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Supply stoppage to Huawei brought a big blow for Flex with loss attached

Flex, a former major smartphone assembler for Huawei, has stopped production in its Changsha factory in Central China’s Hunan Province, after the stoppage of supply to the Chinese tech giant.

Huawei started reducing its reliance on U.S. suppliers to keep moving forward: Report

Reported previously, Flex privately detained Huawei’s materials and equipment worth more than 700 million yuan ($102 million) for more than one month after the US Commerce Department added the Chinese tech giant on a blacklist in May.

Expert says, following the closure of its Changsha factory, Flex might face a difficult time in China as it could not fill the order gap left by Huawei. Other customers including Xiaomi, Oppo and Vivo might also have concerns about giving orders because of Huawei issue, reported GlobalTimes.

Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, a telecom industry association, told the Global Times on Sunday that the mobile phone OEM industry does not have a high technology threshold. So if Flex is kicked out, others such as BYD and Foxconn will soon follow up.

A big heavyweight customer like Huawei is hard to find even in the global context, Fu Liang a Beijing-based independent telecom expert, told that Flex is set to bear large losses.

As Huawei contributed nearly 2.5 billion yuan or 5 percent of Flex’s total revenue in the third quarter of 2018.

Given this fact, more Chinese companies would hesitate to cooperate with Flex, as they would face both pressures from the public and concerns that Flex might ‘detain’ some of their materials in the future, says Ligang.



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