Elon Musk's X Corp faces $61M lawsuit over unpaid tech tabs

Taiwanese IT infrastructure provider claims platform ghosted it

X is facing yet another legal case in the shape of a breach of contract claim from IT infrastructure provider Wiwynn over non-payment for $120 million in components it procured for the Elon Musk-owned biz.

The Taiwanese firm describes itself as a cloud infrastructure provider for hyperscale datacenters. The case regards $120 million of equipment it says it procured for X, but did not receive payment for. Wiwynn was able to recoup some of this cost, and is suing for $61 million it says is still owed by the social media giant.

According to the complaint [PDF], filed in the California Northern District Court on August 16, Wiwynn had a "Master Purchase Agreement" with X, formerly Twitter, that dates back to September 2014, but the social media company abruptly stopped honoring this agreement after Musk's acquisition in 2022.

Wiwynn says in the court filing that its business model is to work directly with customers to design and deliver custom solutions tailored to their individual needs, and this is the relationship it had with X.

Under the Master Purchase Agreement, X would provide the Taiwanese supplier with forecasts of its infrastructure requirements, and Wiwynn would submit lists of components to procure in order to fulfil these needs – requiring X's approval before purchasing.

The crux of the case is that Wiwynn claims X understood that by approving the purchase of the required components, it was assuming liability for them – even in the event that the components were not used. This worked for eight years, with X making full payments for all products built from components that Wiwynn purchased.

However, from November 2022, the social media biz abruptly stopped making any payments to Wiwynn or even responding to communications, the Taiwanese tech company claims.

At this time, Wiwynn had bought and paid for approximately $120 million of custom and non-custom components, which it says X had authorized Wiwynn to purchase in writing.

Wiwynn says it was able to cancel approximately $40 million worth of components that had not yet been delivered, and recoup a further $19 million by reselling or repurposing some of the unused components, leaving approximately $61 million of them.

However, due to the custom nature of the remainder of these components, the company says it has been limited in its attempts to resell or reuse them, and has also faced the expense of storing them.

Wiwynn claims it has made a number of attempts to communicate with Twitter to resolve its outstanding liability, but says the platform has refused to accept responsibility for the unused components, hence its decision to resort to legal action.

The company is asking for a jury trial, and to be awarded damages no less than the $61 million it claims it is owed plus interest, if the court finds in its favor.

This is all Wiwynn's views as laid out in the court filing, of course, so we asked X for its side of the dispute, to which it responded: "Busy now, please check back later."

This is just the latest in a number of legal cases involving the social media platform. It is being sued by a former chairman over damages claimed to run to more than $23 million over unpaid stock options, for example. X was also ordered to pay €550,000 ($607,000) compensation for unfair dismissal to a former senior executive in Ireland this month. ®