Passives component supplier AVX Corp. said Friday it would incur an $80 to $90 million charge in its fiscal quarter ending September, to reflect a writedown of the value of its tantalum powder inventory the company paid Cabot Corp. steep contract prices in 2000 to help alleviate component shortages.
In a statement, AVX, Myrtle Beach, S.C., said the writedown was needed as the current mix of tantalum components produced and their selling prices made it unrealistic to continue valuing the tantalum powder inventory at the prices under the supply agreement.
AVX entered a long-term tantalum powder supply agreement with Boston-based Cabot three years ago. In July 2002, AVX filed suit against Cabot, claiming unfair trade practices and breach of contract by the materials supplier. That suit is now pending in the Superior Court for the Commonwealth of Massachusetts.
Two rival suppliers, Kemet Corp. and Vishay Intertechnology Inc., settled tantalum powder contract disputes with Cabot last year.