Foxconn Unit to Build Dedicated Taiwan Display Plant

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Foxconn Technology Group will spend NT$80 billion ($2.6 billion) over the next two years on a new factory in Taiwan to supply displays exclusively for a client.

Equipment installation will commence next month with mass production of panels to start by the end of 2015 after an urgent request for exclusive capacity, Sophia Cheng, a public relations representative for Foxconn’s display unit Innolux Corp., said by phone, citing comments made by President Wang Jyh-chau at a press conference today.

Apple Inc., a Foxconn customer, has previously tapped suppliers for dedicated access to factories in a bid to avoid shortages that can crimp sales of its iPhones and iPads. Previous attempts to pay cash to Taiwan Semiconductor Manufacturing Co. for exclusive capacity in its factories were rebuffed, while Apple has had success gaining priority in the supply of memory chips from Samsung Electronics Co. and sapphire glass from GT Advanced Technologies Inc.

Innolux will build an advanced sixth-generation plant at its Kaohsiung Science Park campus in Southern Taiwan, Cheng said. The funds will be spent over two years with the company expecting to hire 2,300 people at the new plant, she said.

Foxconn currently has dedicated factories for assembling Apple iPhones and iPads in China, while this would be the first for components that go into the devices.

A shortage of metal casings for the iPhone 5 resulted in a shortage of the devices within a month of it going on sale in September 2012, Bloomberg News reported at the time.

In November last year, Apple signed a $578 million deal to provide furnaces to GT Advanced to secure supply of sapphire, a hardened material that’s more scratch-resistant than glass. GT Advanced filed for bankruptcy protection in October with creditors to hold a settlement hearing in the U.S. next month.

Foxconn Diversifies

TSMC, the world’s largest custom manufacturer of chips, rebuffed both Apple and Qualcomm Inc. requests to pay for exclusive capacity in order to prevent a supply shortage, Bloomberg News reported in 2012. Apple, TSMC and Qualcomm each declined to comment at the time.

Innolux’s Cheng said she wasn’t aware if any supply deal had been signed with Apple. Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment.

Terry Gou’s Foxconn, which counts Apple as its largest client, is seeking to broaden beyond assembly and boost revenue from the components that go into electronic devices.

Innolux, Taiwan’s largest maker of liquid-crystal displays, will spend less than NT$20 billion on capital expenditure this year and almost NT$40 billion next year, Chairman Tuan Hsing-chien told an investors’ conference call last month.

(Innolux corrects to change reference to client in first paragraph.)
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