Please refresh my memory?

Against Mike's conscience, he had taken Hector's "offer you can't refuse" to accept a bribe (and the lives of his granddaughter and daughter-in-law) in return for lying to the cops to save Tuco from jail on the gun charge.

Mike then robbed one of Hector's trucks, and left the driver bound at the side of the road, hoping the scene would get handled by the police and ultimately incriminate Hector.

As Nacho later explains to Mike, the driver was actually freed by a good samaritan. The driver called in Hector's people, who cleaned up the scene without any police attention, including Hector personally murdering the good samaritan. And Nacho knows Mike was behind it.

So Hector is still a free man, and at least one person realizes Mike is the guy who held up the truck. And Hector killed an innocent man as a result of Mike's actions. This together with the existing bad blood between Mike and Hector, and the continuing potential for Hector to mess with Mike's family, leads Mike to the conclusion that Hector has to be terminated.

I think it's intimated that Hector's murder of the samaritan was the final straw for Mike.