Stargate – Different This Time?
In 2017 Foxconn (2354.TT) announced that it was thinking about coming to Wisconsin, and, as all good politicians do, local bureaucrats quickly cobbled together a $2.85b tax credit plan to help convince Foxconn to choose their site in the tiny (27,732 in 2020) village of Mt. Pleasant for the $10b Gen 10 LCD fab that Foxconn was going to build, along with ‘thousands of jobs to the state’ as per the company. The deal, which had tax incentives that were 10 times larger than any deal ever made in Wisconsin with a foreign entity was approved by Foxconn in 2018. Houses were purchased under the threat of eminent domain and razed, and then President Trump, along with Terry Gou, chairman of Foxconn and the governor of Wisconsin, broke ground at the 1,200-acre site on a sunny day in June, promising at least 13,000 jobs.
Figure 1 - Groundbreaking in Mount Pleasant, WI on 6/28/18 - Source: Milwaukee Journal Sentinel
However, as has been the case with a number of Foxconn projects, things got off to a slow start, although local government spending on roads and infrastructure continued, and Foxconn did not meet qualifications for subsidies in 2018, falling short of the target of 260 hires for the year by 104. Foxconn decided to change its plans in early 2019, then promising a Gen 6 LCD fab, due to ‘market conditions’ and by 2021, with little project development, a new administration signed a ‘modified’ agreement with Foxconn that reduced the number of jobs created by the project from 13,000 (“…probably 50,00 or more…” – Donald J. Trump) to 1,454, reduced the tax credits to $80m (paid by taxpayers) if conditions were met, and lowered Foxconn’s capital commitment from $10b to $672m (by 2026), while giving Foxconn the option to produce items other than LCD displays at the site.
Over the years since the original plan was formulated a number of buildings have been erected on the site (Figure 2); a guardhouse, a 120k ft2 storage facility, a 1m ft2 factory, and a dome. During the pandemic the manufacturing center was used to produce respirators, face masks, and coffee kiosks, and more recently servers. No displays were ever built on the site, but Foxconn began leasing about 1/3 of the site to Microsoft (MSFT) for $50m in 2023. Microsoft is building a $1b data center on the site that is thought to eventually employ between 300 and 400 people. Phase 1 of the Microsoft project must begin by July 2026 and phase 2 by July 2033 to qualify for tax breaks.
All in, promises were made by Foxconn, the Governor of Wisconsin, and President Trump that the Foxconn project would be “…the Eighth Wonder of the World”, bringing jobs and prosperity to the region. In this case taxpayers footed much of the bill for infrastructure, but few realize that the person who introduced the Chairman of Foxconn to President Trump which began this sad tale, was none other than Masayoshi Son, the Chairman of Softbank (9984.JP), who is the financial spearhead of the just announced ‘Stargate Project’ that promises to spend $500b over the next 4 years to build power efficient Ai data centers across the US.
While we expect at least the initial $100b funding that the partners in the project are promising will be privately funded, with little taxpayer involvement other than infrastructure and lost tax revenue (We note that the taxpayers footed the bill for the Foxconn site to the tune of $426m by 2023 and an additional $257m for high-voltage power lines through electricity rate increases), but actual funding details have yet to be worked out. Hopefully, taxpayers are not going to be required to be involved in this massive project, as its long-term benefits will likely accrue to the partners, but more important are the timelines and how the project is going to provide itself with power without tapping into the national grid or further destroying the environment with fossil fuel power plants. Once the politicians and plutocrats move on to the next headline, it will be interesting to see whether Project Stargate becomes another ‘Foxconn Wisconsin’ or actually does anything other than making its wealthy partners more wealthy.
Over the years since the original plan was formulated a number of buildings have been erected on the site (Figure 2); a guardhouse, a 120k ft2 storage facility, a 1m ft2 factory, and a dome. During the pandemic the manufacturing center was used to produce respirators, face masks, and coffee kiosks, and more recently servers. No displays were ever built on the site, but Foxconn began leasing about 1/3 of the site to Microsoft (MSFT) for $50m in 2023. Microsoft is building a $1b data center on the site that is thought to eventually employ between 300 and 400 people. Phase 1 of the Microsoft project must begin by July 2026 and phase 2 by July 2033 to qualify for tax breaks.
All in, promises were made by Foxconn, the Governor of Wisconsin, and President Trump that the Foxconn project would be “…the Eighth Wonder of the World”, bringing jobs and prosperity to the region. In this case taxpayers footed much of the bill for infrastructure, but few realize that the person who introduced the Chairman of Foxconn to President Trump which began this sad tale, was none other than Masayoshi Son, the Chairman of Softbank (9984.JP), who is the financial spearhead of the just announced ‘Stargate Project’ that promises to spend $500b over the next 4 years to build power efficient Ai data centers across the US.
While we expect at least the initial $100b funding that the partners in the project are promising will be privately funded, with little taxpayer involvement other than infrastructure and lost tax revenue (We note that the taxpayers footed the bill for the Foxconn site to the tune of $426m by 2023 and an additional $257m for high-voltage power lines through electricity rate increases), but actual funding details have yet to be worked out. Hopefully, taxpayers are not going to be required to be involved in this massive project, as its long-term benefits will likely accrue to the partners, but more important are the timelines and how the project is going to provide itself with power without tapping into the national grid or further destroying the environment with fossil fuel power plants. Once the politicians and plutocrats move on to the next headline, it will be interesting to see whether Project Stargate becomes another ‘Foxconn Wisconsin’ or actually does anything other than making its wealthy partners more wealthy.
Figure 2 - Foxconn Mt. Pleasant Site (white) - Source: SCMR LLC, Google Earth
Figure 3 - Foxconn Site - 2023 - Source: SCMR LLC, Google Earth-
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