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Trade war

US and China will reach trade deal soon, Trump tells Foxconn's Gou

President asks iPhone assembler to continue Wisconsin investment and offers help

U.S. President Donald Trump joins Foxconn Technology Group Chairman Terry Gou during a ground-breaking ceremony at the company's site in Mount Pleasant, Wisconsin, in June 2018.   © Reuters

TAIPEI -- The lingering trade negotiations between Washington and Beijing are likely to lead to an agreement soon, Foxconn Technology Group Chairman Terry Gou said on Saturday, citing his conversation with U.S. President Donald Trump a day earlier.

"U.S. President Trump shared with me yesterday on the phone that the negotiation progress between China and the U.S. is going well and it is likely that they will come up with an agreement soon," Gou said in opening remarks at Foxconn's annual carnival for employees in Taipei.

He later told reporters that he discussed the matter with Trump because he has investments in the U.S. and is concerned about the friction between Washington and Beijing.

The global economy is undergoing a structural change, Gou said. And whatever the outcome of the trade war, the Western market will still be led by the U.S., and the Asian market will be dominated by China, an economy with a population of 1.4 billion.

"Luckily, we have investments and have been nurturing a lot of talent in both countries," Gou said.

The phone call with Trump came after the key iPhone assembler's major flip-flop this week on its Wisconsin $10 billion display project.

Gou said on Saturday in Taipei that Trump hopes Foxconn will continue to invest in R&D and the manufacturing of LCD technology in Wisconsin. (Photo by Kensaku Ihara)   

Foxconn's special assistant to the chairman, Louis Woo, on Wednesday told Reuters in an interview that the company may scale back or even shelve some of its plans in Wisconsin, citing steep costs over the difficulty of manufacturing televisions in the U.S.

Then on Friday afternoon, Gou, in a Facebook livestream broadcast, said that his company's focus in Wisconsin will turn from production to R&D, creating a technology hub there. "Foxconn plans to hire more than 10,000 engineers to do research and development," he said.

The Nikkei Asian Review reported on Thursday that Foxconn would put on hold the majority of production of both of its flagship LCD display projects in Wisconsin and Guangzhou, due to worsening geopolitical uncertainties, according to internal documents obtained by Nikkei.

But things moved quickly. Foxconn late on Friday night said in a statement that it will move forward to build a Generation-6 display facility in Wisconsin after a "personal conversation" between Trump and Gou, and productive discussions between the White House and the Taiwanese company.

"It's the right decision to invest in the U.S.," Gou said on Saturday, without mentioning the Gen-6 project during his speech.

Gou later said Foxconn's presence in Wisconsin will go beyond the Gen-6 facility. "People focus only on Gen-6," he told reporters on the sidelines of the event, adding: "We will do a lot of things there. ... We will do cloud computing, a high-performance computing center, health-related internet of things and medical equipment."

The chairman continued: "The large-sized display market is suffering from a serious supply glut. ... Some Chinese companies are churning out so many panels and they don't care about the cost. ... That's why we are revising our previous plan a bit."

The Friday statement said the Gen-6 LCD facility will be the "heart" of the Wisconsin Valley Science and Technology Park. Gen-6 LCD technology will mainly churn out smaller but value-added displays for such uses as automotive, aviation and medical.

"I was honored to receive a phone call from President Trump yesterday," Gou said on Saturday. "Actually, in December last year, I also went to the White House to have an extensive discussion with the president about the outlook on the trade situation between the U.S. and China, as well as our investment in the U.S."

Gou said the president hopes Foxconn, formally known as Hon Hai Precision Industry, will continue to invest in R&D and the manufacturing of LCD technology in Wisconsin, and Trump promised to offer any necessary help to the company.

Trump suggested to Foxconn that it hire more military veterans to help with production when Gou brought up the issue of the difficulty of being able to find sufficiently skilled technicians and workers, the Foxconn chairman said.

Even though Foxconn's annual revenue last year reached a record 5.4 trillion New Taiwan dollars ($175.4 billion), Gou said that this year is "100% for certain the most challenging year in a decade," but that it would also be the start of a positive path over the coming 10 years.

"Everyone in the industry is now monitoring and exploring ways to mitigate the downturn," Gou said after describing 2018 as a "peak." "We will invest in talent and technology," he said, "and the most important thing is always to keep the faith and confidence when facing downtrends."

Gou's comments on the outlook for the industry come as Apple, its biggest customer, this week saw its first major decline in shipments of the iconic iPhones and slower economic growth in China. Foxconn also supplies to many other global electronics brands, including HP, Dell, Huawei Technologies and Xiaomi.

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