Trump Effect? Foxconn In Talks To Expand US Operations


Apple’s manufacturing partner Foxconn may invest billions of dollars in the United States. The Taiwan-based contract manufacturer said Wednesday that it was in preliminary discussions to expand its US operations. Foxconn’s confirmation came just hours after the US President-elect Donald Trump held a meeting with SoftBank chief Masayoshi Son at Trump Tower. Trump announced that SoftBank would invest $50 billion in the US to create 50,000 jobs.

Will Foxconn invest $7 billion in the US?

Taking credit for Masayoshi Son’s huge investment, the President-elect said SoftBank “would never do this had we not won the election.” However, Dow Jones said the $50 billion investment would be part of a $100 billion technology fund that SoftBank was setting up with Saudi Arabia’s sovereign wealth fund and other investors. The technology fund was announced prior to the election.

During Trump’s announcement, what caught the attention of media was a document held up by Masayoshi Son that included Foxconn’s logo and words “Foxconn,” “$7 billion,” and “50,000 new jobs” alongside SoftBank’s commitments. The Taiwanese firm later confirmed the discussions regarding US investments. The scope of the investment was yet to be determined. “Those plans would be made based on mutually-agreed terms,” said the contract manufacturer.

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Trump wants Apple to make iPhones in the US

Apple accounts for more than 50% of Foxconn’s total sales. The company assembles iPhones, iPads and other Apple products in China. The Taiwan-based company has many operations besides iPhone and iPad production. It is unclear what the company plans to manufacture in the United States. Masayoshi Son and Foxconn chief Terry Gou are considered close. They have made several investments together.

Donald Trump has called China a currency manipulator, and has accused the country of stealing American manufacturing jobs. During his election campaign, Trump had promised to get Apple and other companies to make their products in the United States. He has also talked about imposing a 45% tariff on goods imported from China.

Making iPhones in the US is impractical

Foxconn has manufacturing plants in Indiana and Virginia, according to its website. Industry experts believe that it is impractical to make iPhones in the US. According to IHS Markit, the cost of making a 32GB iPhone 7 is $224.80, excluding costs related to R&D, shipments, patent licensing, and software. The device retails at $649. Assembling the iPhones in the US could add $30-$40 to the cost.

Last month, Nikkei Asian Review claimed that Apple had asked both iPhone assemblers Foxconn and Pegatron in June to study the possibility of making iPhones in the United States. Pegatron declined to consider such a move due to cost concerns. Foxconn has been working on the request from its largest client. Even if the company chooses to move manufacturing to the US, it may use robots to make the production plant more efficient.

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