**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

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**FORM 10-Q**

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(MARK ONE)

**[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended **March 2, 2001****

**[  ]       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 of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**777 Gibraltar DriveMilpitas, California     95035**(Address of principal executive offices including zip code)

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







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 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 April 10, 2001,  653,250,246  shares of Common Stock of the  Registrant  were
outstanding.







**SOLECTRON CORPORATION
                           Report On Form 10-Q For The
                           Quarter Ended February 28, 2001
                                     INDEX**



|**PART I.   Financial Information**                                                                                                                                      | **Page No.**
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------
|                                                                                                                                                                         |             
|Item 1.   Financial Statements                                                                                                                                           |             
|                                                                                                                                                                         |             
|Condensed Consolidated Balance Sheets at
          
         February 28, 2001 and August 31, 2000                                                                       | 3           
|                                                                                                                                                                         |             
|Condensed Consolidated Statements of Income
          
         for the three months and six months ended
         February 28, 2001 and February 29, 2000               | 4           
|                                                                                                                                                                         |             
|Condensed Consolidated Statements of Comprehensive Income
          
         for the three months and six months ended
         February 28, 2001 and February 29, 2000 | 5           
|                                                                                                                                                                         |             
|Condensed Consolidated Statements of Cash Flows
          
         for the six months ended
         February 28, 2001 and February 29, 2000                            | 6           
|                                                                                                                                                                         |             
|Notes to Condensed Consolidated Financial
         Statements                                                                                                            | 7           
|                                                                                                                                                                         |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                                                    | 14          
|                                                                                                                                                                         |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                                                                     | 32          
|                                                                                                                                                                         |             
|**PART II.  Other Information**                                                                                                                                          |             
|                                                                                                                                                                         |             
|Item 1.  Legal Proceedings                                                                                                                                               | 33          
|                                                                                                                                                                         |             
|Item 2.  Changes in Securities                                                                                                                                           | 34          
|                                                                                                                                                                         |             
|Item 3.  Defaults Upon Senior Securities                                                                                                                                 | 34          
|                                                                                                                                                                         |             
|Item 4.  Submission of Matters to a Vote of Security Holders                                                                                                             | 34          
|                                                                                                                                                                         |             
|Item 5.  Other Information                                                                                                                                               | 34          
|                                                                                                                                                                         |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                                                                               | 35          
|                                                                                                                                                                         |             
|**Signature**                                                                                                                                                            | 36          

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**PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS**

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**SOLECTRON CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                  (In millions)**

`February 28,   August 31,
                                                           2001          2000
                                                       ------------  ------------
                                                       (unaudited)
ASSETS
Current assets:
  Cash, cash equivalents and short-term investments.. $    1,819.1  $    2,434.1
  Accounts receivable, net...........................      3,187.8       2,146.3
  Inventories........................................      4,882.5       3,787.3
  Prepaid expenses and other current assets..........        306.2         260.5
                                                       ------------  ------------
    Total current assets.............................     10,195.6       8,628.2
Net property and equipment...........................      1,564.0       1,080.4
Other assets.........................................        934.0         627.4
Goodwill.............................................      1,911.4          39.6
                                                       ------------  ------------
Total assets......................................... $   14,605.0  $   10,375.6
                                                       ============  ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt.................................... $      355.1  $       69.2
  Accounts payable...................................      2,675.1       2,694.1
  Accrued employee compensation......................        173.4         179.8
  Accrued expenses...................................        275.2         262.5
  Other current liabilities..........................        519.3          11.2
                                                       ------------  ------------
    Total current liabilities........................      3,998.1       3,216.8
Long-term debt.......................................      4,949.1       3,319.5
Other long-term liabilities..........................         68.7          37.2
                                                       ------------  ------------
    Total liabilities................................      9,015.9       6,573.5
                                                       ------------  ------------
Committments

Stockholders' equity:
  Common stock.......................................          0.7           0.6
  Additional paid-in capital.........................      3,769.1       2,259.1
  Retained earnings..................................      1,967.7       1,656.8
  Accumulated other comprehensive losses.............       (148.4)       (114.4)
                                                       ------------  ------------
     Total stockholders' equity......................      5,589.1       3,802.1
                                                       ------------  ------------
Total liabilities and stockholders' equity........... $   14,605.0  $   10,375.6
                                                       ============  ============`

See accompanying notes to condensed consolidated financial statements.

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**SOLECTRON CORPORATION AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                      (In millions, except per share data)

                                   (Unaudited)**

`Three Months Ended           Six Months Ended
                                       February 28,  February 29,  February 28,  February 29,
                                         2001          2000          2001          2000
                                      ------------  ------------  ------------  ------------
Net sales........................... $    5,418.5  $    2,921.7  $   11,114.0  $    5,756.3
Cost of sales.......................      4,930.3       2,641.8      10,141.1       5,199.4
                                      ------------  ------------  ------------  ------------
Gross profit........................        488.2         279.9         972.9         556.9
Operating expenses:
  Selling, general and
    administrative..................        189.1         102.4         377.7         208.1
  Research and development..........         18.3          14.3          36.3          29.0
  Goodwill amortization expense.......       33.8           1.3          35.5           2.6
  Acquisition and
    restructuring costs...............       54.5          26.2          54.5          26.2
                                      ------------  ------------  ------------  ------------
      Operating income..............        192.5         135.7         468.9         291.0
Interest income.....................         36.6          20.4          73.2          43.4
Interest expense....................        (47.1)        (12.3)        (79.8)        (23.9)
                                      ------------  ------------  ------------  ------------
Income before income taxes
  and cumulative effect of
  change in accounting principle....        182.0         143.8         462.3         310.5
Income tax expense..................         60.1          47.1         149.8         100.5
                                      ------------  ------------  ------------  ------------
Income before cumulative
  effect of change in
  accounting principle..............        121.9          96.7         312.5         210.0
Cumulative effect of change
  in accounting principle
  for start-up costs, net of
  $1.6 income tax benefit...........            --            --            --         (3.5)
                                      ------------  ------------  ------------  ------------
     Net income..................... $      121.9  $       96.7  $      312.5  $      206.5
                                      ============  ============  ============  ============
Basic net income per share:
 Income before cumulative
  effect of change in
  accounting principle.............. $       0.19  $       0.16  $       0.50          0.35
 Cumulative effect of change
  in accounting principle...........            --            --            --        (0.01)
                                      ------------  ------------  ------------  ------------
                                     $       0.19  $       0.16  $       0.50          0.34
                                      ============  ============  ============  ============
 Diluted net income per share:
  Income before cumulative
   effect of change in
   accounting principle............. $       0.18  $       0.16  $       0.48          0.34
  Cumulative effect of change
   in accounting principle..........            --            --            --        (0.01)
                                      ------------  ------------  ------------  ------------
                                     $       0.18  $       0.16  $       0.48          0.33
                                      ============  ============  ============  ============
Shares used to compute
 net income per share:
     Basic..........................        648.4         597.5         628.6         596.1
                                      ============  ============  ============  ============

     Diluted........................        664.3         623.5         722.0         622.4
                                      ============  ============  ============  ============`

See accompanying notes to condensed consolidated financial statements.

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**SOLECTRON CORPORATION AND SUBSIDIARIES

                         CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                              (In millions)

                                               (Unaudited)**

`Three Months Ended           Six Months Ended
                                          February 28,  February 29,  February 28,  February 29,
                                            2001          2000          2001          2000
                                         ------------  ------------  ------------  ------------
Net income............................. $      121.9  $       96.7         312.5         206.5
Other comprehensive income (loss):
 Foreign currency translation
  adjustments, net of income
  tax expense of $0.5 and $0.2
  for the three- and  six-month
  periods in fiscal 2001 ..............         15.1           4.5         (29.1)        (12.8)
 Unrealized gain (loss) on investments
  and derivatives, net of income
  tax benefit of $1.0 and $2.8
  for the three- and six-month
  periods in fiscal 2001 ..............          0.9          (0.6)         (4.7)         (0.8)
                                         ------------  ------------  ------------  ------------
Comprehensive income................... $      137.9  $      100.6         278.7         192.9
                                         ============  ============  ============  ============`

_____________________

Accumulated foreign currency translation losses were $148.8
million at February 28, 2001 and $119.6 million at August 31, 2000. The foreign
currency translation losses for fiscal year 2000 and for the six months ended
February 28, 2001 primarily resulted from the unrealized losses on dollar-
denominated debt held by certain foreign subsidiaries. Most of Solectron's
foreign currency translation adjustment amounts relate to investments that are
permanent in nature, no adjustment for income taxes is made.
Accumulated unrealized gain on investments and derivatives
was $0.5 million at February 28, 2001, and $5.2 million at August 31, 2000.





See accompanying notes to condensed consolidated financial
statements.



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**SOLECTRON CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (In millions)

                                   (Unaudited)**

`Six Months Ended
                                                           February 28,   February 29,
                                                             2001           2000
                                                          -----------    -----------
Cash flows from operating activities:
  Net income............................................ $     312.5    $     206.5
  Adjustments to reconcile net income to net cash
   used in operating activities:
     Depreciation and amortization......................       231.2          104.7
     Amortization of debt issuance costs and accretion
      of discount on notes payable......................        71.4           13.5
     Tax benefit associated with the
      exercise of stock options.........................        36.5           22.2
     Cumulative effect of change in accounting
      principle for start-up costs......................           --           3.5
     Adjustment to conform fiscal year ends of pooled
      acquisitions......................................           --         (12.2)
     Loss on disposal of property and equipment.........         5.5           (5.2)
     Other..............................................        13.1            4.2
     Changes in operating assets and liabilities:
       Accounts receivable..............................      (694.3)        (217.3)
       Inventories......................................      (672.5)        (625.9)
       Prepaid expenses and other current assets........       (12.1)         (59.4)
       Accounts payable.................................      (374.7)         271.7
       Accrued expenses and other
        current liabilities.............................       406.7           (3.6)
                                                          -----------    -----------
     Net cash used in
       operating activities.............................      (676.7)        (297.3)
                                                          -----------    -----------
Cash flows from investing activities:
  Sales and maturities of short-term investments........       921.6          547.4
  Purchases of short-term investments...................      (376.6)        (869.8)
  Purchase of NatSteel Electronics Ltd, net of cash acqu    (2,389.5)             --
  Acquisition of manufacturing assets and locations.....       (83.5)         (68.5)
  Capital expenditures..................................      (414.6)        (196.0)
  Proceeds from sale of property and equipment..........        74.5           61.7
  Other.................................................      (157.3)          (9.8)
                                                          -----------    -----------
     Net cash used in investing
      activities........................................    (2,425.4)        (535.0)
                                                          -----------    -----------
Cash flows from financing activities:
  Net proceeds from bank lines of credit................        99.1           27.7
  Repayment of borrowings under bank lines of credit....       (66.8)             --
  Net proceeds from long-term debt......................     1,535.5           24.7
  Principal payments on long-term debt..................        (5.3)             --
  Net proceeds from stock issued under
   option and employee purchase plans...................        44.6           30.2
  Net proceeds from issuance of common stock............     1,429.0           17.8
  Other.................................................        12.6            5.8
                                                          -----------    -----------
    Net cash provided by financing
    activities..........................................     3,048.7          106.2
                                                          -----------    -----------
Effect of exchange rate changes on
 cash and cash equivalents..............................       (16.5)          (8.3)
                                                          -----------    -----------
Net decrease in cash and cash equivalents...............       (69.9)        (734.4)
Cash and cash equivalents at beginning of period........     1,475.5        1,428.1
                                                          -----------    -----------
Cash and cash equivalents at
 end of period.......................................... $   1,405.6    $     693.7
                                                          ===========    ===========
SUPPLEMENTAL DISCLOSURES
Cash paid during the period:
   Income taxes......................................... $     130.4    $      64.1
   Interest............................................. $      11.0    $       6.5`

See accompanying notes to condensed consolidated financial statements.

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**SOLECTRON CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements**
**NOTE 1 - Basis of Presentation**

The accompanying unaudited condensed consolidated balance
sheet as of February 28, 2001, and the related unaudited condensed consolidated
statements of income, comprehensive income and cash flows for the three- and
six-months ended February 28, 2001 and February 29, 2000, 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 condensed consolidated balance sheet as of August 31, 2000 was
derived from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles.  These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended August
31, 2000, included in the Company's Annual Report to Stockholders.



The Company's second quarter of fiscal 2001 ended March 2,
2001, its second quarter of fiscal 2000 ended February 25, 2000 and its 2000
fiscal year ended August 25, 2000. For clarity of presentation, the Company has
indicated its second fiscal quarters as having ended February 28, 2001 and
February 29, 2000, and its fiscal year ended August 31, 2000.

NOTE 2 - Inventories

Inventories consisted of (in millions):

`February 28,  August 31,
                                                     2001         2000
                                                 -----------  -----------
          Raw materials........................ $   3,731.8  $   3,043.0
          Work-in-process......................       642.0        558.9
          Finished goods.......................       508.7        185.4
                                                 -----------  -----------
          Total................................ $   4,882.5  $   3,787.3
                                                 ===========  ===========`

NOTE 3 - Net Income Per Share

The following table sets forth the computation of
basic and diluted net income per share for the three- and six-month periods
ended February 28, 2001 and February 29, 2000.

`Three Months Ended        Six Months Ended
                                          February 28, February 29, February 28, February 29,
                                             2001         2000         2001         2000
                                          -----------  -----------  -----------  -----------
                                                     (in millions, except per share data)

Income before cumulative
  effect of change in
  accounting principle.................. $     121.9  $      96.7 $      312.5 $      210.0
Cumulative effect of change
  in accounting principle,
  net of tax ...........................        --           --           --          (3.50)
Interest expense from convertible
  subordinated notes net of taxes.......        --           --           31.5         --
                                          -----------  -----------  -----------  -----------
Net income - diluted.................... $     121.9  $      96.7 $      344.0 $      206.5
                                          ===========  ===========  ===========  ===========

Weighted average shares - basic.........       648.4        597.5        628.6        596.1
Common shares issuable upon
  exercise of stock options.............        15.9         26.0         19.0         26.3
Common shares issuable upon conversion
  of subordinated notes.................        --           --           74.4         --
                                          -----------  -----------  -----------  -----------
Weighted average shares
  diluted...............................       664.3        623.5        722.0        622.4
                                          ===========  ===========  ===========  ===========

Basic net income per share:
 Income before cumulative
   effect of change in
   accounting principle................. $      0.19  $      0.16 $       0.50 $       0.35
 Cumulative effect of change
   in accounting principle..............        --           --           --          (0.01)
                                          -----------  -----------  -----------  -----------
    Net income per share................ $      0.19  $      0.16 $       0.50 $       0.34
                                          ===========  ===========  ===========  ===========

Diluted net income per share:
 Income before cumulative
   effect of change in
   accounting principle................. $      0.18  $      0.16 $       0.48 $       0.34
 Cumulative effect of change
   in accounting principle..............        --           --           --          (0.01)
                                          -----------  -----------  -----------  -----------
     Net income per share............... $      0.18  $      0.16 $       0.48 $       0.33
                                          ===========  ===========  ===========  ===========`



For the three- and six-month periods ended February
28, 2001, the exercise prices for 14.7 million and 8.4 million options,
respectively, were greater than the average market prices of these options,
which were priced at $33.71 and $38.31, respectively. Consequently, these
options were not included in the calculation because the effect would have been
antidilutive.  For the comparable periods in fiscal 2000, the exercise prices
for 1.3 million option shares for both of these periods were greater than the
average market price of $41.29 and $39.82, respectively, and were not included
in the calculation because the effect would have been antidilutive.

In addition, the calculation for the three- and six-month
periods ended February 28, 2001, did not include the 108.6 million and 18.4
million, respectively, common shares issuable upon conversion of the zero-coupon
senior convertible notes, as the effect would have been antidilutive. For the
comparable periods in fiscal 2000, the calculation did not include the 24.7
million common shares issuable upon conversion of the zero-coupon senior
convertible notes, as the effect would have been antidilutive.

NOTE 4 - Commitments

Solectron leases various facilities under operating lease
agreements. The facility leases outstanding on February 28, 2001 expire at
various dates through 2004. 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 Fremont, Milpitas and San Jose, California; Everett,
Washington; Suwanee, Georgia; Columbia, South Carolina; and Nakaniida, Japan,
provide Solectron with an option at the end of the lease term to either acquire
the property at its original cost or arrange for the property to be acquired. In
the event Solectron does not purchase the properties or reach an agreement with
the lessor to extend the lease at the end of the respective lease terms,
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 $359 million in total as of February 28, 2001. Under such
agreements, the Company must also maintain compliance with financial covenants
similar to its credit facilities.  As of February 28, 2001, Solectron was in
compliance with all of its lease facility financial covenants.

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 accounts for
these leases as operating leases.

NOTE 5 - Segment Information

The Company operates as three strategic business units -
manufacturing and operations, technology solutions, and global services.  Each
business unit 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 resources for the three business
units. Certain corporate expenses were allocated to these operating segments and
were included for performance evaluation.  Some amortization expenses were also
allocated to these business units, but the related intangible assets were not
allocated.  The accounting policies for the segments were the same as for
Solectron taken as a whole.

Segment information by business units and geography for the
three- and six-month periods ended February 28, 2001 and February 29, 2000, was
as follows:

`Three Months Ended            Six Months Ended
                                  February 28,  February 29,    February 28,  February 29
                                     2001          2000            2001          2000
                                 ------------  ------------    ------------  ------------
                                                        (in millions)
Net sales:
 Manufacturing and operations.. $    5,044.7  $    2,518.5    $   10,187.6  $    4,992.2
 Technology solutions..........        298.8         355.8           788.5         672.1
 Global services...............         75.0          47.4           137.9          92.0
                                 ------------  ------------    ------------  ------------
                                $    5,418.5  $    2,921.7    $   11,114.0  $    5,756.3
                                 ============  ============    ============  ============
Depreciation and amortization:
 Manufacturing and operations.. $      135.0  $       40.4    $      210.5  $       80.6
 Technology solutions..........          7.7           6.9            14.6          14.5
 Global services...............          3.3           2.6             6.1           9.6
                                 ------------  ------------    ------------  ------------
                                $      146.0  $       49.9    $      231.2  $      104.7
                                 ============  ============    ============  ============
Interest income:
 Manufacturing and operations.. $        5.1  $        1.5    $        7.7  $        3.9
 Technology solutions..........          0.6           1.2             1.1           3.1
 Global services...............            --            --            0.1             --
 Corporate.....................         30.9          17.7            64.3          36.4
                                 ------------  ------------    ------------  ------------
                                $       36.6  $       20.4    $       73.2  $       43.4
                                 ============  ============    ============  ============
Interest expense:
 Manufacturing and operations.. $        6.5  $        1.5    $        9.1  $        2.3
 Technology solutions..........          0.2           0.2             0.4           0.6
 Global services...............            --          0.2               --          0.4
 Corporate.....................         40.4          10.4            70.3          20.6
                                 ------------  ------------    ------------  ------------
                                $       47.1  $       12.3    $       79.8  $       23.9
                                 ============  ============    ============  ============
Pre-tax income:
 Manufacturing and operations.. $      192.9  $      139.4    $      435.7  $      293.7
 Technology solutions..........         16.0           4.3            42.7          23.9
 Global services...............          8.6           0.4            16.9           5.4
 Corporate.....................        (35.5)         (0.3)          (33.0)        (12.5)
                                 ------------  ------------    ------------  ------------
                                $      182.0  $      143.8 a  $      462.3  $      310.5
                                 ============  ============    ============  ============
Capital expenditures:
 Manufacturing and operations.. $      145.1  $       71.0    $      360.3  $      160.9
 Technology solutions..........          5.8           5.0            17.0          13.8
 Global services...............          5.2           2.0             7.6           8.5
 Corporate.....................          9.6           5.0            29.7          12.8
                                 ------------  ------------    ------------  ------------
                                $      165.7  $       83.0    $      414.6  $      196.0
                                 ============  ============    ============  ============

Geographic net sales:
 North America................. $    2,816.2  $    1,815.9    $    5,713.3  $    3,634.0
 Europe........................        905.0         318.6         2,033.8         618.1
 Asia Pacific & Other..........      1,697.3         787.2         3,366.9       1,504.2
                                 ------------  ------------    ------------  ------------
                                $    5,418.5  $    2,921.7    $   11,114.0  $    5,756.3
                                 ============  ============    ============  ============


                                  February 28,   August 31,
                                     2001          2000
                                 ------------  ------------
                                      (in millions)
Total assets:
 Manufacturing and operations.. $    8,072.0  $    5,303.4
 Technology solutions..........        430.8         500.2
 Global services...............        225.2         222.2
 Corporate.....................      5,877.0       4,349.8
                                 ------------  ------------
                                $   14,605.0  $   10,375.6
                                 ============  ============


                                  February 28,   August 31,
                                     2001          2000
                                 ------------  ------------
                                      (in millions)
Total assets:
 North America................. $    9,423.7  $    6,060.8
 Europe........................      2,491.5       1,864.8
 Asia Pacific & Other..........      2,689.8       2,450.0
                                 ------------  ------------
                                $   14,605.0  $   10,375.6
                                 ============  ============`

a. Excludes $5.1 million pretax charge for cumulative effect of change in
accounting principle for start-up costs.

NOTE 6 - Zero-Coupon Convertible Senior Notes

In November 2000, Solectron issued 2,900,000 zero-coupon
convertible senior notes at an issue price of $524.78 per note, which resulted
in net proceeds to Solectron of approximately $1.5 billion. These notes are
unsecured and unsubordinated indebtedness of Solectron with a maturity value
aggregating $2.9 billion. Solectron will pay no interest prior to maturity. Each
note has a yield of 3.25% with a maturity value of $1,000 on November 20, 2020.
Solectron is amortizing the issue discount using the effective interest method
over the term of the notes. Each note is convertible at any time by the holder
at a conversion rate of 11.7862 shares per note. Holders may require Solectron
to purchase all or a portion of their notes on May 20, 2004, November 20, 2005
and November 20, 2010, at a price of $587.46, $616.57 and $724.42 per note,
respectively, payable in cash or common stock at the option of Solectron. Also,
each holder may require Solectron to repurchase all or a portion of such
holder's notes if a change in control of the Company occurs on or before May 20,
2004. Solectron, at its option, may redeem all or a portion of the notes at any
time on or after May 20, 2004.

NOTE 7 - Stockholders' Equity

In November 2000, Solectron issued 35 million shares of
its common stock at a price of $34.25 per share, less a 98 cent per share
underwriter's discount, resulting in a net per share price of $33.27.  Total net
proceeds after underwriter's discount and issuance costs were approximately
$1.16 billion.

NOTE 8 - Accounting Pronouncements

On September 1, 2000, the Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS No. 137 and No. 138.

Solectron enters into short-term foreign currency forward
contracts and borrowings to hedge only those currency exposures associated with
certain assets and liabilities denominated in non-functional currencies. These
contracts' fair value is recorded on the balance sheet with corresponding
charges or credits to income. The fair value of these short-term foreign
currency forward contracts was not material upon adoption of the standard or at
the end of the second quarter of fiscal 2001.

In addition, the Company periodically hedges variability in
cash flows resulting from fluctuating interest rates. The Company entered into
an interest rate swap agreement with a notional amount of $52 million, maturing
on June 3, 2002, to hedge against varying rental payments associated with an
operating lease that requires payments based on LIBOR. This swap agreement was
designated as a cash flow hedge upon adoption of the standard and the
ineffective portion of the hedge was not material. Accordingly, changes in the
fair value of this interest rate swap designated as a cash flow hedge are
included in Accumulated Other Comprehensive Income (AOCI). These amounts are
subsequently reclassified into rent expense during the period in which the
LIBOR-based lease agreement affects earnings.
At February 28, 2001, the fair value of the swap agreement
was not significant.

NOTE 9 - Acquisitions and Pending Acquisition

During the second quarter of the fiscal 2001, the Company
completed acquisitions of NatSteel Electronics Ltd. (NEL), Sony's manufacturing
facilities in Japan and Taiwan as well as IBM's repair center in the
Netherlands. The Company accounted for these acquisitions using the purchase
method of accounting and did not record any goodwill related to the Sony and IBM
transactions.

In connection with the NEL acquisition, the Company purchased
all of the outstanding issued share capital and convertible bonds of NEL for
approximately $2.3 billion and $122.4 million, respectively.  As a result, the
Company recorded goodwill of approximately $1.9 billion. Goodwill is being
amortized in equal quarterly amounts over a ten-year period. The Company also
recorded acquisition and integration costs of $29.2 million related to the
acquisition of NEL.

`The NEL purchase price was allocated as follows:


  Assets acquired............................ $    1,212.5
  Goodwill...................................      1,923.0
  Liabilities assumed........................       (813.1)
                                               ------------

      Total purchase price................... $    2,322.4
                                               ============`

On January 23, 2001, the Company entered into a definitive
merger agreement with Centennial Technologies, Inc.  According to the terms of
the agreement, Solectron will acquire all of Centennial's outstanding shares in
exchange for Solectron shares. Solectron will also gain design, manufacturing
and marketing capabilities, which include memory module and memory card
solutions based on SRAM and flash technologies for OEMs and end users in
multiple markets such as telecommunications, data communications, mobile
computing and medical markets. Centennial will operate under Solectron's
technology solutions business unit.  This transaction is expected to close
during the third quarter.

NOTE 10 - Restructuring

During the second quarter of the fiscal 2001, the Company
recorded restructuring costs of $25.3 million related to the consolidation of
certain facilities.  These restructuring costs included fixed asset write-offs
of $19.7 million, severance costs of approximately $3.2 million, and other
nonrecurring costs of $2.4 million.  As of February 28, 2001, liabilities
related to these restructuring activities, totaling approximately $4.2 million,
are expected to be paid out within the next twelve months.

NOTE 11 - Subsequent Event

In March 2001, Solectron announced that it was reviewing its
operations in light of the current economic downturn and that it expected to
undertake several measures to restructure the company. The measures, which
include reducing the workforce, consolidating some facilities, relocating
certain capabilities and changing the strategic focus of a number of sites, are
largely intended to align the Company's capacity and infrastructure to
anticipated customer demand as well as rationalize the Company's footprint
world-wide. The Company plans to reduce its workforce and expects to record a
restructuring charge in its third fiscal quarter in connection with these
actions. The restructuring charge will cover costs resulting from the payment of
employee severance, closure of facilities and disposal of equipment, the write-
off of any intangibles related thereto, and any other costs associated with the
restructuring.







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS



Cautionary Statement Regarding Forward-Looking Statements

With the exception of historical facts, the statements
contained in this discussion are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and are subject
to the Safe Harbor provisions created by that statute. 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 that involve
risks and uncertainties. Such statements are based on current expectations and
are subject to risk, uncertainties and changes in condition, significance, value
and effect, including those discussed under the heading Risk Factors within the
section of this report entitled "Item 2," "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and reports filed by Solectron with the Securities and Exchange Commission,
specifically, forms 8-K, 10-Q, 10-K, S-3, S-4 and S-8. Such risks, uncertainties
and changes in condition, significance, value and effect could cause our actual
results to differ materially from our anticipated outcomes. Although we believe
that the assumptions underlying the forward-looking statements are reasonable,
any of the assumptions could prove inaccurate, including, but not limited to,
statements about our future operating results and business plans. We disclaim
any intention or obligation to update or revise any forward-looking statements
as a result of new information, future events or otherwise.

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 "Risk Factors" for additional factors relating to
possible fluctuations of our operating results.

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           Six Months Ended
                                       February 28,  February 29,  February 28,  February 29,
                                      --------------------------  ------------  ------------
                                         2001          2000          2001          2000
                                      ------------  ------------  ------------  ------------
Net sales...........................        100.0 %       100.0 %       100.0 %       100.0 %
Cost of sales.......................         91.0          90.4          91.2          90.3
                                      ------------  ------------  ------------  ------------
Gross profit........................          9.0           9.6           8.8           9.7
Operating expenses:
  Selling, general and
    administrative..................          3.5           3.5           3.4           3.6
  Research and development..........          0.3           0.5           0.3           0.5
  Goodwill amortization expense.....          0.6           0.0           0.3           0.0
  Acquisition and
    restructuring costs...............        1.0           0.9           0.5           0.5
                                      ------------  ------------  ------------  ------------
      Operating income..............          3.6           4.7           4.3           5.1
Interest income.....................          0.7           0.7           0.7           0.8
Interest expense....................         (0.9)         (0.5)         (0.8)         (0.5)
                                      ------------  ------------  ------------  ------------
Income before income taxes
  and cumulative effect of
  change in accounting principle....          3.4           4.9           4.2           5.4
Income tax expense..................          1.1           1.6           1.4           1.8
                                      ------------  ------------  ------------  ------------
Income before cumulative
  effect of change in
  accounting principle..............          2.3           3.3           2.8           3.6
Cumulative effect of change
  in accounting principle
  for start-up costs................            --            --            --            --
                                      ------------  ------------  ------------  ------------
     Net income.....................          2.3 %         3.3 %         2.8 %         3.6 %
                                      ============  ============  ============  ============`

Net Sales

Net sales for the three- and six-month periods of fiscal
2001 grew to $5.4 billion and $11.1 billion, respectively. Net sales increased
85.5% and 93.1%, respectively, over the same periods in fiscal 2000.  The growth
in sales was primarily attributable to higher demand from our networking
equipment and telecommunication equipment customers worldwide, and to the
acquisitions of NEL and Sony manufacturing plants in Nakaniida, Japan and
Kaohsiung, Taiwan (collectively referred to as "Sony Plants") during
the second quarter of fiscal 2001. However, we started to experience an overall
softening of demand toward the end of the second quarter of fiscal 2001.

Our worldwide manufacturing operations business unit,
including the former NEL and Sony Plants, accounted for 93.1% and 91.7% of total
sales, respectively, for the three- and six-month periods of fiscal 2001
compared to 86.2% and 86.7% respectively, for the same periods in fiscal 2000.
Technology solutions unit generated 5.5% and 7.1% of total sales respectively
for the three- and six-month period of fiscal 2001 compared to 12.2% and 11.7%
respectively, for the same periods in fiscal 2000. The global services unit
contributed 1.4% and 1.2% respectively, for the three- and six-month periods of
fiscal 2001 compared to 1.6% for each of the same periods in fiscal 2000.

Manufacturing and Operations

Net sales from our worldwide manufacturing operations
group grew to $5.0 billion and $10.2 billion, respectively, for the three- and
six-month periods in fiscal 2001 compared to $2.5 billion and $5.0 billion for
the corresponding periods in fiscal 2000.  This represented increases of 100.3%
and 104.1% for the three- and six-month periods in fiscal 2001 the comparable
periods of fiscal 2000.  The increase in net sales was principally due to higher
demand growth from our customers and to the acquisitions of NEL and Sony
manufacturing plants during the current fiscal quarter, as well as Nortel sites
during the fourth quarter of fiscal 2000.

Within the Americas, net sales increased 47.3% for the three-
month period ended February 28, 2001 from the corresponding period in the prior
year and 52.0% for the six-month period from the same period in the prior year.
The Solectron plants in California, Texas, Mexico and Charlotte, North Carolina
were the largest contributors primarily due to higher demand from our customers.



In Europe, net sales increased 149.9% and 165.2%,
respectively, in the three- and six-month periods of fiscal 2001 from the
corresponding periods of fiscal 2000. The increase was principally due to higher
demand from our customers and to our acquisition of Ericsson's manufacturing
assets in Ostersund, Sweden ("Ostersund") during the third quarter of
fiscal 2000. Our France and Ostersund sites were the largest contributors to
sales increase in the region.



In Asia Pacific, net sales grew to $891.9 million for the
three-month period ended February 28, 2001 compared to $479.1 million for the
corresponding period of the prior year, and $1.9 billion for the six-month
period for fiscal 2001 compared to $860.8 million for the corresponding period
of the prior year. The increase from the prior year was primarily due to the
ramp-up in production to meet demand growth from our customers. Our Penang site
in Malaysia benefited from the transfer of networking business from Milpitas,
California. Our Penang site in Malyasia and Suzhou site in China as well as NEL
sites were the major contributors to the increase.

Technology Solutions

Net sales from our new technology solutions operations,
including SMART and Force, decreased 16.0% for the three-month period ended
February 28, 2001, and increased 17.3% for the six-month period from the
corresponding periods of fiscal 2000. The decrease in the three-month period
ended February 28, 2001 was principally due to decrease in demand and declines
in average selling prices of memory components. The increase in net sales for
the six-month period was attributable to the increase in the first fiscal
quarter of 2001. The increase in sales in the first fiscal quarter of 2001
primarily resulted from an overall increase in the average memory densities
incorporated into the standard memory products and from stronger sales of
specialty memory modules and embedded computer boards and systems.  The increase
in net sales was partially offset by declines in average selling prices of
memory components.

Global Services

Net sales from our global services unit increased 58.2% and
49.9%, respectively, for the three- and six-month periods of fiscal 2001 over
the corresponding periods in fiscal 2000.  Net sales benefited from stronger
demand as well as the acquisitions of Nortel and Bluegum Group's service
facilities.

International Sales - In the three- and six-month periods of
fiscal 2001, international locations contributed 46.6% and 45.8% respectively,
of consolidated net sales compared to 38.5% and 37.7% for the same periods of
fiscal 2000.  Our international operations are subject to various risks of doing
business abroad. See "Risk Factors" for additional factors relating to
possible fluctuations of our international operating results. While these
dynamics have not materially harmed our results of operations, we cannot ensure
that there will not be such an impact in the future.

Net Sales to Major Customers - Several of our customers
accounted for 10% or more of our net sales in the three- and six-month periods
of fiscal 2001 and 2000.  The following table details these customers and the
percentage of net sales attributed to them.

`Three Months Ended          Six Months Ended
                                 February 28,  February 29,  February 28,   February 29,
                                 ------------  ------------  -------------  ------------
                                    2001          2000          2001           2000
                                 ------------  ------------  -------------  ------------
Cisco..........................         15.2%         11.9%          13.9%         11.4%
Ericsson ......................         13.2%         10.4%          14.0%            --
Nortel ........................         12.0%            --          12.1%            --
Compaq.........................            --         10.0%             --            --`

Our top ten customers accounted for approximately 71% and 74% respectively,
of consolidated net sales in the three- and six-month periods of fiscal 2001
compared to 66% and 67% respectively, for the corresponding periods in fiscal
2000.  We are dependent upon continued revenues from Cisco, Ericsson, Nortel and
Compaq 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. Consequently, any
material decrease in sales to these or other customers could materially harm our
results of operations.

We believe that our ability to grow depends on increasing
sales to existing customers for their current and future product generations, on
successfully attracting new customers and on 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 ensured.  In addition, we cannot ensure that any of our current
customers will continue to utilize our services.  Because of these factors, we
cannot ensure that our historical revenue growth rate will continue.

Gross Profit

The gross margin percentage decreased to 9.0% and 8.8%
respectively, for the three- and six-month periods of fiscal 2001 compared to
9.6% and 9.7% for the corresponding periods of fiscal 2000. The decrease was
primarily attributable to manufacturing inefficiencies due to higher-than-normal
costs associated with the additional manpower required in the materials
management area and underutilization of capacity late in the second quarter. In
the first quarter of fiscal 2001, we sustained the improvement in component
linearity that had gained in the fourth quarter of the prior year. While the
constricted supply of components in the electronics industry began to ease late
in the first quarter, we continued to experience spot shortages of parts
resulting in production control inefficiencies during the first quarter of the
fiscal 2001.

For our worldwide manufacturing operations, we anticipate
that a larger percentage of our sales may be derived from systems-build
projects, which generally yield lower profit margins than PCB assemblies. We
expect most of our technology solutions sales may continue to be derived from
turn-key projects, which typically yield lower profit margins than the
consignment projects.  In addition, factors affecting technology solutions
profit margins include the sales mix of specialty memory modules, standard
memory modules, communication card products and embedded computer modules, as
well as changes in average memory densities used in memory products.

In the foreseeable future, our overall gross margin will
depend primarily on product mix, production efficiencies, utilization of
manufacturing capacity, start-up and integration costs of new and acquired
businesses, percentage of sales derived from systems-build and turn-key
projects, pricing within the electronics industry, component costs, and delivery
linearity, and cost structure at individual sites.   Over time, gross margins at
the individual sites and for Solectron as a whole may continue to fluctuate.
Increases in the systems-build business or turn-key projects, additional costs
associated with new projects, and price erosion within the electronics industry
could harm our gross margin.

In addition, we have 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 net profit growth
and might have a negative impact on our sales and gross margins for the
foreseeable future.  Therefore, we cannot ensure that our 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 84.7% and 81.5% respectively, for the three- and
six-month periods of fiscal 2001 over the corresponding periods of fiscal 2000.
As a percentage of net sales, SG&A expenses were 3.5% for the three-month
period ended February 28, 2001, compared to 3.5% for the corresponding period in
fiscal 2000, and 3.4% for the six-month period in fiscal 2001 compared to 3.6%
for the corresponding period in fiscal 2000.  The increase in absolute dollars
for the first three- and six-month periods in fiscal 2001 primarily resulted
from higher human resource costs, information systems costs, and sales and
marketing costs to support sales growth. The decline as a percentage of net
sales for the six- month period reflected our on-going efforts to manage
operating expenses relative to sales growth and gross margin levels. We
anticipate SG&A expenses will increase in terms of absolute dollars in the
future, and may possibly increase as a percentage of revenue, as we continue to
invest in our infrastructure such as marketing, sales, supply-base management
and information systems to support the increased size and complexity of our
business.

Research and Development Expenses

With the exception of our technology solutions unit, our
research and development (R&D) activities have been focused primarily on
developing prototype and engineering design capabilities, fine pitch
interconnecting technologies (including 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.  Technology
solutions' 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 increased 28.0% and
25.2% respectively, for the three- and six-month periods in fiscal 2001 from the
corresponding periods in fiscal 2000. As a percentage of net sales, R&D
expenses decreased to 0.3% for the three- and six-month periods in fiscal 2001
compared to 0.5% for the same periods in fiscal 2000. The increases in absolute
dollars in the fiscal 2001 periods compared to fiscal 2000 periods was primarily
due to increased R&D effort at SMART and 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 and Force will continue to invest in their R&D efforts and additional
R&D projects are undertaken at certain sites.

Goodwill Amortization Expense

The goodwill amortization expense of $33.8 million primarily
resulted from the NEL acquisition. During the second quarter of fiscal 2001, we
purchased all of the outstanding issued share capital and convertible bonds of
NEL for approximately $2.3 billion and $122.4 million, respectively.  The NEL
acquisition was accounted for under the purchase accounting method and, as a
result, we recorded approximately $1.9 billion of goodwill.  Goodwill will be
amortized in equal quarterly amounts over a ten-year period. Annually and
quarterly goodwill amortization expense are approximately $190.0 million and
$47.5 million, respectively. The quarter ended February 28, 2001 included two
months of the quarterly goodwill amortization due to the timing of the
acquisition.

Acquisition and Restructuring Costs

Acquisition and integration costs of $29.2 million related to
the acquisition of NEL.  Total restructuring costs of $25.3 million related to
the consolidation of certain facilities.  These restructuring costs included
fixed asset write-offs of $19.7 million, severance costs of approximately $3.2
million, and other nonrecurring costs of $2.4 million.  As of February 28, 2001,
liabilities related to these restructuring activities, totaling approximately
$4.2 million, are expected to be paid out within next twelve months.

In March 2001, Solectron announced that it was reviewing its
operations in light of the current economic downturn and that it expected to
undertake several measures to restructure the company. The measures, which
include reducing the workforce, consolidating some facilities, relocating
certain capabilities and changing the strategic focus of a number of sites, are
largely intended to align the Company's capacity and infrastructure to
anticipated customer demand as well as rationalize the Company's footprint
world-wide. The Company plans to reduce its workforce and expects to record a
restructuring charge in its third fiscal quarter in connection with these
actions. The restructuring charge will cover costs resulting from the payment of
employee severance, closure of facilities and disposal of equipment, the write-
off of any intangibles related thereto, and any other costs associated with the
restructuring.

Net Interest Income (Expense)

Net interest expense was $10.5 million for the second quarter
of fiscal 2001 compared to net interest income of $8.1 million for the same
period of fiscal 2000.  For the first half of fiscal 2001, net interest expense
was $6.6 million compared to net interest income of $19.5 million for the
comparable period of fiscal 2000. The net interest expense in the fiscal 2001
periods primarily resulted from our 4.0% yield zero-coupon convertible senior
notes, 2.75% and 3.25% yield zero-coupon convertible senior notes and 7.38%
senior notes partially offset by interest income earned on undeployed cash and
investments. We did not incur any interest expense from 2.75% and 3.25% yield
zero-coupon convertible senior notes in the three- and six-month periods in
fiscal 2000 since these notes were issued subsequently.

Income Taxes

For the first half of fiscal 2001, income taxes increased to
$149.8 million from $100.5 million for the same period of fiscal 2000.  The
increase was primarily due to increased income before income taxes.  In general,
the effective income tax rate is largely a function of the balance between
income from domestic and international operations.  Our international
operations, taken as a whole, have been taxed at a lower rate than those in the
United States, primarily due to a tax holiday granted to our sites in Malaysia.
The Malaysian tax holiday is effective through January 31, 2002, subject to some
conditions, including maintaining certain levels of research and development
expenditures.  We have also been granted various tax holidays in China, that are
effective for various terms and are subject to certain conditions.

Cumulative Effect of Change in Accounting Principle

Statement of Position 98-5, "Reporting on the Costs of Start-
up Activities" requires companies to expense all costs incurred in connection
with start-up activities. We recorded a cumulative effect of change in
accounting principle of $3.5 million, net of $1.6 million tax benefit in the
first quarter of fiscal 2000.

Liquidity and Capital Resources

Net working capital was $6.2 billion at February 28, 2001
compared to $5.4 billion at August 31, 2000. The increase in net working capital
was primarily due to the growth in accounts receivable and inventory
attributable to higher sales. Cash, cash equivalents and short-term investments
decreased to $1.8 billion at February 28, 2001 from $2.4 billion at August 31,
2000.  This change reflected the proceeds of approximately $1.5 billion from the
3.25% yield zero-coupon convertible senior debt issued in November 2000 and the
issuance of 35 million shares of common stock for approximately $1.2 billion,
offset by inventory purchases and investing activities, including the
acquisition of NEL's shares and convertible bonds for approximately $2.4
billion, purchases of manufacturing assets of $83.5 million and capital
expenditures of $414.6 million.

Accounts receivable increased approximately $1.0 billion
during the first half of fiscal 2001 over the fiscal year ended 2000. The
increase was primarily due to growth in total net sales and the acquisition of
NEL. Inventories increased $1.1 billion during the first half of fiscal 2001
over the fiscal year ended 2000. The increase in inventory levels was primarily
due to strong business ramp-up programs, certain customers' requests to plan for
higher than normal supply commitment levels during the first two quarters of
fiscal 2001, and the acquisition of NEL.

As of February 28, 2001, we had available a $100 million
unsecured multicurrency revolving line of credit that expires April 30, 2002.
Borrowings under the credit facility bear interest, at our option, at either the
bank's prime rate, the London interbank offering rate (LIBOR) plus a margin, or
the bank's certificate of deposit (CD) rate plus a margin. The margin under the
LIBOR or CD rate options will vary depending on Solectron's Standard &
Poor's Corporation and/or Moody's Investor Services, Inc. rating for its long-
term senior unsecured debt. Under the credit agreement, we must meet certain
financial covenants. There were no borrowings outstanding under this line of
credit as of February 28, 2001. In addition, we had approximately $200 million
and $686 million, respectively, in committed and uncommitted foreign lines of
credit and other bank facilities as of February 28, 2001. The interest rates
ranged from the bank's prime lending rate to the bank's prime rate plus a
margin. As of February 28, 2001, borrowings and guaranteed amounts under
committed and uncommitted foreign lines of credit were $177 million and $220
million, respectively. Under these lines of credit agreements, we must meet
certain financial covenants.  We were in compliance with all of our line of
credit financial covenants as of February 28, 2001.

We believe that our current cash and cash equivalents, short-
term investments, line of credit and cash generated from operations will satisfy
our expected working capital, capital expenditure, and investment requirements
through at least the next 12 months.





#### 

#### RISK FACTORS



MOST OF OUR NET SALES COMES FROM A SMALL NUMBER OF CUSTOMERS;
IF WE LOSE ANY OF THESE CUSTOMERS, OUR NET SALES COULD DECLINE
SIGNIFICANTLY.



Most of our annual net sales come from a small number of our
customers. Our 10 largest customers accounted for approximately 71% and 74% of
net sales in the three- and six-month periods ended February 28, 2001 and
approximately 66% and 67% of net sales for the corresponding periods of fiscal
2000. Since we depend on continued net sales from our 10 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 10 percent of our annual net sales.
We cannot guarantee that we will be able to retain any of our 10 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. Moreover, our business, financial
condition and results of operations will continue to depend significantly on our
ability to obtain orders from new customers, as well as on the financial
condition and success of our customers. Therefore, any adverse factors affecting
any of our customers or their customers could have a material adverse effect on
our business, financial condition and results of operations.

OUR LONG-TERM CONTRACTS DO NOT INCLUDE MINIMUM PURCHASE
REQUIREMENTS.



Although we have long-term contracts with a few of our top 10
customers, including Cisco, Ericsson and Nortel under which these customers are
obligated to obtain services from us, not all of them are 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, customers which we have
long-term contracts with 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.



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
PCB and systems assembly services have lower gross margins than low-volume,
high-complexity PCB and systems assembly services;



- Our ability to maximize the use of our equipment and
facilities depends on the duration of the production run time for each job and
customer;



- The amount of automation 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
needs;



- Fluctuations in demand for our services or the products
being manufactured;



- Fluctuations in the availability and pricing of
components;



- Timing of expenditures in anticipation of increased
sales;



- Cyclicality in our target markets; and



- Expenses associated with acquisitions.



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 DEPEND UPON THE ELECTRONICS INDUSTRY, WHICH CONTINUALLY
PRODUCES TECHNOLOGICALLY ADVANCED PRODUCTS WITH SHORT LIFE CYCLES; OUR INABILITY
TO CONTINUALLY MANUFACTURE SUCH PRODUCTS' COST EFFECTIVELY WOULD HARM OUR
BUSINESS.



Most of our net sales are 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 would 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.



For our technology solutions business, we have experienced,
and may in the future experience, delays from time to time in the development
and introduction of new products. Moreover, we cannot ensure that we will be
successful in selecting, developing, manufacturing and marketing new products or
enhancements.  We cannot ensure that defects or errors will not be found in our
products after commencement of commercial shipments, which could delay the
market acceptance of those products. The inability to introduce new products or
enhancements could harm our business, financial condition and results of
operations.



WE DEPEND ON A LIMITED OR SOLE SOURCE OF SUPPLIERS FOR
CRITICAL COMPONENTS. THE INABILITY TO OBTAIN SUFFICIENT COMPONENTS AS REQUIRED
WOULD CAUSE SALES REDUCTIONS.



We depend on certain suppliers, including limited and sole
source suppliers, to provide key components used in our products. We have
experienced and may continue to experience delays in component deliveries, which
could cause delays in product shipments and require the redesign of certain
products. Also, for our technology solutions business, we depend on certain
limited or sole source suppliers for critical components used for our memory
module, communications card and embedded computer products. The electronics
industry has experienced in the past, and may experience in the future,
shortages in semiconductor devices, including DRAM, SRAM, flash memory, tantalum
capacitors and other commodities that may be caused by such conditions as
overall market demand surges or supplier production capacity constraints. Except
for certain commodity parts, we generally have no written agreements with our
suppliers. We cannot ensure that we will receive adequate component supplies on
a timely basis in the future. The inability to continue to obtain sufficient
components as required, or to develop alternative sources as required, could
cause delays, disruptions or reductions in product shipments or require product
redesigns, which could damage relationships with current or prospective
customers, thereby causing sales reductions.



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 if we are unable to purchase components at the
pricing level anticipated to support the margins assumed in our agreements with
our customers.



OUR NET SALES COULD DECLINE IF OUR COMPETITORS PROVIDE
COMPARABLE MANUFACTURING SERVICES AND IMPROVED PRODUCTS AT A LOWER COST.



We compete with different contract manufacturers, depending
on the type of service we provide or the location of our operations. The memory
module, communications card and embedded computer subsystem industries are also
intensely competitive. 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. We also expect our competitors to continue to improve the
performance of their current products or services, to reduce their current
products or service sales prices and to introduce new products or services that
may offer greater performance and improved pricing. Any of these could cause a
decline in sales, loss of market acceptance of our products or services, or
profit margin compression.



WE DEPEND ON THE MEMORY MODULE PRODUCT MARKET.



Most of our technology solutions net sales is derived from
memory modular products. The market for these products is characterized by
frequent transitions in which products rapidly incorporate new features and
performance standards. A failure to develop products with required feature sets
or performance standards or a delay as short as a few months in bringing a new
product to market could reduce our net sales which may have a material adverse
effect on our business, financial condition and results of operations. In
addition, the market for semiconductor memory devices has been cyclical. The
industry has experienced significant economic downturns at various times,
characterized by diminished product demand, excess production, and accelerated
erosion of average selling prices. In the past, there have been significant
declines in the prices for DRAM, SRAM and flash memory. Similar occurrences in
the future would reduce our profit.



WE DEPEND ON THE CONTINUING TREND OF OEMs TO
OUTSOURCE.



A substantial factor in our revenue growth is attributable to
the transfer of manufacturing and supply base management activities from our OEM
customers. Future growth depends partially on new outsourcing opportunities. To
the extent that these opportunities are not available, our future growth would
be unfavorably impacted. These outsourcing opportunities may include the
transfer of assets such as facilities, equipment and inventory.



WE ARE EXPOSED TO GENERAL ECONOMIC CONDITIONS



As a result of recent unfavorable economic conditions and
reduced capital spending, our sales have declined in the second quarter compared
to the first quarter of fiscal 2001. In particular, sales to OEMs in the
telecommunications, workstation and server equipment manufacturing industry in
the United States were impacted during the second quarter of fiscal 2001. If the
economic conditions in the United States worsen or if a wider or global economic
slowdown occurs, we may experience a material adverse impact on our business,
operating results, and financial condition.



IF WE ARE UNABLE TO MANAGE OUR RAPID GROWTH AND ASSIMILATE
NEW OPERATIONS COST EFFECTIVELY, OUR PROFITABILITY COULD DECLINE.



We have experienced rapid growth over many years. Our
historical growth may not continue. In recent years we have established
operations throughout the world. For example, in fiscal 1998, we opened offices
in Taipei, Taiwan; Norrkoping and Stockholm, Sweden; and commenced manufacturing
operations in Guadalajara, Mexico; Suzhou, China; and Timisoara, Romania. Also
in fiscal 1998, we acquired facilities in Sao Paulo, Brazil, and Dublin,
Ireland. Furthermore, through acquisitions in fiscal 1998 and 1999, we added
facilities in Columbia, South Carolina; Memphis, Tennessee; and enhanced our
capabilities in Charlotte, North Carolina; Austin, Texas; and Milpitas,
California.



In fiscal 2000, we completed acquisitions of AMERICOM, SMART
and Bluegum Group, each of which was accounted for as a pooling of interests.
Through additional acquisitions, we also acquired facilities in Aguadilla,
Puerto Rico; Monterrey, Mexico; Calgary, Canada; Longuenesse, France; Ostersund,
Sweden; Cwmcarn, Wales; Pont de Buis and Douarnenez, France; Monkstown, Northern
Ireland; and Liverpool, Wangaratta, Melbourne, Sydney and North Melbourne,
Australia.



During the second quarter of fiscal 2001, we completed
acquisitions of NEL, Sony's manufacturing facilities in Japan and Taiwan and
IBM's repair center in the Netherlands.

Our expansion and growth places a heavy strain on our
personnel and management, manufacturing and other resources. Our ability to
manage the expansion to date, as well as any future expansion, will require
progressive increases in manufacturing capacity, enhancements or upgrades of
accounting and other internal management systems, and implementation of various
procedures and controls. We cannot ensure that significant problems in these
areas will not occur. Any failure to enhance or expand these systems and
implement such procedures and controls in an efficient manner and at a pace
consistent with our business activities could harm our financial condition and
results of operations. Also, in order to achieve anticipated revenue and other
financial performance targets, we will continue to be required to manage our
assets and operations efficiently. In addition, should we continue to expand
geographically, we may experience certain inefficiencies from the management of
geographically dispersed facilities.



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 would decline.



WE NEED TO SUCCESSFULLY INTEGRATE OUR ACQUISITIONS TO
MAINTAIN PROFITABILITY.



As we expand our operations through acquisitions and continue
to evaluate acquisition opportunities, we may pursue additional acquisitions
over time. These acquisitions involve risks, including:



- Integration and management of the
operations;



- Retention of key personnel;



- Integration of purchasing operations and information
systems;



- Retention of the customer base of acquired
businesses;



- 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 and pending acquisitions
including, in particular, the NEL transaction, 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 NON-U.S. LOCATIONS REPRESENT A SIGNIFICANT AND GROWING
PORTION OF OUR NET SALES; WE ARE INCREASINGLY EXPOSED TO RISKS ASSOCIATED WITH
OPERATING INTERNATIONALLY.



In the three- and six-month periods of fiscal 2001,
approximately 47% and 46% respectively, of net sales came from sites outside the
United States, while approximately 39% and 38% of net sales came from sites
outside the United States in the same period of fiscal 2000. As a result of our
foreign sales and facilities, our operations are subject to a variety of risks
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 complying with foreign
laws.



In addition, we have operations in several emerging or
developing economies that have a potential for higher risk. The risks associated
with these economies include but are not limited to currency volatility and
other economic or political risks. In the future, these factors may harm our
results of operations. Solectron locations in emerging or developing economies
include Mexico, Brazil, China, Malaysia and Romania. As of February 28, 2001 we
recorded $148.8 million in cumulative foreign exchange translation losses on our
balance sheet, primarily due to 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 ensure 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 ensure
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.



NEL currently benefits from tax holidays in Singapore and
Indonesia. It is possible that the tax holidays will be terminated or modified
or that future tax holidays will not be granted, in each case as a result of the
acquisition transaction, and that the effective income tax rate for NEL's
business would likely increase as a result thereof.



We have been granted a tax holiday 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 that future tax holidays
that we 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, our
effective income tax rate would likely increase.



WE ARE EXPOSED TO FLUCTUATIONS IN FOREIGN CURRENCY
EXCHANGE RATES.



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 non-functional
currencies. Corresponding gains and losses on the underlying transaction
generally offset the gains and losses on these foreign currency hedges.



As of February 28, 2001, the majority 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 would result in lower sales when translated to
U.S. dollars, operating expenses would also be lower in these circumstances.
Also, since less than 13% of our net sales for the six-month period in fiscal
2001 are denominated in currencies other than U.S. dollar, we do not believe our
total exposure is significant.



We have currency exposures arising from both sales and
purchases denominated in currencies other than the functional currency of our
sites. Fluctuations in the rate of exchange between the currency of the exposure
and the functional currency of our site could seriously harm our business,
operating results and financial condition. For example, an increase in the rate
at which a foreign currency is exchanged for U.S. dollars would 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 would 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 would result in our prices being
uncompetitive in market where business is transacted in the local currency.



WE ARE EXPOSED TO INTEREST RATE FLUCTUATIONS.



The primary objective of our investment activities is to
preserve principal and 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 deposit and money
market funds. As of February 28, 2001, approximately 90% of our total portfolio
was scheduled to mature in less than six months. In addition, our investments
are diversified and of relatively short maturity.



The following table presents the amounts of our cash
equivalents and short-term investments that are subject to interest rate risk by
calendar year of expected maturity and weighted average interest rates as of
February 28, 2001:

|                                                   | Expected Maturity     |         
|-------------------------------------------------- | --------------------- | --------
|                                                   | 2001                  | 2002    
|                                                   | (amounts in millions)
|Cash equivalents and short-term
       investments | $988.6                | $  104.9
|Average interest rate                              | 5.60%                 | 6.34%   



We have entered into an interest rate swap transaction under
which we pay a fixed rate of interest hedging against the variable interest
rates implicit in the rent 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 substance, such interest rate swap has fixed the interest rate for the
facility lease, thus reducing interest rate risk.



Our long-term 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 exposed to variable
interest rates related to our long-term 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, we were served, along with 87 other companies including SMART, as a
defendant in a lawsuit brought by the Lemelson Medical, Education & Research
Foundation. The lawsuit alleges that we have infringed certain of the
plaintiff's patents relating to machine vision and bar-code technology. We
believe we have meritorious defenses to these allegations and do not expect this
litigation to materially impact our financial condition or results of
operations. In the semiconductor, computer, telecommunications and networking
industries, companies receive notices from time to time alleging infringement of
patents, copyrights or other intellectual property rights, and litigation
sometimes arises out of such notices. For example, in January of last year,
SMART filed a lawsuit seeking to have declared invalid, and/or not infringed,
three patents purportedly applicable to industry standard memory products,
including those manufactured by SMART and the other manufacturers of these
industry standard memory products.  The owner of these patents brought a cross-
complaint alleging patent infringement against SMART, and has also brought suit
against several other memory product manufacturers alleging infringement of the
three patents.  We believe that SMART's memory products do not infringe any
valid claims of any of the three patents at issue.  Moreover, we have been and
may from time to time continue to be notified of claims that we may be
infringing patents, copyrights or other intellectual property rights owned by
other third parties. The current litigation or any other litigation could result
in substantial costs and diversion of resources and could have a material
adverse effect on our business, financial condition and results of operations.
In the future, third parties may assert infringement claims against us or our
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 processes. Although we have never sustained any significant loss
as a result of non-compliance 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 ADMINISTRATIVE FACILITIES AND PRINCIPAL BUSINESS
OPERATIONS ARE LOCATED IN CALIFORNIA, AND ANY DISTRUPTION IN THE AVAILABLE POWER
SUPPLY IN CALIFORNIA COULD DISRUPT OUR OPERATIONS, REDUCE OUR REVENUES, AND
INCREASE OUR EXPENSE.



The State of California is in the midst of an energy
crisis that could interrupt our power supply or that of the third-party service
providers and thereby disrupt our operations, reduce our revenues, and increase
our expenses. A substantial portion of our operating activities and facilities,
including our headquarter and principal administrative facilities, are located
in California. During acute power shortages, California has implemented, and may
in the future continue to implement, rolling blackouts throughout the state. The
rolling blackouts that have occurred to date have not materially disrupted the
operations of our facilities. Should these blackouts continue or increase in
severity, however, they could materially disrupt the operations of one or more
of our facilities. Although Solectron currently does not have backup generator
or long-term alternate sources of power in the event of a blackout, Solectron
does have some flexibility to shift some manufacturing volume to other
manufacturing sites around the world. If blackouts interrupt our power supply,
we would be temporarily unable to continue operations at our affected
facilities. Our current insurance does not provide coverage for any damages we
or our customers may suffer as a result of any interruption in our power supply.
Consequently, any interruption in our ability to continue operations at our
facilities could damage our reputation, harm our ability to retain existing
customers and to obtain new customers, and could result in lost revenue, any of
which would substantially harm our business and results of operations.



In addition, the utility deregulation program instituted in
1996 by the California government deregulated wholesale prices while continuing
to regulate the retail prices charged by the electrical utilities. While
wholesale prices have increased dramatically, retail prices have, until
recently, not increased at a comparable rate. Our business is substantially
dependent on the availability and price of electricity. If retail electricity
prices rise dramatically, we would expect our expenses to increase, our
operating results to be harmed, and the possible decline of our stock price.



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:



- Announcements of operating results and business
conditions by our

customers;



- Announcements by our competitors relating to new
customers,

technological innovation or new services;



- Economic developments in the electronics industry as a
whole;



- Political and economic developments in countries where we
have

operations; and



- General market conditions.



OUR LOW STOCK PRICE MAY REDUCE OUR DILUTED EARNINGS PER
SHARE



On January 27, 2002, we may become obligated to purchase,
at the option of the Holder, all or a portion of the outstanding 4.0% LYONs at a
price of $510.03 per note ("Purchase Price"). We have the option to
pay the Purchase Price of LYONs in cash or common stock or any combination
thereof. If we elect to pay the Purchase Price, in whole or part, in shares of
our common stock, the number of shares of common stock to be delivered shall
equal the Purchase Price divided by the average of the Sale Prices of the common
stock for the five trading day period ending on the third business day prior to
January 27, 2002. The LYONs are convertible into common stock at a price of
$34.13 per share or 14.944 shares per LYON.  In the event that our stock price
remains below $34.13 per share at January 27, 2002, we may have to issue
additional shares to the Holder. Accordingly, our diluted earnings per share
may be reduced.



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.



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 make it more difficult for a third party to acquire, or
may discourage 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.



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 "Risk Factors."













SOLECTRON CORPORATION AND SUBSIDIARIES



PART II. OTHER INFORMATION



Item 1:  Legal Proceedings

SMART Modular Technologies, Inc. ("SMART"),
a wholly owned subsidiary of Solectron Corporation, and certain of SMART's ex-
officers and ex-directors have been named as defendants in six securities class
action lawsuits filed in the United States District Court for the Northern
District of California, Boren v. SMART Modular Technologies, Inc., et
al., No. C 98 20692 JW (PVT) (filed July 1, 1998), Woszczak v. SMART
Modular Technologies, Inc., et al., No. C 98 2617 JL (filed July 2, 1998),
Bisson v. SMART Modular Technologies, Inc., et al., No. C 98 20714 JF
(filed July 8, 1998), D'Amato v. SMART Modular Technologies, Inc., et
al., No. C 98 2804 PJH (filed July 16, 1998), Cha v. SMART Modular
Technologies, Inc., et al., No. C 98 2833 BZ (filed July 17, 1998) and
Chang v. SMART Modular Technologies, Inc., et al., No. C 98 3151 SI
(filed August 13, 1998) (collectively, the "Federal Actions").  The plaintiffs
in the Federal Actions allege that defendants made material misrepresentations
and omissions during the period from July 1, 1997 through May 21, 1998 in
violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder.  The Federal Actions were consolidated on October 9,
1998, and a consolidated complaint was filed on November 30, 1998 (the "Federal
Complaint"). On November 2, 1999, defendants filed a motion to dismiss the
Federal Complaint. This motion is pending.  On January 26, 2001, the Court
dismissed the Federal Complaint with prejudice.



On October 22, 1998, a putative securities class action
lawsuit, captioned Reagan v. SMART Modular Technologies, Inc., et al.,
Case No. H204162-5 (the "State Complaint"), was filed against SMART and certain
of SMART's ex-officers and ex-directors in the Superior Court of the State of
California, County of Alameda.  The State Complaint alleges violations of
Sections 25400 and 25500 of the California Corporations Code and seeks
unspecified damages on behalf of a purported class of purchasers of SMART common
stock during the period from July 1, 1997 through May 21, 1998.  The factual
allegations of the State Complaint are nearly identical to the factual
allegations contained within the Federal Complaint.  On February 22, 1999, the
Superior Court granted SMART's motion to stay the state action pending
                                                                               resolution of the federal action.  In March 2001, plaintiffs notified defendants
of their intent to have the stay of the state action lifted and to proceed with
the state action.



On February 26, 1999, Solectron was named as a defendant in
the lawsuit Lemelson Medical Education and Research Foundation v. Lucent
Technologies, Inc., et al., No. CIV99-0377, along with 87 other companies
including SMART, filed in the US District for the District of Arizona.  The
lawsuit alleges that Solectron and SMART have infringed certain of the
plaintiff's patents relating to machine vision and bar-code technology.  The
lawsuit, as it pertains to Solectron, has been stayed pending the outcome of two
actions in the state of Arizona, Cognex v. Lemelson and Symbol Technologies
v. Lemelson.  Cognex and Symbol are seeking a declaratory judgement stating
that their machine-read and bar-code technologies, respectively, do not infringe
on Lemelson's patents.



The Company believes that all claims related to the state and
federal securities actions are without merit and intends to defend vigorously
against these actions. The Company also believes it has meritorious defenses to
the patent infringement allegations.  The Company does not expect that all these
allegations will result in a material impact on its financial position or
results of operations.

Item 2:  Changes in Securities



Item 3:  Defaults upon Senior Securities



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

The Company held its Annual Meeting of Stockholders on
January 18, 2001.  At the meeting, the following proposals received the votes
listed below:

`Proposal 1. Election of Directors

                                           For           Withheld       Exceptions
Dr. Koichi Nishimura                    549,201,467       4,631,908         196,222
Dr. Winston Chen                        547,084,572       6,748,803       2,313,117
Richard A. D'Amore                      549,128,072       4,705,303         269,617
Charles A. Dickinson                    546,693,635       7,139,740       2,704,054
Heinz Fridrich                          549,078,217       4,755,158         319,472
Dr. Phillip V. Gerdine                  549,167,565       4,665,810         230,124
William A. Hasler                       549,154,442       4,678,933         243,247
Dr. Kenneth E. Haughton                 548,989,835       4,843,540         407,854
Dr. Paul R. Low                         549,139,103       4,694,272         258,586
Osamu Yamada                            549,107,501       4,725,874         290,188


Proposal 2. Amendment of Certificate of Incorporation

                                           For           Against         Abstain
                                        525,932,648      25,623,599       2,276,798


Proposal 3. Amendment of 1992 Option Plan

                                           For           Against         Abstain
                                        357,217,201     193,120,257       3,021,240


Proposal 4. Ratification of Appointment of KPMG  LLP

                                           For           Against         Abstain
                                        550,426,109         874,654       2,071,935`



Item 5:  Other Information



Item 6:  Exhibits and Reports on Form 8-K

(a) Exhibits



3.1 Amendment of Certificate of Incorporation of the
Company



(b) Reports on Form 8-K



On December 22, 2000, Solectron filed a Current Report on Form 8-K regarding
its fiscal first quarter sales and net income.



On January 3, 2001, Solectron filed a Current Report on Form
8-K regarding the declaration that all the conditions of its cash offers to
purchase outstanding shares and bonds of NatSteel Electronics had been
waived.



On January 10, 2001, Solectron filed a Current Report on Form
8-K regarding its completion of acquisition of NatSteel Electronics.



On March 20, 2001, Solectron filed a Current Report on Form
8-K/A to include the required pro forma financial information gives effect to
the acquisition of NatSteel Electronics and audited financial statements of
NatSteel Electronics.

> 

---

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)



| |     |               
| | --- | --------------
| | By: | /s/ Susan Wang

| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| |                                                                                                  
| | Susan S. Wang                                                                                    
| | Senior Vice President, Chief
                                     Financial Officer and Secretary
| | (Principal Financial and
                                     Accounting Officer)                

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INDEX TO EXHIBITS

|Exhibit Number | Description                                              
|-------------- | ---------------------------------------------------------
|3.1            | Amendment of Certificate of Incorporation
of the Company.

---