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Foxconn stops US and China's $ 20 billion growth fear

YES – Top iPhone Installer The Foxconn Technology Group stops two major projects in China and the United States worth US $ 20 billion because the war between the two countries creates uncertainty about demand, according to people who know the company's plans.

The decision by Foxconn to delay work at both plants casts doubt on the promise of new investment and employment at a delicate time for both countries. China's economic growth has slowed down to 28 years, while US US President Donald Trump is still trying to win his oath to return production in America.

On the Chinese side, Foxconn will postpone the work of a 61 billion yuan ($ 9 billion) display panel project in Guangzhou city for at least six months, according to internal documents obtained by Nikkei Asian Review. US $ 10bn investment in display production in Wisconsin State has been halted and reduced due to talks with the new Cow Toni Evers, the Foxconn document from Nikkei.

"Foxconn decided to slow down the investment pace and lag slightly behind due to weakening macroeconomic conditions and uncertainties caused by the trade war," said Nikkei, who knew of the Foxconn decision.

"If Foxconn expands as planned, despite the rapidly changing market dynamics, it could ultimately harm the company's business. It's much safer to wait and carefully review the next step," added the person.

Foxconn's attempts to detain planned investments come after the company made cost-cutting measures that included 100,000 employees by the end of 2018. The business climate is even smaller now that the highest customer, Apple, received a shocking drop in earnings this month, citing a slowdown in China's sales.

Taiwan's Foxconn investment in Hon Hai Precision Industry was complemented by many fanfares when announced in December 2016 and July 2017, respectively.

The Guangzhou project, led mainly by a joint venture between Foxconn and its subsidiary Sharp, uses the liquid crystal display technology of a Japanese company. It marks Foxconn's most advanced LCD factory in China, positioning it to serve a wide market and to compete better with the top China display maker BOE Technology Group.

The device is designed to produce the latest 10.5 generation LCD panels for 8K TVs as well as for automotive and aviation applications. The investment at that time was greatly supported by the local authorities, given that only 60 days of signing up to 61 billion yuan by March 2017 was halted.

However, according to Foxconn's revised schedule, only 20% to 25% of the planned monthly capacity will operate in the third quarter of this year. The remaining planned capacity will be pressed for six months until 2020 due to market uncertainty, confirming two sources in the sector. Production in Guangzhou was scheduled to start in the second half of 2019.

The company decided to delay the Guangzhou project, as Sakai Display Products, a progressive panel factory in Japan under Foxconn, currently has a low utilization rate, and the person with the exact knowledge of the matter told Nikkei. "If the existing machine does not work to its full extent, why does Foxconn expand aggressively?" this person added.

The US Foxconn $ 10 billion Wisconsin project, one of the largest foreign investments in the country, was a high-level revolutionary in June last year, attended by Trump, who was called Foxconn Chairman Terry Gou, one of my friends. the most successful entrepreneurs in the world. "

But since then, the team from Sharp and Foxconn showed their subsidiary Innolux, which was sent to Wisconsin to support the program, has been withdrawn to Japan and Taiwan, two sources said Nikkei.

Changes in the construction schedule followed last November's Republican Cow Scott Walker, an ally of Trump, who supported nearly $ 4 billion in tax relief and other project incentives, people knew about the issue. Historical Cow Evers, a Democrat, turned to Foxconn to discuss a party dealing with his predecessor with the company, three sources said Nikkei.

In a statement dated 19 January, Foxconn said that so far Wisconsin has invested more than $ 200 million, but it will not receive tax relief from the government in 2018 after the lack of recruitment requirements. "While Foxconn is still committed to creating 13,000 jobs in Wisconsin, we have adapted our recruitment and rental schedule," the company said. "As a company operating globally, we need to be flexible to adapt to a variety of factors, including global economic conditions," he added.

Foxconn does not intend to completely abandon the $ 10 billion project, just stop it for further evaluation and discussion with the new governor, one of those sources.

On Thursday, Racine's local leaders, where the Foxconn plant was built, issued a joint statement on Thursday that they understood the problem. "Foxconn has to be skillful in responding to market changes to ensure the long-term success of Wisconsin operations," they said, however, adding that they expect the company to "meet its obligations to the country, county and village."

Foxconn's Special Assistant to President Louis Woo told Reuter on Wednesday that the company was rethinking plans in Wisconsin, referring to the rapid cost of TV production and labor in the US.

This is not the first time that Foxconn has changed its plans for Wisconsin investment, called Project 868, as it was first announced at the White House in July 2017. Instead of setting up the company's second 10.5-generation LCD panel factory at the Guangzhou site, Foxconn reduced the design to smaller displays for the sixth generation technology. The company approved the change of plans in local media only a few days before the revolutionary event last June. Nikkei reported for the first time in May.

On Thursday, Foxconn confirmed the adaptation of its Wisconsin plans to the changed global perspective, but said it was still committed to "creating 13,000 jobs and our long-term investment in Wisconsin."

The company will continue to "actively consider opportunities [LCD] Maximizing the positive impact of the Wisconsin project ”, while exploring the research and development potential of“ advanced industrial Internet technologies ”.

It has not commented on its Guangzhou project.

This article was attended by Nikkei staff writers Kensaku Ihara in Taipei and Gen Nakamura Osaka.

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