BOTHELL — Integrex Inc., which makes electronic components for other firms, will wind down operations and close over the next two months after an Arizona company purchased many of its assets.

Three-Five Systems Inc. of Tempe, Ariz., said Thursday it has hired about 40 employees from Bothell-based Integrex and bought its roster of customers.

Three-Five will immediately begin transferring work from Bothell to its Redmond manufacturing facility, said spokeswoman Elizabeth Sharp.

Another 20 to 25 Integrex employees, as well as some temporary workers, will lose their jobs.

"This was as good an outcome as could have happened," said Alan Fuhrman, president of Integrex.

Terms of the deal were not released, but Three-Five said it gave Integrex a one-time payment and agreed to make future payments based on sales revenue.

The fact that a majority of the employees in Bothell will be able to join Three-Five was an important consideration in the acquisition. The Redmond facility belonged to ETMA until December 2002, when Three-Five bought out that company as well.

Three-Five will not take over Integrex’ leased facility in Canyon Park. Fuhrman said much of the equipment there is leased, while what remains of Integrex’s assets will be sold.

Founded in 1999, Integrex got its initial investment from Benaroya Capital, Fluke Venture Partners and Sunrise Capital. The privately held firm made a profit during its first years by specializing in printed circuit board assembly.

But then the technology sector slumped. Since then, the company has struggled.

Recently, however, Integrex won a large military-related job. It was so big, in fact, that it couldn’t handle the whole job, which was one of the reasons Integrex began looking for a larger partner, Fuhrman said.

Three-Five, meanwhile, wants to establish a dominant position in the region’s electronics manufacturing sector. Sharp said that accounts for its two purchases in Washington state during the past 15 months.

"Washington is pretty key for us," she said.

Many firms specializing in electronics manufacturing services have not fared well in recent years, thanks to lower technology spending and offshore competition. In Bothell, Wisconsin-based Plexus Corp. laid off more than 150 employees last year as it consolidated its local operations from two buildings into one.

Fuhrman, who will leave the business after Three-Five completes its takeover, said the industry could see more consolidation.

"The small electronics manufacturing services companies that don’t have off-shore manufacturing will continue to have problems," he said.

In addition to the plant in Redmond, Three-Five has large manufacturing centers in China, Malaysia and the Philippines, Sharp said.

A publicly held company traded on the New York Stock Exchange, Three-Five reported sales of $159 million last year.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.