Foxconn said to eye sale of China plant amid trade war woes

Foxconn founder Terry Gou addressing a press conference earlier this year. (AFP)
Updated 02 August 2019

Foxconn said to eye sale of China plant amid trade war woes

  • Foxconn is in talks to appoint banks to find a buyer for its LCD factory

TAIPEI: Taiwan’s Foxconn is exploring the sale of its new $8.8 billion display panel factory in China, people familiar with the matter told Reuters, as demand for the product wanes amid an intensifying US-China trade war.

Foxconn, formally known as Hon Hai Precision Industry, is in talks to appoint banks to find a buyer for its liquid crystal display (LCD) factory that 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 has extensive investments in China, a large roster of US clients that includes Apple Inc, and is having to navigate a tricky path amid the protracted trade war between Washington and Beijing. It would mark one of its largest divestments from China. Foxconn’s discussions are at an initial stage and it has not yet come up with a price tag for the so-called Gen-10.5 facility specializing in large-screen LCDs, the sources said, adding a sale was not a surety.

“It’s not an easy sale and it could take a while,” said one of the sources, citing tepid global demand for large-screen LCDs.

Foxconn, in a written statement to Reuters, said: “As a matter of company policy, Foxconn does not respond to market rumors or speculation.” The sources requested anonymity because the deliberations are confidential.

HIGHLIGHTS

• Foxconn in talks to appoint banks for sale.

• Discussions at early stages, sale not a surety.

• Plant won’t start production until early October.

US President Donald Trump sharply raised the stakes in the bruising trade war with China and jolted global financial markets by vowing on Thursday to impose a 10% tariff on $300 billion of Chinese imports from Sept. 1.

The trade war has disrupted technology global supply chains in a major way, forcing Foxconn to review its own. That and slowing demand for large-screen televisions and monitors prompted Foxconn’s management to seek a buyer for the LCD plant, one of the sources familiar with the management’s thinking said.

Questions were also being raised within Foxconn on the need for the Guangzhou project. “Existing plants are already not running at full capacity ... Did they need another one?” the source said.

The second source said the new factory would not go into production until early October, which makes it less appealing for buyers because of the additional risks as compared to an already operating plant.

The Nikkei daily reported earlier this year that the company would delay most of its planned production in Guangzhou for a minimum of six months, but Foxconn said the project was on schedule.

Dubbed the largest single investment ever in the southern city by Chinese media, Foxconn announced the Guangzhou plant in 2016, hoping to start operations by 2019 to meet an expected rise in demand for large-screen TVs and monitors in Asia in a challenge to top Chinese display maker BOE Technology Group .

The project was mainly run by a joint venture between the Guangzhou government and Japan’s Sakai Display Products, an advanced panel factory owned by Foxconn founder Terry Gou and Japan’s Sharp Corp, Foxconn’s display unit.

The Japanese panel maker said on Thursday it would build a plant in Vietnam to make flat screens and electronic devices to guard against additional US import tariffs on Chinese goods.

The global display industry has been struggling with a supply glut and tumbling earnings due to moribund sales of televisions and smartphones, and the worsening trade dispute that could raise product prices and dampen consumer demand.

Sharp reported on Thursday a double-digit decline in profit for the quarter ended June due to sluggish tech demand.

Taipei-based Foxconn said in April that it remained committed to building a display plant and tech research facilities in Wisconsin amid growing skepticism about the fate of the $10 billion project. Trump had cited Foxconn’s Wisconsin plans as proof he was reviving American manufacturing.

But Foxconn is already under the spotlight for having failed so far to meet job-creation targets in Wisconsin.

The company told Reuters earlier this year it was reconsidering plans to make advanced LCD panels at Wisconsin. 


Davos 2020: Ministers, top executives in Saudi delegation to WEF

Klaus Schwab, founder and executive chairman of the World Economic Forum, center, his wife Hilde, left, and President of the European Commission Ursula von der Leyen are seated during the opening session of the 50th annual meeting of the World Economic Forum, in Davos, Switzerland, Monday, Jan. 20, 2020. (AP)
Updated 21 January 2020

Davos 2020: Ministers, top executives in Saudi delegation to WEF

  • A large KSA contingent comprising 55 senior figures will be attending the WEF in Davos
  • Around 3,000 leaders from business, public policy, culture and technology will be in attendance

DAVOS: Some 3,000 leaders from the worlds of business, public policy, culture and technology are due to arrive in the Alpine town of Davos for the annual meeting of the World Economic Forum (WEF), which begins on Tuesday.

The meeting this year — under the theme “stakeholders for a cohesive and sustainable world” — is the 50th time the annual meeting has been held in the Swiss resort, but it comes at a time of growing global tensions over climate change and geopolitical confrontation.

Last week, the WEF published its annual global risk report, one of the gloomiest ever, with global experts concerned about accelerating environmental damage and potential political flashpoints in several parts of the world.

Saudi Arabia is sending a top-level delegation to the meeting, headed by Dr. Ibrahim bin Abdulaziz Al-Assaf, Minister of State and Member of the Cabinet, with some 55 senior figures.

They include ministers and senior executives from industry, finance and the economy, in addition to many other Saudi participants attending for bilateral meetings and support roles, as well as the event’s legendary networking.

Prince Abdulaziz bin Salman will attend his first WEF annual meeting since he was named energy minister last year. Deputy Defense Minister Prince Khalid bin Salman will also attend.

Amin Nasser, CEO of Saudi Aramco, will attend for the first time as head of a publicly listed company following the oil giant’s successful initial public offering (IPO) last year.

Relations between Saudi Arabia and the WEF have grown stronger as the Kingdom’s ambitious Vision 2030 strategy has accelerated.

Later this year, Riyadh will play host to a meeting of the WEF under the banner of the Centre for the Fourth Industrial Revolution, the brainchild of Klaus Schwab, WEF founder and executive chairman.

“On the eve of its G20 presidency, we welcome the Kingdom of Saudi Arabia … to shape those technologies in a way that serves society,” Schwab said.

In contrast with the strong participation from Saudi Arabia and other Gulf countries, notably the UAE, Iran has pulled out of the meeting altogether because of the heightened political tensions in the region following the killing of the country’s top general, Qassem Soleimani, in a US strike earlier this month.

President Donald Trump is leading a big American delegation to the event, the second time he has attended Davos since moving into the White House, having missed last year. He is due to deliver a keynote address on the opening day of the meeting.

Climate change and its consequences look certain to be a big topic in snowy Davos, where the temperature rarely rises above freezing.

Greta Thunberg, the young environmental campaigner, is also taking part in sessions, including one on “averting a climate apocalypse.”

She has hiked over the Alps to get to Davos, having pledged not to use environmentally damaging public transport.

Davos 2020 is split across seven key themes: Healthy futures, how to save the planet, better business, beyond geopolitics, technology for good, fairer economies, and society and the future of work.

On climate change, the WEF said: “The Earth is getting hotter, the ice is melting, the oceans are rising, and they’re filling up with plastic. We’re losing species, building up greenhouse gases, and running out of time. It’s easy to feel downhearted.”

On rising geopolitical tensions, it added: “We need to move from geopolitics and international competition to a default of consummate global collaboration. Nations are going to have to change.”

In an effort to change the event’s image as a showy gathering of the global elite, often traveling in helicopters and limousines to the Alpine resort, the WEF has offered to pay half of the first-class rail fare from anywhere in the world to Davos.