Apple may enter into a joint venture with Foxconn Technology Group, which reportedly presented the U.S. firm a proposal to build a display panel manufacturing facility in the United States. This facility would also create as many as 50,000 jobs, the company’s chairman said on Sunday.
Why will Apple invest in the facility?
The Nikkei Asian Review reports that Foxconn chairman and CEO Terry Gou recently said that the facility would cost $7 billion and will also help generate 30,000 to 50,000 jobs. The facility would also produce TV screens in addition to smartphone displays. There are no TV display factories in the U.S., which is the second-largest TV market in the world.
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Gou told Nikkei, “Apple is willing to invest in the facility together because they need the (panels) as well.”
Also in its Sunday report, Nikkei said that Foxconn, which already operates a facility in Pennsylvania, is planning to open another molding plant there.
Nikkei also claimed in another report that Foxconn-controlled Smart Technologies is thinking about moving its interactive-display production from Canada to the U.S. However, its decision will be based on President Trump’s success in his goal of renegotiating the North American Free Trade Agreement.
Foxconn is known as the world’s biggest contract maker of electronics, and its Chinese factories manufacture most of Apple’s iPhones. Foxconn, also known as Hon Hai Precision Industry Co., had been thinking about building a new U.S. facility for years.
The issue was highlighted again when Gou was talking with Masayoshi Son, founder and CEO of Softbank Group Co, notes MarketWatch. In a December meeting with Donald Trump, Son pledged to invest $50 billion in the U.S., and the next day, Foxconn declared its plan to expand its U.S. operations but offered no details.
Is it feasible to manufacture in the U.S.?
Even though manufacturing electronics in the U.S. is more expensive due to higher labor and operational costs and the currency factor, Gou believes that with the rising demand for bigger display panels, it makes sense to shift production to the U.S. rather than import parts from China, notes Apple Insider.
Gou also issued a warning to the U.S. government that in order to prevent products from becoming unaffordable, it should offer concessions on land and electricity.
“In the future they [shoppers] may be paying some $500 more for products, but those do not necessarily work better than a $300 phone.”
Trump has claimed that Apple would bring its iPhone manufacturing to the U.S., possibly lured by a promise of a “very large tax cut” in exchange for relocating jobs.