Compaq Computer Corporation and Subsidiaries - Page 10




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          business with Automated Assembly of Singapore (AAS), purchasing             
          through hole PCA's.  AAS did not, however, meet Compaq U.S.                 
          quality expectations and was not responsive to Compaq U.S.                  
          production demands.  Accordingly, petitioner fired AAS in                   
          February 1985.  Compaq U.S. attempted a similar cost savings                
          effort in 1984 using Bolnar, an unrelated international                     
          purchasing organization, but this business relationship was also            
          unsuccessful.                                                               
               Based on these two unsuccessful attempts to access lower               
          material costs, Compaq U.S. opened Compaq Asia in Singapore in              
          1986.  Compaq Asia was organized under the laws of Singapore and,           
          during all relevant years, was a wholly controlled subsidiary of            
          Compaq U.S.  Compaq Asia was primarily a PCA subcontractor,                 
          manufacturing all types of PCA's to Compaq U.S. specifications.             
          Compaq Asia shipped its first PCA's in 1987 and, overall, was               
          successful in achieving worldwide material cost savings for                 
          Compaq U.S.                                                                 
               The Compaq Asia factory was substantially similar to Compaq            
          U.S. from the architecture of the plant to the makes and models             
          of the machines on the production floors.  Specifically, Compaq             
          Asia used the same Fuji vision centering pick-and-place                     
          equipment, GenRad test equipment, screen printers, and reflow               
          ovens used by Compaq U.S.  In addition, Compaq Asia utilized many           
          of the same manufacturing processes used by Compaq U.S.,                    





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