Foxconn In Talks To Build $9 Billion Factory In Saudi Arabia
Dear liberals: Pretty soon, your iPhone could be assembled in a country where homosexuality is punishable by death, and religious dissidents are sometimes beheaded.
In what could be a victory for Crown Prince Mohammad bin Salman’s effort to attract tech companies to help diversify Saudi Arabia’s economy away from oil and gas, Foxconn, the Taiwanese consumer tech giant that’s one of Apple’s biggest contractors, has reportedly submitted a proposal to build a $9 billion factory in the Kingdom.
WSJ reports that the kingdom “is reviewing an offer from the company, formally known as Hon Hai Precision Industry, to build a dual-line foundry for surface-mount technology and wafer fabrication in Neom, a tech-focused city-state the kingdom is developing in the desert.”
For those who aren’t familiar with Neom, here’s what the BBC has to say about the planned futuristic tech-centric city in the desert. The Kingdom plans to use its massive sovereign wealth fund to finance the effort.
Glow-in-the dark beaches. Billions of trees planted in a country dominated by the desert. Levitating trains. A fake moon. A car-free, carbon-free city built in a straight line over 100 miles long in the desert. These are some of the plans for Neom – a futuristic eco-city that is part of Saudi Arabia’s pivot to go green. But is it all too good to be true?
Neom claims to be a “blueprint for tomorrow in which humanity progresses without compromise to the health of the planet”. It’s a $500bn (£366bn) project, part of Saudi Arabia’s Vision 2030 plan to wean the country off oil – the industry that made it rich.
The factory isn’t a done deal – at least not yet. The Saudis are reportedly still conducting due diligence and “benchmarking the offer against others Foxconn has made for similar projects globally”.
The Saudis are also reportedly in talks with the UAE about potentially building the factory there.
Foxconn has long been looking to diversify its factory capacity away from China. But Riyadh wants the company to guarantee that it would direct “at least two-thirds of the foundry’s production into Foxconn’s existing supply chain…to ensure there are buyers for its products and the project is ultimately profitable.”
But if the company meets all the Saudis requirements, the kingdom is prepared to co-invest, while also offering low-interest loans, and other incentives.
Of course, just because Foxconn is planning to invest, doesn’t mean it will. Let’s not forget how the company supposedly promised to build a large factory in Wisconsin, but ended up with a project that was much smaller than it initially promised.
The Kingdom has struggled to recruit western businesses for Neom
Although, as we noted above, we would be curious to see how Apple reacts to Foxconn’s decision to possibly assemble the company’s phones in the kingdom.
Tyler Durden Mon, 03/14/2022 – 22:00
