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Technology

Foxconn reaches new deal with Wisconsin on scaled-back US plant

Trump-era $10bn plan hit snags after supply chain and demand issues

Construction continues on Foxconn's manufacturing complex in Mount Pleasant, Wisconsin, in August 2020.    © Reuters

PALO ALTO, U.S. -- Foxconn, the world's biggest contract electronics manufacturer, has reached a new agreement with the state of Wisconsin after years of delays to begin mass production at its U.S. plant.

The agreement likely will let the Apple supplier scale back its unfinished manufacturing facility in Wisconsin, with reduced tax breaks from the government, based on Monday's announcement by Foxconn and Gov. Tony Evers. The deal still needs approval from Wisconsin Economic Development Corp., the state's top business agency, which will meet Tuesday to vote on the issue.

Foxconn in 2017 released initial plans for a $10 billion plant in Wisconsin to produce cutting-edge 10.5-generation displays, responding to then-President Donald Trump's call to bring more manufacturing jobs to the U.S. Wisconsin is a political battleground state that Trump won in the 2016 election.

The Taiwanese company, which trades as Hon Hai Precision Industry, said the project would create 13,000 local jobs. In exchange, the state and federal governments promised to give Foxconn a $4 billion package of tax breaks and other incentives.

But Foxconn later scaled back the project several times, citing an incomplete supply chain and a glut of displays at the time. The planned manufacturing complex largely remains unbuilt.

The groundbreaking for Foxconn's Wisconsin plant in 2018 was attended by, from left, then-Gov. Scott Walker, then-President Donald Trump and Foxconn founder Terry Gou. The plant remains largely unfinished.   © Reuters

Given the weaker demand for its displays, the company said it also is considering production of a wide range of items in the Wisconsin factory including servers, software and artificial intelligence-related offerings.

Foxconn said last month it is looking at two possible sites in North America -- Wisconsin and Mexico -- for test production and mass manufacturing of electric vehicles.

"In response to unforeseeable economic conditions, Foxconn began formal negotiations with a desire to lower taxpayer liability in exchange for the flexibility to pursue business opportunities [that] meet market demand," Vice Chairman Jay Lee said in a statement Monday. A Foxconn spokesperson declined to provide more details on the new deal.

Meanwhile, a Foxconn report this year recapping 2020 said the company has "hundreds" of employees in Wisconsin, falling short of job numbers it promised four years ago. The state government has come under fire for providing the tech giant incentives while plant progress and job creation stall. Those incentives were offered by the state's previous governor, Scott Walker, and Evers was among those who criticized the original deal.

"I've said all along that my goal as governor would be to find an agreement that works for Wisconsin taxpayers while providing the support Foxconn needs to be successful here in our state," Evers said in a statement Monday.

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