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 NOVEMBER 26, 1999.

__  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 December 31, 1999,  296,331,101 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 as of
         November 30, 1999 and August 31, 1999                    3

         Condensed Consolidated Statements of Income for
         the three months ended November 30, 1999
         and 1998                                                 4

         Condensed Consolidated Statements of Comprehensive
         Income for the three months ended November 30, 1999
         and 1998                                                 5

         Condensed Consolidated Statements of Cash Flows
         for the three months ended November 30, 1999
         and 1998                                               6 - 7

         Notes to Condensed Consolidated Financial
         Statements                                             8 - 13

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                   14 - 30

Item 3.  Quantitative and Qualitative Disclosures About           31
         Market Risk


PART II. OTHER INFORMATION


Item 1.  Legal Proceedings                                        32

Item 2.  Changes in Securities                                    32

Item 3.  Defaults Upon Senior Securities                          32

Item 4.  Submission of Matters to a Vote of Security Holders      32

Item 5.  Other Information                                        32

Item 6.  Exhibits and Reports on Form 8-K                         32

Signature                                                         33


                                       2
<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                     SOLECTRON CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In millions)
                                   (Unaudited)

                                             November 30,    August 31,
                                                 1999           1999
ASSETS                                       -----------    -----------
Current assets:
  Cash, cash equivalents and
    short-term investments                    $  1,470.7     $  1,688.4
  Accounts receivable, net                       1,250.8        1,118.3
  Inventories                                    1,495.7        1,080.1
  Prepaid expenses and other
    current assets                                 116.5          107.3
                                              ----------     ----------
    Total current assets                         4,333.7        3,994.1
Net property and equipment                         675.7          653.6
Other assets                                       217.7          187.0
                                              ----------     ----------
Total assets                                  $  5,227.1     $  4,834.7
                                              ==========     ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt                             $     29.8     $     21.4
  Accounts payable                               1,129.6          902.6
  Accrued employee compensation                     75.2           88.9
  Accrued expenses                                  55.1           40.4
  Other current liabilities                         83.9           59.9
                                              ----------     ----------
    Total current liabilities                    1,373.6        1,113.2
Long-term debt                                     943.9          922.6
Other long-term liabilities                          9.1            5.8
                                              ----------     ----------
    Total liabilities                            2,326.6        2,041.6
                                              ----------     ----------
Commitments

Stockholders' equity:
  Common stock                                       0.3            0.3
  Additional paid-in capital                     1,935.5        1,910.1
  Retained earnings                              1,069.2          971.2
  Accumulated other comprehensive losses          (104.5)         (88.5)
                                              ----------     ----------
     Total stockholders' equity                  2,900.5        2,793.1
                                              ----------     ----------
Total liabilities and
  stockholders' equity                        $  5,227.1     $  4,834.7
                                              ==========     ==========


See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>


                     SOLECTRON CORPORATION AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (In millions, except per share data)
                                   (Unaudited)

                                                   Three Months Ended
                                                      November 30,
                                                -----------------------
                                                   1999         1998
                                                ----------   ----------
Net sales                                       $  2,501.8   $  1,945.6
Cost of sales                                      2,268.7      1,769.7
                                                ----------   ----------
 Gross profit                                        233.1        175.9
Operating expenses:
Selling, general and administrative                   85.4         70.8
Research and development                               8.8          7.9
                                                 ----------   ----------
 Operating income                                    138.9         97.2

Interest income                                       21.2          4.4
Interest expense                                     (10.9)        (5.5)
                                                ----------   ----------
Income before income taxes and cumulative
 effect of change in accounting principle            149.2         96.1
Income taxes                                          47.7         32.2
                                                ----------    ---------
Income before cumulative effect of change
 in accounting principle                             101.5         63.9
Cumulative effect of change in accounting
 principle for start-up costs, net of $1.6
 income tax benefit                                   (3.5)          -
                                                ----------    ---------

     Net income                                 $     98.0    $    63.9
                                                ==========    =========

Basic net income per share:
 Income before cumulative effect of change
  in accounting principle                       $     0.37    $    0.27
 Cumulative effect of change in accounting
  principle                                          (0.01)          -
                                                ----------    ---------
     Net income per share                       $     0.36    $    0.27
                                                ==========    =========
Diluted net income per share:
 Income before cumulative effect of change
  in accounting principle                       $     0.36    $    0.26
 Cumulative effect of change in accounting
  principle                                          (0.01)          -
                                                ----------    ---------
     Net income per share                       $     0.35    $    0.26
                                                ==========    =========
Shares used to compute net income per share:

     Basic                                           271.7        236.8
     Diluted                                         283.5        257.5


See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>



                     SOLECTRON CORPORATION AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (In millions)
                                   (Unaudited)

                                                  Three Months Ended
                                                      November 30,
                                                -----------------------
                                                   1999         1998
                                                ----------   ----------



Net income                                      $     98.0   $     63.9

Other comprehensive income (loss):

Foreign currency translation adjustments,
 net of income tax benefit of $0.4 in 1999           (15.7)         2.2

Unrealized loss on investments, net of
 income tax benefit of $0.1 in 1999                   (0.3)          -
                                                ----------    ---------
Comprehensive income                            $     82.0    $    66.1
                                                ==========    =========

---------------
Accumulated foreign currency  translation losses were $103.2 million at November
30, 1999 and $87.5 million at August 31, 1999. For fiscal year 1999, the foreign
currency  translation  loss  primarily  resulted  from  the  devaluation  of the
Brazilian  real. Most of Solectron's  foreign  currency  translation  adjustment
amounts relate to investments  which are permanent in nature. To the extent that
such amounts relate to investments  which are permanent in nature, no adjustment
for income taxes is made. Accumulated unrealized losses on investments were $1.3
million at November 30, 1999 and $1.0 million at August 31, 1999.


See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>


                     SOLECTRON CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In millions)
                                   (Unaudited)



                                                  Three Months Ended
                                                     November 30,
                                                -----------------------
                                                    1999         1998
                                                ----------   ----------
Cash flows from operating activities:
  Net income                                    $     98.0    $    63.9
  Adjustments to reconcile net income
   to net cash used in operating
   activities:
     Depreciation and amortization                    49.0         40.6
     Non-cash interest                                 7.7           -
     Tax benefit associated with the
      exercise of stock options                        7.1           -
     Cumulative effect of change in accounting
      principle for start-up costs                     3.5           -
     Other                                             2.4          0.6
     Changes in operating assets and
     liabilities:
       Accounts receivable                          (133.9)      (201.7)
       Inventories                                  (404.5)       (99.2)
       Prepaid expenses and other
        current assets                                (8.0)       (18.2)
       Accounts payable                              227.3        177.6
       Accrued expenses and other
        current liabilities                           22.9         17.7
                                                ----------    ---------
     Net cash used in operating
      activities                                    (128.5)       (18.7)
                                                ----------    ---------
Cash flows from investing activities:
  Sales and maturities of short-term
   investments                                       144.5         56.4
  Purchases of short-term investments               (816.2)        (9.7)
  Acquisition of manufacturing locations             (38.1)       (24.6)
  Capital expenditures                              (103.7)      (118.8)
  Proceeds from sale of property and equipment        24.6          5.0
  Other                                              (12.6)         0.3
                                                ----------    ---------
     Net cash used in investing
      activities                                    (801.5)       (91.4)
                                                ----------    ---------


                               (continued on next page)


                                       6
<PAGE>


                     SOLECTRON CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                                  (In millions)
                                   (Unaudited)



                                                  Three Months Ended
                                                     November 30,
                                               ------------------------
                                                   1999          1998
                                               ----------    ----------
Cash flows from financing activities:
  Net proceeds from bank lines of credit              8.4          11.2
  Proceeds from long-term debt                       13.5            -
  Net proceeds from stock issued under
   option and employee purchase plans                18.3          25.6
  Other                                               4.2           3.9
                                               ----------    ----------
    Net cash provided by financing
    activities                                       44.4          40.7
                                               ----------    ----------
Effect of exchange rate changes on
 cash and cash equivalents                           (3.8)          2.2
                                                ----------    ---------
Net decrease in cash and
 cash equivalents                                  (889.4)        (67.2)

Cash and cash equivalents at
 beginning of period                              1,325.6         225.2
                                               ----------    ----------
Cash and cash equivalents at
 end of period                                 $    436.2    $    158.0
                                               ==========    ==========


SUPPLEMENTAL DISCLOSURES

Cash paid during the period:
   Income taxes                                $      6.2    $      9.1
   Interest                                    $      5.8    $     12.6


See accompanying notes to condensed consolidated financial statements.


                                       7
<PAGE>


SOLECTRON CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

NOTE 1 - Basis of Presentation

The accompanying  unaudited condensed consolidated balance sheets as of November
30, 1999 and August 31, 1999, and the related unaudited  condensed  consolidated
statements of income for the three months ended  November 30, 1999 and 1998, and
the unaudited condensed consolidated  statements of comprehensive income for the
three  months  ended  November 30, 1999 and 1998,  and the  unaudited  condensed
consolidated  statements  of cash flows for the three months ended  November 30,
1999 and 1998 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 a fair presentation of the Company's financial position, operating
results and cash flows for the periods presented.  The results of operations for
the three  months  ended  November 30, 1999 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,  1999
included in the Company's Annual Report to Stockholders.

For clarity of presentation, the Company has indicated its first fiscal quarters
as ending on  November  30, and its fiscal year as ending on August 31. In fact,
the Company's first quarter of fiscal 2000 ended on November 26, 1999, its first
quarter of fiscal 1999 ended on November 27, 1998 and its 1999 fiscal year ended
on August 27, 1999.

NOTE 2 - Inventories

Inventories consisted of (in millions):

                                 November 30,        August 31,
                                     1999               1999
                                 -----------        -----------
          Raw materials          $   1,138.3        $     789.6
          Work-in-process              262.2              211.1
          Finished goods                95.2               79.4
                                 -----------        -----------
          Total                  $   1,495.7        $   1,080.1
                                 ===========        ===========



                                       8
<PAGE>


NOTE 3 - Net Income Per Share

The following  table sets forth the  computation of basic and diluted net income
per share for the three months ended November 30, 1999 and 1998.

                                                  Three Months Ended
                                                      November 30,
                                                -----------------------
                                                    1999         1998
                                                ----------   ----------
                                                     (in millions,
                                                 except per share data)
Net income before cumulative effect of
 change in accounting principle                 $    101.5   $     63.9

Cumulative effect of change in
 accounting principle, net of taxes                   (3.5)          -

Interest expense from convertible
 subordinated notes, net of taxes                       -           2.4
                                                ----------   ----------
Net income - diluted                            $     98.0   $     66.3
                                                ==========   ==========

Weighted average shares - basic                      271.7        236.8

Common stock equivalents - stock options              11.8          7.1
Common shares issuable upon assumed
 conversion of convertible subordinated notes           -          13.6
                                                ----------   ----------
Weighted average shares - diluted                    283.5        257.5
                                                ==========   ==========

Basic net income per share:
 Income before cumulative effect of change
  in accounting principle                       $     0.37    $    0.27
 Cumulative effect of change in accounting
  principle                                          (0.01)          -
                                                ----------    ---------
     Net income per share                       $     0.36    $    0.27
                                                ==========    =========
Diluted net income per share:
 Income before cumulative effect of change
  in accounting principle                       $     0.36    $    0.26
 Cumulative effect of change in accounting
  principle                                          (0.01)          -
                                                ----------    ---------
     Net income per share                       $     0.35    $    0.26
                                                ==========    =========

For the first  quarter  ended  November  30, 1999,  options to purchase  273,000
shares of common stock with exercise prices greater than the average fair market
value of the  Company's  stock for the period of $76.80 were not included in the
calculation  because  the  effect  would have been  antidilutive.  For the first
quarter ended  November 30, 1998,  options to purchase  489,000 shares of common
stock with  exercise  prices  greater  than the average fair market value of the
Company's  stock for the period of $26.77 were not  included in the  calculation
because the effect would have been  antidilutive.  In addition,  the calculation
above did not include the 12.4 million common shares issuable upon conversion of
the  zero-coupon  senior  notes as they would have been  antidilutive.

                                       9
<PAGE>


NOTE 4 - Commitments

Solectron  leases various  facilities  under  operating  lease  agreements.  The
facility  leases expire at various dates through 2008.  All such leases  require
Solectron  to pay  property  taxes,  insurance  and  normal  maintenance  costs.
Payments of some leases are periodically  adjusted based on LIBOR rates. Certain
leases for Solectron's facilities,  including Milpitas and San Jose, California;
Everett,  Washington;  Suwanee,  Georgia; and Columbia, South Carolina,  provide
Solectron  with an option at the end of the lease term of either  acquiring  the
property at its original cost or arranging for the property to be acquired.  For
these leases,  Solectron is contingently  liable under a first loss clause for a
decline in market  value of such  leased  facilities  up to 85% of the  original
costs,  or  approximately  $149 million in total as of November 30, 1999, in the
event  Solectron  does not purchase the  properties at the end of the respective
lease terms.  Under such agreements,  the Company must also maintain  compliance
with financial  covenants  similar to its $100 million  unsecured  multicurrency
revolving credit facility.

Additionally,   Solectron  periodically  enters  into  lease  arrangements  with
third-party  leasing companies under which it sells fixed assets and leases them
back from the leasing  companies.  Solectron is  accounting  for these leases as
operating leases.

NOTE 5 - Segment Information

Solectron  is  operated  and  managed  geographically.  Each  region has its own
president and support staff.  Solectron's management uses an internal management
reporting  system,   which  provides  important   financial  data,  to  evaluate
performance and allocate Solectron's  resources on a geographic basis.  However,
the  current  management  reporting  structure  may be  subject  to  changes  as
Solectron is transitioning  into a global  supply-chain  facilitator  offering a
complete  range of  integrated  supply-chain  solutions to its customers for the
entire  product  cycle.  The Company is  realigning  its  operations  into three
strategic business units - technology  solutions,  manufacturing and operations,
and Global Services.

As of November 30, 1999,  Solectron's three reportable  operating  segments were
the Americas,  Europe and Asia. Intersegment  adjustments were related primarily
to intersegment  sales that were generally  recorded at prices that approximated
arm's length  transactions.  Certain corporate  expenses were allocated to these
operating   segments  and  were  included  for  performance   evaluation.   Some
amortization  expenses were also allocated to these operating segments,  but the
related  intangible assets were not allocated.  The accounting  policies for the
segments were the same as for Solectron taken as a whole.  Information about the
operating segments for the three months ended November 30, 1999 and 1998, was as
follows:


                                       10
<PAGE>


                                                  Three Months Ended
                                                      November 30,
                                                -----------------------
                                                   1999         1998
                                                ----------   ----------
                                                      (in millions)
Net sales:
 Americas                                       $  1,909.9   $  1,336.0
 Europe                                              347.4        315.5
 Asia                                                341.0        312.5
 Intersegment adjustments                            (96.5)       (18.4)
                                                ----------   ----------
                                                $  2,501.8   $  1,945.6
                                                ==========   ==========

Depreciation and amortization:
 Americas                                       $     28.2   $     21.9
 Europe                                                6.6          7.6
 Asia                                                  8.8         10.1
 Corporate                                             5.4          1.0
                                                ----------   ----------
                                                $     49.0   $     40.6
                                                ==========   ==========
Interest income:
 Americas                                       $      4.1   $      4.7
 Europe                                                1.2          0.9
 Asia                                                  0.7          0.3
 Corporate                                            24.2          5.0
 Intersegment adjustments                             (9.0)        (6.5)
                                                ----------   ----------
                                                $     21.2   $      4.4
                                                ==========   ==========
Interest expense:
 Americas                                       $      7.9   $      5.2
 Europe                                                1.4          1.7
 Asia                                                  0.1          0.1
 Corporate                                            10.5          5.0
 Intersegment adjustments                             (9.0)        (6.5)
                                                ----------   ----------
                                                $     10.9   $      5.5
                                                ==========   ==========
Pre-tax income:
 Americas                                       $    123.0   $     80.9
 Europe                                               14.2          7.6
 Asia                                                 26.5         20.2
 Corporate                                           (19.6)       (12.6)
                                                ----------   ----------
                                                $    144.1*  $     96.1
                                                ==========   ==========
Capital expenditures:
 Americas                                       $     59.2   $     59.6
 Europe                                               18.5         11.4
 Asia                                                 11.3         29.5
 Corporate                                            14.7         18.3
                                                ----------   ----------
                                                $    103.7   $    118.8
                                                ==========   ==========
---------------
*Includes $5.1 million for cumulative  effect of change in accounting  principle
 for start-up costs.

                                       11
<PAGE>


                                              November 30,   August 31,
                                                  1999          1999
                                              ------------   ----------
                                                    (in millions)

Total assets:
 Americas                                     $    2,719.3   $  2,492.8
 Europe                                              601.9        491.7
 Asia                                                544.8        480.1
 Corporate                                         2,365.0      2,317.9
 Intersegment adjustments                         (1,003.9)      (947.8)
                                              ------------   ----------
                                              $    5,227.1   $  4,834.7
                                              ============   ==========

NOTE 6 - Purchase of Business

In November 1999, Solectron acquired NULOGIX Technical Services, Inc. (NULOGIX),
a wholly owned subsidiary of IBM Canada, in its entirety.  NULOGIX is located in
Vaughan,  Canada, and specializes in repair,  remanufacturing and refurbishment.
The purchase price was approximately $4.5 million,  subject to adjustments.  The
acquisition was accounted for as a purchase of a business  resulting in goodwill
of approximately $1.4 million. The condensed  consolidated  financial statements
include the operating results of NULOGIX from the date of acquisition. Pro forma
results of operations are not presented  because the effect of this  acquisition
is not significant.

NOTE 7 - Purchase of Manufacturing Assets

In  September  1999,   Solectron  entered  into  an  agreement  to  acquire  the
manufacturing  assets,  primarily  inventory and equipment,  of IBM's  Netfinity
server operations in Greenock,  Scotland in several phases for approximately $27
million,  subject to adjustments.  In addition,  Solectron  acquired certain IBM
intellectual property rights included in the design and manufacture of PC server
motherboards  for $19.7 million.  Under the terms of the agreement,  the Company
assumed NPI and  manufacturing  responsibility  for the PCB  assemblies  used in
IBM's Netfinity server lines which were formerly  manufactured at IBM's Greenock
operations.  The Company  will provide IBM  full-service  NPI  management  which
includes a full range of premanufacturing  services,  specifically component and
concurrent engineering, test development,  prototype,  procurement and assembly.
Solectron will also provide to IBM for the next three years fully integrated PCB
assembly services including early prototyping,  new product launch, assembly and
test, volume production, end-of-life support and life cycle management.

NOTE 8 - Pending Acquisition of Manufacturing Assets

In November 1999,  Solectron announced the signing of memoranda of understanding
for Solectron to acquire the complex systems  manufacturing assets of Ericsson's
telecommunications  infrastructure equipment operations in Longuenesse,  France,
and  Ostersund,  Sweden.  As part of the  agreement,  Solectron  will  provide a
complete range of integrated  supply-chain solutions to Ericsson.  This includes
supply-base management, early prototyping, NPI management, complex PCB assembly,
configure-to-order  and  build-to-order  complex  systems  assembly,  and global
services.  The  transaction  is expected to be completed by the first quarter of
calendar  year 2000.  Completion  of the  transaction  is subject to  applicable
government approvals and various conditions of closing.

                                       12
<PAGE>

NOTE 9 - Newly Adopted Accounting Pronouncement

Effective in the first quarter of fiscal 1999, the Company  adopted the American
Institute of Certified Public  Accountants  (AICPA)  Statement of Position (SOP)
98-5,  "Reporting  on the  Costs of  Start-up  Activities."  This  SOP  requires
companies to expense all costs incurred in connection with start-up  activities.
The Company  recorded a cumulative  effect of change in accounting  principle of
$3.5 million, net of $1.6 million tax benefit.

NOTE 10 - Subsequent Event

On November 30, 1999,  Solectron  completed  its  acquisition  of SMART  Modular
Technologies, Inc (SMART). Under the terms of the agreement, each share of SMART
common stock was  exchanged  for 0.51 shares of  Solectron  common  stock.  As a
result,  Solectron issued  approximately 23.8 million shares of Solectron common
stock and assumed all stock options held by SMART employees.  The acquisition is
being  accounted  for  as a  pooling  of  interests.  SMART  is a  designer  and
manufacturer  of memory  modules and memory  cards,  embedded  computers and I/O
products.

Since the fiscal years for  Solectron  and SMART  differ,  SMART has changed its
fiscal year to coincide with Solectron's starting in the first quarter of fiscal
2000. The following pro forma combined financial information gives effect to the
acquisition of SMART using the pooling of interests  method of accounting.  This
pro forma combined financial  information  includes certain  adjustments for the
elimination of net sales, cost of sales and income taxes related to shipments by
SMART to Solectron  as well as for  reclassification  of other,  net of SMART to
selling,  general  and  administrative  to conform  with  Solectron's  financial
statement  presentation.  There were no  adjustments  necessary  to conform  the
accounting policies of the combining companies.

                                                       Pro Forma
                                                   Three Months Ended
                                                      November 30,
                                                -----------------------
                                                    1999         1998
                                                ----------   ----------
                                                     (in millions)

Net sales                                       $  2,775.6   $  2,203.1
Operating income                                $    154.8   $    113.0

The  combined  pro forma  financial  information  presented  is not  necessarily
indicative  of the  operating  results  or  financial  position  that would have
occurred if the merger had been in effect during the periods  indicated,  nor is
such  information  indicative  of the  future  operating  results  or  financial
positions of the combined company after the merger.



                                       13
<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  provides  electronics  manufacturing  services to original  equipment
manufacturers  (OEMs) who design and sell  networking  equipment,  workstations,
personal  and  notebook  computers,  computer  peripherals,   telecommunications
equipment or other electronic equipment. These OEMs include Cisco Systems, Inc.,
Hewlett-Packard  Company,  Inc.,  International  Business  Machines  Corporation
(IBM),  and Sun  Microsystems,  Inc. These companies  contract with Solectron to
build  their  products  for  them  or to  obtain  other  related  services  from
Solectron.

Solectron  furnishes  integrated  supply-chain  solutions  that span the  entire
product life cycle - from  technology,  to  manufacturing,  to global  services.
These solutions include the following range of services:

-  Product design;
-  New Product Introduction  management;
-  Materials purchasing and management;
-  Prototyping;
-  Printed circuit board assembly (the process of placing components on
   an electrical printed circuit board that controls the processing functions
   of a personal computer or other electronic equipment);
-  System  assembly  (for  example,  building  complete  systems  such as mobile
   telephones and testing them to ensure functionality);
-  Distribution;
-  Product repair; and
-  Warranty services.

Solectron's  performance  of these  services  allows  its  customers  to  remain
competitive  by focusing on their core  competencies  of sales,  marketing,  and
research and  development.  We have  manufacturing  facilities  in the Americas,
Europe  and  Asia.  This  geographic  presence  gives  our  customers  access to
manufacturing  services  in the  locations  where they need to be close to their
expanding markets for faster product delivery.

During 1997, Solectron established a strategic, global manufacturing partnership
with  Ericsson  Telecom  AB's  Business  Area  Infocom  Systems  (Ericsson).  We
established a New Product  Introduction  (NPI) center in Sweden and  transferred
production from certain  Ericsson plants  worldwide to our  manufacturing  sites
around the  world.  In October  1997,  we  acquired  certain  assets,  primarily
equipment and  inventory,  of Ericsson's  printed  circuit board (PCB)  assembly
operation located in Sao Paulo, Brazil.

In April 1998,  Solectron acquired NCR Corporation's (NCR) manufacturing  assets
in Columbia,  South Carolina;  Duluth,  Georgia; and Dublin,  Ireland. Under the
terms of the agreement, NCR will outsource the manufacturing of certain computer
components  to  Solectron  for at  least

                                       14

<PAGE>

five  years.  The site in Duluth was  subsequently  merged  with the  Braselton,
Georgia,  site  into a newly  constructed  manufacturing  facility  in  Suwanee,
Georgia,  in October  1999.  The  Braselton  site was  originally  acquired from
Mitsubishi in October 1998.

In June 1998, Solectron acquired  International  Business Machines Corporation's
(IBM)  Electronic  Card  Assembly  and  Test  (ECAT)   manufacturing  assets  in
Charlotte,  North Carolina, and non-exclusive rights to certain IBM intellectual
property.  Under  the  terms of the  agreement,  we will  provide  PCB  assembly
services to IBM in North America for the next three years. In addition,  IBM has
made  available  to  Solectron  intellectual  property  rights  covering  a wide
spectrum of  technologies  and  capabilities.  IBM also  provided  to  Solectron
failure  analysis  and  characterization   tools  for  process  development  and
manufacturing, including fault detection and isolation.

In October 1998, Solectron acquired the wireless telephone  manufacturing assets
of  Mitsubishi  Consumer  Electronics  America,  Inc.'s (MCEA)  Cellular  Mobile
Telephone  (CMT)  division  in  Braselton,  Georgia.  MCEA was a  subsidiary  of
Mitsubishi Electric Corporation (Mitsubishi).  Under the terms of the agreement,
we will provide  MCEA-CMT with a full range of  manufacturing  services for five
years,  including  NPI  management,  PCB assembly and full systems  assembly for
MCEA's branded and  private-label  cellular  products sold in North America.  In
October  1999,  we combined the  operations of Braselton and Duluth into a newly
constructed manufacturing facility in Suwanee, Georgia.

Also in October 1998,  Solectron signed a definitive agreement with Ingram Micro
Inc. under which the two companies entered into a strategic  alliance 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 is managed by both companies under a joint
management matrix that includes a sales and marketing staff, program management,
materials  management,   information  technology  resources,  test  and  process
engineers,  and in most cases, uses existing facilities,  systems and personnel.
Shipments to customers under the arrangement began in April 1999.

In February 1999,  Solectron  acquired IBM's  Electronic  Card Assembly and Test
(ECAT)  manufacturing  assets in  Austin,  Texas,  and  non-exclusive  rights to
certain IBM  intellectual  property.  Under the terms of the agreement,  for the
next three years we will  provide PCB assembly  for  motherboards  used in IBM's
mobile computer products manufactured worldwide.  This includes physical design,
early prototyping, new product launch, PCB assembly and test, volume production,
end-of-life  support,  field return services and life cycle management.  We will
also  provide  IBM's  worldwide  design  teams a full  range of  integrated  NPI
services  which involve  pre-manufacturing  support,  such as design and layout,
component and concurrent engineering, test development,  prototype,  procurement
and assembly.

In July 1999,  Solectron issued common stock to acquire Sequel,  Inc.  (Sequel).
Sequel was a privately held  corporation  specializing in notebook  computer and
liquid   crystal   display   repair   service  and  support.   We  have  assumed
responsibility  for  Sequel's  business  operations  in  San  Jose,  California;
Memphis,  Tennessee;  and Reading, United Kingdom. We have also assumed Sequel's
ownership in  joint-venture  operations in Japan and Taiwan.  The acquisition is
expected  to enable us to expand our global  support  services  capabilities  by
adding  quick-turn  service

                                       15
<PAGE>

operations,  customer service centers and help-desk support for the end-users of
Solectron-built products.

In  August  1999,   Solectron  acquired  the  manufacturing  assets  of  Trimble
Navigation  Limited  (Trimble)  in  Sunnyvale,   California,  and  assumed  full
manufacturing  responsibility of Trimble's Global  Positioning  System (GPS) and
related  radio  frequency  (RF)  technology  products  for the next three years.
Trimble is a leader in RF products  enabled by GPS technology.  We also acquired
certain intellectual  property rights related to RF technology.  Under the terms
of the agreement,  we will provide  Trimble a full range of integrated  services
across the entire product life cycle including design consultation, prototyping,
NPI management, and volume PCB and systems assembly.

In  September  1999,  Solectron  acquired  the  manufacturing  assets  of  IBM's
Netfinity  server  operations in Greenock,  Scotland.  In addition,  we acquired
certain IBM intellectual  property rights included in the design and manufacture
of PC server motherboards.  Under the terms of the agreement, we assumed NPI and
manufacturing  responsibility  for the PCB  assemblies  used in IBM's  Netfinity
server lines which were formerly  manufactured at IBM's Greenock operations.  We
will provide IBM  full-service  NPI  management  which  includes a full range of
premanufacturing  services,  specifically component and concurrent  engineering,
test development,  prototype, procurement and assembly. We will also provide IBM
for the next three years fully integrated PCB assembly services  including early
prototyping,   new  product  launch,   assembly  and  test,  volume  production,
end-of-life support and life cycle management.  The volume PCB assembly services
will  be  transferred  from  IBM's  Greenock  facility  to our  existing  global
manufacturing  operations.  In addition, we have established a new, full-service
NPI center in Port Glasgow, Scotland, to support the IBM design teams.

In October 1999, Solectron signed a definitive agreement with Acer, Inc. (Acer),
a core unit of the Acer Group, the world's  third-largest  PC  manufacturer,  to
form a strategic  alliance to provide global design,  manufacturing  and service
solutions for OEM-branded  personal  computers,  servers and workstations.  As a
result of the alliance, it is expected that customers will be able to access the
extensive technology,  motherboard and system-level design services,  and global
supply-base,   manufacturing,   distribution,   logistics  and  Global  Services
operations of both  companies to further  streamline  their global supply chain.
Solectron  and  Acer  plan  to  leverage  their  combined  resources,  including
facilities,  systems  and  personnel,  to provide  the  industry's  first  fully
integrated,  global and optimized end-to-end design,  manufacturing and services
solution.  The  companies  will manage this  alliance  under a joint  management
matrix.

In November 1999, Solectron acquired NULOGIX Technical Services, Inc. (NULOGIX),
a wholly owned subsidiary of IBM Canada, in its entirety.  NULOGIX is located in
Vaughan,  Canada, and specializes in repair,  remanufacturing and refurbishment.
With this  acquisition,  we expect to be able to provide the  Canadian  market a
full range of value-added  global  service  solutions.  These  services  include
product repair,  upgrades,  remanufacturing  and maintenance through factory and
fast-hub  service  centers located around the world;  help-desk  support through
customer call centers for  end-users;  logistics and parts  management;  returns
processing;   warehousing;   engineering  change  management;   and  end-of-life
manufacturing.

Also  in  November  1999,  Solectron  announced  the  signing  of  memoranda  of
understanding for Solectron to acquire the complex systems  manufacturing

                                       16
<PAGE>

assets of Ericsson's  telecommunications  infrastructure equipment operations in
Longuenesse,  France, and Ostersund, Sweden. As part of the agreement, Solectron
will provide a complete range of integrated  supply-chain solutions to Ericsson.
This includes supply-base management, early prototyping, NPI management, complex
PCB assembly,  configure-to-order  and build-to-order  complex systems assembly,
and global  services.  The  transaction is expected to be completed by the first
quarter of  calendar  year 2000.  Completion  of the  transaction  is subject to
applicable government approvals and various conditions of closing.

On November 30, 1999,  Solectron  completed  its  acquisition  of SMART  Modular
Technologies, Inc (SMART). Under the terms of the agreement, each share of SMART
common  stock  was  exchanged  for 0.51 of a share of  Solectron  common  stock.
Solectron  issued  approximately  23.8 million shares of Solectron common stock.
SMART is a  designer  and  manufacturer  of memory  modules  and  memory  cards,
embedded  computers,  and I/O  products.  The  acquisition  is  another  step in
enabling  Solectron to expand its service  capabilities and infrastructure as it
continues to transform itself into a global  supply-chain  facilitator.  We have
gained  a  manufacturing   presence  in  Aguada,  Puerto  Rico,  and  additional
manufacturing  capacity  through  SMART's  facilities  in  Fremont,  California;
Penang,  Malaysia;  and East  Kilbride,  Scotland.  In addition,  we have gained
design centers in Fremont, California;  Bangalore, India; Boston, Massachusetts;
and Ayr, Scotland.

On  January 5, 2000,  Solectron  signed a letter of intent to acquire  Alcatel's
manufacturing assets in Aguadilla,  Puerto Rico, and Longview, Texas. Alcatel is
a world leader in building  next-generation  networks and end-to-end  data voice
solutions. Solectron will assume full manufacturing responsibility for Alcatel's
build-to-order  (BTO) RF communication  systems and certain  networking  printed
circuit board (PCB) products. As part of the proposed agreement,  Solectron will
provide a full range of  manufacturing  services  to Alcatel  for the next three
years including: prototyping and NPI management of RF systems, BTO systems build
and high-volume PCB assembly. The transaction is expected to be completed by the
end of the first quarter of calendar year 2000. Completion of the transaction is
subject to applicable government approvals and various conditions of closing.

On  January  6,  2000,  Solectron  signed a letter  of  intent  to  acquire  tbe
manufacturing assets of Premisys Communications, Inc., a wholly owned subsidiary
of  Zhone  Technologies,  Inc.  (Zhone).  Zhone  is a  communications  equipment
provider integrating  expertise in voice, video and data  communications.  Under
the proposed  agreement,  Solectron  will become  Zhone's  virtual  supply-chain
partner and will sign a five-year  commitment with Zhone to provide product life
cycle  management  services,   including  NPI  through  repair  and  end-of-life
services.  The  transaction  is expected to be completed by the end of the first
quarter of  calendar  year 2000.  Completion  of the  transaction  is subject to
applicable government approvals and various conditions of closing.

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
materially   harm   Solectron's   results  of   operations.   See   "Trends  and
Uncertainties" for factors relating to possible fluctuation of operating results
and our competitors.

                                       17
<PAGE>

The following table sets forth, for the periods indicated,  certain items in the
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.

                                                    Three Months Ended
                                                       November 30,
                                                   -------------------
                                                    1999         1998
                                                   ------       ------
Net sales                                           100.0%       100.0%
Cost of sales                                        90.7         91.0
                                                   ------       ------
 Gross profit                                         9.3          9.0
Operating expenses:
Selling, general and administrative                   3.4          3.6
Research and development                              0.4          0.4
                                                   ------       ------
 Operating income                                     5.5          5.0

Net interest income (expense)                         0.4         (0.1)
                                                   ------       ------
Income before income taxes and cumulative
 effect of change in accounting principle             5.9          4.9
Income taxes                                          1.9          1.6
                                                   ------       ------
Income before cumulative effect of change
 in accounting principle                              4.0          3.3
Cumulative effect of change in accounting
 principle for start-up costs                        (0.1)          -
                                                   ------       ------
      Net income                                      3.9%         3.3%
                                                   ======       ======

Net Sales

Net sales for the first quarter of fiscal 2000 grew to $2.5 billion, an increase
of 28.6% over the same period in fiscal  1999.  The sales  growth was  primarily
attributable to strong demand from our customers worldwide and acquisitions made
during fiscal 1999.  However,  the demand  increases  were  partially  offset by
end-of-life   products  and  component  shortages  in  flash  memory,   tantalum
capacitors and saw filters.

Americas - The sales  increase for the first  quarter of fiscal 2000 compared to
the  corresponding  period in fiscal 1999 was primarily due to strong demand and
acquisitions of manufacturing  assets of Mitsubishi in October 1998, IBM ECAT in
Austin,  Texas in  February  1999 and  Trimble  in  August  1999.  The  business
acquisitions  of  Sequel  in  July  1999  and  NULOGIX  in  November  1999  also
contributed  incremental  net sales to the first  quarter  of  fiscal  2000.  In
addition,  the Mexico  site and  Milpitas  site in  California  were the largest
contributors  due to demand  growth  from our  customers.  The  sales  growth in
Milpitas site was partially offset by planned transfer of personal  computer PCB
programs  and  computer  peripherals  systems  assembly  programs  to Mexico and
networking business to Penang.

Solectron's  operations  in  Milpitas,  California,  contributed  a  substantial
portion of Solectron's  net sales and operating  income during fiscal 1999, 1998
and 1997. In recent  years,  management  has  undertaken  deliberate  actions to
achieve improved global load balancing by

                                       18
<PAGE>

transferring  certain  projects from the Milpitas site to other sites worldwide.
However, the performance of the Milpitas operation is expected to continue to be
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 materially harm Solectron's  consolidated  results
of operations.

Europe - Net sales  increase  in the first  quarter of fiscal 2000 over the same
period  of  fiscal  1999  was  principally  due to  increased  demand  from  our
telecommunications customers.  Additionally,  the recently expanded Romania site
started ramping up its production to meet demand.

Asia - Net sales growth was primarily  due to core business  growth in the first
quarter of fiscal 2000 compared to the same period of fiscal 1999. The China and
Japan  sites  also  experienced   ramp-up  production  to  meet  demand  growth.
Solectron's  Penang operations in Malaysia continue to benefit from the transfer
of networking business from Milpitas, California.

In the first quarter of fiscal 2000,  international  locations contributed 40.1%
of  consolidated  net sales compared to 39.2% in the same period of fiscal 1999.
As a result  of  Solectron's  international  sales and  facilities,  Solectron's
operations are subject to the risks of doing business  abroad.  While,  to date,
these dynamics have not materially harmed Solectron's results of operations,  we
cannot  assure that there will not be such an impact in the future.  See "Trends
and  Uncertainties"  for  factors  pertaining  to our  international  sales  and
fluctuations in the exchange rates of foreign currency for further discussion of
potential  adverse  effects in operating  results  associated  with the risks of
doing business abroad.

Net Sales to Major Customers - Several of our customers  accounted for more than
10% of our net sales in the first  three  months  of fiscal  2000 and 1999.  The
following  table  details  these  customers  and  the  percentage  of net  sales
attributed to them.

                                                Three Months Ended
                                                     November 30,
                                                -------------------
                                                 1999         1998
                                                ------       ------

Cisco Systems, Inc. (Cisco)                       11.5%          *
Lucent Technologies Inc. (Lucent)**               10.1%          *
International Business Machines
 Corporation (IBM)                                10.0%          *
Hewlett-Packard Company (HP)                        *          12.2%
----------------
* Less than 10%.
**Reflects the merger of Lucent and Ascend Communications, Inc.

No other  customer  accounted  for more than 10% of net sales  during any of the
periods presented.

Solectron's top ten customers  accounted for  approximately  72% of consolidated
net sales in the first three  months of fiscal 2000 and 1999.  We are  dependent
upon continued revenues from Cisco, Lucent, IBM, and HP as well as our other top
ten customers.  We cannot  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.

                                       19
<PAGE>

Consequently,  any material  decrease in sales to these or other customers could
materially harm Solectron's results of operations.

Solectron  believes  that its ability to continue  achieving  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,  we cannot  assure that any of
Solectron's  current  customers will continue to utilize  Solectron's  services.
Because of these factors,  we cannot assure 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  increased to 9.3% for the first  quarter of fiscal
2000 period  from 9.0% for the same  period of fiscal  1999.  The  increase  was
primarily attributable to higher sales volume, manufacturing efficiency and cost
reduction,  partially  offset  by the  negative  impacts  from  product  mix and
non-linear  production  due  to  component  shortages  and  integration  of  new
projects.

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  systems-build  projects,  pricing  within the
electronics  industry,  and the cost structure at individual  sites.  Over time,
gross margins at the individual  sites and for Solectron as a whole may continue
to fluctuate.  In future periods,  we anticipate that a larger percentage of our
sales may be derived from  systems-build  projects which  generally  yield lower
profit  margins  than PCB  assembly.  Increases in the  systems-build  business,
additional  costs  associated  with new projects,  and price erosion  within the
electronics industry could harm our gross margin.

In  addition,  we have  recently  experienced  component  shortages.  While  the
component availability fluctuates from time to time and is still subject to lead
time and other  constraints,  this could  possibly  limit our revenue growth and
might have a negative  impact on our  revenue  projections  for the  foreseeable
future.  Because  of these  factors  and  others  discussed  under  "Trends  and
Uncertainties"  below, we cannot assure that  Solectron'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  20.6% in the first  quarter  of fiscal  2000 over the same  period of
fiscal 1999.  The increase in fiscal 2000 period was primarily due to investment
in infrastructure such as marketing,  sales,  supply-base  management as well as
continuing  investment in information  systems to support the increased size and
complexity  of our business.  As a percentage  of net sales,  SG&A expenses were
3.4% and 3.6% in the fiscal  2000 and fiscal  1999  periods,  respectively.  The
primary  reason for the fiscal 2000 decrease in SG&A expenses as a percentage of
net sales is the significant increase in the sales base, offset partially by the
costs related to  investments  in our business  infrastructure  and

                                       20
<PAGE>

information  systems.  We anticipate  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 we continue to build the infrastructure  necessary to
support our current and prospective business.

Research and Development Expenses

With the exception of our Force Computers  operation,  Solectron'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 microprocessors in embedded
applications.

In absolute  dollars,  R&D expenses  were $8.8  million in the first  quarter of
fiscal 2000 and $7.9 million in the same quarter of fiscal 1999. As a percentage
of net sales,  R&D  expenses  were 0.4% in the first  quarter of fiscal 2000 and
1999 periods. The increase in R&D expenses in the fiscal 2000 period compared to
fiscal 1999 period was  primarily  due to increased  R&D effort at Force and new
R&D  projects  initiated  at various  sites.  We expect that R&D  expenses  will
increase in absolute  dollars in the future and may increase as a percentage  of
net sales as SMART,  our newly acquired  operations,  and Force will continue to
invest in their R&D  efforts and  additional  R&D  projects  are  undertaken  at
certain sites.

Net Interest Income (Expense)

Net interest  income was $10.3 million for the first three months of fiscal 2000
compared to net  interest  expense of $1.1  million in the same period of fiscal
1999. The net interest  income in the fiscal 2000 period  resulted from interest
income earned on  undeployed  cash and  investments  and the  capitalization  of
interest  expense,  partially  offset  by  interest  expense  on  our  4%  yield
zero-coupon  convertible  senior  notes and 7 3/8%  senior  notes.  In the first
quarter of fiscal 2000, we  capitalized  approximately  $0.3 million of interest
expense related to the costs of computer software developed for internal use. We
expect to utilize  more of the  undeployed  cash during  fiscal 2000 in order to
fund  anticipated  future  growth.  See "Trends and  Uncertainties"  for factors
relating to management growth and potential fluctuations in operating results.

Income Taxes

Income taxes increased to $47.7 million in the first quarter of fiscal 2000 from
$32.2  million in the fiscal 1999  period.  The increase  was  primarily  due to
increased  income before income taxes,  partially  offset by the lower effective
income tax rate of 32.0% for the first quarter of fiscal 2000 comparing to 33.5%
for the same quarter of fiscal 1999.

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
those  in the  United  States,  primarily  due to the  tax  holiday  granted  to
Solectron's  sites in Malaysia.  The Malaysian tax holiday is effective  through
January  31,  2002,  subject to some

                                       21
<PAGE>

conditions,  including certain levels of research and development  expenditures.
Solectron  has also been  granted  various  tax  holidays  in  China,  which are
effective for various terms and are subject to some conditions.

Cumulative Effect of Change in Accounting Principle

See Note 9 of Notes to Condensed Consolidated Financial Statements.


Liquidity and Capital Resources

Working  capital was $3.0 billion at November 30, 1999  compared to $2.9 billion
at the end of fiscal 1999. During the first  three-month  period of fiscal 2000,
cash, cash equivalents and short-term investments decreased to $1.5 billion from
$1.7 billion which reflects funding for required  investments in working capital
and  capital  expenditures  to  support  sales  growth.  Additionally,  we  used
approximately $38.1 million for acquisitions of additional  manufacturing assets
from Trimble in California,  partial acquisition funding of manufacturing assets
at IBM's Netfinity server  operations in Greenock of Scotland,  and the business
acquisition of NULOGIX in Canada during the first quarter of fiscal 2000.

As we continue to grow, it is expected that we will require  greater  amounts of
working capital to support our operations.  We believe that our current level of
working capital,  together with cash generated from operations and our available
credit  facilities,  will provide  adequate  working capital for the foreseeable
future.  However,  we may need to raise  additional  funds to finance  our rapid
expansion,   including   establishing  new  locations  or  financing  additional
acquisitions.  We cannot assure that such funds, if needed, will be available on
terms acceptable to us or at all.

Inventory   levels   fluctuate   directly   with  the   volume  of   Solectron's
manufacturing. Changes or significant fluctuations in product market demands can
cause  fluctuations in inventory  levels that may result in changes of inventory
turns and  liquidity.  Historically,  we have been able to manage our  inventory
levels for these fluctuations.  However,  should material  fluctuations occur in
product demand,  we could  experience  slower turns and reduced  liquidity.  The
increase in inventory  levels at November 30, 1999 from fiscal year end 1999 was
primarily  due to Y2K  buffer  inventory,  bulk  inventory  buys from  customers
associated  with  acquisitions  and new business,  and  incomplete  kits on hand
awaiting short components.

In the first  quarter  of fiscal  2000,  Solectron  invested  $103.7  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 which was retired or sold.  Expenditures  were also made for the
acquisition  of land and buildings for the Mexico and Romania  sites.  We expect
total capital expenditures in fiscal 1999 to be approximately $500 million.

In addition to working capital as of November 30, 1999,  which includes cash and
cash  equivalents  investments of $436.2  million and short-term  investments of
$1,034.5 million, Solectron has available a $100 million unsecured multicurrency
revolving credit facility which is subject to financial covenants.  We also have
approximately  $115 million in unused  foreign  credit  facilities  of which $20
million is committed credit line.

                                       22
<PAGE>

"Year 2000" Issues

Solectron  developed a  comprehensive  program to address the issues  associated
with  the  programming  code in  existing  computer  systems  as the  year  2000
approached.  The Year 2000 problem was  pervasive  and complex,  since  computer
systems,  manufacturing equipment and industrial control systems would have been
affected in some way by the rollover of the two-digit  year value to 00. Systems
that could not  properly  recognize  such dates could have  generated  erroneous
information  or caused a system to fail. The Year 2000 issue created risk for us
from  unforeseen  problems in our systems and from those of third  parties  with
whom we do business.  Any failure of Solectron's  and/or third parties' computer
systems,  manufacturing  equipment  and  industrial  control  systems could have
materially harmed our ability to conduct business.

To deal with this  issue we formed a  worldwide  task  force and  implemented  a
comprehensive  program to analyze our  internal  systems as well as all external
systems  (including  vendor,  customer and banking  systems)  upon which we were
dependent,  to identify and evaluate any potential  Year 2000 issues.  This task
force met regularly and tracked progress against the program,  and then modified
the program as was needed to help ensure timely completion of all tasks. We were
committed to achieving  Year 2000  compliance;  however,  because a  significant
portion of the potential problem was external to us and therefore outside of our
direct control,  we could not totally give assurance that we would be fully Year
2000 compliant.  In addition,  since full testing of Year 2000 functionality had
to occur in a simulated  environment,  we were not able to test full system Year
2000 interfaces and capabilities prior to the start of the year 2000.

As of November 30, 1999, we had completed an inventory, assessment,  remediation
and testing of internal systems, hardware, software, manufacturing equipment and
embedded  chips in industrial  control  instruments.  While we believed that our
testing  and  evaluation  had been  entirely  comprehensive,  we could  not give
assurance that all systems critical to Year 2000 compliance had been identified,
or that the corrective actions identified would be completely successful.

As of November  30,  1999,  we had  inventoried  every key supplier of goods and
services to us and considered the potential impact of these suppliers being Year
2000  compliant on our customers  and us. Also, we evaluated the key  suppliers'
responses  to  our  mailing  surveys  and  then  audited  those  suppliers.   We
disqualified  potentially  non-compliant  sources and qualified new suppliers as
needed.  We were also involved with various  geographic  Year 2000  consortiums,
with the goal of leveraging contacts and information for commonly used suppliers
and services  such as utility  companies.  We are a founding  member of the High
Tech Consortium (HTC) - Year 2000 & Beyond, which through  collaborative efforts
ensured  that  member  companies  were  addressing  Year  2000  readiness  on  a
coordinated basis. The HTC addressed the risk associated with the interconnected
supply chain.  Detailed  supplier  audits by the HTC's  independent  consultants
began in late March.  In addition,  we completed  the review of EDI linkages and
data transmission for our customers and suppliers.

We developed  contingency  plans for the  replacement  and  re-qualification  of
suppliers,  the creation of certain  buffer stock,  the relocation of production
using our disaster  recovery plans, and the purchase of emergency  generators in
the event of power outages at locations we considered not to be low risk.

                                       23
<PAGE>

We estimate the total cost of  completing  the program to be in the range of $32
million to $36 million.  Of this amount,  approximately  $10 million was for the
replacement  of  capital  equipment,   approximately  half  of  which  comprises
non-compliant  systems that would not otherwise have been replaced at that point
in time. A  significant  portion of these costs was not  incremental  to us, but
rather  represents  the  redeployment  of  existing  resources.   Certain  other
information  technology projects have been delayed due to the focus on Year 2000
issues.  The total  amount  spent on the program in the prior  fiscal year ended
August 31, 1999, was $27 million, of which $18 million principally  pertained to
payroll  costs for  personnel  involved  in the  program  and  costs of  outside
consultants and $9 million  principally  pertained to the replacement of capital
equipment.  The total amount spent for the first quarter ended November 30, 1999
was  $2.9  million  in  expense  plus an  additional  $0.4  million  on  capital
expenditures.  Prior to fiscal 1999, costs of software and hardware applications
incurred  for  Year  2000  compliance  were  not  tracked  separately,  but were
estimated to be in the range of $2 million to $3 million.

Although we experienced no significant  incidents as we passed the 12/31/99 date
and we do not  believe  that this  issue  will have  material  future  costs for
reparations or that there will be any collateral  legal costs,  we cannot assure
such results.


                            Trends and Uncertainties

A majority of our net sales comes from a small number of  customers;  if we lose
any of these customers, our net sales could decline significantly.

A majority of our annual net sales comes from a small  number of our  customers.
Our ten largest customers accounted for 72% of net sales in the first quarter of
fiscal 2000 and 74% of net sales in fiscal  1999.  Since we are  dependent  upon
continued  net  sales  from  our ten  largest  customers,  any  material  delay,
cancellation  or reduction of orders from these or other major  customers  could
cause  our  net  sales  to  decline  significantly.   Some  of  these  customers
individually  account  for more than ten  percent of our  annual  net sales.  We
cannot guarantee that we will be able to retain any of our ten largest customers
or any other  accounts.  In addition,  our customers may  materially  reduce the
level of services  ordered from us at any time.  This could cause a  significant
decline  in our net  sales  and we may not be able to  reduce  the  accompanying
expenses at the same time.

Our long-term contracts do not include minimum purchase requirements.

Although  we have  long-term  contracts  with a few of our  top  ten  customers,
including Ericsson Telecom AB, NCR Corporation and IBM Corporation,  under which
these customers are obligated to obtain services from us, they are not obligated
to purchase any minimum  amount of services.  As a result,  we cannot  guarantee
that we will  receive any net sales from these  contracts.  In  addition,  these
customers with whom we have long-term  contracts may materially reduce the level
of services  ordered at any time. This could cause a significant  decline in our
net sales and we may not be able to reduce our accompanying expenses at the same
time.

                                       24
<PAGE>

Possible  fluctuation of operating  results from quarter to quarter could affect
the market price of our common stock.

Our  quarterly  earnings may  fluctuate in the future due to a number of factors
including the following:

-   Differences in the  profitability of the types of manufacturing  services we
    provide.  For example,  high velocity and low  complexity  systems  assembly
    services have lower gross margins than PCB assembly services;
-   Our ability to maximize the hours of use of our equipment and   facilities
    is dependent on the duration of the production run time for each job and
    customer;
-   The amount of automation  that we can use in the  manufacturing  process for
    cost  reduction  varies  depending  upon the complexity of the product being
    made;
-   Our ability to optimize the ordering of inventory as to timing and amount to
    avoid holding inventory in excess of immediate production; and
-   Fluctuations in demand for our services or the products being manufactured.

Therefore,  our operating  results in the future could be below the expectations
of securities  analysts and investors.  If this occurs,  the market price of our
common stock could be harmed.

We are  dependent  upon the  electronics  industry  which  continually  produces
technologically  advanced  products  with short life  cycles;  Our  inability to
continually  manufacture such products on a cost-effective  basis would harm our
business.

A majority of our net sales is to companies in the electronics  industry,  which
is  subject  to rapid  technological  change and  product  obsolescence.  If our
customers  are  unable to  create  products  that  keep  pace with the  changing
technological environment, our customers' products could become obsolete and the
demand for our services could decline  significantly.  If we are unable to offer
technologically advanced, cost-effective,  quick-response manufacturing services
to  customers,  demand  for our  services  will also  decline.  In  addition,  a
substantial  portion  of our net  sales is  derived  from our  ability  to offer
complete  service  solutions  for  our  customers.  For  example,  if we fail to
maintain  high-quality  design and  engineering  services,  our net sales  would
significantly decline.

We  potentially  bear the  risk of price  increases  associated  with  potential
shortages in the availability of electronics components.

At various  times,  there have been  shortages of components in the  electronics
industry.  One of the services that we perform for many  customers is purchasing
electronics  components used in the manufacturing of the customers' products. As
a result of this service,  we potentially  bear the risk of price  increases for
these components  because we are unable to purchase  components at the same time
as we agree with our customers on the pricing for the components.

Our net sales could decline if our competitors provide comparable  manufacturing
services at a lower cost.

We compete  with  different  contract  manufacturers,  depending  on the type of
service we provide or the geographic locale of our operations. These

                                       25
<PAGE>

competitors  may have greater  manufacturing,  financial,  R&D and/or  marketing
resources  than we have. In addition,  we may not be able to offer prices as low
as some of our  competitors  because  those  competitors  may  have  lower  cost
structures  as a result  of  their  geographic  location  or the  services  they
provide. Our inability to provide comparable or better manufacturing services at
a lower cost than our competitors could cause our net sales to decline.

If we are unable to manage our rapid growth and  assimilate  new operations in a
cost-effective manner, our profitability could decline.

We have experienced rapid growth over the last five fiscal years. Our historical
growth may not continue.  In recent  years,  we have  established  operations in
different places  throughout the world.  For example,  in fiscal 1998, we opened
offices in Taipei,  Taiwan;  Tel Aviv,  Israel;  and  Norrkoping  and Stockholm,
Sweden,  and commenced  manufacturing  operations in  Guadalajara,  Mexico,  and
Timisoara,  Romania.  Also in fiscal 1998, we acquired foreign facilities in Sao
Paulo, Brazil, and Dublin, Ireland. Furthermore,  through acquisitions in fiscal
1998 and 1999,  we  acquired  facilities  in Duluth,  Georgia;  Columbia,  South
Carolina;  and Memphis,  Tennessee,  and enhanced our capabilities in Charlotte,
North  Carolina;  Austin,  Texas;  and  Milpitas,  California.  Also during that
period, we announced a joint venture with Ingram Micro Inc.

During October and November of 1999, we completed the asset acquisition of IBM's
Netfinity  server  operations in Greenock,  Scotland,  and acquired IBM Canada's
NULOGIX Technical Services, Inc. subsidiary in Vaughan, Canada, in its entirety.
Also in October 1999, we signed a definitive agreement with Acer, Inc. (Acer), a
core unit of the Acer Group, the world's third-largest PC manufacturer,  to form
a  strategic  alliance  to provide  global  design,  manufacturing  and  service
solutions for OEM-branded personal computers, servers and workstations.  Also in
November  1999,  we  announced  the signing of memoranda  of  understanding  for
Solectron  to acquire the complex  systems  manufacturing  assets of  Ericsson's
telecommunications  infrastructure equipment operations in Longuenesse,  France,
and  Ostersund,  Sweden.

On  November  30,  1999,   we  completed  the   acquisition   of  SMART  Modular
Technologies,  Inc. On January 5, 2000,  we signed a letter of intent to acquire
Alcatel's manufacturing assets in Aguadilla,  Puerto Rico, and Longview,  Texas.
On January 6, 2000,  we signed a letter of intent to acquire  tbe  manufacturing
assets of Premisys  Communications,  Inc.,  a wholly owned  subsidiary  of Zhone
Technologies, Inc.

As we manage and  continue to expand new  operations,  we may incur  substantial
infrastructure and working capital costs. If we do not achieve sufficient growth
to offset increased expenses associated with rapid expansion,  our profitability
will decline.

We need to manage integration of our acquisitions to maintain profitability.

In fiscal 1998 and 1999, we completed  acquisitions of manufacturing  assets and
facilities from Ericsson,  NCR, IBM,  Mitsubishi and Trimble  Navigation Limited
and  acquired  all of the  capital  stock of Sequel,  Inc.  We also  continue to
evaluate acquisition  opportunities and may pursue additional  acquisitions over
time. These acquisitions involve risks, including:

                                       26
<PAGE>

-   Integration and management of the operations;
-   Retention of key personnel;
-   Integration of purchasing operations and information systems;
-   Management  of an  increasingly  larger  and  more  geographically
    disparate business;  and
-   Diversion of management's attention from other ongoing business
    concerns.

Our  profitability  will suffer if we are unable to  successfully  integrate and
manage recent  acquisitions,  as well as any future  acquisitions  that we might
pursue,  or if we do not  achieve  sufficient  revenue to offset  the  increased
expenses associated with these acquisitions.

Our international  sales are a significant and growing portion of our net sales;
we are increasingly exposed to risks associated with operating internationally.

In fiscal  1999,  approximately  36% of our net sales  came from  outside of the
United States.  As a result of our foreign sales and facilities,  our operations
are subject to a variety of risks that are unique to  international  operations,
including the following:

-   Adverse movement of foreign currencies against the U.S. dollar in
    which our results are reported;
-   Import and export duties, and value-added taxes;
-   Import and export regulation changes that could erode our profit margins
    or restrict exports;
-   Potential restrictions on the transfer of funds;
-   Inflexible  employee contracts in the event of business  downturns;
    and
-   The burden and cost of compliance with foreign laws.

In addition,  we have  operations in several  locations  that have  inflationary
economies or potentially volatile currencies, including Guadalajara, Mexico; Sao
Paulo,  Brazil;  Suzhou,  China; and Timisoara,  Romania.  In the future,  these
factors may harm our results of  operations.  Markets in Southeast  Asia,  Latin
America  and Eastern  Europe  have  recently  experienced  and are  experiencing
currency,  economic and  political  instability.  As of November  30,  1999,  we
recorded $103.2 million in cumulative foreign exchange translation losses on our
balance  sheet  which  were  primarily  the  result  of the  devaluation  of the
Brazilian real. While, to date, these factors have not had a significant adverse
impact on our  results of  operations,  we cannot  assure that there will not be
such an impact. Furthermore, while we may adopt measures to reduce the impact of
losses  resulting  from volatile  currencies  and other risks of doing  business
abroad, we cannot assure that such measures will be adequate.

The Malaysian government adopted currency exchange controls,  including controls
on its currency,  the ringgit,  held outside  Malaysia,  and established a fixed
exchange rate for the ringgit against the U.S.  dollar.  The fixed exchange rate
provides a stable rate environment when applied to local expenses denominated in
ringgit. The long-term impact of such controls is not predictable due to dynamic
economic conditions that also affect or are affected by other regional or global
economies.

We have been granted a tax holiday which is effective  through January 31, 2002,
subject to some  conditions,  for our Malaysian sites. We have also been granted
various tax  holidays in China.  These tax holidays  are  effective  for various
terms and are subject to some  conditions.  It is possible  that the current tax
holidays  will be  terminated  or  modified  or

                                       27
<PAGE>

that future tax holidays  that  Solectron  may seek will not be granted.  If the
current tax holidays are  terminated or modified,  or if additional tax holidays
are not  granted  in the  future,  Solectron's  effective  income tax rate would
likely increase.

We are exposed to fluctuations in the exchange rates of foreign currency.

We do not use derivative  financial  instruments for speculative  purposes.  Our
policy is to hedge our foreign  currency  denominated  transactions  in a manner
that  substantially  offsets the effects of changes in foreign currency exchange
rates.  Presently,  we use foreign  currency  borrowings  and  foreign  currency
forward contracts to hedge only those currency exposures associated with certain
assets and liabilities  denominated in nonfunctional  currencies.  Corresponding
gains and losses on the underlying  transaction  generally  offset the gains and
losses on these foreign currency hedges.

As of November 30, 1999,  all of the foreign  currency  hedging  contracts  were
scheduled  to mature in less  than  three  months  and  there  were no  material
deferred  gains or losses.  In addition,  our  international  operations in some
instances act as a natural hedge because both  operating  expenses and a portion
of sales are denominated in local currency.  In these  instances,  including our
current experience  involving the devaluation of the Brazilian real, 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.  However,  because less than
10% of net sales are denominated in currencies other than the U.S. dollar, we do
not believe our total exposure to be significant.

Fluctuations in the rate of exchange  between the U.S. dollar and the currencies
of countries  other than the U.S. in which we conduct  business could  seriously
harm our business,  operating results and financial  condition.  For example, if
there is an increase in the rate at which a foreign  currency is  exchanged  for
U.S. dollars,  it will require more of the foreign currency to equal a specified
amount of U.S.  dollars than before the rate increase.  In such cases, and if we
price our products and services in the foreign currency, we will receive less in
U.S. dollars than we did before the rate increase went into effect.  If we price
our products and services in U.S.  dollars and competitors  price their products
in local currency, an increase in the relative strength of the U.S. dollar could
result in our prices being uncompetitive in markets where business is transacted
in the local currency.

We have a task force which  evaluates  the effect of the Euro  conversion  on us
from many  perspectives.  We  continue  to evaluate  our tax  positions  and all
outstanding contracts in currencies of the participating  countries to determine
the  effects,  if any,  of the Euro  conversion.  It is  possible  that the Euro
conversion  could  significantly  harm our results of  operations  and financial
position due to competitive and other factors relating to the conversion that we
cannot predict.

We are exposed to fluctuations in interest rates.

The primary  objective of our  investment  activities is to preserve  principal,
while at the same time, maximize yields without  significantly  increasing risk.
To achieve this  objective,  we maintain our portfolio of cash  equivalents  and
short-term investments in a variety of securities, including both government and
corporate  obligations,  certificates  of

                                       28
<PAGE>

deposit and money market funds.  As of November 30, 1999,  approximately  63% of
our total portfolio was scheduled to mature in less than six months.

We have  entered  into an interest  rate swap  transaction  under which we pay a
fixed rate of interest  hedging  against the variable  interest rates charged by
the lessor for the facility  lease at Milpitas,  California.  The interest  rate
swap expires in the year 2002,  which  coincides  with the maturity  date of the
lease term. As we intend to hold the interest rate swap until the maturity date,
we are not subject to market risk.  In fact,  such  interest rate swap has fixed
the interest rate for the facility lease, thus reducing interest rate risk.

Solectron's  debt  instruments are subject to fixed interest rates. In addition,
the amount of principal  to be repaid at maturity is also fixed.  In the case of
the  convertible  notes,  such notes are based on fixed  conversion  ratios into
common  stock.  Therefore,  we are not  subject  to  market  risk  from our debt
instruments.

We may not be able to adequately  protect or enforce our  intellectual  property
rights; and we could become involved in intellectual property disputes.

Our ability to effectively compete may be affected by our ability to protect our
proprietary  information.  We hold a number of patents and other license rights.
These patent and license  rights may not provide  meaningful  protection for our
manufacturing  processes and equipment innovations.  On June 23, 1999, Solectron
was served, along with 87 other companies including SMART Modular  Technologies,
Inc., as a defendant in a lawsuit brought by the Lemelson  Medical,  Education &
Research Foundation. The lawsuit alleges that Solectron has infringed certain of
the  plaintiff's  patents  relating to machine  vision and bar-code  technology.
Solectron believes it has meritorious defenses to these allegations and does not
expect that this  litigation  will result in a material  impact on its financial
condition  or results of  operations.  In the future,  third  parties may assert
infringement  claims  against  Solectron  or its  customers.  In the event of an
infringement claim, we may be required to spend a significant amount of money to
develop  a  non-infringing  alternative  or to  obtain  licenses.  We may not be
successful  in  developing  such  an  alternative  or  obtaining  a  license  on
reasonable  terms, if at all. In addition,  any such litigation could be lengthy
and costly and could harm our financial condition.

Failure to comply with environmental regulations could harm our business.

As a company in the electronics  manufacturing services industry, we are subject
to a  variety  of  environmental  regulations  relating  to  the  use,  storage,
discharge  and disposal of  hazardous  chemicals  used during our  manufacturing
process.  Although we have never sustained any  significant  loss as a result of
noncompliance  with  such  regulations,   any  failure  by  us  to  comply  with
environmental laws and regulations could result in liabilities or the suspension
of  production.  In  addition,  these laws and  regulations  could  restrict our
ability to expand our  facilities or require us to acquire  costly  equipment or
incur other significant costs to comply with regulations.

Our stock price may be volatile due to factors outside of our control.

Our stock price could fluctuate due to the following factors, among others:

                                       29
<PAGE>

- Announcements of operating results and business conditions by our customers;
- Announcements  by our  competitors  relating to new  customers or
  technological innovation or new services;
- Economic  developments in the electronics industry as a whole;
- Political and economic  developments in countries in which we have
  operations;  and
- General market conditions.

Failure  to  retain  key  personnel  and  skilled   associates  could  hurt  our
operations.

Our continued  success  depends to a large extent upon the efforts and abilities
of key managerial and technical associates. Losing the services of key personnel
could harm us. Our business also depends upon our ability to continue to attract
and retain senior managers and skilled  associates.  Failure to do so could harm
our operations.

Year 2000 problems may have an adverse  effect on our  operations and ability to
offer products and services without interruption.

The Year 2000 issue was a result of computer  programs  being  written using two
digits rather than four to define the applicable  year.  Computer  programs that
had this date-sensitive  software could have recognized a date using "00" as the
year 1900 rather than the year 2000. This could have resulted in system failures
or  miscalculations  causing  disruptions of operations  including,  among other
things,  a temporary  inability to process  transactions,  send invoices,  order
materials or otherwise  engage in normal business  activities.  While we believe
the Year  2000  issue  has  been  successfully  addressed  we are  still  highly
dependent on computer systems.

A key to our ability to successfully manage our operations is the responsiveness
of the supply chain for electronics  components.  Whether for issues such as Y2K
or others,  the supply chain is dependent on processes that are often controlled
by computer  systems which could fail.  While  Solectron  controls some of these
systems, our vendors, our customers,  transportation companies and other service
providers that are outside of Solectron's control operate some of these computer
systems,  as well. If any of these computer systems failed,  for any reason,  it
could delay our receipt of previously ordered  electronics  components,  thereby
causing us to delay,  cancel or modify  orders from our  customers,  which could
harm our  business.  Although  we have now  passed  the  12/31/99  date  without
incident or disruptions thus far, we cannot give assurance that disruptions will
not occur in the days and months ahead.

Our  anti-takeover  defense  provisions  may deter  potential  acquirors and may
depress our stock price.

Our certificate of incorporation  and bylaws contain  provisions that could have
the  effect of making it more  difficult  for a third  party to  acquire,  or of
discouraging  a third party from  attempting  to acquire,  control of Solectron.
These  provisions  allow us to issue preferred stock with rights senior to those
of our common stock and impose various  procedural and other  requirements  that
could make it more difficult for our  stockholders  to effect certain  corporate
actions.

                                       30

<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Management's  Discussion and Analysis of Financial  Condition and Results of
Operations for factors  related to fluctuations in the exchange rates of foreign
currency and fluctuations in interest rates under "Trend and Uncertainties."


                                       31
<PAGE>


SOLECTRON CORPORATION AND SUBSIDIARIES


Part II. OTHER INFORMATION

Item 1:  Legal Proceedings

         On June 23, 1999,  Solectron was served,  along with 87 other companies
         including SMART Modular Technologies, Inc., as a defendant in a lawsuit
         brought by the Lemelson Medical,  Education & Research Foundation.  The
         lawsuit alleges that Solectron has infringed certain of the plaintiff's
         patents relating to machine vision and bar-code  technology.  Solectron
         believes it has meritorious  defenses to these allegations and does not
         expect that this  litigation  will  result in a material  impact on its
         financial position or results of operations.

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

             27.1  Financial Data Schedule - Three Months Ended
                   November 26, 1999

         (b) Reports on Form 8-K

             On September 17, 1999, Solectron filed a Current Report on Form 8-K
             regarding the  completion  of a definitive  merger  agreement  with
             SMART Modular Technologies.


                                     32

<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: January 7, 2000                By: /s/ Susan Wang
                                     ----------------------
                                     Susan S. Wang
                                     Senior Vice President, Chief
                                     Financial Officer and Secretary
                                     (Principal Financial and
                                     Accounting Officer)



                                       33
<PAGE>




                                  EXHIBIT INDEX

Exhibit Number    Document
--------------    --------
27.1              Financial Data Schedule - Three Months Ended November 26, 1999