Supply chain
Commentary: The US$30 billion question for Foxconn
Ninelu Tu, Taipei; Willis Ke, DIGITIMES

US president Donald Trump revealed at a meeting with a group of small-business leaders August 1 that Foxconn chairman Terry Gou told him privately that his company could invest as much as US$30 billion in the US, three times the figure announced by Gou at a press conference held on July 27 at the White House. Trump's unexpected disclosure has sparked concerns over Gou's willingness to carry out the sharply-floated investment bid.

At the press conference, Gou announced that Foxconn will spend US$10 billion over the next four years building a LCD panel manufacturing plant in Wisconsin.

Foxconn issued a statement on August 2 that the Wisconsin plant "will be the first of a series of facilities we will be building in several states as part of the robust electronics ecosystem we will be creating in the US." It did not address Trump's statement about the total investment amount or Trump's claims that Gou told it to him in confidence.

"We have not yet announced our investment plans for other sites," Foxconn said in the statement. "We will provide an update as soon as we have finalized those plans."

Some observers said Trump intentionally released the encouraging news about the US$30 billion investment simply to encourage the small-business leaders. Some other opined that he was trying to test the response of Foxconn to the claimed US$30 billion investment or leverage the matter to directly triple his administration's achievement in soliciting overseas foreign investments in the manufacturing industries in the US.

Observers said that it's a sure decision for Gou to set the US as another major market beyond China's and it's foreseeable for Foxconn to make long-term investments in US. Whether Foxconn will duplicate his China success in the US remains to be seen. Neither is it clear how Gou can materialize his "8K+5G ecosystem" for the US. If the company can build a complete supply chain for the display panel industry in the US, it can benefit from lower tariffs and transportation costs, but how to maintain viable operations of the supply chains will be another issue to address, observers said.

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