1 Billion Reasons for Disbelief

Where do they come up with these numbers?

DigiTimes is now reporting that Foxconn will open a pair of R&D centers in Japan at a total cost of $1 billion. Unless Foxconn is planning to break into wafer fabrication — and it’s not — $1 billion is an otherworldly sum. It’s certainly far greater than would be needed for even the most statest state-of-the-art facility. (Not to mention all those Japanese OEMs that are looking to sell their own internal operations on the cheap.)

This comes on the heels of the proclamation that Foxconn plans to ultimately invest $10 billion in a large-volume production center in Indonesia. Again, given that there are only a handful of EMS/ODM companies that even do $10 billion a year in sales, and that the market for SMT manufacturing equipment is less than $2 billion worldwide, these estimates suggest land costs in Serang compare with those of downtown Tokyo. (They don’t, and even an operation the size of Foxconn’s reported vision — a 1,000 hectare [3.86 sq. mile] industrial city — would cost only a relatively affordable $1.1 billion for the raw land.)

Sorry, but either there’s some gamesmanship going on, or someone needs a new currency converter.


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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow