Huawei cut ties with Flextronics for seizing its equipment worth over $100 million


Huawei
Huawei cut ties with Flextronics for seizing its equipment worth over $100 million
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In May, the US included Huawei in its list of entities. As a result, many American companies suspended cooperation with Huawei. However, most of them subsequently resumed cooperation. In the hub of the crises, two American companies stood out. One is FedEx who repeatedly diverted Huawei Express to the US. The second is American foundry, Flextronics, who seized Huawei’s equipment worth over $100 million for a month.

Huawei vs Flextronics

Flextronics is the second-largest EMS foundry in the world after Foxconn and one of Huawei’s important foundries. It has received $2.5 billion worth of Huawei orders each year. However, at the inception of the US ban, Flextronics immediately complied. It stopped all cooperation with Huawei in all factories around the world. In addition, it didn’t continue production and rejected all shipments from Huawei. Most surprising is that it refused to return Huawei-owned equipment and materials.

Among the Huawei materials Flextronics was withholding, the Zhuhai plant has about 400 million yuan ($58 million) worth of Huawei materials and equipment. Its foreign factories were holding 300 million yuan ($43 million). Until mid-June this year, Flextronics did not release Huawei’s equipment. Flextronics’s unprofessional act did not go down well with Huawei. After retrieving its materials, Huawei also discontinued all business transactions with Flextronics.

According to Flextronics Q1 quarter earnings, its revenue is $61.76 billion. This is a 3.48% drop from last year’s $63.99 billion. Its net profit is 487 million, a 61% drop from its $1.2 billion profit same period last year. Flextronics CEO, Revathi Advaithi, said that the trade war had an effect on its business. According to him, the companies business in China went down and the Huawei situation was beyond its control. However, Revathi Advaithi still believes that China is an important production and marketing center of the company.

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