Posted on 08/02/2019 7:46:42 PM PDT by cba123
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 specialising in large-screen LCDs, the sources said, adding a sale was not a surety.
(please see link for full story)
But so far I think Trump seems to be doing exactly the right things, to win the original trading agreement, which the Chinese originally agreed to, before (someone, some where) objected on the Chinese side.
China, you are dealing with Donald Trump.
You could always go back and agree.
Maybe.
If that is still available. Maybe not, though...
Neutron Jack Welch caught hell for saying “wouldn’t it be nice if we could just build factories on big ships and pull them into which every country was cheapest to do business in?”. But it would be.
China benefited at our expense, now maybe Vietnam and other countries will benefit at China’s expense.
I am not against moving lots of American factories to Vietnam from China.
Personally I am all for that.
Vietnam, unlike China is NOT trying to take over the world.
The country is just not. Vietnamese are the one nationality on the entire globe, where I just don’t ever, ever encounter racist people.
Ever.
That said, I understand there are lots of people who want jobs to return to America. That would be great also.
:)
But I think it is high time for American companies to start moving out of China.
For real.
This seems to signal an acceleration of the move out of China, and more of a long term negative indicator for China.
Foxconn has been setting up new production lines elsewhere, and even shifting some production out of existing facilities. But this is a long term investment on an entire major facility. It looks like the easier cost savings and drawdowns are done, and now the really major cuts are starting.
Foxconn knows that they will likely take a loss on selling this facility now - and they know they will attract the ire of Chinese regulators. This had been a showcase project, touted as the largest single investment ever in the city of Guangzhou. Now it will be a vacant symbol of the loss of business - the iconic Rust Belt empty factory.
It looks like they are willing to now take those greater risks, and pay those higher costs. They may have viewed any further investment as just good money after bad, and sought to stop the bleeding now, and see what they can recover from this investment later. The next step might be to close an existing plant, perhaps consolidating operations into fewer facilities.
Korean firms were penalized by Chinese regulators, when they started closing facilities and withdrawing their capital back out of China. Lets see what the CCP does when the flood rises.
If the numbers are so bad that major companies like the partners on this facility (Japan’s Sharp and Taiwan’s Foxconn) are willing to take such a big hit to get out of this facility, you can bet that that others will not be starting new projects.
There must be a total bubble of virtually no new Foreign Investment in future facilities working its way through the development pipeline.
Production numbers might taper off, but behind those numbers the death rate of existing production lines will probably increase, while the birth rate drops to zero.
At some point, a financial crisis of some sort could possibly push that region off the cliff, with a run of plant closings, and a supply chain meltdown.
Be aware this is a new factory they just invested in, I don’t believe this is producing anything yet.
was one of the greediest subhuman pieces of greedy immoral slime from the era, and contaminated most US companies with the "CEO as God" from which the economy still hasn't recovered.
That line "we gave them lifetime employability" was an utter lie -- even as he welched off (har!) with a $2 million/yr FOR LIFE severance, and left his wife for the 40-something year old chick from Harvard Business Review who interviewed him once.
This class of MBA-worshipping executives are subhuman scum, putting the robber barons of yore to shame.
“Be aware this is a new factory they just invested in, I don’t believe this is producing anything yet.”
Understood. It was supposed to open this year. They invested billions, and are pulling the the plug, rather than starting it up.
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