The decision by Foxconn Electronics to invest US$10 billion in the US, which will include the establishment of a 10.5G TFT-LCD panel plant in Wisconsin in the initial stage, will help the company move closer to its clients and accelerate its corporate transformation, according to Digitimes Research.
Including the planned LCD plant in Wisconsin, a total of five 10.5G flat panel fabs are expected to commence for commercial operations during the period from 2018-2021 signaling that there will be a risk of overproduction of large-sized TV panels. But Foxconn's decision still makes sense given the US is one of the world's two major high-end TV markets. The establishment of a streamlined production line covering from the panel production to the system assembly will help improve manufacturing efficiency and make prompt responses to market demand, while also reducing transportation costs, said Digitimes Research.
The new US investment plans, if realized, will also help Foxconn transform itself from its current OEM business model into a conglomerate with powerful system integration and brand management ability.
While Foxconn is likely to win a US$3 billion tax break from the State of Wisconsin, the capital efficiency and optimization of the 10.5G plant in the US still shows a significant difference as compared to a 10.5G line currently being built by China-based BOE Technology, which is required to put up a mere 5% of capital needed for the construction and operation of the plant.
Leveraging its advantages of being close to the US market and able to deliver goods promptly, Foxconn is expected to further expand its investments in the US to include other products such as automotive panels, robots and other innovative products.