Insiders at Flextronics said they withheld Huawei’s 100 million material payables or shut down Huawei’s business unit.
Recently, it has been reported that Huawei is seeking compensation from its contract manufacturer, Viacom, because it illegally withheld some hundreds of millions of dollars worth of Huawei’s goods after the U.S. government listed Huawei on the so-called “entity list”.
Huawei officials did not respond to the above information, but reporters confirmed the above information from reliable sources.
On Monday (5), Huawei sent a lawyer’s letter to Weichuangli asking for compensation of “hundreds of millions of yuan” for loss of income, waste of materials and replacement of equipment. The lawyer wrote that after Washington issued the Huawei ban in May this year, the Chinese subsidiary of Flextronics “ignored Chinese law” and refused to return Huawei’s production equipment, raw materials and semi-finished products at its Zhuhai plant, worth about 400 million yuan.
According to public data, Flextronics was founded in 1969 in Silicon Valley of the United States and set up a factory in Singapore in 1981. It is the first manufacturer in the United States to set up factories overseas. It is also the second largest electronic product OEM in the world after Foxconn.
Flextronics provides contract services for Huawei, including OEM smartphones and 5G base stations. It can be said that Flextronics occupies an absolute share in Huawei’s mobile phone supply chain system.
But on May 19, the third day after Huawei was listed as an entity, Flextronics stopped all cooperation with Huawei in all its factories around the world, including stopping production and refusing delivery.
At present, Huawei has completely eliminated Flextronics from its supply chain system.
Flextronics also suffered a heavy blow.
In a conference call on July 26, Revathi Advaithi, CEO of Flextronics, said, “In the first quarter, the widely publicized actions of the U.S. government and significant geopolitical uncertainties affected Huawei’s customers. These actions went beyond our control and reduced our assembly for Huawei in China. As a result, we will reduce our business cooperation with Huawei in China.
According to the results, Flextronics achieved revenue of about $6.2 billion in the quarter, down 3% from a year earlier; net profit of about $45 million, down 61.2% from $116 million in the same period last year. In its performance guidance for the next quarter, Flextronics adjusted its revenue range to 6.1 billion to 6.5 billion U.S. dollars and its loss range to 15 million to 110 million U.S. dollars under GAAP.
Flextronics said it was preparing a statement and could not comment immediately.