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Foxconn in talks to build $9 billion factory in Saudi Arabia

Taiwan's largest Foxconn Technology Group is in talks with the Saudi government to jointly build a $9 billion multi-purpose facility that will produce microchips, components for electric vehicles, and other electronics, the Wall Street Journal reported, citing unnamed sources.

The Saudi authorities are considering a proposal to build a twin-line foundry as part of the Neom project, which involves the construction of a smart and tourism city in the northwest of the country. Discussions between the parties began last year.

Saudi Arabia is currently reviewing the conditions under which Foxconn is pursuing similar projects in other countries, the sources said. There is information that the Taiwanese company is also negotiating with the leadership of the United Arab Emirates about the possibility of building a plant there.

The construction of enterprises in the countries of the Middle East is an attempt by the company to diversify its production sites against the background of the economic confrontation between the US and China. This rivalry could put Foxconn in a vulnerable position.

The Saudis are pressing the company to provide guarantees that at least two-thirds of the new plant's products must be included in Foxconn's supply chains. This will ensure the availability of buyers for the goods of the enterprise and the profitability of the project.

WSJ sources note that Foxconn needs incentives from the state, including funding, tax holidays, subsidies for resources in exchange for the creation of high-tech production. This will be a step for Saudi Arabia to diversify its economy, which depends solely on oil. It is likely that the country will offer the company a direct joint equity investment, an industrial development loan and low-interest loans from local and foreign banks.

Neither the Saudi Arabian authorities nor Foxconn representatives commented on reports from WSJ sources.

Foxconn is the main manufacturer of Apple products, including iPhone, iPad, MacBook. The company is merging with automakers Jeep and Chrysler Stellantis, as well as with the American electric car startup Fisker.

Last summer, Foxconn bought a plant for the production of specialized memory chips from Taiwan's Macronix International for $90 million. Thus, the company intends to become a supplier of electric vehicles around the world.

Saudi Arabia plans to invest about $500 billion in diversifying its economy. Back in 2019, the country acquired a controlling stake in Lucid Motors, which signed an agreement to open its own enterprise in Saudi Arabia.

In November last year, Foxconn bought the American electric vehicle plant Lordstown Motors. The deal cost the Taiwanese company $230 million.

Foxconn in talks to build $9 billion factory in Saudi Arabia