Foxconn’s shrinking project shows US’ failure to arbitrarily reset value chain
Published: Apr 21, 2021 09:48 PM
Illustration: Tang Tengfei/GT

Illustration: Tang Tengfei/GT

Four years after the grand announcement in the White House, the record $10 billion investment project of Foxconn in Wisconsin has now been scaled down drastically to $672 million, with promised number of new jobs cut to 1,454 from 13,000, according to a statement released by Wisconsin authorities on Tuesday.

Once being hailed as "the eighth wonder of the world" by then-US President Donald Trump, the deal, after years of dilatory progress, is now being described as a nearly abandoned project by some media outlets.

From the start, the project could hardly be regarded as a decision based on economic or market rules; instead, it was more of a compromised choice under pressure from the Trump administration, which relentlessly pushed the protectionist "America first" agenda.

The scaling back, though drastic, is not a surprise move. More importantly, it demonstrated the fruitless nature of Washington's efforts in trying to artificially reset the well-shaped global value chain in order to serve certain political forces in the US. 

Even before Trump, the US has long been attempting to revive the country's hollowed-out manufacturing sector and trying to draw the sector back from overseas. After the announcement of Foxconn's investment in Wisconsin, Trump used it as a proof of his ability to revive the US' manufacturing sector.

But, it has become a proof that using hegemonic power to interfere the market will only end up futile. 

Based on the island of Taiwan, Foxconn is the world's biggest contract electronics manufacturer and known as a major Apple supplier. The Wisconsin project was never a cost-efficient move given its far-distance for key suppliers, high-cost workers, as well as opposition from some local politicians and environmental groups.

Under US President Joe Biden, the US has not changed its essential intention of maintaining the country's technological hegemony. But, the economic rules have not changed as well, and firms planning to build factories in the US under similar circumstances may share the same fate as Foxconn.

One example could be Taiwan-based contract chip manufacturer TSMC. The company has announced that it would build a factory in Arizona last year. However, industrial observers have pointed out that the monthly production capacity would only account for 1-2 percent of TSMC's total output, and building the factory was absolutely not a remunerative move.

The global value chain has been developed over decades with elaborated division of labor that can benefits companies as well as the advancement of related technology. In fact, the US has long benefited from the globalized value chain.

China, as the world's largest manufacturing power and second-largest economy, has made great progress in technological development in recent years. That has triggered fear among some US politicians, who have spared no efforts in cracking down on Chinese firms. Vilifying China has become an inertial thinking of those short-sighted politicians. Competing China now has become a catch-all target for US to promote its own developments in such areas as 5G, semiconductor, electric vehicle and digital currency.

However, such ill-advised moves won't succeed, and will only disrupt the global value chain. Whether addressing the current worldwide shortage of chips or ensuring the long-term technological advancement, joint efforts from all global players, especially major economies, are necessary.

The article was compiled based on an interview with Ma Jihua, a senior tech industry analyst based in Beijing.
blog comments powered by Disqus