The Wall Street Journal is today reporting (Paid subscription required) that high-tech and consumer electronics provider Foxconn Technology is considering an investing $7 billion to build an advanced flat-panel LCD screen factory in the United States. This investment would involving the contract manufacturer’s recent acquisition of Sharp.
However, ongoing discussions reportedly remain fluid and highly dependent on government and other incentives. According to the WSJ report, a Foxconn spokeswoman declined to confirm specific statements but did indicate that the company was considering potential manufacturing presence in the U.S.
When SoftBank Group CEO Masayoshi Son recently personally met with U.S. President Donald Trump during the transition period, the two disclosed upwards of a $50 billion investment of technology companies with the United States. A hand-written piece of paper held by Mr. Son and shown to the press had the words Foxconn and SoftBank included.
Today’s WSJ report indicates remarks from Foxconn Chairman Terry Gou:
“In his comments Sunday, Mr. Gou indicated that a deal was far from assured, and that he thought his discussions with Mr. Son were private and informal. But then when he and Trump met with the media, he exposed me”
Speaking a company event in Taiwan on Sunday, Gou indicated that such a facility could generate from 30,000 to 50,000 jobs in the United States and discussions were underway with state and local officials in Pennsylvania and other U.S. states. Further stated was that any deal would hinge on getting rather attractive land and utility rates.
The report indicates that Foxconn has been considering a flat-panel display manufacturing facility in the U.S. for years in order to avoid the costly transport of large displays from Asia to U.S. based destinations. These efforts did not make headwind because of reported unfavorable economics and terms. Last month, Foxconn announced a new $8.8 billion investment for a new flat-panel manufacturing facility in Guangzhou China.
We at Supply Chain Matters view this Foxconn focused report in the context of our 2017 Prediction related to increased anti-trade geopolitical forces providing added supply chain global sourcing challenges and/or opportunities. The new dynamic related to the United States is for multi-national manufacturers to gain the good graces or attention of the new Trump Administration by announcing incremental investments in U.S. based manufacturing. What makes this Foxconn development ever more interesting is not only its potential strategy related to Sharp LCD technology, but also its relationship as the prime contract manufacturing partner to Apple which has the bulk of its component and finished goods high tech consumer electronics manufacturing capabilities sourced throughout China.
While Chairman Gou’s hand was possibly forced by the SoftBank announcement, one can speculate as to other potential manufacturing shifts motivated by Apple. Thus morning, President Trump met with a select group of business CEO’s and reinforced his tendencies to favor a major border tax on products imported into the United States by manufacturers selling products in the U.S. Such statements may motivate other manufacturer’s, including Apple to revisit existing sourcing strategies.
Thus is this evolving new era of global sourcing dynamics.
© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.