Add Wisconsin to the List of Failed Foxconn Bettors

The ink was barely dry on the lawsuit filed by Lordstown Motors against would-be savior Foxconn when the next round of news hit: the world’s largest ODM/EMS company is pulling out of Wisconsin.

If we go back to 2019, we will recall Lordstown opening the doors of its plant, formerly owned by GM and seen as critical to its hometown’s economic future, to Foxconn, which came bearing (the promise of) much-needed cash. In return, the ODM was to obtain access to Lordstown’s electric vehicle technology, which Foxconn sought as it reportedly focuses on building electronics and other products for what is seen as the future platform for individual and fleet transportation.

That dream ended in a crash, unfortunately but unsurprisingly. The investment never really materialized, Lordstown went bankrupt, and the winners will be the lawyers.

Some 460 miles away, 30 miles due south of Milwaukee, Foxconn’s much-ballyhooed splash into the Wisconsin cornfields is resolving with the sale of its 315-acre campus to Microsoft.

That’s a far cry from the $10 billion in investment and 13,000 jobs the company forecast – and lots of politicians touted – as longtime homeowners were hit with eminent domain mandates to make way for the 200,000 sq. ft. plant. Some $500 million of taxpayer money later, the prairie landscape is left with a mostly vacant shell. Likewise, company plans to build innovation centers in Madison, Milwaukee, Green Bay, Eau Claire and Racine have mostly been shelved, and the properties are going on the block.

What both deals had in common was that they took place in states that of late are highly contested in federal elections. That’s no surprise: Foreign companies have often (always?) tried to influence the outcome of US elections to suit their strategic interests. (The constraints foreign entities should have on such maneuvers, if any, are for others to decide.)

Experienced bettors know when to fold their cards, however, and Foxconn is well-known for exiting the table when it doesn’t like the stakes. When the trade winds blew cold, the company headed for warmer climes.

So a shoutout to Georgia, Arizona and Nevada, among others: If Foxconn comes calling, look hard at the cards before asking for a hit.

In-house production making a comeback? A few years back – well, probably 10 or so – I saw a glimpse of a trend by OEMs to start bringing assembly back in-house. The moves weren’t typically wholesale. In many cases, they supplemented existing arrangements, ensuring that they would have at least some internal capabilities.

The thinking went that, if their quarterly build volume peaked at, say, $30 million, they would install a sufficient number of lines to handle that level of production.

This was borne out by some very real developments. Blue chip companies like GE, Eaton, Otis and others were opening captive shops. And other OEMs were adding some level of assembly through acquisitions. Likewise, companies such as Quanta, Compal Electronics, Wistron and Pegatron – all former assembly units of major OEMs – were investing considerable capital in vertical capabilities. The evolution appeared to be OEMs divested their assembly operations, then eventually the EMS companies became ODMs, and ultimately ODMs became OEMs.

The reasons for this are plenty. Knowledge of manufacturing makes for better designs. The ability to build things provides a certain amount of supply-chain resiliency (which wasn’t a term then) in the event key suppliers aren’t delivering. Maintaining control of critical IP helps keep competitors at bay.

We are seeing echoes of this again. BYD’s pending $2.2 billion acquisition of Jabil’s mobile unit puts the EV maker squarely in the mix of the top rank electronics manufacturers. Starlink is outfitting a massive manufacturing plant in Austin. Micross Components purchased Technograph Microcircuits, and medical manufacturing OEM Ocutrx Technologies nabbed Spectrum Advanced Manufacturing Technologies.

Likewise, Space X (Starlink), Schweitzer Engineering Laboratories and Vicor are among those OEMs that have announced or opened bare board fabrication plants in the past year.

Is my long-ago prediction actually becoming a trend? Possibly. But while for many the supply-chain problems of the past few years have underscored the reasons for bringing production in-house, I do worry that the mode in some cases might be more reaction than planning. What difference does it make? Nonstrategic acquisitions don’t take long to become nonstrategic divestitures.

P.S. See you this month at PCB West (booth 113), the largest trade show in the Silicon Valley for the electronics industry, next month at SMTAI, and in November at Productronica.

MIKE BUETOW is president of PCEA (pcea.net); mike@pcea.net.