Foxconn to Start Work on $9 Billion Chinese TV Display Plant

(Bloomberg) -- Foxconn Technology Group will begin construction this month on a $9 billion display plant in southern China, as billionaire founder Terry Gou makes a big bet on demand for giant-sized TV screens in healthcare and homes.

Gou and the Taiwanese company are looking to capitalize on the technology and branding acquired with the purchase of Sharp Corp. last year. Foxconn, whose main listed unit is Hon Hai Precision Industry Co., is investing 61 billion yuan ($8.9 billion) in the factory in Guangzhou and plans to complete it by 2019. It will use the largest glass substrates available, and have a monthly output capacity of 90,000 ultra-high-definition panels worth about 92 billion yuan annually. Those will be aimed at the healthcare, education and smart home applications, Foxconn said in a statement on Wednesday.

Gou is reshaping Foxconn, the main assembler of Apple Inc.'s iPhones,  by installing robots throughout a juggernaut that spans China to Southeast Asia to shore up its manufacturing prowess and investing in emergent fields from virtual reality to artificial intelligence. The acquisition of Sharp gave Gou a consumer electronics brand of his own and boosted Foxconn's ability to compete in the market for smartphone and TV screens. Sharp and Foxconn are now considering expanding production in the U.S.

“Building the Guangzhou factory is in line with Terry Gou's long-term strategy of using Sharp to sell consumer electronic products,” said David Hsieh, a senior director at IHS Markit. “The new plant will help Sharp cement a leading role in the large-scale screen segment.”

The Guangzhou factory will use large-screen liquid-crystal display technology from Sakai Display Products Corp., a venture controlled by Sharp and Foxconn. Gou originally acquired a stake in the Osaka-based unit of Sharp's in 2012, cementing his control when Sharp itself was bought out last year. Foxconn will ultimately hire about 15,000 people to keep the new plant running.

Demand for LCD TVs has plateaued and prices are falling as supply swells. But emergent demand from new sectors such as healthcare may spur a recovery in coming years. Shipments of screens larger than 65 inches will almost triple by 2020 to 28 million units, while those between 55 and 60 inches will jump 72 percent to 65 million, according to market researcher Display Supply Chain Consultants.

Foxconn is now considering building a display-making facility for upwards of $7 billion with Sharp in the U.S., potentially creating tens of thousands of American jobs during President Donald Trump's first year in office. The Guangzhou facility could help allay concerns of the Chinese government, which is promoting its “Made in China 2025” program to raise the domestic content of core components and materials.

To contact Bloomberg News staff for this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net, Gao Yuan in Beijing at ygao199@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan

With assistance from Pavel Alpeyev, Gao Yuan