Foxconn produces a significant share of the world’s consumer electronics at its factories in central China, but is now spending millions to build up its operations around the world and lessen its dependence on Beijing. — Shane Lavalette/The New York Times
TAIPEI: Last month, giant Taiwanese electronics manufacturer Foxconn spent US$33mil (RM147mil) to buy a 10-acre (4-hectare) tract north of Houston to expand its operations. It is also building factories in India and Mexico and investing hundreds of millions of dollars in Thailand.
Foxconn produces a significant share of the world’s consumer electronics at its factories in central China. It has long assembled iPhones for Apple and says it makes almost half of all computer servers that power artificial intelligence (AI) systems.
Over the past two years, Foxconn has spent millions of dollars building up its operations around the world to lessen its dependence on China.
President-elect Donald Trump has promised to impose tariffs on goods imported from China and elsewhere on his first day in office next month. Foxconn has been preparing for this possibility for years.
Young Liu, Foxconn’s chair, said recently that the company’s growing global footprint would help to insulate it against Trump’s expected tariffs.
“The impact on us is likely smaller compared to our competitors,” Liu told reporters after a forum in Taipei after the company closed its Texas deal.
The Texas parcel, which is next to an existing Foxconn warehouse, will be used for the company’s AI business.
Foxconn has also spent hundreds of millions of dollars on land and equipment for factories to make iPhones in Bangalore and Tamil Nadu in India and to make AI servers in Jalisco in Mexico. On Dec 11, Thailand’s government approved a Foxconn subsidiary’s US$300mil (RM1.3bil) investment to make parts and equipment for its computer chip business.
Foxconn’s moves are emblematic of how multinational companies, particularly in Asia, have tried to restructure supply chains and relocate manufacturing operations in the years since Trump initiated a trade war with China during his first term in office. Manufacturers hope that having more production elsewhere will take the sting out of the next round of tariffs Trump has promised.
But it will not be easy for Foxconn to replicate its manufacturing model outside China, where it has benefited from years of government-backed infrastructure investment. The company previously invested in smaller factories in other countries, and none have ever come close to rivaling the importance of its huge factories in China, which generate a vast majority of its revenue. Last year, Liu vowed that would change.
The trade war created new risks for companies such as Foxconn that rely heavily on manufacturing in China. The country’s harsh pandemic lockdowns, some of which spurred protests at Foxconn’s giant campus in central China, added to the concerns among the company’s clients, including Apple, about their reliance on the country.
Now Trump’s promised tariffs could push Foxconn to invest even more outside China, said Chiu Shih-fang, a senior analyst at the Taiwan Institute of Economic Research, a think tank in Taipei. “Foxconn already has some contingency plans in place,” Chiu said.
But the company has a track record of making big investment promises that fail to materialize.
In 2011, Foxconn announced plans for a factory in Brazil that was expected to create as many as 100,000 jobs. But by 2017, it employed fewer than 3,000 people. Before that, plans for a US$1bil (RM4.4bil) plant in Indonesia fell through.
In 2017, Foxconn said it would spend US$10bil (RM44bil) to build an enormous manufacturing plant in Wisconsin – but spent only a small fraction of that amount.
The investment began as a way for Foxconn to establish goodwill with Trump by pledging to create manufacturing jobs when the U.S. president embraced a tough stance on trade and especially exports from China.
At the time, Trump lauded the project as a major achievement for his economic agenda. He framed it as a windfall that he had personally negotiated with Terry Gou, the company’s founder, also a billionaire who later became a politician.
“I’d see Terry and say, ‘You’ve got to give us one of these massive places,’” Trump said. “If I didn’t get elected, he definitely wouldn’t be spending US$10bil (RM44bil).”
The project became a political lightning rod, and progress stalled for years while state officials traded blame and the company repeatedly scaled back its plans. – ©2024 The New York Times Company
