Hon Hai Precision, the parent company of Foxconn, will spend $10 billion to build in Kenosha, Wisconsin a 10.5-generation LCD plant for 8K displays. The deal brokered by the Trump Administration includes $3 billion in tax breaks to create at least 3,000 Foxconn jobs in the U.S.

“TV was invented in America, but it does not have a single fab to produce a single 8K system--we are going to change that,” said Foxconn chairman and founder in a White House event. “We are committed to build the most advanced 8K ecosystem in America — the most advanced in the world,” Gou said.

The deal initially includes a 20 million square foot Foxconn campus but could ultimately create up to 13,000 Foxconn and 22,000 indirect jobs. The Foxconn jobs will have an average annual salary of $53,000 plus benefits, said Wisconsin Governor Scott Walker.

In a Foxconn press release, Gou said the Wisconsin plant was “the first in a series of facilities we will build in several U.S. states, this is part of a bigger plan to create a robust 8K+5G ecosystem in the United States,” implying smartphone manufacturing. In remarks at the event President Trump alluded to other plants “in negotiations.”

Separately, President Trump told the Wall Street Journal that Apple chief executive Tim Cook promised to build three manufacturing plants in the U.S. Foxconn’s Wisconsin plan has no apparent connection to Apple, but is focused on LCDs for large-screen TVs, something that Apple was rumored years ago to be considering

Former President Obama once asked Apple founder Steve Jobs what it would take to bring iPhone manufacturing to the U.S. Jobs famously responded that those factory jobs are not coming back.

What happened between the Trump Administration and Gou, potentially changing the calculus is not clear. Several observers noted the $3 billion in tax breaks was a high price to pay for a guarantee of a minimum of 3,000 jobs.

Analysts described the Foxconn plan as ambitious given the supply chain required to make large LCDs is almost entirely in Korea and China. However, North America is the largest market for large-screen TVs of 55-inches and above, said Ken Werner, a veteran display analyst with Nutmeg Consultants (Norwalk, Conn.).

Since it bought Sharp a year ago for $3.5 billion, Foxconn has been trying to revive Sharp’s branded TV business, which the Japanese company sold to China’s HiSense in 2015. HiSense and other TV makers in China, such as TCL and Skyworth, have leapfrogged Sharp and many other TV giants in Japan. Sharp once dominated the flat-panel business but now only Sony remains among top players from Japan.

Large screen displays and to a lesser extent the TVs they go into are cyclical and highly automated businesses typically based on large volumes and thin profits, said Werner. While LCD and TV makers have reaped good profits in the last two years, the business is known for quick up and down swings, he said.

A 10.5-G Sharp plant would need to attract others suppliers such as Corning that makes the large sheets of glass LCDs require. It would also represent a challenge for Applied Materials, which generally makes in Asia the large plasma-enhanced chemical vapor deposition systems used for making LCDs.

The 10.5G fabs use sheets of glass that measure about three meters square and are only a few millimeters thick. Thus today’s large LCD fabs have glass plants, usually Corning, co-located next to them. “You can’t make the glass elsewhere and ship it because it’s too unwieldy,” said a former display analyst who asked not to be named.

As for direct labor, the LCD plants “are largely automated, so if you see a half dozen people on the manufacturing floor at one time it’s a lot,” said Werner.

Most of the work assembling the displays into TVs for North America is currently done in Mexico. Both Sharp and Sony have sold large TV assembly plants in Mexico to top China TV makers.

These plants require supplies of chips, connectors, cables and plastic moldings that have also clustered around the large China and Korean LCD fabs.

“It’s an ambitious plan. With no recent experience making LCDs in the U.S. to start at the high end is ambitious. They have done it to some extent in China but even then they have tended to step back a generation or so in maturity,” said the former analyst.

The world market for TVs is estimated at about 250 million sets a year.

The top-down Trump plan to encourage manufacturing in the U.S. is an ambitious approach radically different from the bottom’s up approach of his predecessor. During his tenure, President Obama focused on creating centers of excellence for next generation technologies such as flexible, printed electronics and photonics and encouraging global entrepreneurs.

By: DocMemory
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