Foxconn’s original plan to build a Gen 10.5 LCD fab in Racine County has taken yet another weird turn.
The saga continues. Foxconn, which had announced it would build a state-of-the-art LCD fab and R&D facility in the Badger State back in 2017, continues to backtrack and leave people guessing what will actually materialize when all the dust settles. That original Gen 10.5 LCD fab was effectively torpedoed when then-chairman Terry Gou said in January of last year that “…In terms of TV, we have no place in the U.S. We can’t compete.”
After a ruckus was raised in Washington by the Trump administration, Gou announced that the new facility – which was originally going to employ 13,000 workers – would instead feature a scaled-down Gen 6 LCD fab, producing specialty panels. Employment figures were revised to show something in the range of 1500 jobs – quite a drop from the 13k originally promised. Now, Foxconn’s latest plan is to build a smart manufacturing facility that will make automated coffee kiosks, along with a data center. These buildings would total a bit more than a million square feet, quite a bit smaller than the original plan.
The tech Web site The Verge, to its credit, has doggedly pursued every twist and turn in this strange tale. A recent post on April 12 (“Foxconn’s buildings in Wisconsin are still empty, one year later”) revealed that numerous ballyhooed Foxconn “innovation center” buildings around the state are indeed vacant, with not much happening at the main facility in Mt. Pleasant Township (Racine County) either.
Quoting from the Verge story,
“…Foxconn originally promised to turn two buildings in Eau Claire into office space and research facilities. It never purchased one of the buildings and has taken out no substantive building permits for the other… The Green Bay innovation center has also made no progress…. Foxconn submitted plans toward the end of 2019 for an even smaller space: 3,500 square feet of office space for 49 people. But no permits have been taken out, and construction has yet to begin.”
Not much is happening at the newly-built Mt. Pleasant facility, either.
“…The company got a permit to remodel 1,451 square feet in its Racine building toward the end of last year, but it’s unclear whether any construction has occurred. (Foxconn originally said it planned to remodel 20,000 square feet and open in January 2019.)”
Discussions Continue
Discussions and negotiations (and likely some terse conversations) continue back and forth between the governor’s office, the Wisconsin Economic Development Corporation, and Foxconn subsidiary Foxconn Industrial Internet (FII), which wasn’t even listed as a party to the original contract. According to The Verge, fewer than 200 people were employed at the Racine facility at the end of 2019, yet somehow Foxconn managed to hire enough additional workers by April 1 to quality for a $50 million subsidy from the state. With all incentives, Wisconsin could wind up paying Foxconn almost $300,000 for each employee.
Wisconsin officials claim that, because Foxconn veered away from its original written commitment to build a Gen 10.5 LCD fab for televisions, the promised subsidies and tax credits would no longer apply. Foxconn is arguing that its decision to build a smaller, less ambitious facility with fewer jobs should still qualify, and that the original contract should be amended.
Is the Building Suitable for a Fab?
While the two sides go at it in meetings (and likely in court at some point), Foxconn has started building…well, something, at the Racine facility. It doesn’t appear to be large enough to house a Gen 6 fab, nor is the construction apparently sturdy enough for such a fab, according to the Verge story. Foxconn has floated the idea of making specialty LCD panels for automotive and medical markets, something Display Supply Chain Consultants’ Bob O’Brien thought might possibly be feasible.
O’Brien said:
“You could construct a business with a small Gen 6 fab for automotive and medical markets, and make it work. It could work because of the higher prices for specialized LCD displays, which would be 3 times to 4 times those of commoditized LCD panels for televisions. And automotive and medical equipment manufacturers would appreciate having a local source of supply, just as they do for other components. But no one has ever done this business model before.”
Whatever Foxconn is planning to use this building for will become public knowledge next month, when the facility will begin manufacturing. Foxconn has said that they could not produce LCD panels before 2022 – but it looks like everyone’s plans have changed in a hurry.
Covid-19 Intrudes
The coronavirus outbreak has led to a nationwide shortage of ventilators, and Foxconn announced on April 8 that they would partner with Medtronic to start making copies of the latter’s ventilator design by mid-May in Racine. In a Reuters story, Medtronic CEO Omar Ishrak said the Foxconn plant would produce Medtronic’s Puritan Bennet PB-560, a design that has already been open-sourced and copied numerous times.
So, it appears after all that something will be manufactured in Mt. Pleasant next month. Although the PB-560 does incorporate a simple LCD display, there’s no indication of the panels being made stateside. As ventilator production ramps up, the phantom Gen 6 fab may disappear altogether. And with all of the distractions created by the pandemic, very few people are worrying about fabbing LCD panels these days.
Perhaps Foxconn is playing a game of “run out the clock,” guessing that there may be a different administration in Washington come next January? And that tariffs may not be a big issue after that? And that the original contract might be revised, albeit with greatly reduced financial incentives? Or maybe they’re just adrift, with no distinct corporate strategy, and making things up as they go along?
One thing’s for certain: This story has more characters than a soap opera, and you can’t keep track of them without a scorecard. Read the original Verge article, “Showdown in Wisconn Valley,” if you’d like to take a deeper dive.
As for Gou? He claimed a vision appeared to him in his sleep, urging him to run for president of Taiwan. So, he stepped down as Foxconn’s CEO to start his campaign, only to finish second in primary voting.
You can’t make this stuff up… (PP)
