Foxconn factory fiasco could leave Wisconsinites on the hook for $300m

What's Mandarin for 'Where's my money?'

For five years, Foxconn promised and spectacularly failed to build a much-hyped sprawling factory near Mount Pleasant, Wisconsin. Now, the area's leaders may be saddled with $300 million in bond repayments that the Taiwanese iPhone maker had promised to repay. 

According to the Wall Street Journal, Foxconn agreed to pay $36 million annually across a 20-year term to pay for the surrounding infrastructure supporting the now-abandoned 3,000-acre site. Those payments are scheduled to start next tax year, and local leaders told the newspaper they're counting on Foxconn's cash to maintain the site while they try to attract another occupant. 

Finding an occupant hasn't been easy. Intel, which announced a $20 billion investment in two chip factories in Ohio in January, was also considering Wisconsin for the project, with its focus on Racine, the nearest large city to the proposed Foxconn plant. 

The other option to cover the costs would be a total Foxconn pullout, which state officials said would let the government sell the land, assessed at a value of over $500 million.

Ultimately, we're told, Foxconn promised to cough up $300 million to cover bonds for the infrastructure, whether the plant went ahead or not, but with that deal in tatters, it's now not clear if the money will be paid.

'Eighth wonder of the world' still just a dream

Foxconn was lured to Wisconsin by now-former state governor Scott Walker (R) and a $3 billion tax incentive package for it to build a massive LCD manufacturing facility, which then-President Donald Trump heralded as the "eighth wonder of the world."

Work continues on the Foxconn development in Wisconsin as the state of Wisconsin seeks to renegotiate it's original 2017 contract with Foxconn

Above and below: Construction on the project was still underway in 2020 while the US state was still trying to renegotiate its original 2017 contract with Foxconn

The deal required Foxconn to meet hiring numbers, which is where things began to go awry. The company manipulated that requirement the first year it operated in Wisconsin by hiring people at the end of a reporting period and laying them off a short time later.

Hiring hasn't progressed much since then, with recent numbers suggesting fewer than 600 people have been recruited for the Mount Pleasant site, many of whom are reportedly sitting idle with nothing to do since the promised factory lines largely still don't exist.

Thirty thousand jobs were promised in Foxconn's original deal with Wisconsin. That number has been revised down several times, and now sits at 1,454, arrived at as part of a rehashed 2021 agreement between Foxconn and current Wisconsin governor Tony Evers (D). 

The 2021 deal also reduced Foxconn's pledged $10bn investment to $672 million and changed the scope of its facility near Racine from being an LCD factory to an undefined "manufacturing ecosystem" facility. Foxconn also reportedly considered using the site to make electric vehicles and other electronics, but nothing has come of any of its announcements. 

Unfortunately for Wisconsin, Foxconn's electric vehicle ambitions may push even more big tech companies to consider migrating further south: it recently agreed to buy EV startup Lordstown Motors' Ohio factory for $230 million. ®

Other stories you might like

  • Why Wi-Fi 6 and 6E will connect factories of the future
    Tech body pushes reliability, cost savings of next-gen wireless comms for IIoT – not a typo

    Wi-Fi 6 and 6E are being promoted as technologies for enabling industrial automation and the Industrial Internet of Things (IIoT) thanks to features that provide more reliable communications and reduced costs compared with wired network alternatives, at least according to the Wireless Broadband Alliance (WBA).

    The WBA’s Wi-Fi 6/6E for IIoT working group, led by Cisco, Deutsche Telekom, and Intel, has pulled together ideas on the future of networked devices in factories and written it all up in a “Wi-Fi 6/6E for Industrial IoT: Enabling Wi-Fi Determinism in an IoT World” manifesto.

    The detailed whitepaper makes the case that wireless communications has become the preferred way to network sensors as part of IIoT deployments because it's faster and cheaper than fiber or copper infrastructure. The alliance is a collection of technology companies and service providers that work together on developing standards, coming up with certifications and guidelines, advocating for stuff that they want, and so on.

    Continue reading
  • Top chip foundries grow amid electronics spending slowdown. Except Samsung
    Chaebol hit by lower demand for smartphones and TVs plus 4nm yield issues

    The demand for consumer electronics has slowed down in the face of inflation – but that didn't stop nine of the world's 10 largest contract chip manufacturers from growing in the first three months of the year.

    That's according to Taiwanese research firm TrendForce, which said on Monday the collective revenues for the top 10 chip foundries grew 8.2 percent to $31.96 billion in the first quarter of 2022 from the previous quarter. That's a hair slower than the 8.3 percent quarterly growth reported for the top-ten foundries in the fourth quarter of last year.

    On a broader level, TrendForce said this revenue growth came from a mix of "robust wafer production" and foundries continuing to raise the prices of wafers as a result of high demand.

    Continue reading
  • Big Tech begs Congress to pass $52bn chip subsidies bill
    This silicon business ain't cheap, you know, say execs at Alphabet, Amazon, Microsoft, Nvidia etc

    Big Tech in America has had enough of Congress' inability to pass pending legislation that includes tens of billions of dollars in subsidies to boost semiconductor manufacturing and R&D in the country.

    In a letter [PDF] sent to Senate and House leaders Wednesday, the CEOs of Alphabet, Amazon, Dell, IBM, Microsoft, Salesforce, VMware, and dozens of other tech and tech-adjacent companies urged the two chambers of Congress to reach consensus on a long-stalled bill they believe will make the US more competitive against China and other countries.

    "The rest of the world is not waiting for the US to act. Our global competitors are investing in their industry, their workers, and their economies, and it is imperative that Congress act to enhance US competitiveness," said the letter.

    Continue reading
  • US to help Japan make leading-edge 2nm chips, possibly by 2025
    Player Four has entered the game

    Japan is reportedly hoping to join the ranks of countries producing leading-edge 2nm chips as soon as 2025, and it's working with the US to make such ambitions a reality.

    Nikkei reported Wednesday that businesses from both countries will jointly research the design and manufacturing of such components for devices ranging from smartphones to servers as part of a "bilateral chip technology partnership" between America and Japan.

    The report arrives less than a month after US and Japanese leaders said they would collaborate on next-generation semiconductors as part of broader agreement that also calls for "protecting and promoting critical technologies, including through the use of export controls."

    Continue reading

Biting the hand that feeds IT © 1998–2022