Samsung, LG pressed to build plants in U.S.

Foxconn plan to build $7bn LCD factory there puts pressure on Korean IT giants

By Lee Min-hyung

Samsung Electronics and LG Electronics are under growing pressure to build a manufacturing facility in the U.S., while Taiwanese rival Foxconn, the world’s largest contract electronics maker, planning to invest $7 billion (8.17 trillion won) to establish a liquid crystal diode (LCD) plant there.

Foxconn Chairman Terry Gou confirmed that the company was considering the plan as part of its joint project with SoftBank.

The Foxconn chief is known to have had in-depth talks with SoftBank founder and CEO Masayoshi Son over the latter’s plan to invest $50 billion in the U.S., creating about 50,000 jobs.

But the latest announcement also reflects lingering concerns about the Donald Trump administration which in recent months has threatened to raise tariffs on imported products.

This has intensified market uncertainty for non-American firms ― such as Foxconn and the two Seoul-based consumer electronics firms ― all of which do not have manufacturing facilities there.

“Korean companies in the manufacturing industry are under mounting pressure to make more investment in the U.S. by building plants there, as more and more global firms such as Foxconn and SoftBank respond to the Trump administration’s ‘Buy American and Hire American’ pledge,” a local electronics industry official said, asking for anonymity.

“But once those Seoul-based firms relocate or establish plants in the U.S., consumer electronics prices there will inevitably increase by a large margin, which does no good for U.S. consumers.

“The companies need to discuss details about such issues with the Trump administration, in a way that benefits both parties.”

Earlier this month, LG Electronics Vice Chairman Jo Seong-jin said the company was discussing a plan to build a washing machine plant in the U.S.

He said LG would make a final decision no later than the first half of the year, with the company paying closer attention to how the Trump administration’s protectionist policy will develop.

The new U.S. president has so far pushed his “American First” policy, pledging to impose a 35 percent tax on goods from Mexico. At the moment, the two Korean firms export their electronics devices to the U.S.

Another industry source said: “It is true that Samsung and LG are in a dilemma over whether they have to follow the same footsteps as Foxconn.

“But it remains to be seen whether they can do the same thing, as they have already massive manufacturing facilities, mostly in Southeast Asian territories ― including Vietnam and China.”