Suntron Corporation sues Applied Materials, Inc.

Suntron Corporation (Nasdaq: SUNN) recently served a lawsuit seeking over $20 million in damages against Applied Materials, Inc. Suntron filed the lawsuit in Fort Bend County, the home of Suntron's Sugar Land manufacturing facility, where Suntron until recently employed more than 2,000 area residents. The case is styled Suntron Corporation and Suntron GCO, L.P. v. Applied Materials, Inc., Cause No. 04-CV-139910, in the 268th Judicial District of Fort Bend County, Texas. Representing Suntron in the case is Vinson & Elkins LLP, an international law firm based in Houston, Texas.
 
The lawsuit claims that Applied Materials defrauded Suntron into expending millions of dollars on raw materials and other inventory-related costs, as well as capital and human resources, with false promises of reimbursement. Suntron's lawsuit alleges a variety of other unlawful acts and unfair business practices by which Applied Materials was unjustly enriched at Suntron's expense.

As a contract manufacturer of complex electronic assemblies, Suntron provided more than 7,000 different finished products to Applied Materials. Applied Materials incorporated these products into the manufacturing assemblies that it sells to computer chip manufacturers such as Intel and Taiwan Semiconductor. Suntron utilized more than 50,000 different component parts, raw materials and subassemblies and purchased material from more than 1,200 different sub-tier suppliers in order to manufacture the items it supplied to Applied Materials.

Suntron's lawsuit claims that it has been left with more than $18 million worth of unused and obsolete inventory for which Applied Materials owes it reimbursement. After years of attempting to resolve this dispute, Suntron seeks reimbursement not only for the excess inventory but for other costs such as warehousing, employment costs, accounts receivable, cancellation charges, lease expenses necessary to maintain the physical inventory associated with its claims, and expenses Suntron incurred in reliance upon Applied Materials' alleged promises. Suntron's lawsuit also requests attorneys' fees, prejudgment and postjudgment interest and an award of exemplary damages for the alleged fraud.