Last month, Foxconn Electronics (Hon Hai Precision Industry), the Taiwan-based company that now holds controlling interest in Sharp Electronics, sent out a teasing message that it might be interested in building a large-screen LCD panel manufacturing operation in the United States.

At the time, the message was received with some skepticism since television manufacturing factories, particularly those that produce the main glass display component (CRTs at the time) of the set had all been shuttered and new LCD, plasma and later OLED glass panel facilities had all located in Asia, where disproportionately lower wages enabled manufacturers to make display panels much more cost-effectively than was possible in the United States.

At the same time, the controversial North American Free Trade Agreement (NAFTA) made it cheaper to assemble all the disparate parts, which come primarily from Asia, in factories south of the Mexican border, where labor is also disproportionately cheaper than in the United States. Thousands of American workers got the shaft.

Now comes word, through reports out of Asia Thursday, that Foxconn is serious, and could be using the factory proposal to deliberately play into the U.S. jobs-creation directive of the new Trump administration. The only problem is, Foxconn doesn’t control the use in the United States of the Sharp brand that it now effectively owns, and virtually all the television assembly factories used to produce televisions sets for the U.S. market are located outside of the country.

In addition, the exact number of workers the new plant would require is expected to be significantly lower than what was required for the old CRT plants that were scattered around the country a decade ago. This is due to innovation in LCD panel manufacturing that relies more heavily on automated (and cleaner) systems.

Read more on the possible U.S. LCD factory after the jump:

Now, according reports from Digitimes and Nikkei Asian Review, Foxconn really is pursuing plans to establish an LCD panel factory in the U.S. through Sharp. Sharp is reportedly taking the lead in the project, and the government of Japan may be showing interest in using the plan to impress U.S. president Donald Trump. The plant could, reportedly, generate “thousands of jobs for the U.S. and billions of dollars in foreign investment.”

Digitimes pointed out it will also likely require “more than a billion dollars in domestic investment as well.”

Another important consideration is exactly which customers the plant would build the television-sized panels for, since, as mentioned, the former management of Sharp licensed off the Sharp brand for television and A/V components marketing in the United States to China-based Hisense. As part of the deal, Hisense also got Sharp’s television assembly plant in Mexico.

Could Sharp, under Foxconn, be planning to enlist the support of the Trump administration in convincing Hisense to sell the rights to the Sharp brand back to the new Foxconn-controlled Sharp Electronics or does Foxconn have another TV vendor in mind that would use Sharp/Foxconn as an OEM?

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After Foxconn gained controlling interest in Sharp, the new executives overseeing the operation began talking about getting back control of the Sharp brand in order to market Sharp and Aquos TVs in the United States. Hisense, however, has adamantly refused to relinquish its five-year rights to the brand. In retaliation, Foxconn has cut off supplies of LCD panels from Sharp factories to Hisense, forcing the Chinese company to turn to other LCD panel suppliers.

Last month Foxconn chairman Terry Gou stated that the company is considering the U.S. LCD panel factory investment based on strong demand for large-sized TVs in the North America market and the costs of transporting such panels. But that demand appears to be from consumers, not television makers, since only Element Electronics (owned by China-based Tong Fang Global) and a few lower-tier TV brands have operated U.S.-based final assembly plants here in recent years.

The Nikkei Asian Review reported the project, which will require a $7.13 billion investment, was confirmed by Sharp executives, as an answer to Trump’s demands for more U.S. job creation by foreign manufacturers.

According to reports, the plant is expected to be a 10G fab, and Foxconn chairman Terry Gou has said that Sharp remains the world’s only panel maker with a 10G factory capable of making large-sized mother glass to accommodate the growing demand for larger and larger television screen sizes.

Sharp is trying to recruit other Japan-based companies, including manufacturers of LCD panel manufacturing equipment, to participate in the investment, the Japan Times reported.

Digitimes pointed out that among the many hurdles a U.S.-based LCD panel plant faces is the lack of a localized supply chain for elements like glass substrates, polarizers, backlight modules and materials. Most of those sources are located in Asia, requiring them to set up operations in the United States.

Corning, which is U.S. based, manufactures LCD glass substrates for LCD panel factories around the world, but it is said to have little production capacity available for TV glass substrate manufacturing in the U.S. to answer the call of a new U.S. 10G fab. That would require the company to make a sizeable investment in a another substrate facility that would probably be located close to the Foxconn/Sharp panel plant.

Digitimes pointed out that compounding problems is the fact that Corning has already announced a $1.3 billion investment in a 10.5G LCD glass substrate (2,940mm x 3,370mm) facility in Hefei, China but production is not expected to begin there until 2018.

Still, it is surmised that there would be significant cost savings in shipping large-sized panels and television sets over shorter distances, and those savings could get even larger if President Trump goes through with the imposition of tariffs on goods coming into the country from Mexico and other regions.

Stay tuned.

By Greg Tarr


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