Foxconn Is Looking to Move iPhone Production Out of China… Maybe to Wisconsin?

Two big manufacturing stories we’ve been following closely over the past few months are converging.

First, there’s the U.S.-China trade negotiations, which are… so not happening right now. President Trump, emboldened from his recent tariff spat with Mexico, is playing hardball with China, and the Chinese are not backing down, either.

That means that businesses are looking at long-term strategies on how best to survive a trade war between the two nations before things really get out of hand.

One of those companies is Foxconn, which makes a ton of tech but is perhaps best known for manufacturing iPhones in China. Most of the factories that produce the iPhone and its various parts are in China, and Foxconn employs 350,000 people to make them at a massive factory complex in Zhengzhou called “iPhone City.”

Working conditions there are just great and people are very happy.

But I digress. If Trump does indeed follow through on his current plan to place a 25 percent tariff on Chinese imports, the iPhone and other Apple gadgets would take a hit. As The Verge noted, one-third of Apple’s iPhone revenue comes from products imported to the United States from China, so it’s a big deal for the California-based company’s bottom line.

Apple would have to decide whether to pass the cost increase onto consumers, which could raise the price of the already expensive iPhone by up to 16 percent, according to Bloomberg. Demand for the iPhone could then decrease by up to 40 percent. Either way, Apple is in a bad place.

So Foxconn — which relies on Apple for about half of its revenue — is now looking at ways to make the iPhone outside of China and avoid the tariffs. Foxconn executives already have made a big deal about how it is “totally capable of dealing with Apple’s needs to move production lines,” possibly to plants in Brazil, Mexico, Vietnam or... Wisconsin? 

Which brings us to the second story we’ve been monitoring.

Now, the last time we checked in on this ambitious Foxconn project in Wisconsin, things were going just terrible. Foxconn has changed plans for the planned $10 billion factory so much that Wisconsin’s new governor wants to redo the deal the state made with the company. Meanwhile, Wisconsin residents are paying the price for Foxconn’s continued shadiness.

But now there’s talk that some of the iPhone production being moved out of China might come to the Badger State:

Preparing for a possible U.S.-China trade war, Foxconn Technology Group reportedly said this week that it may expand the range of products at the Wisconsin factory it has begun building.

The development came as Foxconn, which draws more than half its revenue from Apple Inc., signaled it could move iPhone production outside China, its main manufacturing base. 

And, speaking in Taiwan to analysts at a rare investor conference, key Foxconn executive Young Liu pointed to the importance of the Wisconsin project... Besides the liquid-crystal display panels that have long been planned for the Mount Pleasant factory, it could also be used to produce servers, networking products and central controls for automobiles.

Wow, this is totally great news! Except it probably won’t happen.

Look, I legitimately, sincerely hope I am wrong. It would be wonderful if Foxconn actually follows through here, making good on its promise to create 13,000 new jobs and reshoring valuable electronics production that could help spur additional investments in the United States.

But as AAM President Scott Paul noted when the Foxconn factory was first announced in 2017, the company is notorious for not following through on its promises. “I’ll be excited about this Foxconn announcement when I see actual paychecks going to workers,” he told the Huffington Post.

Foxconn’s actions in Wisconsin since then have only reinforced that point. Bloomberg recently described the Wisconsin deal as “disastrous.” New York Magazine put it this way: “Foxconn Is Good at Grifting Governments, and the U.S. is an Easy Mark.”

Like I said, I really do hope I am wrong. I hope that Foxconn does bring production of iPhones and servers and automotive central controls to Wisconsin. I hope that tens of thousands of good-paying jobs are created and it sparks a rebirth for the U.S. electronics manufacturing industry.

But I’ll wait until those paychecks actually get to workers before celebrating.


Reposted from AAM