TAIPEI -- Foxconn Chairman Young Liu on Tuesday confirmed that the world's biggest contract electronics manufacturer will build electric vehicles in North America by 2023 in a bid to cut its dependence on the slowing smartphone market.
Liu told foreign media that the major Apple supplier will decide this year whether it will build the cars in Mexico or the U.S. It has facilities in both countries. It will also finalize its plan for what to produce at its Wisconsin manufacturing complex by July.
"We are trying to look for ideal products for our Wisconsin plants. Recently we found that maybe electric cars might be good products to make in the U.S.," Liu told a media gathering with the Taipei Foreign Correspondents' Club in Taipei. "The location is also close to the traditional automotive supply chain."
The chairman said his company is also evaluating Mexico as a venue for building electric cars. "We have existing factories in both places. All Foxconn needs to do is to install equipment."
He added that the choice will come down to "business, not political," considerations. "The most critical factor for us to choose between [Wisconsin and Mexico] would be the combination of engineering and labor [resources]," he said.
Liu said Foxconn has received some support from the Wisconsin state government, "but my priority is whether making this product here is right for the business. ... The incentives will not sustain [our operation] if the products are not the right ones to be made there."
Foxconn plans to invest 10 billion New Taiwan dollars ($354 million) every year for the next three years, with the majority going toward EV-related operations, semiconductors and other new growth drivers.
"The year 2023 will be the year to invest the most [in EVs], but that still depends on the model and volume we are making," Liu said.
Liu's remarks came just weeks after Foxconn signed a memorandum of understanding with American EV startup Fisker. The iPhone assembler has agreed to build its first electric vehicle with the startup by the end of 2023, with a planned annual mass production capacity of 250,000.
Foxconn edged out Magna International -- a longtime automobile industry heavyweight that supplies Ford, General Motors, Geely, BYD, and Toyota -- to help Fisker build its second EV model.
Liu said Foxconn is also in talks with other U.S. EV startups and said the company has the capacity to take one or two more clients with a similar production capacity to Fisker.
Foxconn broke ground on its Wisconsin plant in June 2018 under the then-Trump administration with a plan to invest $10 billion over the next few years, including money to build an advanced display facility. However the company is still negotiating with the state government over changes to its plans.
The agreement with Fisker marks a major shift in Foxconn's EV strategy. Previously, company founder Terry Gou had said the company would not get into car assembly due to safety concerns.
Foxconn has no experience of building cars but aims to build its know-how through a recent joint venture with Yulon Group, Taiwan's second-biggest automaker, and its recent partnership with Chinese EV startup Byton, where Foxconn personnel are helping the financially struggling startup to improve its supply chain management.
Foxconn's chairman also confirmed for the first time that U.S. sanctions have affected one of its Chinese customers -- widely taken to be a reference to Huawei Technologies -- but downplayed its impact on his company, saying orders shift. "Look at who is gaining market share in the smartphone market. For example Xiaomi is gaining, and Xiaomi is also our customer."
And while diversifying regional manufacturing capacity is a trend, Liu said, the company's "major production site is still in China."
The Taiwanese tech manufacturing giant, formally traded as Hon Hai Precision Industry, has been a key component supplier and assembler to big tech companies such as Apple, Dell, HP, Cisco, IBM and Microsoft for decades.
Apple is Foxconn's largest client, contributing more than 50% of its total revenue.
Nearly all of Foxconn's revenue in 2019 came from consumer electronics, computers and communication-related products. Only 9.5 billion New Taiwan dollars of its more than NT$5 trillion revenue was related to automobile parts.
Liu, who took the helm of Foxconn from Gou in June 2019, has been trying to steer the contract electronics manufacturing giant to growth areas such as electric vehicles, robotics and smart health to counter the slowing smartphone industry.
To advance its electric vehicle aims Foxconn is betting on its MIH software and hardware open platform, which includes a chassis, electronic architecture and support for autonomous driving and is designed to make it easier and faster for automakers to turn out cars.
The MIH-based alliance, established in October last year, has attracted more than 1,000 companies across a range of industries, including Qualcomm, MediaTek, Arm, AWS, Microsoft, CATL, and CTBC Bank. The company will convene its first alliance conference next week in Taipei.
Liu has said the first three EV models based on the MIH platform will be released this year, including an electric bus and two passenger vehicles.