Xilinx Sues Flextronics Alleging Fraudulent Chip Resale

Xilinx Inc. sued Flextronics International Ltd. (FLEX) over claims the electronics manufacturer fraudulently resold its products at marked-up prices.

Xilinx said Flextronics buys its semiconductor chips at a discount based on misrepresentations about end users and sells the Xilinx chips to other customers at a profit, according to a complaint filed today in state court in San Jose, California. The complaint, provided by lawyers for Xilinx, couldn’t immediately be confirmed in court records.

Flextronics, a Singapore-based supplier of cameras and battery chargers to Apple Inc. (AAPL), has also dealt in “gray market and counterfeit” Xilinx devices, according to the complaint.

“Many of these devices are incorrectly remarked in order to appear to be more expensive, higher performing devices in order to sell for a higher price,” according to the complaint. “Because some of these devices are defective, Xilinx incurs additional damages upon the warranty-mandated replacement.”

In June, Flextronics, an authorized distributor of Xilinx products, placed a large discounted order on behalf of a preferred Xilinx customer, Airvana Network Solutions, and sold the devices to Checkpoint Systems Inc., which pays as much as $4.50 more for the same device, according to the complaint.

The complaint includes allegations of fraud, misrepresentation and breach of contract.

Xilinx, based in San Jose, manufactures chips that can be reprogrammed after they’ve been installed in electronic devices.

Renee Brotherton, a spokeswoman for Flextronics, declined to immediately comment on the the complaint.

The case is Xilinx Inc. (XLNX) v. Flextronics International Ltd., 113CV257431, California Superior Court, Santa Clara County (San Jose).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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