Taiwan’s Foxconn Group is exploring the sale of its new US$8.8 billion display panel factory in China, Reuters reports, citing people familiar with the matter.
The firm is in discussions to appoint banks to find a buyer for the liquid crystal display (LCD) factory that is being built in Guangzhou, the report said.
The talks are at an initial stage, and the company has yet come up with a price tag for the so-called Gen-10.5 facility specializing in large-screen LCDs, sources were quoted as saying.
“It’s not an easy sale and it could take a while,” one source told Reuters, citing tepid global demand for large-screen LCDs.
The Taiwan firm, formally known as Hon Hai Precision Industry, issued a statement to Reuters in which it said: “As a matter of company policy, Foxconn does not respond to market rumors or speculation.”
According to the report, questions were being raised within Foxconn on the need for the Guangzhou project.
“Existing plants are already not running at full capacity … why need another one?,” one source said.
Another person pointed out that the new factory would not go into production until early October, which makes it less appealing for buyers because of the additional risks as compared to an already operating plant.
The Nikkei daily reported earlier this year that Foxconn would delay most of its planned production in Guangzhou for a minimum of six months, but the Taiwan firm has said the project was on schedule.
Dubbed the largest single investment ever in the southern Chinese city by mainland media, Foxconn announced the Guangzhou plant in 2016, hoping to start operations by 2019 to meet an expected rise in demand for large-screen TVs and monitors in Asia.
The project was mainly run by a joint venture between the Guangzhou government and Japan’s Sakai Display Products, an advanced panel factory owned by Foxconn founder Terry Gou and Japan’s Sharp Corp, Foxconn’s display unit.
Sharp said on Thursday that it will build a plant in Vietnam to make flat screens and electronic devices to guard against additional US import tariffs on Chinese goods.
A sale would come at a delicate time for Foxconn, which has extensive investments in China, a large roster of US clients that includes Apple, and is having to navigate a tricky path amid the protracted trade war between Washington and Beijing, Reuters noted.
If a sale does materialize, it would mark one of the Taiwan group’s largest divestments from China.
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