A WHOLLY-owned unit of MFS Technology has inked a memorandum of understanding (MOU) with Japan-based SIIX Corp to enter into an alliance estimated to generate business activities worth $100 million in FY2005.

To demonstrate commitment on both sides, SIIX, which is listed on the Tokyo and Osaka stock exchanges, will buy $3 million worth of mainboard-listed MFS's shares on the open market over the next 90 days. MFS subsidiary MFS Technology Singapore (MFSS), meanwhile, will likewise buy $3 million worth of SIIX's shares on the open market during the same period.

MFS, a manufacturer of flexible printed circuits (FPCs) and printed circuit boards, called the deal a 'mutually beneficial strategic alliance' between the two parties.

In the deal, SIIX, an electronics manufacturer and supplier, will direct all of its requirements and enquiries for FPCs to MFSS for quotation and supply. SIIX is currently already buying FPCs from MFSS, but only for non-Japanese accounts and for its own consumption. MFSS is also supplying to other Japanese customers.

On its part, MFSS will qualify SIIX as another source for its contract assembly services and will direct its non-customer assigned component requirements and enquiries to SIIX. The two companies will also set the terms of the collaboration in agency agreements.

MFS said the alliance will 'enable MFS to take advantage of SIIX's design capability, its sourcing and procurement capability for components, its distribution and logistics service for customers in Japan, as well as its experience in managing customers in Japan and outside Japan'.

MFS said the global FPC market is about US$5.1 billion, and the Japanese market accounts for about 58.5 per cent of that.

MFS, a subsidiary of mainboard-listed WBL Corp, recently posted net profit of $29.5 million for the nine months ended June 30, 2004, an 85 per cent year-on-year jump. In its Q3 results announcement, the company said it is 'confident that the performance for FY2004 would be significantly higher than the previous year's'. The company's shares gained 5.5 cents yesterday to close at 86.5 cents.