New | Hon Hai will build US assembly for display panels to get closer to American customers

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Employees on the assembly line of Hon Hai Group, also called Foxconn, in Shenzhen. The company is the world’s largest electronics contract manufacturer, producing Apple’s iPhones and iPads. Photo: SCMP

Published: 8:01pm, 18 May 2017Updated: 10:48pm, 18 May 2017

Hon Hai Precision Industry, the world’s largest contract electronics manufacturer, is moving ahead with plans to establish a display panel factory in the United States to be closer to its biggest customers, giving Donald Trump bragging right to bolster his “American First” political message and jobs agenda.

The Taiwan company’s founder Terry Gou (郭台銘) will proceed with a US$7 billion American factory to make display panels for televisions and other electronic devices, following several low-key White House meetings in late April between him, the president of Sharp Corp. -- the Japanese electronics maker two-thirds owned by Hon Hai -- and Trump administration officials, according to analysts and officials familiar with his plans.

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Terry Gou Tai-ming, founder, Chairman and CEO of Foxconn, also known as Hon Hai, at a forum in Wuhen on Nov. 17, 2016 during the 3rd World Internet Conference. Photo: Simon Song

The US uses so many panels, and a lot of panels are shipped there, but there’s no panel industry there, so that’s kind of strange,” Gou had said in a video during a company event in January, when he announced his plan.

The move is a significant step for Foxconn Technology Group, as the company is also called, getting it closer to its biggest customers including Apple Inc and Dell Inc. Hon Hai is the largest contract assembler of Apple’s iPhones and iPads.

“The US, or North America as a whole, is the most important consumer electronics market worldwide,” said Eric Chiou, research vice president with the WitsView division of Taipei-based market analysis firm TrendForce. “Since panels are needed in TVs, notebooks, smartphones and other devices, setting up panel fabrication facilities and to promote local manufacturing could help bring about further supply chain integration for non-U.S. consumer electronics companies and create proximity advantage for them.”