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Hon Hai, Wisconsin officially sign accord on flat panel plant deal

2017/11/11 14:43:34

Hon Hai Precision Industry Co. Chairman Terry Gou

Taipei, Nov. 11 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. (鴻海) said Saturday that it has officially signed an agreement with the Wisconsin Economic Development Corp. (WEDC) to finalize a deal to build a state-of-the-art flat panel plant in the state.

The WEDC is an entity created by Wisconsin Governor Scott Walker to facilitate investments in the state.

In a statement, Hon Hai Chairman Terry Gou (郭台銘) said that his company will invest US$10 billion to build the flat screen plant, which will manufacture 8K high definition panels plus 5G technology ecosystems in Wisconsin to roll out the most sophisticated flat screens in the world.

The advanced plant in Wisconsin is expected to provide screens for a wide range of applications such as TVs, self-driving cars, aviation systems, education, entertainment, health care and office automation, Gou said in the statement.

Before the statement was released by Hon Hai, media in the U.S. reported that Gou and Walker inked an incentive agreement on Friday for the state to provide US$3 billion in tax incentives to the Taiwanese firm for establishing the US$10 billion flat screen plant. The reports said it was the largest package of subsidies ever given to a foreign company by a U.S. state.

According to the Associated Press, the accord locks the state into providing up to US$3 billion in tax incentives if Hon Hai invests US$10 billion on a new display-screen manufacturing factory and campus in Mount Pleasant in Wisconsin's Racine County.

Hon Hai, also known as Foxconn in the global market, has said it expects the new plant will hire 13,000 workers in Wisconsin, the report said.

The report cited Gou as saying that he will pay Wisconsin up to US$500 million if Hon Hai fails to fulfill its side of the contract.

According to Racine County, the Foxconn manufacturing campus will occupy an area of about 20 million square feet (185.8 hectares), making it the largest project ever in the state.

On its website, Racine County said Hon Hai has started hiring. Under the agreement signed by Foxconn and Wisconsin, the investment is expected to create about 3,000 jobs in its initial stage and boost the number of new jobs to 13,000 over the next six years.

In July, Gou, accompanied by top U.S. government officials, including President Donald Trump, announced that it will build a US$10 billion sophisticated flat panel plant in Wisconsin to respond to Trump's "America First" calls to bring jobs to the U.S.

In August, Trump disclosed Hon Hai's longer investments in the U.S. market could hit US$30 billion. In response, Hon Hai said studies on further U.S. investments remained underway.

Meanwhile, Hon Hai reported on Friday that its consolidated sales for October totaled NT$485.46 billion (US$16.07 billion), up 7.6 percent from a month earlier and also up 2.87 percent from a year earlier.

Market analysts said the increase in October sales largely resulted from an increase in orders placed by Apple Inc., which unveiled the latest iPhone models -- the iPhone 8, the iPhone 8 Plus and the iPhone X -- in September.

According to Hon Hai, its consumer electronics operations saw sales rising at a larger pace in October, ahead of its computing device and communication device operations.

Due to strong global demand for the iPhone X -- the 10th anniversary premium model for the iPhone, Hon Hai's sales are expected to continue to rise for the rest of the year.

It is expected that Hon Hai's fourth quarter sales will rise more than 30 percent from a quarter earlier to range between NT$1.4 trillion and NT$1.45 trillion, the highest quarterly figure for this year.

With demand for the iPhone X rising, a research note by KGI Securities said Hon Hai is expected to shift part of its production for the iPhone 8 Plus to assemble the premium model starting from the end of the fourth quarter.

In the first 10 months of this year, Hon Hai's consolidated sales rose 1.05 percent to NT$3.46 trillion, the company said.

(By Chen Yi-wei, Jackson Chang and Frances Huang)
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