Foxconn is scrambling to establish its foothold in the United States in a bid to secure its position as an Apple supplier amid Donald Trump's call for American companies to start building their products at home. This is recently demonstrated by Sharp's announcement that it is mulling the opening of an LCD plant in the country.
Foxconn has acquired Sharp last year for $3.5 billion.
The announcement, which was made by a Sharp executive last Jan. 13, is not yet set in stone as officials stress that they will be making the decision carefully. However, a possible entry to the United States could earn Foxconn a tremendous amount of goodwill from a president who has largely based his election campaign rhetoric on the creation of jobs.
The company is currently facing the prospect of losing Apple as a client, which, for its part, must also contend with Trump's call to bring its manufacturing operation back from China to the United States. The new administration will purportedly slap a 35 percent tax on products made from other countries.
Sharp's U.S. Investment
It is not yet clear how Sharp's new U.S. facility is going to figure in the equation. One must remember, however, that Trump has indicated a business-like approach to governance wherein policies and governmental regulation governing private entities could be subject to negotiation and deals.
Sharp's announced plan also seems part of Softbank's much publicized support for Trump's Make in America initiative. According to the Sharp official, the move to open an LCD facility was suggested by Masayoshi Son, who is Softbank's chairman. He has been recently seen paraded around Trump Tower as the president-elect trumpeted Softbank's planned U.S. investments.
Son, Softbank, And Foxconn's Prospects
In the convoluted world of business, Son's influential role at Sharp can be attributed to the fact that Softbank Group is Foxconn's Japanese partner. More specifically, the Taiwanese manufacturer relied heavily on Softbank to acquire Sharp. The financial organization is even said to hold 10 to 20 percent stake in the company.
Sharp is not the only factor that binds Foxconn and Softbank. The former manufactures Softbank's Pepper robot and the chairmen of the two companies are also reportedly close to each other.
The official talking point is that Sharp's new facility, which is being valued at $8 billion, is a strategic move for the company, as the United States remain home to a sizable number of its television customers. That is a valid argument, but there is also the possibility that Foxconn and Softbank will significantly gain in the entire affair.
Foxconn, particularly, could be in a better position to improve its precarious footing as an Apple supplier. Cupertino still remains one of its largest sources of revenue, and it is at risk of losing a large chunk of revenue if Apple indeed starts reducing its reliance on the Taiwanese manufacturer.
