SAN JOSE, Calif. — Hon Hai Precision, the parent company of Foxconn, will spend $10 billion to build in Kenosha, Wisconsin a 10.5-generation LCD plant for 8K displays. The deal brokered by the Trump Administration includes $3 billion in tax breaks to create at least 3,000 Foxconn jobs in the U.S.
“TV was invented in America, but it does not have a single fab to produce a single 8K system--we are going to change that,” said Foxconn chairman and founder in a White House event. “We are committed to build the most advanced 8K ecosystem in America — the most advanced in the world,” Gou said.
The deal initially includes a 20 million square foot Foxconn campus but could ultimately create up to 13,000 Foxconn and 22,000 indirect jobs. The Foxconn jobs will have an average annual salary of $53,000 plus benefits, said Wisconsin Governor Scott Walker.
In a Foxconn press release, Gou said the Wisconsin plant was “the first in a series of facilities we will build in several U.S. states, this is part of a bigger plan to create a robust 8K+5G ecosystem in the United States,” implying smartphone manufacturing. In remarks at the event President Trump alluded to other plants “in negotiations.”
Separately, President Trump told the Wall Street Journal that Apple chief executive Tim Cook promised to build three manufacturing plants in the U.S. Foxconn’s Wisconsin plan has no apparent connection to Apple, but is focused on LCDs for large-screen TVs, something that Apple was rumored years ago to be considering
Former President Obama once asked Apple founder Steve Jobs what it would take to bring iPhone manufacturing to the U.S. Jobs famously responded that those factory jobs are not coming back.
What happened between the Trump Administration and Gou, potentially changing the calculus is not clear. Several observers noted the $3 billion in tax breaks was a high price to pay for a guarantee of a minimum of 3,000 jobs.
From left Wisconsin Governor Scott Walker, Vice President Pence and House Speaker Ryan listen as Foxconn chairman Terry Gou speaks at the White House. (Image: WhiteHouse.gov)
Analysts described the Foxconn plan as ambitious given the supply chain required to make large LCDs is almost entirely in Korea and China. However, North America is the largest market for large-screen TVs of 55-inches and above, said Ken Werner, a veteran display analyst with Nutmeg Consultants (Norwalk, Conn.).
Since it bought Sharp a year ago for $3.5 billion, Foxconn has been trying to revive Sharp’s branded TV business, which the Japanese company sold to China’s HiSense in 2015. HiSense and other TV makers in China, such as TCL and Skyworth, have leapfrogged Sharp and many other TV giants in Japan. Sharp once dominated the flat-panel business but now only Sony remains among top players from Japan.
Large screen displays and to a lesser extent the TVs they go into are cyclical and highly automated businesses typically based on large volumes and thin profits, said Werner. While LCD and TV makers have reaped good profits in the last two years, the business is known for quick up and down swings, he said.
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