The Trump Effect: Foxconn, Sharp & TSMC Are Contemplating Shifting Manufacturing To The US

foxconn considering moving to US

New US President Donald Trump promised to bring businesses in general, and manufacturing in particular, back to the US during his election campaign to boost employment across the country. All US businesses with substantial manufacturing plants scattered throughout the globe are starting to feel the heat as the President Trump takes charge at the Oval office. Donald Trump promised that he will make major US companies to bring majority of their manufacturing back to the US in an attempt to raise employment figures to the levels of the pre-recession years.

It goes without saying the industry most likely to be affected by this policy will be the Tech sector where most of the companies have significant footprints around the world at places where manufacturing cost is lower due to cheap labor. Apple is the brightest jewel in the crown of US tech industry, which made Trump explicitly call out the Cupertino giant to consider moving manufacturing back to the US to help boosts employment. Since the announcement, which it has to be said ruffled quite a few feathers, Apple’s major supplying partners started deliberating on the merits of shifting manufacturing back to the US. Here are the details.

Foxconn, Sharp & TSMC Are Conjuring Up Plans To Bring Manufacturing To The US

After winning the general elections back in November, Donald Trump held meetings with the heads of major tech firms in an effort to convince them to bring some, if not all, of the manufacturing back to the US in return for lucrative concessions in the form of tax breaks, subsidies, contracts, and other proposed incentives from his government. Here’s how it all started.

According to a Sharp executive, who said in an interview with Nikkei Asian that this idea of shifting manufacturing back to the US was first mooted by the Chairmain of the Softbank group, Masayoshi Son, who after meeting with Trump started floating his plans for possible move back to the US. It’s important to note here that Mr. Son’s Softbank group has a partnership agreement with Foxconn and thus holds sway over Foxconn’s policies to an extent.

Foxconn itself seems receptive to the idea of bringing manufacturing to the US if the proper terms are offered to them by the Trump administration. It’s not hard to see the reason behind Foxconn’s intention. The US is one of the world’s largest markets of electronic appliances. The prospected move  by Foxconn would help the company establish stronger presence in the US market. Although, nothing is confirmed as of now, things can take any direction depending on how the negotiations between tech firms and Trump’s government pan out.

One stumbling block to moving manufacturing plants to the US is the exorbitant cost of shifting the entire operation. Which, according to some estimates, could be in billions of dollars. Since both Sharp and Foxconn invested heavily last year on a new LCD manufacturing plant, situated at the Chinese city of Guanghou, both firms would be extremely cautious before making any solid commitments.

tsmc establishing plant in us

There is another chunk of news that’s doing rounds on the internet and that is related to the TSMC, which is reportedly considering establishing a manufacturing plant in the US. Morris Chang, the chairman of TSMC, when talking to DigiTimes elaborated on the company’s future plans regarding setting up a manufacturing site in the United States. TSMC’s major share of revenue is generated in the US market, which makes building a plant in the same country understandable. However, Chang did go on to say that the increase in manufacturing cost won’t be in the wider interest of the company and its customers, since the move could result in the price hike.

With that being said, all plans are still in infancy and could take some years to develop as is the case with any move of such magnitude that carries significant repercussions along with it. What are your views on the matter? Do share your opinion in the comments section below.

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