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Foxconn faces problems setting up shop in US

by on25 January 2017

Sharp co-operation is not done and dusted

While the press has made much of Foxconn’s plans to co-operate with Sharp to build a new panel plant in the US, the deal is so far from being done and dusted it is increasingly looking unlikely.

Foxconn Electronics chairman Terry Guo has indicated that the company is considering establishing a display panel factory in the US through cooperation with Sharp, which is expected to provide advanced panel technology.

The deal was heralded as a way that more US jobs would be created by Donald (Prince of Orange) Trump. Since Foxconn was an Apple partner, it was being touted as the way Apple was going to avoid facing huge taxes under the Trump regime.

Guo pointed out that there were shedloads of reasons the deal would not go ahead. Foxconn would not go ahead with it if it could not get deals on land costs for land, water supply and power supply.

It would also have to talk its suppliers in South Korea, China, Taiwan and Japan to shift their glass substrates, polarizers, backlight modules and materials, form clusters from Asia to the US.

The question is how many of them will want that?

According to Digitimes, Foxconn will need its glass substrates companies localised because transportation is very costly and it is necessary to supply the material nearby. There is a US-based supplier, Corning, but it has almost all its plants for volume production located in Asia. For Foxconn to set up, it will need Corning to come back, something which is pretty unlikely.

Foxconn is currently working with Sharp to set up a 10.5G line in Guangzhou, southern China, and one of the main incentives is strong financial support from the local government. So not only will all the above boxes need to be ticked before the deal goes ahead, the US government will have to come up with shedloads of sweeteners too.

We can’t see it.

Last modified on 25 January 2017
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