The two plants, one located in Japan's Miyagi prefecture and the other in Taiwan, make car audio and satellite navigation systems as well as lithium-ion battery packs.

Sony said that the plan would allow it to concentrate on its manufacturing know-how on core businesses, such as its PlayStation 2 video game machines."Although manufacturing remains a key part of our business model...we are changing our thinking to a process where we may develop products and some will be built in-house and others will be outsourced separately," Sony president and chief operating officer Kunitake Ando said.

The companies declined to disclose the sales price of the two plants. All 1,300 employees in the Miyagi plant and 750 in Taiwan will be offered continued employment at the facilities.

For Milpitas, California-based Solectron, which provides manufacturing and supply-chain management services to many major high-tech electronics companies, the new pact will help it establish a strong presence in Japan and Taiwan, both important production bases for the global electronics industry.

For example, Solectron makes about 10 per cent of the world's cellular phone handsets for major manufacturers, the company's president and chief executive Koichi Nishimura said.

Under the agreement, the US maker said it will integrate the two factories into its global structure, and also offer its manufacturing services to other customers.

Shares in Sony sagged 4 per cent on Wednesday to close at 9,610 yen, in line with a shaky performance in the Tokyo stock market.