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Foxconn and Sharp Team Up To Build $8.8 Billion LCD Plant In China (reuters.com)
Foxconn was in the news recently for plans to "automate entire factories" in China, but the electronics manufacturing company has also announced plans with Sharp to build a $8.8 billion (61 million yuan) factory in China to produce liquid-crystal displays (LCDs). Reuters reports: Sakai Display Products Corp's plant will be a so-called Gen-10.5 facility specializing in large-screen LCDs and will be operational by 2019, the company said at a signing event with local officials in Guangzhou on Friday. It said the plant will have capacity equating to 92 billion yuan a year. The heavy investment is aimed at increasing production to meet expected rising demand for large-screen televisions and monitors in Asia. Sakai Display Products Corp's plans for the Guangzhou plant come as Hon Hai seeks to turn the joint venture into a subsidiary, investing a total of 15.1 billion yuan in the company. The venture will also sell 436,000 shares for 17.1 billion yuan to an investment co-owned by Hon Hai Chairman Terry Gou, giving Hon Hai a 53 percent interest in the business and lowering Sharp's stake from to 26 percent from 40 percent.
If they're building panels for monitors, and they only produce them in 16x9, then my money is looking for a competitor that produces 16x10, or even 4x3 or 3x2 panels.
My money, my decision.
If my money remains unspent, so be it - I'll stick with what I already have, until it finally stops working.
Less regulations are part of it and cheaper labor is still there. Atleast cheaper, more replaceable, and larger pool than Western societies. However, China has been eyeing Africa as the next labor intensive manufacturing hub. So cheap labor hasn't been a big factor for almost a decade.
The primary pull to manufacture in China is the ability to go from back-office-design to product-at-store quickly and cheaply. China has a massive economies of scale and network effect:
- Suppliers are many times across town. Worst case, via train from a neighboring country
- Suppliers are available at all levels of production. From raw materials like iron/wood/coal, simple parts like screws/buttons/wires, infrastructure like trucks/machines/office supplies, and highend parts like sensors/processors/LCDs.
- There is a well defined transportation and delivery infrastructure for distribution of supplies.
- Supply chain for export & delivery of a massive volume of goods at a minimal cost
- Connection to a massive network of global customers
- A lot of local knowledge in assembling and running the above network
- With each additional manufacturer and product offering, the above increases in value add
With all that going for China, I think people are underestimating their opponent and handicapping themselves in competing by passing it all off as "cheap labor" and "lax regulations". Those just end up being icing on the cake.
You think anything Trump "promised" will actually happen?
Americans who thought they were going to be able to drop out of high school, get a job at the Ford plant, and buy a house with a swimming pool – like their dads did – are delusional.
(Yeah, I'm an American too, but I went to college and write software for a living. Now I just need to make it ten more years to retirement. Sometimes I wonder if I'll make it.)
I'm not holding my breath on tariffs. (And I agree that they're a bad idea.)