July 3, 2024
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Ventura County supplier sues Volkswagon

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A Camarillo-based electronics firm has sued Volkswagen AG in Ventura County Superior court in a breach of contract case that brings to light the severe shortage of computer chips that automakers were facing last fall.

In its complaint, Data Exchange Corp., or DEX, alleges it agreed to supply some 4,500 computer chips, known as SAK chips to Volkswagen in October of last year. The suit says that it was subsequently told to ship the chips to Kostal, a Volkswagen sub-manufacturer based in the Republic of North Macedonia in Europe. DEX alleges that it acquired the chips, made an initial shipment, never got paid and is owed $1.7 million in procurement, testing and shipping costs.

The suit does not name specific defendants and it is not clear whether Volkswagen AG has been served with the complaint. A Volkswagen spokesperson declined to comment.

Volkswagen, based in Wolfsburg, Germany is one of the world’s largest automakers whose brands include VW, Audi, Bentley and Porsche.

DEX is a 30-year-old company that specializes in sourcing electronic components and the complaint says it is one of a few firms that specializes in providing “in-house testing, measurement and failure analysis” of chips acquired through sourcing in the open market. It says it procured the SAK chips only after receiving written instructions from Volkswagen and submitting a written quote including a price of $390 per chip.

The company was later directed to ship the chips to Kostal, a company that DEX had not done business with, according to the complaint.  What followed, the suit says, was a series of communications that included a cancellation notice and then a re-confirmation of the agreement, after which it sent an expedited shipment of chips to Kostal.

DEX alleges it began invoicing for payment in January but has received no payment and, according to the suit, Kostal now claims the order was canceled in November 2022. The suit alleges that at all times Kostal was acting as an agent of Volkswagen.

The DEX-Volkswagen dispute appears to be emblematic of the supply chain issues that automakers faced in the summer and fall of 2022 when chips were in extremely short supply. The latest economic reports suggest that supply chain issues have eased in recent months, particularly for automakers. But disputes between suppliers and manufacturers are likely to continue long after the logistics issues themselves have been resolved.

DEX is seeking actual as well as punitive damages.

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