Company X is facing a new lawsuit from IT infrastructure provider Wiwynn, which has accused the company of breaching contract over unpaid $120 million in parts procured for a company owned by Elon Musk.
The Taiwanese company describes itself as a cloud infrastructure provider for hyperscale data centers. The lawsuit is over the company not receiving payment for $120 million worth of equipment it allegedly procured for X. Wiwynn was able to recoup some of this expense and is suing the social media giant for the unpaid $61 million.
According to the lawsuit: [PDF]According to the lawsuit, filed on Aug. 16 in the U.S. District Court for the Northern District of California, Wewin had a “master purchase agreement” with Company X (formerly Twitter) dating back to September 2014, but the social media company suddenly stopped enforcing the agreement after its acquisition by Musk in 2022.
In its court filings, Wiwynn said its business model is to work directly with customers to design and deliver custom solutions tailored to their individual needs, and this is its relationship with Company X.
Under the master purchasing agreement, Company X will provide its Taiwanese suppliers with a forecast of its infrastructure requirements, and Wiwynn will submit a list of components to be procured to meet these needs, which will be approved by Company X prior to purchase.
The crux of the case is that Wiwynn alleges that by approving the purchase of necessary parts, X understood that it would be responsible for them even if the parts were never used. This claim lasted for eight years, during which X paid in full for all products made with parts purchased by Wiwynn.
However, starting in November 2022, social media companies suddenly stopped making payments to Wiwynn or even responding to its communications, the Taiwanese tech company claims.
At this point, Wiwynn had purchased and paid for approximately $120 million of custom and non-custom components, which X had allegedly authorized in writing to Wiwynn to make the purchases.
Wiwin said it was able to cancel about $40 million in parts that had not yet been delivered and recoup another $19 million by reselling or reusing some of the unused parts, leaving it with about $61 million in reserves.
But the remaining parts are custom-made, limiting the company’s attempts to resell or reuse them and incurring storage costs.
Wiwynn claims that it has repeatedly tried to negotiate with Twitter to settle its outstanding debts, but that the company has refused to accept responsibility for the unused components, leading it to resort to legal action.
The company is seeking a jury trial and, if the court rules in its favor, is seeking damages in excess of the $61 million plus interest it claims.
Of course, this is all Wiwynn’s view as stated in the court documents, so we asked X for his side of the dispute and he replied, “I’m busy right now, check back later.”
This is just the latest in a string of lawsuits surrounding the social media platform, which is being sued by its former chairman for more than $23 million in damages over unpaid stock options, for example. X was also ordered this month to pay 550,000 euros ($607,000) in damages in Ireland for wrongfully firing a former senior executive.®