Foxconn’s recent announcement that it plans to build a 20 million square foot manufacturing facility in Wisconsin has garnered a lot of attention, and deservedly so. From an economic standpoint, this $10 billion investment over the next three to four years promises to boost the local and U.S. national economy, and create anywhere from three thousand to thirteen thousand new jobs if executed according to plan.
And that’s just the tip of the iceberg in terms of potential economic development. Electronics manufacturing facilities of this size and scale aren’t typically built in a geographical void. Instead they help comprise a regional supply, manufacturing, and transportation ecosystem via which a range of materials and components can be locally sourced, assembled into products, and shipped to distributors. It’s increasingly likely then that the supply chain for consumer electronic devices will see an expanding footprint in the midwestern U.S. on the heels of Foxconn’s investment. When the world’s largest contract manufacturer sets up shop in a new territory, others are bound to follow.
The announcement is similarly noteworthy for the components slated to be manufactured at this new facility. Although Foxconn is best known to many in the U.S. for its role in assembling Apple iPhones in China, the new Foxconn fab isn’t targeted to service the lucrative smartphone market. In a move that pivots its attention from small-screen portable devices, the Foxconn facility in Wisconsin will produce LCD displays for large-screen televisions.
The market for LCD display panels is notoriously volatile, prone to upswings and downswings as consumer tastes and market demands shift. Panel suppliers must calibrate their manufacturing capacity accordingly, carefully calculating production and inventory targets to preserve their razor-thin profit margins. In this context, a $10B investment in a new LCD panel fab can be perceived as a major gamble.
But a brand new fab is precisely what’s required to sustain production capacity when transitioning from sub-40-inch displays to displays that are 50 inches and larger – sometimes much larger. You can’t simply upgrade an existing fab to accommodate significantly larger glass panels. Across the entire production line, from the manufacturing tools to the conveyers and beyond, new infrastructure and equipment will be needed.
And yet Foxconn has correctly predicted that a new large-screen LCD display fab is a sound investment to meet growing consumer demand for larger TVs. Experts estimate that global demand for large-sized TVs is growing at an annual rate of more than 20%. Market research firm IHS Markit specifically notes that 65-inch and 75-inch LCD TVs are the fastest growing segments in the LCD TV market, and the 60-inch and above LCD TV market in North America is expected to grow from 4.2 million units in 2015 to 9.5 million units in 2021. Indeed, North America is the biggest market for large-screen LCD displays of 55-inches and above, perhaps a telling reason why Foxconn has expanded its manufacturing operations here.
The demand for larger TVs has been growing for many years, but it wasn’t until relatively recently that these TVs’ price points became palatable to mainstream consumers. This comes at a time when consumers are looking to upgrade their smaller, earlier-generation TVs in favor of larger, higher resolution TVs that provide a more immersive and high-quality visual experience.
Bulky, plastic bezels have given way to sleeker designs that maximize screen space and conserve living room space, and the evolution to 4K video and onward to 8K is enabling shorter viewer-to-TV viewing distances. Where previously a standard HD, large-screen TV required a wide viewing berth to compensate for image pixilation, the newest generation of ultra-HD, large screen LCD TVs enable comfortable, closer-range viewing regardless of room size. Factoring in the additional benefits of new quantum dot color enhancement technology, one could make the argument that there’s never been a better time to upgrade our LCD TVs.