Foxconn has enough capacity outside China to meet Apple’s US demand
The leading electronics assembler’s investment in Wisconsin becomes ‘more important than ever’ amid growing US-China trade war
Taipei — Foxconn, the world’s top contract electronics assembler, said on Tuesday it had enough capacity outside China to meet Apple’s demand in the American market if the need should arise for the iPhone maker to adjust its production lines due to the US-China trade war.
The comments come as US President Donald Trump has threatened to unlock further tariffs on $300bn worth of goods from China — where the bulk of Apple’s devices are assembled. The country is also a key market for the firm.
“Twenty-five percent of our production capacity is outside of China and we have enough capacity to meet Apple’s demand in the US market,” a member of the Taiwanese firm’s proposed new board, Liu Young-way, said on Tuesday. Foxconn could adjust its production lines according to Apple's needs.
Liu was speaking at Foxconn’s first investor conference in Taipei, where the company also said it was well positioned to tackle the “increasingly tough” trade war situation with its production lines across 16 countries.
The trade war “will have some impact, but it will be limited”, Liu said.
He also emphasised that Foxconn’s investment in Wisconsin was more important than before given the trade war. The firm is already under the spotlight for having failed so far to meet job-creation targets in the US state.
Foxconn, formally Hon Hai Precision Industry, also unveiled a leadership overhaul that will see more executives involved in its daily operations, as chair Terry Gou prepares to run in Taiwan’s 2020 presidential election.
The overhaul marks a major shift in Foxconn’s corporate leadership that has seen 68-year-old Gou hold a tight grip on the firm’s daily operations and strategic decisions.
Gou said in April that he planned to step down from Foxconn to pave the way for younger talent to move up the ranks.
Foxconn will now get an “operations committee”, that will give nine senior executives from the group’s subsidiaries greater control. It will meet once a week.
The committee includes most members from Foxconn’s proposed new board, including Foxconn CFO Huang Chiu-lien and Foxconn Interconnect Technology chair Lu Sung-Ching.
The committee did not include Gou or the chairman of Foxconn’s Japanese electronics unit Sharp Corp, Tai Jeng-wu, who are both members of the new proposed board.
Two people with direct knowledge of the matter said Tai had resigned from the committee to avoid possible conflict of interest between parent Foxconn and its Japanese unit.
Foxconn did not provide a reason for Tai’s absence.
Investors are keen for any insight into succession plans at Foxconn and what it means for plans laid out by Gou, such as the $10bn investment to create 13,000 jobs in Wisconsin and an $8.8bn display factory in southern China.
Liu said the Wisconsin investment, which is expected to reach $1.4bn-1.5bn with up to 2,000 employees by end of 2020, was on schedule. He added the project, which includes manufacturing of displays and servers, was poised to go into production by end of 2020.
He also sought to address investors’ concerns about Foxconn’s approach to corporate transparency, saying the company plans to hold investor conferences twice a year.
Foxconn shares have dropped about 20% since Gou announced in April his plans to run for president. They closed up 0.4% on Tuesday, in line with the broader index.