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Foxconn plans new facility next to Apple's in Shenzhen: sources

Hon Hai ups investment in China as company faces pressure from Beijing on US manufacturing

TAIPEI -- Key iPhone assembler Hon Hai Precision Industry, or Foxconn Technology Group, is planning to build a new facility next to Apple's upcoming research and development center in the southern Chinese city of Shenzhen, according to two people familiar with the matter.

"Foxconn aims to better help Apple create prototypes of new products in this new campus," a source told the Nikkei Asian Review.

Another source says that Foxconn had started considering the new facility as soon as Apple announced its Shenzhen plan last October when Chief Executive Tim Cook visited the city.

The sources say that Foxconn is looking to acquire land for the construction project. When probed, Apple referred NAR to Foxconn for a response. Foxconn declined to comment.

Apple said in mid-October that the new Shenzhen unit, set to open in 2017, will help the U.S tech titan work more closely with its manufacturing partners. In China, Apple also has plans for another similar facility in Beijing, bringing its research and development centers in China to two.

Foxconn, China's leading exporter and the world's largest contract electronics manufacturer, already has two large campuses in Shenzhen. Its facility in the Longhua district in Shenzhen doubles as the company's headquarters in China.

Furthermore, Foxconn has been developing and testing new products in its Shenzhen facilities although the company churns out iPhones in the central Chinese city of Zhengzhou.

Most recently, it has been trying to build the wireless charging module in Shenzhen for the upcoming model to be launched in conjunction with iPhone's 10th anniversary.

The Taiwanese manufacturing conglomerate's move to build an additional production base in Shenzhen highlights the fact that it is continuing to expand investments in China, a key market for both Apple and itself. And Foxconn is doing this despite a potential trade war between Beijing and Washington following Donald Trump's victory in the U.S. presidential election in November.

On Dec. 30, Foxconn Chairman Terry Gou announced that Osaka-based Sakai Display Products Corp., controlled by his family, will jointly invest 61 billion yuan ($8.77 billion) in an advanced panel facility together with the government of the southern Chinese city of Guangzhou.

"Foxconn will not leave. Foxconn will stay (in China)," Gou told reporters in Guangzhou when asked whether he plans to move manufacturing sites to the U.S.

The Nikkei reported on Jan. 8 that Foxconn and Sharp are further considering building a facility in Zhengzhou to make advanced organic light emitting diode panels.

In October, the Nikkei Asian Review reported that Foxconn will work with SoftBank Group-owned ARM to create a chip design center in Shenzhen.

A political pawn?

As tensions between China and U.S. rise over Trump's trade policy, Beijing has applied pressure on Foxconn.

Apparently under the instruction of Chinese authorities, Gou has decided not to attend Trump's inauguration on Jan. 20 despite receiving an invitation, NAR learned, although it is believed that the Taiwanese tycoon remains keen to meet the incoming U.S. president at some point.

Bloomberg first reported Gou's decision on Tuesday, adding that a high-ranking Chinese official had expressed concerns to the Taiwanese billionaire directly over Foxconn's intention to increase operations in the U.S.

Gou is considering building a 8.5-generation, highly automated liquid crystal display plant in the U.S., NAR has learned, as Trump continues to nudge companies with business in the country to make products locally.

Different generations of panel plants refer to the size of the glass the facilities produce.

Such sheets of glass will then be cut into smaller panels for final products including TV, notebook monitors and smartphones. The bigger the generation, the larger the size. In this case, 8.5-generation is about is 220 x 250 cm, roughly the size of a pool table.

The Nikkei reported on Jan. 13 that Foxconn and Sharp are considering setting up a LCD plant in the U.S.

Foxconn also declined to comment on whether Gou is shying away from Trump's inauguration due to political pressure and on the new U.S. investments. In December, the company confirmed it was in preliminary discussions over expanding its existing U.S. operations a day after SoftBank chief Masayoshi Son revealed he was making new investments in America together with the Taiwanese manufacturer.

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