Foxconn Technology Group, the Taiwanese giant that assembles Apple’s iPhones, has put plans on hold to build two factories, including one in Wisconsin, owing to concern over falling demand and the repercussions of President Trump’s trade war with China.
The other factory is in Guangzhou, China; together the two factories were to have cost around $20bn.
The company, which has invested about $200m in the schemes so far, may also change the function of the US plant away from display manufacturing and towards a research and development hub, Nikkei Asian Review reported yesterday.
The news is embarrassing for the Trump administration, which had hailed Foxconn’s investment in Mount Pleasant as an early success for its brand of economic nationalism, with Trump describing it as "the eighth wonder of the world".
It led to a political spat as Republicans blamed Wisconsin’s newly elected Democrat governor, Tony Evers. GOP representative Sean Duffy of Wisconsin told a business programme that "Foxconn is under attack in our state because of our new governor."
Nikkei said it had obtained a document that showed Foxconn reached its decision to after negotiations with Evers. The project, which attracted some $4bn in tax breaks, was to have created 13,000 jobs.
However, that claim was disputed by Foxconn and by Mark Hogan, head of the state’s economic development agency under Republican governor Scott Walker, and by Evers himself.
Hogan, chief executive of the Wisconsin Economic Development Corporation, also disputed the Nikkei’s claim that Evers was attempting to renegotiate side deals with the company.
He told Wisconsin broadcaster WISN: "I have been involved with the Foxconn project from day one and there never have been any side deals and the contract stands on its own. In addition, there have been no attempts by either the company or the Evers or Walker administrations to renegotiate the contract."
Foxconn will also postpone a $9bn display project in the southern Chinese city of Guangzhou for at least six months. This was to have been a joint venture with Japan’s Sharp to make LCD screens for ultra-high definition 8K televisions.
Nikkei cited unnamed sources who said Foxconn was reluctant to make such large-scale investments in view of the uncertain state of the global economy, with sales of Apple’s iPhone falling, the Chinese economy slowing and a disruptive trade war in the offing.
It added that Foxconn’s existing plants were not running at full capacity, raising questions over whether such a big increase in production resources were necessary.
Meanwhile, Foxconn shed 100,000 contract workers during 2018, according to Nikkei.
Image: Mount Pleasant in Racine County Wisconsin (Alinghi3/CC BY-SA 3.0)