A local company is suing electronic-giant Intel Corporation for breach of contract and is seeking more than RM163 million in damages.

Unico Holdings Bhd and its subsidiaries - Unico Technology Bhd and IPC Global Sdn Bhd - claimed that they were forced to close down their electronic (motherboard) manufacturing operations after Intel moved its operations from Penang to China last year.

The suit, which also named Intel's local operator Intel Products (M) Sdn Bhd as the second defendant, was filed through Unico's lawyers Messrs Allen Gledhill at the Penang High Court on May 30.

Unico Holdings general manager C Y Wong said today that all documents related to the suit were served to both defendants, who filed in their appearance when the case was mentioned two weeks ago.

"However, they (the defendants) have not filed their defence against the claim," he told malaysiakini .

Wong also stressed that the outcome of the suit would not affect Unico-Desa Plantations Bhd, a listed associated company of Unico Holdings.

Retrenchment benefits

In its statement of claim, the plaintiffs (see chart) said they were taking Intel to court for breach of warranties and collateral contacts, fiduciary duties and repudiation of business partnership.

They were claiming a total of RM163.5 million in special damages for losses incurred as a result of the breaches.

Unico Holdings, the first plaintiff, stated that Unico Technology was forced to shut its electronic (motherboard) manufacturing operations which supported Intel's business in Malaysia after the defendants announced their move to China last year.

It said when Unico closed down its manufacturing plant (which supplied prescribed parts to Intel), the company paid retrenchment benefits amounting to RM12 million to 1,000 workers and managers, many of whom were initially seconded from Intel Corporation and had worked for the company.

It also alleged that the act of severing their business partnership was done in an unfair manner especially since Unico had helped Intel Corporation's suppliers in China set up operations there and source parts before their business partnership was terminated.

Unico said the business partnership started when it entered an original equipment manufacturing (OEM) business in Penang with Intel Corporation in 1992 based on earlier representations and warranties made by the electronic giant.

Unico Holdings then set up subsidiaries to enter into a partnership with Koperasi Pekerja-Pekerja Intel Pulau Pinang Bhd.

Lucrative return

Unico also alleged that it was induced to enter a joint-venture business with Intel Corporation in 1994 after the latter gave its assurance that its commitment would continue as long as Unico propagated and supported Intel's business.

The plaintiffs claimed that Intel Corporation made further representations which among others stated that Unico stood to gain from their business venture, a lucrative return on investment - with annual revenue of RM160 million - in 1996.

"As a result of these representations and subsequent warranties and contracts signed, Unico Holdings and its subsidiaries had in 1992 - 2002 expanded over RM120 million in acquiring land, building of factory, human resource development, installing of new assembly systems and upgrading of technology," they said.