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Apple Supplier Foxconn Weighs $7 Billion US Display Plant

Jan. 23, 2017
The company is considering a joint investment with Sharp Corp., the Japanese display supplier it bought last year.

Foxconn Technology Group is considering building a U.S. display-making facility for upwards of $7 billion, a major investment for Apple Inc.’s main manufacturer that may create tens of thousands of American jobs during President Donald Trump’s first year in office.

The company is considering a joint investment with Sharp Corp., the Japanese display supplier it bought last year, but details have yet to be hammered out, Reuters cited Chairman Terry Gou as telling reporters in Taipei on the sidelines of a company event. Foxconn confirmed the report Monday.

An investment by Foxconn, whose main listed unit is Hon Hai Precision Industry Co. (IW 1000/17), would mark a victory for Trump, who’s repeatedly blasted China for stealing American jobs and devastating U.S. manufacturing. But Foxconn is one of the single largest private employers in China, and the government there has conveyed its concern over the possibility that it will shift investment away from the country.

China is pivotal to Foxconn’s massive electronics assembly operation, which cranks out more iPhones and iPads than any other in the world. Foxconn has said it’s in preliminary discussions to broaden its investment in the U.S., without elaborating. Trump has often articulated his vision of bringing manufacturing jobs back to America from China, which became the world’s factory floor thanks to cheap labor and central policy support. And he’s singled out Apple in the past.

A potential strategic shift by Foxconn unnerves Chinese authorities because the company employs roughly a million workers across the country. Major factory job cuts have been known to trigger protests in the past, even as maintaining social stability remains among the top priorities of the ruling Communist Party.

For now, Foxconn’s prospective U.S. plans remain preliminary. The envisioned facility could cost more than $7 billion and may create 30,000 to 50,000 jobs, according to Gou. It would also bring manufacturing closer to the largest market for iPhones and iPads, a potential boon for Apple, which yields about half Hon Hai’s revenue. The plant could be a joint investment with Apple, the Nikkei Asian Review reported Monday. Apple didn’t respond to a request for comment.

The idea took shape after Gou spoke with Masayoshi Son, chairman of SoftBank Group Corp. and a close business partner. Son, who’s announced his own plan to invest $50 billion in the U.S., asked Gou for his views. A document Son held up for reporters after a December meeting with Trump included the words “Foxconn” and “$7 billion” alongside SoftBank’s numbers.

“I thought it was a private conversation, but then the next morning it was exposed,” Gou told reporters according to Reuters. “There is such a plan, but it is not a promise. It is a wish.”

On Sunday, Gou also told reporters he sees American protectionism as “inevitable” and warned about the subsequent threat to economic development.

By Bloomberg News

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