Foxconn Plant Championed by Trump Lands Google Server Contract

(Bloomberg) -- Foxconn Technology Group plans to assemble key components for Google servers from its plant in Wisconsin, people familiar with the matter said, finally breathing life into a factory Donald Trump hailed as crucial to bringing manufacturing back to the U.S.

The Taiwanese company has decided to locate production for this new contract at the existing complex rather than make the components at home or in China, the people said, asking not to be identified discussing a sensitive move. The under-utilized factory should start mass production in the first quarter, timed with the release of Intel Corp.’s Ice Lake server chips, they said. Foxconn is setting up surface-mount technology assembly lines that it will use to place semiconductors onto circuit boards, they added.

Foxconn, known also as Hon Hai Precision Industry Co., is one of several Taiwanese firms exploring ways to expand in America and lessen a reliance on Chinese production bases. The company has also sought to diversify a business that counts on Apple Inc. for half its revenue, including by courting more American clients. On Thursday, Taiwan Semiconductor Manufacturing Co. won city-level incentives for a $12 billion chip plant in Phoenix, another step toward bringing high-tech manufacture back to the U.S. and addressing security concerns over the industry’s supply chain.

Read more: TSMC Wins Approval From Phoenix for $12 Billion Chip Plant

A Foxconn representative confirmed it’s developing data center infrastructure and high-performance computing “capabilities” in Wisconsin, but declined to name any customers.

Taiwan counts Washington as an essential diplomatic, economic and military ally amid rising tensions with Beijing. Foxconn, which operates most of its factories in central and southern China, won Google’s business because it was the only contract manufacturer capable of establishing a surface-mount technology line on American soil, one of the people said. Shanghai-listed Foxconn Industrial Internet Co., its cloud business unit, will oversee the server business in Wisconsin, another person familiar with Foxconn’s operations said.

The plant in Wisconsin was unveiled to much fanfare in 2018 by Foxconn Chairman Terry Gou and Trump, who called it “the Eighth Wonder of the World.” Once envisioned as the centerpiece of a Made in America effort that would create 13,000 jobs for the Badger State, it instead succumbed to delays and switched directions several times after local officials slashed subsidies. The company missed its first-year hiring target by a wide margin, ending 2018 with just 178 full-time employees. And rather than the promised large-sized display panels, it began churning out face masks and ventilators this year.

Yet its location in the heart of America is now a boon to Alphabet Inc.’s Google, which is trying to win lucrative contracts for its server-dependent cloud business. The U.S. company considers it an important area for the company’s growth, but one in which Amazon.com Inc. and Microsoft Corp. dominate. An American base could help Foxconn court U.S. government contracts, particularly as Washington ramps up scrutiny over a largely Chinese-focused global electronics supply chain.

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