US electronics manufacturer faces life after Huawei as trade war sours relations with Chinese tech giant

Manufacturer Flex’s Zhuhai production lines slowed down in May, after Washington banned US companies from selling parts and components to Huawei

Now it is trying to restructure its operations in Guangdong city which is set to be key manufacturing hub in China’s Greater Bay Area plan

4-MIN READ4-MIN

The front of Flex Industrial Park's south campus in Zhuhai. The US company is battling with geopolitical conditions after losing contract work with Huawei. Photo: Sidney Leng

Published: 7:30pm, 27 Aug 2019Updated: 7:30pm, 27 Aug 2019

In the suburbs of Zhuhai, a city of 1.8 million just north of Macau and due west of Hong Kong, US company Flex was making smartphones for Chinese telecoms giant Huawei until the trade war intervened.

Production lines started slowing down in May, after Washington banned US companies from selling parts and components to Huawei. The relationship between Flex, one of the world’s largest contract electronics manufacturers, and Huawei, one of its biggest clients, rapidly deteriorated.

Huawei claimed that Flex kept 700 million yuan (US$97.7 million) worth of Huawei’s materials and equipment for more than a month after the sales ban. According to a report from Reuters, Huawei was able to retrieve some of these materials via third parties, but at extra cost.

After Huawei pulled its orders, Flex had to close down its Huawei-dedicated production. This forced Flex to let tens of thousands of workers go in its Zhuhai Industrial Park, where it maintains its largest production base in China, between July and August. On an earnings call on July 31, Flex’s CEO, Revathi Advaithi, said that “we are scaling down our Huawei-dedicated operations in China”.

Flex runs two large manufacturing campuses in Zhuhai, which is connected to Hong Kong and Macau by the world’s longest sea bridge, and which is earmarked as a manufacturing hub in China’s Greater Bay Area plans.