(Yicai Global) Aug. 7 -- Chinese telecoms equipment giant Huawei Technologies sent a letter to Flex on Aug. 5 seeking hundreds of millions of yuan in compensation, according to a source, after the US electronics company stopped supplying it with components and refused to return assets worth CNY400 million (USD56.8 million).

Flex ordered its worldwide plants to end cooperation with Huawei, including halting production and rejecting shipments in response to the US government adding Huawei to its so-called Entity List on May 19, which means American firms need a license to trade with it. Flex's Chinese unit also declined to hand back Huawei's equipment, raw materials and semi-finished products at its Zhuhai plant in Guangdong province.

Without disclosing the specific compensation claim, the source said that Shenzhen-based Huawei had dispatched the letter to Flex through its lawyers. The compensation covers multiple losses, including work delays, material waste, and equipment replacement.

Flex, which provides contract services for Huawei, including original equipment manufacturer of smartphones and fifth-generation base stations, told Yicai Global that it would not be making any immediate comment, but would prepare a later statement.

Huawei has completely removed Flex from its supply chain as a result of which Flex's performance has been hit. The company, which is headquartered in the US and Singapore, expects losses of between USD15 million and USD110 million in the next quarter.

Founded in Silicon Valley, California, in 1969, Flex opened a factory in Singapore in 1981. It was the first US manufacturer to set up an overseas plant and is the world's second-largest OEM of electronics after Hon Hai Precision Industry, also known as Foxconn.

Editor: Chen Juan