Hon Hai reaffirms commitment to U.S. plan despite tax credit rejection

10/13/2020 07:21 PM
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CNA file photo
CNA file photo

Taipei, Oct. 13 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. Tuesday reaffirmed its commitment to a major investment plan in the U.S. state of Wisconsin, despite a request for tax credit being reportedly denied by the state, citing the company's failure to create enough jobs.

In a statement, Hon Hai, also known as Foxconn on the global market, said the group is still on course to invest in Wisconsin and will abide by the agreement it signed with the state, adding it will continue to negotiate with the state authorities on the project which will cost an estimated US$10 billion.

Hon Hai made the comments after several U.S. news outlets, including the Wall Street Journal, reported Monday that Wisconsin Economic Development Corp. (WEDC) wrote a letter to the Taiwanese company indicating that its request for the first batch of incentives in tax credits has been turned down.

The Journal cited the WEDC as reporting that Hon Hai initially promised to create 2,080 jobs by investing US$3.3 billion before the end of 2019. As of the end of 2019, the report said, Hon Hai failed to create 520 new jobs and invest US$300 million, the minimum set by the agreement.

According to the report, WEDC Secretary and CEO Missy Hughes, who wrote the letter to Hon Hai vice chairman Jay Lee (李傑), said the Taiwanese investor was not building the advanced 10.5th generation flat panel facility the company previously agreed to set up, but was rather building a smaller one.

In response to the report, Hon Hai said in Taipei that as of the end of 2019, it had hired more than 520 employees in Wisconsin under the investment plan, which aims to transform Wisconsin into a high-tech hub, after investing US$750 million, including more than US$500 million in the Wisconn Valley Science Technology Park (WVSTP).

The Wisconsin project, which is part of an agreement signed by Hon Hai and WEDC in November 2017, is currently focused on a sophisticated sixth generation flat panel complex (Gen 6 Fab) in the WVSTP, while the plan also includes an incubation center to help high-tech startups develop artificial intelligence and integrate AI with 8K screen production and a 5G ecosystem.

In the statement, Hon Hai expressed disappointment with the WEDC's decision to reject its request for the incentives but said the company is willing to continue talks with the Wisconsin authorities.

"As we have discussed numerous times, markets, opportunities and business plans can and often need to change." Hughes said in the letter. "I have expressed to you my commitment to help negotiate fair terms to support Foxconn's new and substantially changed vision for the project."

In April, Hon Hai confirmed it had submitted an application with the authorities in Wisconsin for investment incentives to facilitate the implementation of the project, which is expected to receive a package of potential subsidies and tax breaks worth over US$3 billion based on the promise of creating 13,000 jobs over six years after signing the agreement in 2017.

The finished frame of the data center at its current stage. File photo courtesy of Hon Hai
The finished frame of the data center at its current stage. File photo courtesy of Hon Hai

In September, Hon Hai said the frame for a 100-foot high-performance computing data center globe (HPCDC) that was being built in Wisconsin had been completed. With completion of the frame, the installation of 642 glass panels will begin soon and the state-of-the-art HPCDC dome will serve as home to the WVSTP Network Operations Center (NOC), the company said.

In June 2018, U.S. President Donald Trump attended the groundbreaking ceremony for the Wisconsin complex and described Hon Hai founder Terry Gou (郭台銘), the company's chairman at that time, as "one of the most successful" businessmen in the world.

(By Ozzy Yin, Chung Jung-feng and Frances Huang)

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