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Foxconn To Make A $7 Billion Statement Of Intent?

Foxconn, the world’s largest contract electronics maker, is prepared to invest around $7 billion in a display-making plant in Pennsylvania, America, according to its Chairman and CEO, Mr Terry Gou.

The proposal is likely to be in conjunction with Sharp Corp, the display supplier that Foxconn acquired in March 2016, and is projected to create between 30,000-50,000 jobs. Mr Gou said that although the United States had no panel-making industry, it was the second-largest market for televisions. The plant would also have the capacity to generate over 800 million iPhone 7Plus screens. Apple is rumored to be interested in co-investing; however, with demand outstripping such a vast supply, even if the Cupertino giant procures from this single source, such involvement seems unlikely.

Clearly, the math here does not add up. Why invest in large-screen televisions, when current global technology trends are for the miniature, the bendable and wearable, along with screenless devices, such as Amazon’s Echo? Why would Apple entertain the idea of shipping US-built screens to its prime Asian sales markets, risking damage and incurring Chinese infrastructure costs? The move could be seen to be a conciliatory response to President Trump’s pledge to ‘put America first’ during his inauguration speech and as a strategic proposal from Foxconn to guard against such ‘protectionism’, where politics drive economic development.

President Trump has continuously blamed China for the demise of U.S. manufacturing and has threatened to place tariffs on Chinese-imported goods. Foxconn employs over one million workers in China; therefore, the proposed project is a timely public relation boost for U.S. industry and Asian tech-dominant manufacturers. However, the reality is different; Foxconn has just announced the $8.8 billion construction of an LCD manufacturing plant, in Guangzhou, China, to accommodate the regional demand for large-screen televisions. This would seem to negate the need for a U.S. plant.

Mr Gou’s comments after a meeting with SoftBank head Masayoshi Son – who inadvertently divulged Foxconn’s proposal – were noncommittal, ‘There is such a plan, but it is not a promise. It is a wish.’

It may not be a good idea to hold your breath on this one.

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