Taiwanese semiconductor giant Wistron's subsidiary, server giant Wiwynn, has filed a lawsuit against billionaire and Twitter owner Elon Musk, accusing him of refusing to pay $120 million for server components and seeking $61 million in damages. Since Musk's $44 billion acquisition of Twitter at the end of 2022, his leadership has faced several lawsuits.
According to Taiwanese media, the lawsuit submitted by Wiwynn to the Northern District Court of California stems from a procurement agreement signed in 2014, under which Twitter purchased customized IT products from Wiwynn.
However, after Musk took over the social media platform in November 2022, Twitter suddenly stopped paying for the completed products and ignored multiple payment requests from Wiwynn.
Wiwynn further mentioned that to fulfill Twitter's (now rebranded as X) orders, they accumulated parts worth up to $120 million. But after Musk's takeover, Twitter underwent significant layoffs and spending cuts and refused to take responsibility for these actions.
Although Wiwynn successfully canceled and recovered about $59 million worth of components, $61 million remains unpaid, leading to the lawsuit.
In fact, this is not the first time a Taiwanese server manufacturer has encountered a dispute over Twitter's "failure to pay."
Since Musk took over Twitter, he has aggressively pursued cost-cutting measures, including layoffs and renegotiating orders with suppliers. Another of Twitter's server suppliers, Mitac, also suffered.
Following conservative financial practices, Mitac recorded a $1.4 billion NT ($46 million USD) inventory devaluation and bad debt provision for accounts receivable in the fourth quarter of 2022. This resulted in a quarterly loss of $346 million NT ($11.5 million USD), or $0.29 NT per share, marking only the second quarterly loss since Mitac went public.
Since Musk acquired Twitter, the company has faced numerous lawsuits, ranging from unpaid severance packages to accusations of advertiser boycotts. Whether as a defendant or a plaintiff, Musk has been a constant presence in legal battles. In addition to Wiwynn, former Twitter employees have accused Musk of laying off thousands of employees shortly after acquiring the company and owing them more than $500 million in severance pay.
However, U.S. federal judge Trina Thompson ruled that Twitter did not establish a severance plan governed by the Employee Retirement Income Security Act, so the court lacked jurisdiction.
Nevertheless, Musk has not backed down, countering some advertisers and major companies, accusing them of illegally colluding to boycott Twitter.
This lawsuit targets food giants like Unilever and Mars, as well as companies like CVS Health and Ărsted, claiming these companies caused billions of dollars in lost advertising revenue for Twitter.
However, legal experts believe the chances of success in this lawsuit are slim, as it is difficult to prove illegal collusion between these companies.