This week, The Wall Street Journal reported (paid subscription) that global contract manufacturer Foxconn is in preliminary talks to build a high-end $5.7 billion LCD display screen factory in Northern China. According to this report, the CMS is in discussion with the government of Zhengzhou regarding potential investment arrangements. According to WSJ unnamed sources, Foxconn and Hon Hai Precision Chairmen Terry Gou visited Zhengzhou in August and met with government officials to discuss an investment proposal. The Zhengzhou region is also the home of an Apple iPhone assembly facility.
This news is significant in that it would represent Foxconn’s largest investment in component manufacturing and would be an additional sign of further diversification within key downstream strategic components of high tech and consumer electronics supply chains. LCD production requires rather expensive capital investments and the business has had its ups and downs in profitability.
In its reporting, the WSJ stated that it remains unclear as to whether Apple or other investors are being approached to invest in the proposed display plant. Apple already sources LCD display from three major suppliers. Apple declined any comment to the WSJ report.
Further reported was that Foxconn has been floating ideas for building a component and handset gain manufacturing facility in Indonesia, but is apparently driving a hard bargain for local authorities.