Hon Hai Precision Industry Co (鴻海精密), known internationally as Foxconn Technology Group (富士康科技集團), is considering scaling back or even abandoning plans to make cutting-edge displays from a US$10 billion plant it is building in the US, Reuters reported.
Such a move could undermine promises to create 13,000 jobs at a project hailed by US President Donald Trump for reviving US manufacturing.
Apple Inc’s main manufacturing partner is rethinking its approach because of the high cost of making advanced TV screens in the US, Reuters cited Foxconn executive Louis Woo (胡國輝), a special assistant to chairman Terry Gou (郭台銘), as saying.
Photo: AFP
Hon Hai unveiled the Wisconsin project with much fanfare in 2017 as the firm extracted a raft of incentives from the state, although some were forfeited last year after falling short of hiring goals.
The company is in a particularly precarious position as the US and China wage an escalating battle over trade. It does most of its manufacturing in China, sells products to Americans and faces pressure from both sides to maintain or create new jobs.
Hon Hai now intends to turn the Wisconsin site into a base for mostly engineers and researchers, Reuters cited Woo as saying.
It would also produce specialized products for industrial, healthcare and professional applications, he said.
“In terms of TV, we have no place in the US,” Woo was cited as saying. “We can’t compete.”
“When it comes to manufacturing advanced screens for TVs, if a certain size of display has more supply, whether from China or Japan or Taiwan, we have to change, too,” he told Reuters.
Rather than manufacturing LCD panels in the US, it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the US, he said.
That would represent a supply chain that fits with Foxconn’s current “fluid, good business model,” he said.
Doubt is growing about Foxconn’s ability to meet its hiring commitments.
Wisconsin State Assembly Minority Leader Gordon Hintz expressed concerns that Hon Hai would fall far short, under a deal regarded as the richest tax credit, exemption and subsidy package in state history.
The concern came into focus in a letter to Wisconsin Economic Development Corp, in which Hon Hai confirmed that it missed job-creation targets for last year.
The firm might be prepared to walk away from future incentives if it is unable to meet Wisconsin’s job creation and capital investment requirements, a source familiar with the matter told Reuters.
Company representatives did not immediately respond to requests for comment.
Hon Hai’s potential retreat from its signature US project comes as demand for Apple’s iPhone — and smartphones in general — is flagging.
Hon Hai gets about half its revenue from its US client. It assembles everything from iPhones and laptop computers to Sony Corp PlayStations at factories in China and around the world.
In November last year, Bloomberg News reported that the company was planning a steep reduction in its expenses this year. That same month, the company posted earnings about 12 percent below expectations.
Additional reporting by staff writer
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