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                                                                    EXHIBIT 99.7


                                                                   INITIAL GRANT

                               XETEL CORPORATION
                    NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
                             AUTOMATIC STOCK OPTION


                 Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of XeTel Corporation (the
"Corporation"):

                 Optionee:                                                     
                            ---------------------------------------------------
                 Grant Date: 
                            --------------------------------------------------- 

                 Exercise Price:  $                                    per share
                                    -----------------------------------

                 Number of Option Shares:  15,000 shares

                 Expiration Date:                                              
                                   --------------------------------------------

                 Type of Option:  Non-Statutory Stock Option

                 Date Exercisable:  Immediately Exercisable

                 Vesting Schedule:  The Option Shares shall initially be
                 unvested and subject to repurchase by the Corporation at the
                 Exercise Price paid per share.  Optionee shall acquire a
                 vested interest in, and the Corporation's repurchase right
                 shall accordingly lapse with respect to, the Option Shares in
                 a series of three (3) successive equal annual installments
                 upon Optionee's completion of each year of service as a member
                 of the Corporation's Board of Directors (the "Board") over the
                 three (3)-year period measured from the Grant Date. In no
                 event shall any additional Option Shares vest after Optionee's
                 cessation of Board service.

                 Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the automatic option grant
program under the XeTel Corporation 1997 Stock Incentive Plan (the "Plan").
Optionee further agrees to be bound by the terms of the Plan and the terms of
the Option as set forth in the Automatic Stock Option Agreement attached hereto
as Exhibit A.  A copy of the Plan is available upon request made to the
Corporate Secretary at the Corporation's principal offices.

                 REPURCHASE RIGHT.  OPTIONEE HEREBY AGREES THAT ALL UNVESTED
OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL NOT BE
TRANSFERABLE AND SHALL BE SUBJECT TO REPURCHASE BY THE CORPORATION, AT THE
EXERCISE PRICE PAID PER SHARE, UPON
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OPTIONEE'S TERMINATION OF SERVICE AS A MEMBER OF THE CORPORATION'S BOARD OF
DIRECTORS PRIOR TO VESTING IN THOSE SHARES.  THE TERMS AND CONDITIONS OF SUCH
REPURCHASE RIGHT SHALL BE SPECIFIED IN A STOCK PURCHASE AGREEMENT, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF
THE OPTION EXERCISE.

                 No Impairment of Rights.  Nothing in this Notice or in the
attached Automatic Stock Option Agreement or the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation or the
Corporation's stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.

                 Definitions.  All capitalized terms in this Notice shall have
the meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.

DATED:                                     , 199  
       ------------------------------------     --


                          XETEL CORPORATION


                               
                          By:  
                             -------------------------                  
                      
                          Title:                       
                                ----------------------  
                      
                      
                                                      
                                -----------------------
                                     OPTIONEE
                      
                          Address:                    
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ATTACHMENTS
EXHIBIT A - AUTOMATIC STOCK OPTION AGREEMENT





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