November 13, 2006 – Suntron Corp., a contract manufacturer of electronic assemblies, and Applied Materials Inc. have resolved litigation originally filed in late 2004 and early 2005, with Applied agreeing to pay a confidential sum and acquire certain inventory.
Back in late 2004, principal customer Applied Materials told Suntron that it would transition substantially all of its current Suntron business to alternative contract manufacturers. Suntron noted that the two companies were already embroiled in an ongoing dispute with regard to alleged non-payment for excess and obsolete materials. The company estimated it lost approximately $25 million in sales from the Applied transition.
In March 2005, Suntron filed suit against Applied seeking more than $20 million in damages, claiming it had been defrauded into building up manufacturing operations at a cost of “millions of dollars on raw materials and other inventory-related costs,” with “false promises of reimbursement.” The company, which said it provided more than 7000 different finished products to Applied, asked for $18 million to compensate for the unused and obsolete inventory, and also alleged “a variety of other unlawful acts and unfair business practices.”