Interlacing equipment (120) may be used to form fabric (12) and to create a gap (66) in the fabric. The fabric may include one or more conductive strands (80c). An insertion tool (54) may be used to align an electrical component (26) with the conductive strands (80c) during interlacing operations. A soldering tool may be used to remove insulation from the conductive strands to expose conductive segments on the conductive strands. The soldering tool may be used to solder the conductive segments to the electrical component (26). The solder connections (82) may be located in grooves (50) in the electrical component. An encapsulation tool may dispense encapsulation material (260) in the grooves to encapsulate the solder connections. After the electrical component (26) is electrically connected to the conductive strands (80c), the insertion tool (54) may position and release the electrical component in the gap. A component retention tool (220) may temporarily be used to retain the electrical component (26) in the gap as interlacing operations continue.