Foxconn Technology Group will build three assembly plants in Wisconsin before constructing the high-tech liquid-crystal display panel factory that is the centerpiece of a $10 billion investment it has promised in exchange for a large package of tax incentives, the company said Tuesday.
In a published report Monday, a Foxconn official said a trio of assembly plants would be built as early as next year.
Assembly operations would be up and running before construction is completed on the project’s mainstay — the first U.S. manufacturing plant for LCD screens for televisions and other devices, the Taiwan-based electronics giant said.
It will take about four years to build the multibillion-dollar LCD screen plant, Foxconn said Tuesday.
An industry analyst said the construction schedule for the LCD factory is longer than typical for such facilities, possibly because of a bottleneck that has developed in availability of specialized manufacturing equipment the plant will need.
Foxconn’s plans are contingent on a $3 billion package of tax subsidies and environmental permitting exemptions proposed by Gov. Scott Walker.
Walker has said Foxconn would invest $10 billion by 2020 to create a 1,000-acre campus in southeastern Wisconsin and up to 13,000 jobs.
Foxconn declined to say how many workers the assembly plants would employ. Reuters on Monday quoted a Foxconn official saying the investment would be less than $1 billion of the total.
In a statement Tuesday, the company said the assembly plants may use LCD screens imported from overseas until the Wisconsin LCD manufacturing facility was running.
“We may ship panels from other Foxconn fabs (factories) to Wisconsin,” the company said through a Hong Kong-based spokeswoman, Ellin Choy.
The imports would end after the Wisconsin LCD screen plant began its own production, the company said.
Perhaps an early test
Early construction of the assembly plants could make business sense for the Taiwan-based corporation, industry analyst Bob O’Brien said.
“If you wanted to make a statement of having a modest investment and start testing out some automated assembly lines on small scale, that could make a certain amount of sense,” said O’Brien, president of the Ann Arbor, Michigan-based Display Supply Chain Consultants.
But O’Brien cautioned that Foxconn has made other jobs announcements that never panned out.
Foxconn’s Wisconsin plans were announced last month at a White House event by President Donald Trump and Foxconn chairman Terry Gou.
Walker, who took part in the event and who has been pushing the state Legislature to approve tax subsidies and environmental exemptions, didn’t respond to a request for comment.
The state Assembly approved the incentives package Thursday, but state Senate leaders have said they still have questions about a Legislative Fiscal Bureau analysis showing it would take at least 25 years for the state to begin to recoup the money it would pay Foxconn in tax credits.
Lawmakers on Tuesday conducted a public hearing on the plan for southeastern Wisconsin, where Foxconn is seeking a site. Meanwhile, Walker scheduled three events across the state to talk about the potential for local businesses to become Foxconn suppliers.
Trump said the company would create a minimum of 3,000 jobs, an employment figure that would be realistic for the LCD panel factory The other 10,000 jobs would come from full-scale assembly facilities where lighting and electrical components were installed on the panels and where exterior casing and controls were added to make finished televisions, O’Brien said.
A potential obstacle to operating labor-intensive assembly plants in the U.S. is that wage levels are higher than in China and other places where much of that work is done now.
But Chinese wages have been rising, and the taxpayer subsidy being offered by Walker could make a difference, O’Brien said. In addition, there has been political pressure on manufacturers to invest in jobs in the U.S.
While assembly operations can be labor-intensive, Gou has talked about wanting to pioneer more highly automated assembly operations, which could also reduce costs, O’Brien said.
Foxconn said Tuesday it remains committed to leading the industry’s drive toward more automation and robotics and using that technology in Wisconsin.
“However, the new facilities will deploy a large workforce, including extensive numbers of high-value and high-skilled labor in all aspects of the operations,” the company said.
Two phases planned for construction
While Walker has said Foxconn would invest $10 billion in Wisconsin by 2020, the memorandum of understanding between the company and state officials calls for a six-year construction schedule consisting of a four-year first phase and a two-year second phase.
O’Brien said the four-year timetable Foxconn cited Tuesday could reflect a bottleneck in specialized equipment the plant will need: Currently, there is only one supplier of the lithography tools needed to add electronic circuitry to glass panels of the size Foxconn plans for the Wisconsin plant, O’Brien said.
The panels — called Gen 10.5 and measuring about 10 feet wide by 11 feet long — will be the largest ever manufactured. About a dozen Gen 10.5 plants are in various stages of planning or construction by Foxconn and its competitors, O’Brien said.
The screens are made in a largely automated process in sanitized clean rooms to keep dust particles from creating imperfections in circuitry that is applied to sheets of half-millimeter-thick glass. Each screen is made of two sheets with LCD material sandwiched in between.
The finished panels can be cut into a variety of sizes for shipping to plants where they are assembled into screens for phones, computers, televisions or other devices.
Typically, there is a two-part assembly process. In the first phase, a lighting source and electrical power equipment are added to complete what is referred to as an LCD module. The next phase involves installing the module into the outer shell to make the finished device.
Foxconn said the three facilities it plans for 2018 would assemble “back-end package liquid crystal display modules,” “molding and tool and die processes involved in the production of high-precision housing and frames for display modules,” and “final assembly.”
Leaders in the state Senate still have questions about the Foxconn deal.