TAIPEI (Reuters) – Taiwan's Foxconn is considering the sale of its new $ 8.8 billion scoreboard factory in China, Reuters told reporters, as demand for the product slipped intensified trade war between the US and China.
FILE PHOTO: A motorcyclist passes the Taipei, Taiwan logo of Foxconn, the trade name of Hon Hai Precision Industry. REUTERS / Tyrone Siu / File Photo
Foxconn, formerly known as Hon Hai Precision Industry, is in talks to hire banks to find a buyer for its liquid crystal display (LCD) factory, which is being built in the southern Chinese city of Guangzhou, said two people with direct knowledge of the matter.
A sale would come at a delicate time for Foxconn, which is investing heavily in China, having a large number of American customers, including Apple Inc., and making a difficult journey in the protracted trade war between Washington and Beijing. It would be one of the biggest divestments of China.
The talks with Foxconn are at an early stage and no price tag has yet been found for the so-called Gen 10.5 facility, which specializes in large LCD screens.
"It's not a simple sale, and it could take a while," one of the sources cited as the soft global demand for large LCD screens.
Foxconn said in a written statement to Reuters, "For corporate policy reasons, Foxconn is not responding to market rumors or speculation." The sources demanded anonymity, as the deliberations are confidential.
US. President Donald Trump sharply increased the stakes in the bloody trade war with China, causing turmoil in the global financial markets by pledging Thursday to raise 10% from October 1 to $ 300 billion in Chinese imports.
The Trade War has disrupted global technology supply. This forces Foxconn to review its own. This and the slowdown in demand for large screen televisions and monitors had led Foxconn's management to seek a buyer for the LCD system, one of the sources familiar with management considerations.
Foxconn has also raised questions about the need for the Guangzhou project. "Existing plants are already underutilized, why do we need one more?", It said from the source.
The second source said that the new plant would not go into production until the beginning of October, making it less attractive to buyers due to the added risks compared to a plant already in operation.
The Nikkei daily reported earlier this year that the company would delay most of its planned production in Guangzhou for at least six months, but Foxconn said the project was on schedule.
Foxconn, designated by the Chinese media as the largest single investment in the southern city, announced the Guangzhou plant in 2016, hoping to start operations by 2019 to meet expected increases in demand Satisfying big screen TVs and monitors in Asia in a challenge for Chinese top display manufacturer BOE Technology Group.
The project was mainly led by a joint venture between the Guangzhou government and Japanese Sakai Display Products, a modern panel factory owned by Foxconn founder Terry Gou and Japanese Sharp Corp, the Foxconn display unit.
The Japanese panel maker said Thursday it would build a factory in Vietnam to manufacture flat panel displays and electronic devices to prevent additional US import duties on Chinese goods.
The global display industry is struggling with oversupply and declining earnings due to the dying of televisions and smartphones and the worsening trade dispute that could raise product prices and dampen consumer demand.
Sharp reported a double digit profit decline on Thursday for the June ending quarter due to sluggish tech demand. Taipei-based Foxconn announced in April that the company, despite growing skepticism about the fate of the $ 10 billion project, will continue to drive the construction of a Wisconsin display plant and engineering research facilities. Trump had cited Foxconn's Wisconsin plans as proof that he wanted to revive American manufacturing.
However, Foxconn is already in the limelight because it has failed to meet its Wisconsin job creation goals.
The company told Reuters earlier this year that it is considering plans to produce advanced LCD panels in Wisconsin.
Reporting by Yimou Lee; Edited by Anne Marie Roantree and Muralikumar Anantharaman