Data Sheet—In Wisconsin, Some Fear Foxconn Factory’s Main Product Is Smoke and Mirrors
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Happy Halloween from Hong Kong where stock markets, despite today’s modest rally, are still spooked by the U.S.-China trade war. China tech investors took fright on Monday, as the U.S. Commerce Department, citing national security concerns, announced plans to block Fujian Jinhua Integrated Circuit, a state-owned Chinese tech firm, from buying American components. Analysts say the move could seal the company’s doom.
Tuesday brought fresh horrors as the U.S. Justice Department charged two Chinese intelligence officers with stealing technology for a jet engine being developed by a French and U.S. company. Meanwhile, a recent Wall Street Journal report summing up travails of China’s once-vibrant tech darlings all but called them The Walking Dead: gasping to raise capital, staggered by regulatory restrictions and governance blunders, and reeling from collapsed cross-border investment deals and sinking post-IPO stock prices.
But for my money, the week’s most chilling U.S.-China tech story is this one published in The Verge, and mentioned in the Data Sheet yesterday, alleging that Foxconn’s vow to build a $10 billion factory in Wisconsin is morphing from treat to trick. The plan, which called for locating the facility in Racine County about 40 minutes south of Milwaukee, was announced to great fanfare in July 2017 by governor Scott Walker and Foxconn chairman Terry Gou. The deal was famously inked on a napkin at the two men’s first meeting. The state would chip in $3 billion in subsidies and, in return, Foxconn would build a $10 billion state-of-the-art plant to manufacture liquid crystal displays, generating 13,000 jobs. Walker promised the plant would help deliver on his 2010 campaign pledge to create 250,000 new jobs in the state during his first term.
The Verge says public costs have since ballooned to more than $4 billion, including $764 million in new tax incentives from local governments in Racine County, $164 million for a road and highway connections, and $140 million for a new electric transmission line. All told, public subsidies have risen to more than $315,000 per job, and aren’t expected to be recouped by the state until after 2050–if ever.
Scott and Foxconn declined comment for The Verge story. But the report parses recent statements to local press by Foxconn spokesman Louis Woo suggesting that the company now plans to build a less advanced facility, then eventually shift from TV screens to thin-film transistor fabrication. The company still promises to create 13,000 jobs, although it doesn’t say by when. But Woo says the plant will require assembly line workers for only about 10% of jobs, and less defined “knowledge workers” for the remaining 90%.
Donald Trump, barnstorming in Wisconsin earlier this month, took credit for bringing the Foxconn plant to Wisconsin, calling it “the most incredible thing I’ve ever seen.” But polls suggest a majority Wisconsin voters now doubt the factory will benefit the state. Walker, locked in an unexpectedly tough re-election campaign, generally avoids mentioning it on the stump.
A little too hot. Scooter startup Lime had to pause its rapid growth to recheck a couple of thousand of its scooter fleet. It seems some lithium batteries in a model made by Segway Ninebot could potentially catch on fire. Lime said less than 1/10,000th of its fleet was actually affected by the battery flaw.
It’s why it’s worth so much. Much as expected, Apple rolled out a series of product updates at its event in Brooklyn on Tuesday, then wowed the audience with a couple of tunes sung live by Lana Del Rey (How to Disappear and Venice Bitch, for the record). The company refreshed its long out-of-date MacBook Air and even longer out-of-date Mac mini, with both getting cutting edge specs, like 8th-gen Intel processors and USB-C ports. New versions of the iPad Pro come at 11 and 13-inches and lost both their home buttons and headphone jacks but picked up Face ID. Oh, and all three product lines now have higher starting prices.
Impress the green eye shades. It was a busy day for tech companies on Wall Street. Facebook said its third quarter revenue increased 33% to $13.7 billion and monthly active users rose almost 10% to 1.49 billion. Both figures were slightly below analyst estimates though Facebook shares, previously down 17% this year, gained 4% in premarket trading on Wednesday. At eBay, revenue was up 6% to $2.65 billion and 56 cents in adjusted earnings per share was up 19%. After a tough year, with its shares down 27% so far, eBay saw its stock jump 4% in premarket trading. And T-Mobile reported revenue increased 8% to $10.8 billion and earnings per share jumped 48% to 93 cents. Its shares rose 5%.
Hands off the wheel. California granted Google parent Alphabet’s self-driving car unit, Waymo, the first permit to let self-driving cars drive themselves on public streets with no human test drivers. The company says it will begin its testing in cities including Los Altos, Los Altos Hills, Palo Alto, Sunnyvale, and Mountain View. In less good news, an exec at Alphabet’s X research lab, Richard DeVaul, left after a sexual harassment claim against him and Google CEO Sundar Pichai sent another email to staff trying to defuse the controversy and endorsing a protest walkout planned for Thursday. Google needs to take a “much harder line on inappropriate behavior,” he wrote.
Clear out your desk. Among its various projects, Elon Musk’s SpaceX is supposed to be launching thousands of satellites to build a global Internet service from space dubbed Starlink. But apparently things aren’t moving as fast as Musk would like. He showed up at Starlink headquarters over the summer and fired seven top managers over the slow pace of progress, Reuters reports.
FOOD FOR THOUGHT
As noted above, the price of Apple products keeps going up and others, including Google and Samsung, have similarly hiked the cost of their latest gadgets. Samantha Cole at Motherboard digs into the not terribly surprising reactions by consumers to those actions. For one, people are holding onto their phones for a lot longer than they used to–almost 3 years now. Cole explains:
Part of this, according to Biju Nair, chief executive of Hyla Mobile, is because phone plan carriers moved from a subsidized payment model for new phones, to payment plans, as smartphones got more expensive over the years. Now, if you purchase it from a big carrier like Verizon or T-Mobile as part of a plan package, your phone is basically on loan to you from the carrier, while you make smaller monthly payments until it’s paid off and you own it outright.
It can take years to pay off a new smartphone (the iPhone XS Max costs almost $1,100), and once you’ve done it, there’s not much incentive to give up that investment—especially when the newest models aren’t much different in terms of specs and performance than the one you already have.
Add to this the efforts by right-to-repair groups to raise awareness about the fact that your phone actually doesn’t need to go in the garbage every time you crack the screen, and you’ve got people keeping their phones longer.
IN CASE YOU MISSED IT
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BEFORE YOU GO
Of course, Google was going to post a Google Doodle for Halloween. But did they have to post such an addictive little mini game as the header appearing on its popular search page? The Great Ghoul Duel lets teams of friends or strangers compete against each other as ghosts to collect the most wandering spirit flames in two minutes. Try it, or maybe don’t.