Foxconn has scrapped plans for a $5 billion manufacturing plant in India, citing multiple economic factors.
Industries minister Subhash Desai confirmed to media outlets in India on Monday that the deal was dead. Foxconn signed a memorandum of understanding in 2015 to build the plant to make mobile phones and components and help create up to 50,000 jobs by 2020, according to the Times of India.
Analyst Alberto Moel, who until recently covered the Asian flat panel display industry from Hong Kong for a research firm, Sanford C. Bernstein, said he’s not surprised Foxconn pulled out of India.
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“This is not the first time they’ve done this and the reasons they are giving are sensible,” Moel said. “They are in a tight spot and would rather not spend $5 billion in India.”
A proposed $1 billion manufacturing plant in Indonesia and a $30 million plant in Harrisburg, Pennsylvania, never materialized.
In a statement Thursday from Foxconn Technology Group, the company said:
“Foxconn’s investment plans in markets around the world are reviewed and adjusted on a regular basis based on many factors, including global market conditions and the needs of our wide range of customers. We are a long-term investor in India, where we have invested millions of dollars and employ thousands of Indian workers, and all of our business partners, customers and suppliers, are aligned with our plans and our current investment decisions.”
Moel said Foxconn already began backing out of its deal with Wisconsin in 2018, when the company announced it would not build so-called Generation 10 screens.
“Effectively, Foxconn has already ‘pulled a Foxconn’ and pretty much withdrawn far from the original conception and into something much less splashy,” Moel said. “Can they go further? They could, and they could be well playing hard to get with the new governor. I’m not saying they will, but it’s not out of the realm of possibility.”
In 2017, the Republican-controlled state Legislature approved a $3 billion deal with Foxconn that called for the company to build what’s known as a Generation 10.5 liquid crystal display plant. At the time, the company was planning to build some of the largest, most technologically-advanced screens in the world.
When the deal was pitched to the state Legislature, it called for a 22 million square-foot manufacturing campus and the creation of 13,000 jobs. Foxconn reported that 192 jobs were created in 2018, according to the Wisconsin Economic Development Corp. (WEDC) The company has until April 1 to report 2019 job creation in order to be eligible for state tax credits.
Foxconn and the state are currently in talks to renegotiate its contract since the company has since backed away from its original plans. Foxconn is currently building a 1 million square-foot facility that could eventually build Generation 6 screens, which are smaller.
David Callender, spokesman for WEDC, said Thursday he did not have an update on contract negotiations.
Moel, who wrote a 149-page research paper on Foxconn for investors in 2012, said Foxconn could be purposely vague and difficult to deal with so that Wisconsin decides to back out and throw in the towel.
“I think (Foxconn) could have figured out, before they signed an agreement with Wisconsin to build, that this wasn’t going to happen,” Moel said. “And if, back then, (elected officials) would have talked to people in the industry, we would have told you, this makes no sense.”
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