Analysts See Foxconn Decision to Build Wisconsin Display Fab as ‘Political’ Ploy

That Apple contract manufacturer Foxconn may be nearing a decision to build a $10 billion display fab in Wisconsin (see 1706230041) is “a hard case to make in terms of labor and other costs,” said Chris DeMuth, chief investment officer at Rangeley Capital, on a Monday podcast. U.S. labor costs are “competitive” with those of other world regions only at the very high end of “precision-type manufacturing,” such as for specialty medical devices, said DeMuth. Flat-panel screens “can be made much cheaper in Asia,” he said. That’s why DeMuth sees any decision to build a plant in Wisconsin as a “political” ploy to win favor with the Trump administration, he said. Though building a highly robotic plant in Wisconsin “could make some business sense for Foxconn, I think it’s definitely a political play,” agreed Andrew Walker, Rangeley Capital portfolio manager. “I don’t think it’s an accident that they’re looking to build in Wisconsin, Paul Ryan’s home state,” said Walker of the Republican House speaker. Building a U.S. plant also “serves as an economic hedge” against possible trade wars, he said. “If they do jack up the taxes on iPhones coming into the U.S., you can start building them in the U.S. at that plant you’ve already built.” Foxconn and Wisconsin representatives didn’t comment Tuesday. Foxconn CEO Terry Gou is scheduled to keynote IFA Sept. 2 in Berlin (see 1707110023).