Foxconn Discusses Building Factory Worth 11 Trillion Won with Saudi Government

by Jeong Hyunjin

Published 15 Mar.2022 09:22(KST)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Taiwan's Foxconn, the world's largest electronics contract manufacturer, is reportedly discussing the construction of a factory worth 11 trillion won with the Saudi Arabian government, the Wall Street Journal (WSJ) reported on the 14th (local time), citing sources.

According to the report, the Saudi government is currently reviewing an investment proposal submitted by Foxconn. The proposal includes Foxconn's plan to invest $9 billion (approximately 11.151 trillion won) to build a dual-line foundry facility for surface-mount technology (SMT) and wafer processing in Neom, a technology-intensive new city being developed in northwestern Saudi Arabia.

The discussions have been ongoing since last year, and Foxconn is said to have plans to establish a multipurpose manufacturing facility capable of producing microchips, electric vehicle parts, and displays. A source stated that the project is also being discussed with the United Arab Emirates (UAE) joining alongside Saudi Arabia and Foxconn.

The talks between Saudi Arabia and Foxconn are still in progress, so it is uncertain whether the project will proceed as planned. Saudi Arabia reportedly hopes to secure profitability for the project by sending at least two-thirds of the new foundry production to Foxconn's existing supply chain. WSJ reported that Foxconn is requesting large-scale incentives such as subsidies and tax benefits.

Foxconn's push to build a factory in Saudi Arabia is seen as a result of aligned interests between the two parties. Foxconn has been seeking to diversify its production facilities amid the US-China trade war, while the Saudi government is aiming to restructure its economy away from an oil-based industry toward technology and manufacturing sectors.