Fifty jobs at Nortel Networks in Monkstown, Northern Ireland, are at risk as the company proposes to outsource PCB assembly operations there and at a facility in Canada to SCI Systems.
SCI is buying some assets and inventory, but not the staff, whose future is part of a consultation process. Production will be moved elsewhere.
A Nortel spokesman said: "The deal does not include the workforce. SCI is not taking over the facility. It will supply us the PCBs but I don't know from where."
The space used for PCB assembly at Monkstown will be taken up by Nortel's remaining 1250 operations and R&D employees. Nortel said it would remain a "centre of excellence" for the integration and testing of metro optical and optical long-haul networking solutions.
There are no specific details available surrounding the consultation process. "It's just beginning, but we will be working with employees and their representatives to minimise any impact," said the Nortel spokesman.
Nortel denied that the move to outsource has been accelerated by the threat of recession in the wake of last week's terrorist actions, and maintained it was the culmination of a plan started in 1999.
The deal value was not disclosed, nor was the extent of savings Nortel could make. But SCI said the deal would raise $400m in revenue in the first year of possession.
Richard Lowe, Nortel's vice-president of global customer and product operations, said: "It is Nortel's intent to no longer manufacture PCBs. Instead, we will further leverage the best-in-class capabilities of contract manufacturers, such as SCI, which will continue to play a key role in our supply chain."
The Canadian deal is expected to close in Q3 or early in Q4, and the European portion is expected to close in Q4.
Nortel said outsourcing will increase manufacturing flexibility through access to 200 production plants around the world.