The break up between Huawei and its now-former supplier Flex just got uglier. The Chinese telecom giant is reportedly asking Flex to pay compensation for illegally withholding its equipment and production materials for more than a month.
Flex, which is headquartered in California, has two factories in China. Its factory in Zhuhai which solely assembles Huawei products such smartphones and 5G base stations has halted production, according to Chinese news outled Caixin. The company has laid off more than 10,000 people in its Chinese factories.
While the exact amount Huawei thinks its owed after the break up is unknown, people who are familiar with the situation told Reuters and Chinese business news outlet Yicai that the letter Huawei’s lawyer sent to Flex on Monday demanded a sum in the “hundreds of millions of RMB” for the costs incurred over lost income, wasted materials, and equipment replacements. RMB 100 million roughly equals USD 14 million.
Flex stopped working with Huawei in mid-May after the latter was blacklisted by the US government which effectively barred US suppliers from conducting business with the Shenzhen-based company.
Huawei subsequently ceased its contracts with Flex after the latter refused to return about RMB 700 million worth of equipment and production materials.
An unnamed executive of Flex said the company didn’t return Huawei’s equipment and production material because the telecoms giant still owed the firm about RMB 100 million in payments due. “After all, how could our company be so stupid to illegally withhold equipment and materials from our clients,” he said, according to Yicai.