China's ZTE has filed a lawsuit in Shenzhen Intermediate People's Court against US semiconductor manufacturer Fairchild Semiconductor (FCS).

ZTE is asking for CNY55 million in compensation for receiving faulty handset chips from Fairchild.

ZTE says it purchased 300,000 FM809SS3X chips from the defendant and used them in 220,000 of its A268 PHS handset products, which retail dealers later said had many problems.

ZTE says that it reached an agreement with Fairchild after that happened and Fairchild admitted that the problems were its own. Fairchild also promised to compensate ZTE for the losses, but ZTE says Fairchild has not yet provided any reimbursement.

Fairchild has argued that ZTE has no evidence to show its problem handsets has anything to do with Fairchild's chips. Fairchild also says is only a trademark holder for the chip, but not the original manufacturer.

The case should be heard soon by the court.

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