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Trade War

Trump hails Foxconn breaking ground on $10bn US plant

Apple supplier hints at more US investments to come

U.S. President Donald Trump, center, takes part in a groundbreaking with Wisconsin Gov. Scott Walker, left, and Foxconn Chairman Terry Gou at Foxconn's new site in Mount Pleasant, Wisconsin, on June 28.   © Reuters

MOUNT PLEASANT, U.S. -- iPhone assembler Foxconn formally broke ground on Thursday at its $10 billion factory complex in the state of Wisconsin, a project that supports U.S. President Donald Trump's aim to bring manufacturing back from Asia.

The Taiwanese contract electronics manufacturer, officially Hon Hai Precision Industry, says the project will create 13,000 jobs with an average salary of $54,000 a year. Critics say Wisconsin's promise of $3 billion in state aid for the project is excessive.

Trump, keen to show that his economic policies are working in an important election battleground, was on hand to thank Foxconn Chairman Terry Gou, calling him "one of the most successful businessmen in the world" and even hailing the project as "the eighth wonder of the world." "Today's groundbreaking is only one part of the exciting story that is playing out across our nation," the president said.

Officials, employees, suppliers, and international and domestic media representatives attended the event at a Foxconn facility next to the construction site. House Speaker Paul Ryan and Gov. Scott Walker, both Wisconsin Republicans, also participated.

SoftBank Group Chairman and CEO Masayoshi Son, a close friend of Gou's, showed up to support Foxconn. Son walked over to Trump and Gou after the ceremony and briefly spoke with them on the side. Son was one of the earliest CEOs to visit Trump after he won the presidential election in 2016. He also said SoftBank would invest $50 billion in the U.S. over the next few years.

U.S. President Donald Trump and SoftBank Chairman and CEO Masayoshi Son during a visit to Foxconn in Mount Pleasant, Wisconsin, on June 28. U.S. President Donald Trump and SoftBank chief Masayoshi Son shake hands onstage at Foxconn's groundbreaking ceremony in Mount Pleasant, Wisconsin, on June 28.   © Reuters

"Terry is my best friend," Son said after being asked by Trump to deliver remarks onstage. He recalled not obtaining official permission from Gou before promising Trump that Foxconn would invest in the U.S. But it has all worked out, Son said, with the start of bringing a "new ecosystem of high-tech manufacturing back into the United States."

Foxconn's investment in Wisconsin also marks the largest foreign investment in the state and one of the biggest foreign investments in the U.S.

Alan Yeung, Foxconn's director of U.S. strategic initiatives, said that with Foxconn securing a production base in Racine County and a headquarters including an innovation center in downtown Milwaukee, the company will soon announce more investment plans across the states in the next few months. He did not elaborate further. Gou told shareholders on June 22 that he will stay in the U.S. for three weeks after the groundbreaking ceremony to visit "three to four" states for potential investments or acquisitions of companies there.

The groundbreaking ceremony came less than a year after Gou announced the investment at the White House last July to build what is billed as North America's first LCD-manufacturing facility with 8K-resolution technology. Aided by a few billion dollars in tax incentives, Foxconn's planned Wisconn Valley Science and Technology Park covers 22 million sq. feet in the heart of Racine County.

Earthmoving excavation work began in April at the phase-1 site, which amounts to roughly 12 million sq. feet.

That site will include a liquid crystal display plant and a television assembly plant. The Nikkei Asian Review has reported that Foxconn opted to build a sixth-generation or 8.5-generation factory in Wisconsin for small and midsize displays, instead of a 10.5-generation facility. Louis Woo, special assistant to Gou, told Milwaukee-based BizTimes last week that the company's first LCD fabrication facility on the campus will be a sixth-generation plant. The total investment of $10 billion remains unchanged, he stressed.

Woo said the change in plans obviates the need for a Corning glass plant on-site and still involves the latest LCD technology. A sixth-generation plant will enable production of a wider variety of display sizes, ranging from notebook computers to central displays for autonomous vehicles to 80- or 90-inch TVs, the BizTimes piece explained.

"The Gen 6 would give us a lot of versatility," Woo said.

Foxconn's LCD and TV assembly plants in Wisconsin will serve as a strategic springboard for North American expansion in TVs by the Taiwanese company. Foxconn and LCD-panel-making group member Innolux announced on June 20 a strategic investment in Vizio. The North American TV brand shipped 5.65 million TVs for a global market share of 2.7% in 2017, according to Taipei-based market research firm WitsView.

Nikkei reported on Thursday that Foxconn-controlled Sharp seeks to resume North American marketing of TVs under its own brand as early as this year, driven by Foxconn's production plans in Wisconsin. If Sharp successfully negotiates terms with China's Hisense, which owns the rights to sell Sharp and its Aquos brand TVs in North America for five years from 2016, Foxconn's U.S. expansion plans would be significantly accelerated.

Trump's visit here Thursday followed his criticism of Harley-Davidson's response to his protectionism. The Wisconsin-based motorcycle maker announced plans this week to shift production of bikes for Europe from the U.S. to avoid retaliatory tariffs imposed by the European Union. Trump posted a series of tweets on this, including a prediction of "the beginning of the end" for the company.

Even as trade frictions continue to rise between the U.S. and Canada, Europe and China, Foxconn, with its production bases mainly in China, seems immune at the moment. Groundbreaking on its $10 billion investment went off smoothly on Thursday, and unit Foxconn Industrial Internet successfully listed on the Shanghai Stock Exchange earlier in June.

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