Trump unveils $50bn deal with SoftBank, Foxconn
December 07 2016 08:30 PM
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US President-elect Donald Trump and SoftBank CEO Masayoshi Son speak to the press after meeting at Trump Tower in Manhattan, New York City. The Japanese firm reaped huge profits from a partial sale of its stake in Alibaba, while in June it sold Finnish game-maker Supercell Oy to Chinese Internet giant Tencent for $8.6bn.

AFP/Taipei

Taiwan’s tech giant Foxconn confirmed yesterday it is in talks over a new US investment, while SoftBank shares soared after President-elect Donald Trump unveiled a $50bn deal with the two firms.
Trump announced the agreement – which he said would bring 50,000 jobs – in the lobby of Trump Tower in New York, alongside SoftBank’s flamboyant chief executive Masayoshi Son.
Son brandished a document featuring the names of his firm and Foxconn which read: “Commit to invest $50bn + $7bn in US, generate 50k + 50k new jobs in US in next four years.” 
Foxconn, a major supplier to Apple, confirmed in a statement it is “in preliminary discussions regarding a potential investment” that would expand its current US operations, but would give no further details.
“We will announce the details of any plans following the completion of direct discussions between our leadership and the relevant US officials,” the statement said. The firm is the world’s largest contract electronics maker and is best-known for assembling products for international brands such as Apple and Sony.
But as Apple diversifies its supply chain, Foxconn has branched out into robotics, e-commerce, telecoms and biotech.
Analysts said the potential deal reflected pressure on Apple to refocus on the US. Trump campaigned on a platform of bringing jobs back to the US which he said were being taken away, particularly by China.
While Trump took credit for the deal, Son told the Wall Street Journal in an interview the money would come from a $100bn investment fund he is setting up with Saudi Arabia’s sovereign wealth fund and other partners. The move was announced in mid-October.
“Trump is pressuring Apple to return to the United States and Foxconn as an Apple supplier is going there to be near its client to strengthen its ties with Apple,” said Arthur Liao, an analyst at Fubon Securities.
Liao said he expected the new investment to focus on automation, design, and research and development rather than manufacturing, due to high labour costs in the country. Foxconn, also known as Hon Hai, employs around a million workers at its factories across China and has operations in more than 10 countries. In the US, it has a plant in Virginia for packaging and engineering which employs over 400 people.
It has also announced a $40mn investment in a facility in Pennsylvania to build precision tools and develop a robotics programme.
Foxconn founder Terry Gou and SoftBank’s Son are reported to be good friends. Shares in Foxconn ended 0.97% higher at Tw$83.1 in Taipei yesterday.
Shares in Tokyo-listed SoftBank closed up 6.19% after Trump’s announcement, which he made while wrapping an arm around Son.
“This is Masa of SoftBank from Japan and he’s  just agreed to invest $50bn in the United States and 50,000 jobs,” Trump told reporters.
SoftBank declined to comment on details, but the funds will likely go towards acquisitions and investments in tech companies including start-ups, Japanese media said.
Son has led the firm in a string of acquisitions including early investment in Alibaba, China’s equivalent to eBay.
He pointed to Trump’s business experience as a plus.
“I expect there will be various forms of deregulation,” under Trump, Son told Japanese journalists in New York.
“He has a lot of experience as a businessman. Unlike many politicians who do a lot of talking, but only talking, I feel like he will take action,” he said.
SoftBank reaped huge profits from a partial sale of its stake in Alibaba, while in June it sold Finnish game-maker Supercell Oy to Chinese Internet giant Tencent for $8.6bn.
But its US mobile unit Sprint, which it bought in 2013 for $22bn, is still unprofitable. Son initially set his sights on a merger with US-based T-Mobile but the plan was abandoned owing to likely opposition from US regulators.
Some analysts have also questioned SoftBank’s most recent high-profile deal – the $32bn purchase of British iPhone chip designer ARM Holdings.







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