Foxconn, the world's largest contract manufacturer of electronics including the iPhone, proposes the establishment of a display-making plant in the US with an investment exceeding $7 billion. The proposal came in after the US President Donald Trump vowed in his inauguration speech to put “America First, prompting Terry Gou, Foxconn's chairman and chief executive officer, to warn about the rising protectionism and the political underpinning of economic development.
Foxconn's proposal to establish a display plant would be aided by the company's Sharp Crop (6753.T) unit. The establishment of the plant would, however, depend on a slew of factors such as the investment scenario, where conditions are likely to be negotiated at both state and federal levels. The investment is also expected to generate a large number of employment opportunities for people.
According to Gou, Foxconn, formally called Hon Hai Precision Industry Company, was considering this whopping investment in the US for years, but the matter cropped up when Masayoshi Son, Foxconn's business partner and head of Japan's SoftBank Group Corporation, spoke to Terry Gou before he had a meeting with Trump. The meeting resulted in Son pledging an investment of $50 billion in the United States and unknowingly disclosed Foxconn's logo and an unstated investment of $7 billion. However, Foxconn eluded it by terming it a “preliminary discussion” to increase the size of its US operations.
Terry Gou's discussion with Son revolved around the potential of the US market in the television category but with an absent panel manufacturing industry. This 7 billion dollar investment could create 30,000-50,000 jobs in the United States of America. Besides creating jobs in the US, the investment would act as an aid in promoting Trump's pledge to bring jobs back to the waning steel and manufacturing areas.
Foxconn has an existing unit in Pennsylvania, which is a priority for the company, depending on water, land, power, infrastructure and other conditions for investment. The company would continue operations in China, where its factories manufacture of most Apple's iphones. However, the move by Foxconn also highlights Trump's earlier statement, which encouraged manufacturers to produce in the US, and singles out China as a major cause of losses in manufacturing jobs.
The manufacturers in Taiwan are also showing nervousness about the trade policies proposed by the new administration, which warned about a rise in import tariffs from come countries. The White House website, which was updated after the president's inauguration, signals the administration’s pursuit to change trade relations with Asian countries, especially China, and the NAFTA with Mexico and Canada.