Bloomberg News

Foxconn in Talks With Multiple U.S. States for Manufacturing (1)

January 27, 2014

Foxconn’s Founder and Chairman Terry Gou

Foxconn’s founder and Chairman Terry Gou told reporters any U.S. investment would not be for labor-intensive manufacturing such as assembling smartphones and tablet computers. Photographer: Ashley Pon/Bloomberg

Foxconn Technology Group, the maker of Apple (AAPL:US) Inc.’s iPhone, is in talks with U.S. states including Arizona and Colorado to build advanced manufacturing facilities as part of plans to set up factories closer to its clients.

Representatives from at least six states have contacted the company as they seek to get plants set up in their jurisdictions, Simon Hsing, a spokesman for Taipei-based Foxconn, said in an interview yesterday. The company is looking to open plants for making tools, molds and connectors, he said.

Foxconn, the world’s largest custom manufacturer of electronics, may expand in its largest market as clients including Apple seek to have their products made in the U.S. Its Foxconn Interconnect Technology unit has announced an expansion in Pennsylvania, which will create about 500 jobs.

Getting support and purchase commitments from customers will be a key consideration in building the plants and Foxconn is still in talks about what products clients want from U.S. facilities, Hsing said, declining to identify the customers.

Arizona Governor Jan Brewer met Foxconn’s founder and Chairman Terry Gou in November, while officials from Colorado, Texas, New York, New Jersey and Louisiana have all made contact with the company, Hsing said.

Lucy Nashed, a spokeswoman for Texas Governor Rick Perry, declined to comment on “potential ongoing negotiations.” Colorado officials declined to comment in an e-mailed response to Bloomberg News. Representatives of the other states didn’t immediately reply to e-mails.

Hon Hai Precision Industry Co. (2317), the biggest company in the Foxconn group, in November announced plans to spend $30 million in Pennsylvania through Foxconn Interconnect, a division which develops connectors used in computers and smartphones.

Carnegie Mellon

Foxconn will also invest $10 million in a venture with Carnegie Mellon University for research in robotics and manufacturing.

Any U.S. investment would not be for labor-intensive manufacturing such as assembling smartphones and tablet computers, Gou told reporters in Taipei on Jan. 26. Instead, the company would seek to build facilities that focus on knowledge and content-based skills, he said.

Liquid-crystal display panels are an example of capital intensive work better-suited to the U.S., Gou said. The company has no current plans to build an LCD factory in the U.S., he said.

Closer Proximity

Closer proximity to supply chain partners, such as Applied Materials Inc. (AMAT:US) and Corning Inc. (GLW:US), are among the benefits of being in the U.S., Gou said.

In addition to iPhones and iPads for Apple, Foxconn also makes game consoles for Microsoft Corp., tablets for Amazon.com Inc. and PCs for Dell Inc. and Hewlett-Packard Co., mostly at its China facilities which employ more than one million workers. Foxconn also has more than 20,000 people at plants in Mexico.

Foxconn is investing in automation to convert its employees from production workers to engineers, helping the company avoid an impending labor shortage in China while boosting profit margins.

Gou said he met Tesla Motors Inc. Chairman and Chief Executive Officer Elon Musk this month, telling the 42-year-old that Foxconn’s background in stamping and molding can help the Palo Alto, California-based company make its electric cars cheaper.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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