduction center in 
Sweden. In April 1998, the Company announced plans to open a 
manufacturing facility in Timisoara, Romania, and in May 1998, announced 
the establishment of a program office in Israel. In addition, in April 
and June 1998, the Company completed its acquisitions of certain 
manufacturing facilities and employees from NCR and IBM, respectively. 
(See "Acquisition of NCR and IBM Operations.") In June 1998, the Company 
announced that it intended to enter into a strategic alliance with 
Ingram Micro Inc. (See "Proposed Alliance with Ingram Micro.") During 
fiscal 1997, the Company announced the establishment of new 
manufacturing facilities in Suzhou, China; began operations at its 
manufacturing facility in Westborough, Massachusetts; and, in November 
1996, acquired Force Computers Inc., which has operations in California 
and Germany. The Company continually evaluates growth and acquisition 
opportunities and may pursue additional opportunities over time.  There 
can be no assurance that the Company's historical revenue growth will 
continue or that the Company will successfully manage the facilities in 
China and Mexico, the partnership with and acquisitions from Ericsson, 
the acquisitions from NCR and IBM, the proposed alliance with Ingram 
Micro or any other businesses or assets it may acquire in the future.  
As the Company manages its existing operations and expands 
geographically, it may experience certain inefficiencies as it 
integrates new operations and manages geographically dispersed 
operations.  In addition, the Company's results of operations could be 
adversely affected if its new facilities do not achieve growth 
sufficient to offset increased expenditures associated with geographic 
expansion. The Company's expenses and working capital requirements will 
continue to increase as the new facilities become fully operational and 
the transactions with Ericsson, NCR and IBM are completed.  Should the 
Company increase its expenditures in anticipation of a future level of 
sales which does not materialize, its profitability would be adversely 
affected.  On occasion, customers may require rapid increases in 
production which can place an excessive burden on the Company's 
resources.  

Partnership with Ericsson and Related Transactions

During 1997, the Company established a strategic, global manufacturing 
partnership with Ericsson Telecom AB's Business Area Infocom Systems. 
The Company has established a New Product Introduction center in 
Norrkoping and Stockholm, Sweden, and production from certain Ericsson 
plants worldwide has been transferred to Solectron manufacturing sites 
around the world. In October 1997, Solectron acquired certain assets, 
primarily equipment and inventory, of Ericsson's printed circuit board 
assembly operation located in Brazil. In addition, Solectron's 
subsidiary, Solectron Brasil Ltda., hired approximately 370 persons 
formerly employed by Ericsson Telecomunicacoes S.A. in Brazil. Under the 
terms of the agreement, Ericsson will contract for Solectron's services 
from Solectron Brasil Ltda. through September 1999. Thereafter, 
Solectron will bear the risk of filling the manufacturing capacity at 
the site with renewed business from Ericsson or new business from other 
customers.

The transactions with Ericsson entail a number of risks, including 
successfully managing the integration of the operations, retention of 
key employees, integrating purchasing operations and information 
systems, managing an increasingly larger and more geographically 
disparate business and renewing the Ericsson business or replacing it 
with new business after expiration of the Ericsson commitment.  In 
addition, the completion of the transactions with Ericsson will increase 
Solectron's expenses and working capital requirements and there is no 

                                   18
<PAGE>
assurance that Solectron will achieve sufficient revenue to offset the 
increased expenses.  There can be no assurance that Solectron will 
successfully manage the risks of these transactions.

Acquisitions of NCR and IBM Operations

On April 27, 1998, the Company acquired NCR's manufacturing assets in 
three cities, two in the United States and one in Ireland, for a 
purchase price of approximately $79.5 million, subject to adjustment. As 
part of the transaction, Solectron hired approximately 1,200 NCR 
manufacturing and related support employees currently employed at these 
locations. Under the terms of the agreement, NCR will outsource the 
manufacturing of certain of its computer components to Solectron for at 
least five years. Thereafter, Solectron will bear the risk of filling 
the manufacturing capacity at the sites with renewed business from NCR 
or new business from other customers. 

On June 1, 1998, the Company acquired IBM's ECAT operations in 
Charlotte, North Carolina for a purchase price of approximately $95.4 
million, subject to adjustment. Under the terms of the agreement, 
Solectron has hired approximately 700 IBM manufacturing and related 
support employees and the Company will provide printed circuit board 
assembly services to IBM in North America for the next three years. In 
addition, IBM will make available to Solectron 115 patents and 51 
disclosures covering a wide spectrum of technologies and capabilities. 
IBM will also provide to Solectron failure analysis and characterization 
tools for process development and manufacturing, including fault 
detection and isolation. 

The transactions with NCR and IBM entail a number of risks, including 
successfully managing the integration of the operations, retention of 
key employees, integrating purchasing operations and information 
systems, managing an increasingly larger and more geographically 
disparate business, obtaining customers other than NCR and IBM for these 
facilities and renewing each of the NCR and IBM business or replacing it 
with new business after expiration of NCR's and IBM's respective 
commitments.  In addition, the transactions with NCR and IBM will 
increase Solectron's expenses and working capital requirements and there 
is no assurance that Solectron will achieve sufficient revenue to offset 
the increased expenses.  There can be no assurance that Solectron will 
successfully manage the risks of these transactions.

Proposed Alliance with Ingram Micro

In June 1998, the Company announced that it intended to enter into a 
strategic alliance with Ingram Micro Inc. to provide global build-to-
order and configure-to-order assembly services for personal computers, 
servers and related products in the United States, Canada, Europe, Asia 
and Latin America. The alliance will be managed by both companies under 
a joint management matrix that will include a sales and marketing staff, 
program management, information technology resources and test and 
process engineers and will, in most part, utilize existing facilities, 
systems and personnel. The agreement between the companies is subject to 
negotiation of definitive agreements. The agreement is expected to be 
completed by the end of calendar 1998.

The proposed alliance with Ingram Micro entails a number of risks, 
including successfully establishing the joint management matrix for the 
alliance, retention of key employees, integrating purchasing operations 
and information systems and obtaining customers for the services to be 
provided by the alliance.  In addition, the alliance with Ingram Micro 

                                   19
<PAGE>
will increase Solectron's expenses and working capital requirements and 
there is no assurance that Solectron will achieve sufficient revenue to 
offset the increased expenses.  There can be no assurance that Solectron 
will successfully manage the risks of this alliance or that the terms of 
the alliance will be finalized.

International Operations

As a result of its international sales and facilities, the Company's 
operations are subject to risks of doing business abroad, including but 
not limited to, fluctuations in the value of currency, export duties, 
changes to import and export regulations (including quotas), possible 
restrictions on the transfer of funds, employee turnover, labor unrest, 
longer payment cycles, greater difficulty in collecting accounts 
receivable, the burdens and costs of compliance with a variety of 
foreign laws and, in certain parts of the world, political instability. 
While to date these factors have not had an adverse material impact on 
the Company's results of operations, there can be no assurance that 
there will not be such an impact in the future.

Southeast Asia is currently experiencing currency, economic and 
political instability. To date, the Company's operations have not 
experienced significant adverse effects from this instability. However, 
to the extent the Company's worldwide customers sell the products 
manufactured by Solectron into the Southeast Asia market, the customer's 
sales may be adversely affected, which could decrease demand for the 
Company's manufacturing services. The Company cannot predict whether 
such a decrease in demand will materialize and if it does, whether it 
will have an adverse material effect on the Company's results of 
operations.

The Company has been granted a tax holiday for its Malaysia sites which 
is effective through January 31, 2002, subject to certain conditions.  
The Company has also been granted various tax holidays in China.  These 
tax holidays are effective for various terms and are subject to certain 
conditions.  There is no assurance that the current tax holidays will 
not be terminated or modified or that any future tax holidays that the 
Company may seek will be granted.  If the current tax holidays are 
terminated or modified or if additional tax holidays are not granted in 
the future, the Company's effective income tax rate would likely 
increase.

Availability of Components

A substantial portion of the Company's net sales are derived from 
turnkey manufacturing in which the Company provides both materials 
procurement and assembly.  In turnkey manufacturing, the Company 
potentially bears the risk of component price increases, which could 
adversely affect the Company's gross profit margins.  At various times 
there have been shortages of components in the electronics industry.  If 
significant shortages of components should occur, the Company may be 
forced to delay manufacturing and shipments, which could have an adverse 
material effect on the Company's results of operations.

Potential Fluctuations in Operating Results

The Company's operating results are affected by a number of factors, 
including the mix of turnkey and consignment projects, capacity 
utilization, price competition, the degree of automation that can be 
used in the assembly process, the efficiencies that can be achieved by 
the Company in managing inventories and fixed assets, the timing of 

                                   20
<PAGE>
orders from major customers, fluctuations in demand for customer 
products, the timing of expenditures in anticipation of increased sales, 
customer product delivery requirements and increased costs and shortages 
of components or labor. Turnkey manufacturing currently represents a 
substantial portion of Solectron's sales. Turnkey projects, in which 
Solectron procures some or all of the components necessary for 
production, typically generate higher net sales and higher gross profits 
with lower gross profit percentages than consignment projects due to the 
inclusion in Solectron's operating results of sales and costs associated 
with the purchase and sale of components. Solectron assembles products 
with varying degrees of material content, which may cause Solectron's 
gross margin to fluctuate. In addition, the degree of startup costs and 
inefficiencies associated with new sites and new customer projects may 
affect Solectron's gross margin. All of these factors can cause 
fluctuations in the Company's operating results.

Competition

The electronics assembly and manufacturing industry is comprised of a 
large number of companies, several of which have achieved substantial 
market share.  The Company also faces competition from current and 
prospective customers which evaluate Solectron's capabilities against 
the merits of manufacturing products internally.  Solectron competes 
with different companies depending on the type of service or geographic 
area.  Certain of the Company's competitors may have greater 
manufacturing, financial, research and development and marketing 
resources than the Company.  The Company believes that the primary basis 
of competition in its targeted markets is manufacturing technology, 
quality, responsiveness, the provision of value-added services and 
price.  To be competitive, the Company must provide technologically 
advanced manufacturing services, high product quality levels, flexible 
delivery schedules and reliable delivery of finished products on a 
timely and price competitive basis.  The Company currently may be at a 
competitive disadvantage as to price when compared to manufacturers with 
lower cost structures, particularly with respect to manufacturers with a 
greater number of established facilities where labor costs are lower.

Intellectual Property Protection

The Company's ability to compete may be affected by its ability to 
protect its proprietary information.  The Company holds a limited number 
of U.S. patents related to the process and equipment used in its surface 
mount technology. The Company's subsidiary, Force Computers, also holds 
a number of patents related to VME technology. The Company believes 
these patents are valuable.  In addition, as part of its recent 
acquisition of the IBM ECAT business, the Company has access to a number 
of IBM patents. However, there can be no assurance that these patents 
will provide meaningful protection for the Company's manufacturing 
process and equipment innovations or Force's technology.

There can be no assurance that third parties will not assert 
infringement claims against the Company or its customers in the future, 
either against the patents the Company holds itself or against the IBM 
patents it has access to.  In the event a third party does assert an 
infringement claim, the Company may be required to expend significant 
resources to develop a non-infringing manufacturing process or 
technology or to obtain licenses to the manufacturing process or 
technology which is the subject of litigation.  There can be no 
assurance that the Company would be successful in such development or 
that any such licenses would be available on commercially acceptable 
terms, if at all. In addition, such litigation could be lengthy and 

                                   21
<PAGE>
costly and could have an adverse material effect on the Company's 
financial condition regardless of the outcome of such litigation.

Environmental Compliance

The Company is subject to a variety of environmental regulations 
relating to the use, storage, discharge and disposal of hazardous 
chemicals used during its manufacturing process.  Any failure by the 
Company to comply with present and future regulations could subject it 
to future liabilities or the suspension of production.  In addition, 
such regulations could restrict the Company's ability to expand its 
facilities or could require the Company to acquire costly equipment or 
to incur other significant expenses to comply with environmental 
regulations.

Dependence on Key Personnel and Skilled Employees

The Company's continued success depends to a large extent upon the 
efforts and abilities of key managerial and technical employees.  The 
loss of services of certain key personnel could have an adverse material 
effect on the Company.  The Company's business also depends upon its 
ability to continue to attract and retain senior managers and skilled 
employees.  Failure to do so could adversely affect the Company's 
operations.

"Year 2000" Issues

The Company is aware of the issues associated with the programming code 
in existing computer systems as the year 2000 approaches. The "Year 
2000" problem is pervasive and complex, as many computer systems, 
manufacturing equipment and industrial control systems will be affected 
in some way by the rollover of the two-digit year value to 00. Systems 
that do not properly recognize such data could generate erroneous 
information or cause a system to fail. The Year 2000 issue creates risk 
for the Company from unforeseen problems in its own systems and from 
third parties with whom the Company deals on financial transactions 
worldwide. Failures of the Company's and/or third parties' computer 
systems, manufacturing equipment and industrial control systems could 
have a material impact on the Company's ability to conduct its business. 

The Company has formed a worldwide task force that is currently 
analyzing the Company's internal systems as well as all external systems 
(such as vendor, customer, banking systems, etc.) upon which the Company 
is dependent to identify any potential Year 2000 issues. Based on the 
results of this analysis, which is expected to be completed in the 
fourth quarter of fiscal 1998, the task force will develop a strategy to 
address the issues and take appropriate corrective action. The Company 
has not yet determined the timetable or the cost related to achieving 
Year 2000 compliance.

Possible Volatility of Market Price of Common Stock

The trading price of the common stock is subject to significant 
fluctuations in response to variations in quarterly operating results, 
general conditions in the electronics industry and other factors.  In 
addition, the stock market is subject to price and volume fluctuations 
which affect the market price for many high technology companies in 
particular, and which often are unrelated to operating performance.

                                 22
<PAGE>
ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of the Company's investment activities is to 
preserve principal while at the same time maximizing yields without 
significantly increasing risk. To achieve this objective, the Company 
maintains its portfolio of cash-equivalents and short-term investments 
in a variety of securities, including both government and corporate 
obligations, certificates of deposit and money market funds. 
Approximately 80% of the Company's portfolio matures in less than 6 
months. Because the Company's investments are diversified and of 
relatively short maturity, a hypothetical 10% increase in interest rates 
would not have a material effect on the Company's financial position.

The Company does not use derivative financial instruments for 
speculative purposes. The Company's policy is to hedge its foreign 
currency denominated transactions in a manner that substantially offsets 
the effects of changes in foreign currency exchange rates. The Company 
uses foreign currency borrowings and foreign currency forward contracts 
to hedge the currency risks of transactions denominated in foreign 
currencies. Gains and losses on these foreign currency hedges are 
generally offset by corresponding losses and gains on the underlying 
transaction. In addition, the Company's international operations in many 
instances act as a natural hedge because both sales and operating 
expenses are denominated in local currency. Therefore, although an 
unfavorable change in the exchange rate of a foreign currency against 
the U.S. dollar will result in lower sales when translated to U.S. 
dollars, operating expenses will also be lower in these circumstances.

The Company's debt instruments are subject to fixed interest rates and, 
in the case of the convertible notes, to fixed conversion ratios into 
the Company's common stock. In addition, the amount of principal to be 
repaid at maturity is also fixed. Therefore, the Company is not subject 
to market risk from its debt instruments.

                                  23
<PAGE>
SOLECTRON CORPORATION AND SUBSIDIARIES



Part II.       OTHER INFORMATION

      Item 1:  Legal Proceedings

               None

      Item 2:  Changes in Securities

               None

      Item 3:  Defaults upon Senior Securities

               None

      Item 4:  Submission of Matters to a Vote of Security Holders

               None

      Item 5:  Other Information

               None

      Item 6:  Exhibits and Reports on Form 8-K

               (a)  Exhibits

               27    Financial Data Schedule

               (b)  Reports on Form 8-K

               None

                                    24
<PAGE>
SOLECTRON CORPORATION



SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.




                                     SOLECTRON CORPORATION
                                    (Registrant)





Date: July 7, 1998              By:  /s/ Susan Wang
                                     ______________________
                                     Susan S. Wang
                                     Senior Vice President, Chief
                                     Financial Officer and Secretary
                                     (Principal Financial Officer)


                                   25