Dispute over delay to product supply due to global shortages comes before court

A dispute between two companies over a delay in supplying more than €6 million worth of semiconductor components for use in various devices and machines has come before the Commercial Court.

German firm Ineltek GmbH is suing Microchip Technology Ireland (MTI) Ltd, of East Point Business Park, Dublin, for specific performance of a contract to supply the components which are used in a wide range of products including motor vehicles, industrial machines, electronic products and white goods, such as fridges and freezers.

MTI says the delay is not the result of any wrongdoing on its part but because of global demand problems since the pandemic. There was also the fact that customer demand has increased by 100 per cent, affecting the entire industry, it says.

Ineltek says it entered into a distribution agreement with MTI making it a non-exclusive distributor of the components. MTI sought to terminate that agreement in January last year but, following negotiations, the two firms came to a settlement agreement whereby the distribution agreement would not be terminated until Ineltek received the final batch of products it says it was due.

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It says the overall value of the contract was some €28 million, while the value of the outstanding components was €6.4 million.

In breach of the settlement agreement, says Ineltek, the defendant has failed, refused and/or neglected to supply the outstanding products. Despite receiving payment for the final shipment, the shipping date has been postponed and, in some instances, put back to 2023, it says.

It also claims a number of the products are available from MTI’s US parent Microchip Technology.

However, says Ineltek, MTI has insisted Ineltek is prohibited from placing orders through the US parent’s online sales platform.

Paul Coughlan, for Ineltek, applied to have the case admitted to the fast-track commercial list on Monday but this was opposed by Andrew Fitzpatrick SC, for MTI.

Mr Fitzpatrick said the global supply problem point had been made to Ineltek several times and it now looks like the only way to resolve it is through the court.

The case was admitted to the Commercial Court by Mr Justice Denis McDonald who approved directions for how it is to proceed. The matter will return in November.