**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 **December 1, 2000****

**[  ]       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 December 29,  2000,  645,530,283  shares of Common Stock of the  Registrant  were
outstanding.







**SOLECTRON CORPORATION
                           Report On Form 10-Q For The
                           Quarter Ended November 30, 2000
                                     INDEX**



|**PART I.   Financial Information**                                                                                                          | **Page No.**
|-------------------------------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                                             |             
|Item 1.   Financial Statements                                                                                                               |             
|                                                                                                                                             |             
|Condensed Consolidated Balance Sheets at
          
         November 30, 2000 and August 31, 2000                                           | 4           
|                                                                                                                                             |             
|Condensed Consolidated Statements of Income
          
         for the three months ended
         November 30, 2000 and 1999               | 5           
|                                                                                                                                             |             
|Condensed Consolidated Statements of Comprehensive Income
          
         for the three months ended
         November 30, 2000 and 1999 | 6           
|                                                                                                                                             |             
|Condensed Consolidated Statements of Cash Flows
          
         for the three months ended
         November 30, 2000 and 1999           | 7           
|                                                                                                                                             |             
|Notes to Condensed Consolidated Financial
         Statements                                                                                | 8 - 13      
|                                                                                                                                             |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                        | 14 - 30     
|                                                                                                                                             |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                                         | 31          
|                                                                                                                                             |             
|**PART II.  Other Information**                                                                                                              |             
|                                                                                                                                             |             
|Item 1.  Legal Proceedings                                                                                                                   | 32          
|                                                                                                                                             |             
|Item 2.  Changes in Securities                                                                                                               | 33          
|                                                                                                                                             |             
|Item 3.  Defaults Upon Senior Securities                                                                                                     | 33          
|                                                                                                                                             |             
|Item 4.  Submission of Matters to a Vote of Security Holders                                                                                 | 33          
|                                                                                                                                             |             
|Item 5.  Other Information                                                                                                                   | 33          
|                                                                                                                                             |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                                                   | 33 - 34     
|                                                                                                                                             |             
|**Signature**                                                                                                                                | 35          

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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)**

`November 30,    August 31,
                                                           2000          2000
                                                       ------------  ------------
                                                       (unaudited)
ASSETS
Current assets:
  Cash, cash equivalents and short-term investments.. $    4,518.7  $    2,434.1
  Accounts receivable, net...........................      2,687.8       2,146.3
  Inventories........................................      4,584.0       3,787.3
  Prepaid expenses and other current assets..........        275.3         260.5
                                                       ------------  ------------
    Total current assets.............................     12,065.8       8,628.2
Net property and equipment...........................      1,240.3       1,080.4
Other assets.........................................        720.4         667.0
                                                       ------------  ------------
Total assets......................................... $   14,026.5  $   10,375.6
                                                       ============  ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt.................................... $      118.5  $       69.2
  Accounts payable...................................      2,961.1       2,694.1
  Accrued employee compensation......................        187.9         179.8
  Accrued expenses...................................        197.6         262.5
  Other current liabilities..........................        475.1          11.2
                                                       ------------  ------------
    Total current liabilities........................      3,940.2       3,216.8
Long-term debt.......................................      4,893.9       3,319.5
Other long-term liabilities..........................         41.1          37.2
                                                       ------------  ------------
    Total liabilities................................      8,875.2       6,573.5
                                                       ------------  ------------
Committments

Stockholders' equity:
  Common stock.......................................          0.6           0.6
  Additional paid-in capital.........................      3,469.2       2,259.1
  Retained earnings..................................      1,845.7       1,656.8
  Accumulated other comprehensive losses.............       (164.2)       (114.4)
                                                       ------------  ------------
     Total stockholders' equity......................      5,151.3       3,802.1
                                                       ------------  ------------
Total liabilities and stockholders' equity........... $   14,026.5  $   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
                                         November 30,
                                      --------------------
                                         2000       1999
                                      ---------  ---------
Net sales........................... $ 5,695.5  $ 2,834.6
Cost of sales.......................   5,210.8    2,557.6
                                      ---------  ---------
Gross profit........................     484.7      277.0
Operating expenses:
  Selling, general and
    administrative..................     190.3      107.0
  Research and development..........      18.0       14.7
                                      ---------  ---------
      Operating income..............     276.4      155.3
Interest income.....................      36.6       23.0
Interest expense....................     (32.7)     (11.6)
                                      ---------  ---------
Income before income taxes
  and cumulative effect of
  change in accounting principle....     280.3      166.7
Income tax expense..................      89.7       53.4
                                      ---------  ---------
Income before cumulative
  effect of change in
  accounting principle..............     190.6      113.3
Cumulative effect of change
  in accounting principle
  for start-up costs, net of
  $1.6 income tax benefit...........        --       (3.5)
                                      ---------  ---------
     Net income..................... $   190.6  $   109.8
                                      =========  =========
Basic net income per share:
 Income before cumulative
  effect of change in
  accounting principle.............. $    0.31  $    0.19
 Cumulative effect of change
  in accounting principle...........        --      (0.01)
                                      ---------  ---------
                                     $    0.31  $    0.18
                                      =========  =========
 Diluted net income per share:
  Income before cumulative
   effect of change in
   accounting principle............. $    0.29  $    0.18
  Cumulative effect of change
   in accounting principle..........        --      (0.01)
                                      ---------  ---------
                                     $    0.29  $    0.17
                                      =========  =========
Shares used to compute
 net income per share:
     Basic..........................     610.3      594.5
                                      =========  =========

     Diluted........................     709.1      621.0
                                      =========  =========`

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
                                         November 30,
                                      --------------------
                                         2000       1999
                                      ---------  ---------
Net income.......................... $   190.6  $   109.8
Other comprehensive income (loss):
 Foreign currency translation
  adjustments, net of income
  tax benefit of $0.3 and $0.4
  for the three months in
  in fiscal 2001 and 2000...........     (44.2)     (17.3)
 Unrealized loss on investments
  and derivatives, net of income
  tax benefit of $1.8 and $0.1
  2001 and 2000.....................      (5.6)      (0.2)
                                      ---------  ---------
Comprehensive income................ $   140.8  $    92.3
                                      =========  =========`

_____________________

Accumulated foreign currency translation losses were $163.9 million at November 30, 2000 and
$119.6 million at August 31, 2000. The foreign currency translation losses for fiscal year 2000
and for the three months ended November 30, 2000 primarily resulted from 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. To
the extent that such amounts relate to investments that are permanent in nature, no adjustment for
income taxes is made. Accumulated unrealized gain (loss) on investments were ($0.4) million at
November 30, 2000, which included $0.8 million related to derivatives and hedging, 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)**

`Three Months Ended
                                                             November 30,
                                                          --------------------
                                                             2000       1999
                                                          ---------  ---------
Cash flows from operating activities:
  Net income............................................ $   190.6  $   109.8
  Adjustments to reconcile net income to net cash
   (used in) provided by operating activities:
     Depreciation and amortization......................      85.2       54.8
     Amortization of debt issuance costs and accretion
      of discount on notes payable........................    27.1        8.0
     Tax benefit associated with the
      exercise of stock options.........................      22.0        7.1
     Cumulative effect of change in accounting
      principle for start-up costs......................       --        (3.5)
     Adjustment to conform fiscal year ends of pooled
      acquisitions......................................       --       (12.2)
     Gain on disposal of property and equipment.........      (2.3)      (1.8)
     Other..............................................      (1.2)      (3.0)
     Changes in operating assets and liabilities:
       Accounts receivable..............................    (557.2)    (137.8)
       Inventories......................................    (822.3)    (407.8)
       Prepaid expenses and other current assets........     (18.2)     (15.0)
       Accounts payable.................................     290.2      234.6
       Accrued expenses and other
        current liabilities.............................     413.4       23.6
                                                          ---------  ---------
     Net cash used in
       operating activities.............................    (372.7)    (143.2)
                                                          ---------  ---------
Cash flows from investing activities:
  Sales and maturities of short-term investments........     419.4      235.3
  Purchases of short-term investments...................    (233.9)    (816.2)
  Acquisition of manufacturing assets and locations.....       --       (38.1)
  Capital expenditures..................................    (248.9)    (113.0)
  Proceeds from sale of property and equipment..........      12.9       35.4
  Other.................................................     (35.9)       1.7
                                                          ---------  ---------
     Net cash used in investing
      activities........................................     (86.4)    (694.9)
                                                          ---------  ---------
Cash flows from financing activities:
  Net proceeds from bank lines of credit................      47.9       22.5
  Net proceeds from long-term debt......................   1,511.3       13.2
  Net proceeds from stock issued under
   option and employee purchase plans...................      23.7       11.4
  Net proceeds from issuance of common stock............   1,164.5        --
  Other.................................................       6.2        --
                                                          ---------  ---------
    Net cash provided by financing
    activities..........................................   2,753.6       47.1
                                                          ---------  ---------
Effect of exchange rate changes on
 cash and cash equivalents..............................     (24.3)     (33.4)
                                                          ---------  ---------
Net increase (decrease) in cash and cash equivalents....   2,270.2     (824.4)
Cash and cash equivalents at beginning of period........   1,475.5    1,428.1
                                                          ---------  ---------
Cash and cash equivalents at
 end of period.......................................... $ 3,745.7  $   603.7
                                                          =========  =========
SUPPLEMENTAL DISCLOSURES
Cash paid during the period:
   Income taxes......................................... $     5.5  $     6.3
   Interest............................................. $    32.2  $    12.5`

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 November 30, 2000, and the related unaudited condensed
consolidated statements of income, comprehensive income and cash flows for the
three months ended November 30, 2000 and 1999, 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 first quarter of fiscal 2001 ended December 1, 2000, its first
quarter of fiscal 2000 ended November 26, 1999 and its 2000 fiscal year ended
August 25, 2000. For clarity of presentation, the Company has indicated its
first fiscal quarters ending November 30, 2000 and 1999, and its fiscal year
ending August 31.

NOTE 2 - Inventories

Inventories consisted of (in millions):

`November 30,   August 31,
                                                   2000         2000
                                               -----------  -----------
          Raw materials...................... $   3,606.5  $   3,043.0
          Work-in-process....................       715.6        558.9
          Finished goods.....................       261.9        185.4
                                               -----------  -----------
          Total.............................. $   4,584.0  $   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-month period ended November 30, 2000 and
1999.

`Three Months Ended
                                        November 30,
                                  ------------------------
                                     2000         1999
                                  -----------  -----------
                                      (in millions, except
                                         per share data)
Income before cumulative
  effect of change in
  accounting principle.......... $     190.6  $     113.3
Cumulative effect of change
  in accounting principle,
  net of income tax benefit.....        --           (3.5)
Interest expense from dilutive
  convertible LYON notes                17.0         --
                                  -----------  -----------
Net income - diluted............ $     207.6  $     109.8
                                  ===========  ===========

Weighted average shares - basic.       610.3        594.5
Common shares issuable upon
  exercise of stock options.....        20.6         26.5
LYON notes converted into
  Solectron common stock........        78.2         --
                                  -----------  -----------
Weighted average shares -
  diluted.......................       709.1        621.0
                                  ===========  ===========

Basic net income per share:
 Income before cumulative
   effect of change in
   accounting principle......... $      0.31  $      0.19
 Cumulative effect of change
   in accounting principle......        --          (0.01)
                                  -----------  -----------
    Net income per share........ $      0.31  $      0.18
                                  ===========  ===========

Diluted net income per share:
 Income before cumulative
   effect of change in
   accounting principle......... $      0.29  $      0.18
 Cumulative effect of change
   in accounting principle......        --          (0.01)
                                  -----------  -----------
     Net income per share....... $      0.29  $      0.17
                                  ===========  ===========`



For the three months ended November 30, 2000 and 1999,
options to purchase 8.1 million and 0.6 million shares, respectively, with
exercise prices greater than the $42.84 and $38.40 respective average fair
market values during these periods, were not included in the calculations
because their effect would have been antidilutive. In addition, the calculation
for the three month period ended November 30, 1999 did not include the 12.4
million common shares issuable upon conversion of the zero-coupon senior notes
as they would have been antidilutive.

NOTE 4 - Commitments

Solectron leases various facilities under operating
lease agreements. The facility leases outstanding at November 30, 2000 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; and Columbia, South Carolina, 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. For these leases,
Solectron is contingently liable under a first loss clause for a decline in
market value of such leased facilities up to 85% of the original costs, or
approximately $178.5 million in total as of November 30, 2000, 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. Under such
agreements, the Company must also maintain compliance with financial covenants
similar to its credit facilities. As of November 30, 2000, 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. Intersegment adjustments were related primarily to
intersegment sales that were generally recorded at prices that approximated
arm's length transactions. Certain corporate expenses were allocated to the
business units 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 business units were
the same as for Solectron taken as a whole.

Segment information by business units for the three months
ended November 30, 2000 and 1999, was as follows:

`Three Months Ended
                                         November 30,
                                   -----------------------
                                      2000         1999
                                   ----------   ----------
                                        (in millions)
Net sales:
 Manufacturing and operations.... $  5,143.2   $  2,473.8
 Technology solutions............      489.4        316.2
 Global services.................       62.9         44.6
                                   ----------   ----------
                                  $  5,695.5   $  2,834.6
                                   ==========   ==========
Depreciation and amortization:
 Manufacturing and operations.... $     75.8   $     40.2
 Technology solutions............        6.7          7.6
 Global services.................        2.7          7.0
                                   ----------   ----------
                                  $     85.2   $     54.8
                                   ==========   ==========
Interest income:
 Manufacturing and operations.... $      2.5   $      2.4
 Technology solutions............        0.7          1.9
 Global services.................       --           --
 Corporate.......................       33.4         18.7
                                   ----------   ----------
                                  $     36.6   $     23.0
                                   ==========   ==========
Interest expense:
 Manufacturing and operations.... $      2.6   $      0.8
 Technology solutions............        0.2          0.4
 Global services.................       --            0.2
 Corporate.......................       29.9         10.2
                                   ----------   ----------
                                  $     32.7   $     11.6
                                   ==========   ==========
Pre-tax income:
 Manufacturing and operations.... $    243.7   $    149.9
 Technology solutions............       26.8         19.1
 Global services.................        8.3          4.9
 Corporate.......................        1.5         (7.2)
                                   ----------   ----------
                                  $    280.3   $    166.7 a
                                   ==========   ==========
Capital expenditures:
 Manufacturing and operations.... $    215.2   $     89.8
 Technology solutions............       11.2          8.7
 Global services.................        2.4          6.2
 Corporate.......................       20.1          8.3
                                   ----------   ----------
                                  $    248.9   $    113.0
                                   ==========   ==========

Geographic net sales:
 United States................... $  2,897.1   $  1,652.0
 Europe..........................    1,128.8        451.0
 Asia Pacific & Other............    1,669.6        731.6
                                   ----------   ----------
                                  $  5,695.5   $  2,834.6
                                   ==========   ==========


                                   November 30,   August 31,
                                       2000         2000
                                   ----------   ----------
                                        (in millions)
Total assets:
 United States................... $  8,830.9   $  6,060.8
 Europe..........................    2,195.0      1,864.8
 Asia Pacific & Other............    3,000.6      2,450.0
                                   ----------   ----------
                                  $ 14,026.5   $ 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. 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 - Pending Acquisitions

In October 2000, Solectron entered into an agreement
with Sony Corporation ("Sony") to acquire certain assets associated with two
Sony manufacturing facilities: Sony Nakaniida Corporation in Miyagi, Japan, and
Sony Industry Taiwan in Kaohsiung, Taiwan. These facilities currently produce
high-end consumer products such as automobile satellite navigation systems, car
audio systems and lithium-ion battery packs. The agreement will result in Sony
outsourcing its electronic manufacturing services to Solectron from these two
facilities. In December 2000, Solectron completed the acquisition of Sony's
facility in Miyagi, Japan. Solectron expects to complete the acquisition of the
Kaohsiung site by the end of January 2001.

On October 31, 2000, Solectron signed a definitive agreement
to commence an offer to purchase all outstanding shares of NatSteel Electronics
Ltd. (NEL). NEL provides global contract manufacturing services for original
equipment manufacturers (OEMs) in the electronics industry. The company
manufactures Printed Circuit Board (PCB) assemblies and provides box-building
capabilities and pre- and post-manufacturing services such as design,
prototyping, testing and logistics. On January 5, 2001, Solectron's tender offer
to acquire all of NEL's shares and bonds closed with tendered shares of 99
percent of the issued share capital of NEL and tendered bonds of 99 percent of
outstanding principal amount of bonds. By exceeding the 90 percent threshold,
Solectron will acquire the remaining shares of NEL through compulsory
acquisition, under Singapore law. Once that step is completed, NEL will become a
wholly owned subsidiary of Solectron and will be de-listed from the Main Board
of the Singapore Stock Exchange.

NOTE 9 - 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 first 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.

Adoption of SFAS No. 133 on September 1, 2000 resulted in
recording the fair value of the swap agreement of approximately of $1.3 million
(net of $0.6 million tax effect) as an asset on the balance sheet with the
corresponding credit to AOCI.







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 Security 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-K, S-3 and S-8. Such risks, uncertainties and changes
in condition, significance, value and effect could cause our actual results to
differ materially from those anticipated events. 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, as well as the
acquisition of NatSteel Electronics Ltd. (NEL). We disclaim any intention or
obligation to update or revise any forward-looking statements, whether 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
                                         November 30,
                                      --------------------
                                         2000       1999
                                      ---------  ---------
Net sales...........................     100.0 %    100.0 %
Cost of sales.......................      91.5       90.2
                                      ---------  ---------
Gross profit........................       8.5        9.8
Operating expenses:
  Selling, general and
    administrative..................       3.3        3.8
  Research and development..........       0.3        0.5
                                      ---------  ---------
      Operating income..............       4.9        5.5
Interest income.....................       0.6        0.8
Interest expense....................      (0.6)      (0.4)
                                      ---------  ---------
Income before income taxes
  and cumulative effect of
  change in accounting principle....       4.9        5.9
Income tax expense..................       1.6        1.9
                                      ---------  ---------
Income before cumulative
  effect of change in
  accounting principle..............       3.3        4.0
Cumulative effect of change
  in accounting principle
  for start-up costs................        --       (0.1)
                                      ---------  ---------
     Net income.....................       3.3 %      3.9 %
                                      =========  =========`



Net Sales

We are organized in three business units including
manufacturing and operations, technology solutions, and global services. Our
core business unit, manufacturing and operations, provided 90.3% of net sales
for the first quarter of fiscal 2001 and 87.3% of net sales for the same period
in fiscal 2000. Our technology solutions unit contributed 8.6% and 11.1%,
respectively, of net sales for the first quarter of fiscal 2001 and 2000. The
global services unit contributed 1.1% and 1.6% of net sales for the first
quarter of fiscal 2001 and 2000, respectively.

Net sales for the first quarter of fiscal 2001 were $5.7
billion, compared with $2.8 billion in the same period of fiscal 2000, an
increase of 100.9%. The growth in sales was primarily attributable to strong
demand from our customers worldwide, major new program ramp-ups and acquisitions
made during fiscal 2000, partially offset by end-of-life products.

Manufacturing and Operations

Net sales from our manufacturing and operations unit
grew to $5.1 billion for the first quarter in fiscal 2001, compared to $2.5
billion in the same period in fiscal 2000, an increase of 107.9%. The increase
was principally due to strong demand growth from networking and
telecommunication customers, and acquisitions. Acquisitions included the
manufacturing assets of seven Nortel Networks sites (Calgary, Canada; Raleigh,
North Carolina; Monterrey, Mexico; Cwmcarn, Wales; Pont de Buis and Douarnenez,
France; Monkstown, Northern Ireland and Istanbul, Turkey); Alcatel's
telecommunications manufacturing business in Liverpool, Australia, by our
Bluegum Group subsidiary; Ericsson's telecommunications infrastructure equipment
operations in Longuenesse, France, and Ostersund, Sweden; manufacturing assets
of Zhone Technologies, Inc. in California; and Alcatel's manufacturing business
in Aguadilla, Puerto Rico.

Within the Americas, net sales increased 76.1% in the first
quarter of fiscal 2001 over the same period of fiscal 2000. The Milpitas,
California, Guadalajara, Mexico and Charlotte, North Carolina sites were the
largest contributors to the increase. The increase was primarily due to strong
demand and new programs from our customers.

In Europe, net sales increased 217.8% in the first quarter of
fiscal 2001 over the same period in fiscal 2000. The increase primarily resulted
from greater demand from our customers in Europe and from the acquisition of
Nortel's manufactuirng sites and Ericsson's telecommunications infrastructure
equipment operations. Our France and former Nortel sites were the major
contributors to the increase.

In Asia, net sales grew 165.2% in the first quarter of fiscal
2001 over the same period of fiscal 2000. The increase was primarily due to
demand growth and new project ramp-up from our customers. Our Penang, Malaysia
and Suzhou, China sites were the material contributors to the increase. Our
acquisition of Bluegum also contributed to the increase.

Technology Solutions

Net sales from our technology solutions unit grew
54.8% to $489.4 million in the first quarter of fiscal 2001 over the same period
of fiscal 2000. The increase in net sales 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 to
$62.9 million in the first quarter of fiscal 2001 from $44.6 million in the same
period of fiscal 2000. The increase of 41.0% was due primarily to stronger
demand and to the acquisitions of Nortel and Bluegum service facilities.

International Sales

Net sales from our international sites, as a
percentage of consolidated net sales, grew to 45.1% in the first quarter of
fiscal 2001 compared to 36.9% in the same period 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.

Major Customers

The following table details major customers and the
percentage of net sales attributed to them.

`Three Months Ended
                                           November 30,
                                       --------------------
                                          2000       1999
                                       ---------  ---------
Ericsson ............................      14.8%     --
Cisco................................      12.7%      10.9%
Nortel ..............................      12.3%     --`



________________

Our top 10 customers accounted for approximately 77.8% and
68.5%, respectively, of consolidated net sales in the first quarters of fiscal
2001 and 2000. We depend on continued revenues from Ericsson, Cisco and Nortel
as well as our other top 10 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 Solectron's results
of operations.

We believe that our ability to grow depends on increasing
sales to existing customers for their current and future products 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 decreased to 8.5% for the first
quarter of fiscal 2001, compared with 9.8% for the same period of fiscal 2000.
Our gross margin continued to be affected by manufacturing inefficiencies due to
higher-than-normal costs associated with the additional manpower required in the
materials management area. In the current quarter, we sustained the improvement
in shipment linearity that we gained in the fourth quarter of prior year. While
the constricted supply of components in the electronics industry began to ease
late in the quarter, we did continue to experience spot shortages of parts
resulting in production control inefficiencies.

For our manufacturing and operations unit, 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 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. Currently, a significant majority of
net sales are derived from the sales of standard memory modules, which typically
have lower profit margins than specialty memory modules.

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 the 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
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 77.9% for the first quarter of
fiscal 2001 over the same period of fiscal 2000. As a percentage of net sales,
SG&A expenses were 3.3% and 3.8%, respectively, for the first quarter in
fiscal 2001 and 2000. The increase in absolute dollars for the first quarter of
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 reflects our on-going effort 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 infrastructure, including marketing, sales, supply-base management and
information systems to support the increasing 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 22.4% in the
first quarter of fiscal 2001 over the same period of fiscal 2000. As a
percentage of net sales, R&D expenses were 0.3% and 0.5%, respectively, for
the first quarter in fiscal 2001 and fiscal 2000. The increase in absolute
dollars in R&D expenses in the first quarter of fiscal 2001 was primarily
due to the technology solution unit's focused efforts to develop and improve its
products. We expect R&D expenses will increase in absolute dollars in the
future and may increase as a percentage of net sales as SMART and Force continue
to invest in their R&D efforts and additional R&D projects are
undertaken at certain sites.

Net Interest Income (Expense)

Net interest income was $3.9 million for the first
quarter of fiscal 2001 compared to net interest income of $11.4 million in the
same period of fiscal 2000. The decrease in net interest income in the first
quarter of fiscal 2001 primarily resulted from a lower average cash balance
during the quarter, since our cash reserve from the prior quarter was deployed
to support business growth. The lower interest rate during the quarter also
contributed to the decrease in interest income. However, the decrease was
partially offset by interest earned on the proceeds received from the 3.25%
zero-coupon convertible senior notes and proceeds received from the issuance of
35 million shares of common stock, which were received only 11 days before the
quarter end.

Income Taxes

For the first quarter of fiscal 2001, income taxes
increased to $89.7 million from $53.4 million in 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 certain levels of research and development expenditures.
Solectron has also been granted various tax holidays in China, that are
effective for various terms and are subject to some conditions.

Cumulative Effect of Change in Accounting Principle

Statement of Position (SOP) 98-5, "Reporting on the
Costs of Start-up Activities." This SOP requires companies to expense all costs
incurred in connection with start-up activities. 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 $8.1 billion at November 30, 2000
compared, to $5.4 billion at the end of fiscal 2000. Cash, cash equivalents and
short-term investments increased to $4.5 billion at November 30, 2000, from $2.4
billion at the end of fiscal 2000. The increase reflected the proceeds of
approximately $1.5 billion from 3.25% yield zero-coupon convertible senior debt
issued in November 2000 and issuance of 35 million shares of common stock for
approximately $1.2 billion, partially offset by inventory purchases, capital
expenditures of $248.9 million and the acquisition of Sony manufacturing assets.

Accounts receivable increased $541.5 million during the first
quarter of fiscal 2001 over the fiscal year end 2000. The increase was due to
growth in total net sales. Inventories increased $796.7 million during the first
quarter of fiscal 2001 over the fiscal year end 2000. The increase in inventory
levels was primarily due to strong business ramp-up programs and certain
customers' requests to plan for higher than normal supply commitment levels.

As of November 30, 2000, 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. This margin was 0.4% at November 30, 2000. Under the
credit agreement, we must meet certain financial covenants. There were no
borrowings outstanding under this line of credit as of November 30, 2000. In
addition, we had approximately $72 million and $197 million, respectively, in
committed and uncommitted foreign lines of credit and other bank facilities as
of November 30, 2000. Borrowings were payable on demand. The interest rates
ranged from the bank's prime lending rate to the bank's prime rate plus 2.0%. As
of November 30, 2000, borrowings and guaranteed amounts under committed and
uncommitted foreign lines of credit were $34 million and $110 million,
respectively. The weighted-average interest rate was 5.5% for committed and 5.3%
for uncommitted foreign lines of credit. 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 November 30, 2000.

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 78% of net
sales in the first quarter of fiscal 2001 and approximately 69% of net sales in
the same period 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 Ericsson, IBM 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 dependent 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.

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.

On October 18, 2000 we signed a definitive agreement to
acquire certain assets associated with two Sony manufacturing facilities, Sony
Nakaniida Corporation in Miyagi, Japan and Sony Industries Taiwan in Kaohsiung,
Taiwan. On October 31, 2000, we signed a definitive agreement to commence an
offer to purchase all outstanding shares of NEL. Our tender offer to acquire all
of NEL's shares and bonds closed on January 5, 2001, with tendered shares of 99
percent of the issued share capital of NEL and tendered bonds of 99 percent of
outstanding principal amount of bonds. By exceeding the 90 percent threshold,
Solectron will acquire the remaining shares of NEL through compulsory
acquisition, under Singapore law. Once that step is completed, NEL will become a
wholly owned subsidiary of Solectron and will be de-listed from the Main Board
of the Singapore Stock Exchange.

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 first quarter of fiscal 2001, approximately 45% of
net sales came from sites outside the United States, while approximately 37% 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 November 30, 2000, we
recorded $163.9 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. In the event the acquisition of NEL is completed, 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 or
otherwise, 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 November 30, 2000, 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 14% of our net sales 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 could result in our prices being
uncompetitive in markets 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 November 30, 2000, approximately 97% 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
November 30, 2000:

|                                            | Expected Maturity     |      
|------------------------------------------- | --------------------- | -----
|                                            | 2001                  | 2002 
|                                            | (amounts in millions)
|Cash equivalents and short-term investments | $3,876.4              | $ 9.7
|Average interest rate                       | 6.48%                 | 6.64%

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 fact, 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 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.

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 on pages 27 - 28 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 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 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.

> On June 23, 1999, Solectron was 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 Solectron
> and SMART have infringed certain of the plaintiff's patents relating to machine
> vision and bar-code technology.

> 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

> None

Item 3: Defaults upon Senior Securities

> None

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

The next Annual Meeting of Stockholders of Solectron
Corporation will be held on Thursday, January 18, 2001, at 9 a.m., Pacific
Standard Time, at the Westin Santa Clara, 5101 Great America Parkway, Santa
Clara, California 98054. The following matters will be voted upon at this
meeting:

1. To elect 10 directors to serve for the ensuing year and
until their successors are duly elected and qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock of the
Company from 800 million to 1.6 billion shares.
3. To amend the Company's 1992 Stock Option Plan to increase
the number of shares reserved for issuance thereunder by 20 million shares.
4. To ratify the appointment of KPMG LLP as independent
auditors of the Company for fiscal year ending August 31, 2001.
5. To transact such other business as may properly come
before the meeting or any adjournment thereof.

Item 5: Other Information

> None

Item 6: Exhibits and Reports on Form 8-K

> (a) Exhibits

1.1*	Purchase Agreement dated May 2, 2000 between the
Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

1.2**	Purchase Agreement dated November 14, 2000 between
the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

1.3**	Purchase Agreement dated November 14, 2000 between
the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

4.1*	Supplemental Indenture dated May 8, 2000 between the
Registrant and State Street Bank and Trust Company of California, N.A. as
Trustee.

4.2**	Supplemental Indenture dated November 20, 2000
between the Registrant and State Street Bank and Trust Company of California,
N.A. as Trustee.

Footnotes:

* 	Incorporated by reference to the Exhibits to the
current report on Form 8-K filed May 16, 2000.

> ** 	Incorporated by reference to the Exhibits to the current
> report on Form 8-K filed November 21, 2000.

> (b) Reports on Form 8-K

> On September 6, 2000, Solectron filed a Current Report on Form 8-K
> to include (i) the audited consolidated financial statements of Solectron and
> subsidiaries as of August 31, 1999 and 1998 and for each of the years in the
> three-year period ended August 31, 1999 and (ii) the unaudited condensed
> consolidated financial statements of Solectron and subsidiaries as of May 31,
> 2000 and 1999, and for the nine-month periods ended May 31, 1999 and 1998,
> giving retroactive effect to the acquisitions of AMERICOM and Bluegum, which
> were accounted for as pooling of interests.

> On November 7, 2000, Solectron filed a Current Report on Form 8-K
> updating its guidance on sales and earnings per share for fiscal year 2000 due
> to the Company's announcement that (i) it entered into a joint cooperative
> agreement to acquire two manufacturing facilities from Sony Corporation and to
> provide Sony with manufacturing and supply-chain services and (ii) it intends to
> make a voluntary cash offer to purchase all outstanding common shares of
> NatSteel Electronics, the sixth-largest electronics manufacturing services
> company.

> On November 21, 2000, Solectron filed a Current Report on Form 8-K
> regarding its completion of the sale of its $2,900,000 aggregate principal
> amount of maturity of Liquid Yield Option TM Notes (Zero Coupon-Senior) due
> 2020 under an effective registration statement filed with the Securities and
> Exchange Commission.

> 

---

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)

---

INDEX TO EXHIBITS

Exhibit Number	Description

1.1*	Purchase Agreement dated May 2, 2000 between
the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

1.2**	Purchase Agreement dated November 14, 2000 between
the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

1.3**	Purchase Agreement dated November 14, 2000 between
the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

4.1*	Supplemental Indenture dated May 8, 2000 between the
Registrant and State Street Bank and Trust Company of California, N.A. as
Trustee.

4.2**	Supplemental Indenture dated November 20, 2000
between the Registrant and State Street Bank and Trust Company of California,
N.A. as Trustee.

Footnotes:

* 	Incorporated by reference to the Exhibits to the
current report on Form 8-K filed May 16, 2000.

** 	Incorporated by reference to the Exhibits to the current report on
Form 8-K filed November 21, 2000.



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