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WSJ claims U.S. Foxconn plant will make iPhone displays; $3B tax subsidy under fresh attack [U]

Update: Reuters reports that the Wisconsin Assembly’s jobs and economy committee voted 8-5, along party lines, to recommend the deal. The Wisconsin State Assembly will vote next, followed by Wisconsin State Senate and by the joint finance committee, before going to the governor for final approval.

While previous reports on Foxconn’s U.S. display factory have described it as making large panels for use in TVs and monitors, a WSJ post today claims that it will be making LCD screens for iPhones.

The facility, which would build liquid-crystal display technology, or LCD, screens used for Apple Inc.’s iPhone, would be the first of its kind in North America.

It’s unclear whether the WSJ has new information, or has made what appears to be a common error of conflating Foxconn with iPhone production.

The wisdom of Wisconsin proving a $3B tax subsidy – amounting to a full 30% of Foxconn’s investment – is again being questioned after a state fiscal analysis calculated that taxpayers wouldn’t recoup their investment until the 2042-2043 fiscal year …

An earlier breakdown of the incentives had shown that they will cost the state at least $231k per job.

The WSJ reports that state governor Scott Walker strongly defended the incentive package.

“We believe this is transformational,” Mr. Walker said Wednesday in an interview with The Wall Street Journal. “We think in terms of attracting talent across the country and around the world” […]

Mr. Walker said the benefits of the deal went beyond the number of jobs that would be created from the facility itself. Instead, he said, the deal should be viewed as a way to make Wisconsin a hub for technology jobs and venture capital investment. He said as a “cutting-edge technology” firm, Foxconn would help the state attract young talent and retain its college graduates. He also thinks its most crucial benefit would be changing the popular image of Wisconsin and the benefits of living there.

However, the financial analysis led others to describe the deal as a poor one for taxpayers.

“Traditionally, these incentive packages, when we look back at them, tend to be expensive, inefficient and have a lot of unintended consequences,” said State Rep. Gordon Hintz, a Democrat whose district includes Oshkosh. “We all want to be seen as doing something proactive but there’s a large body of public policy research that lets you know you can’t buy sustainable economic development” […]

“There’s bipartisan concerns over Gov. Walker’s $3 billion corporate welfare package,” said Senate Minority leader Jennifer Shilling. “The best day that this deal had was the day it was unveiled and every day afterwards have been a constant line of questions.”

The debate means that it is not yet certain the package will be approved by the state legislature.

Mr. Walker, a Republican, said he is confident the bill will be passed before Labor Day, which falls on Sept. 4. On Wednesday, Senate Majority Leader Scott Fitzgerald said in an interview that he expects the bill to pass the Republican-majority state legislature, but didn’t confirm that he had enough votes—which could signal that the deal could be in trouble.

One further issue is that Wisconsin has a reciprocal deal with neighbouring states where the income tax of those commuting from out of state is passed back to their home state, meaning Wisconsin sees no tax benefit from these workers.

While Apple is expected to launch the iPhone 8 with an OLED screen, it is sticking with IPS LCD for the iPhone 7S/Plus. However, LCD panels are made in a wide variety of sizes, and it has previously been reported that the U.S. plant will make only TV- and monitor-sized ones.

Photo: Reuters/Bobby Yip

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!

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