President Joe Biden to announce AI data center at failed Foxconn site

President Joe Biden is traveling to Racine, Wisconsin, today to announce a $3.3 billion investment by Microsoft, which will build an AI data center on the same site as the failed Foxconn project, according to a White House press release. 

The Microsoft project, which the White House estimates will create an estimated 2,300 union construction jobs and up to 2,000 permanent jobs, is part of Biden’s Investing in America initiative. Microsoft will roll out the investments in a “four-part strategy designed to create long-term benefits for the state’s economy and job market,” the company said in a press release.

Microsoft will also develop an AI innovation lab at the University of Wisconsin-Milwaukee and a “Data Center Academy” at Gateway Technical College, where Biden is slated to announce the development, the White House release says. The academy will train 1,000 people in the community for data center and STEM jobs by 2030. The AI lab aims to work with 270 Wisconsin companies by 2030. Microsoft said it is also partnering with United Way to train more than 100,000 people across the state on generative AI.

Wisconsinites may be skeptical. In 2017, former President Donald Trump announced that the Taiwanese tech giant Foxconn — which, among other things, manufactures iPhones — was building a massive LCD factory in Mount Pleasant, a small town with high unemployment. The company also promised “innovation centers” in Racine, Eau Claire, and Green Bay. Trump said Foxconn’s $10 billion investment, which would create 13,000 new jobs, would be the “eighth wonder of the world.” Most of it never materialized. 

The company later downsized its plans for the factory. As Josh Dzieza reported for The Verge, the innovation centers stayed empty, and Foxconn hired just a few hundred employees, many of whom were later laid off. According to Dzieza’s reporting, many of the people who ended up employed by Foxconn were hired so the company could get a tax subsidy payment from the state of Wisconsin. The state ended up rejecting Foxconn’s subsidy application after finding that the company had only employed 281 people eligible under the contract. In the end, the project left Racine worse off: to build the factory, the state seized land, including people’s homes, via eminent domain and diverted water from Lake Michigan. 

In response to Dzieza’s reporting, Foxconn’s then-CEO, Alan Yeung, denied that the buildings were empty. But in a 2022 interview with Decoder, Yeung — now a professor of entrepreneurship at the University of Wisconsin-Madison — acknowledged that the project failed but emphasized that the buildings weren’t completely empty. He also denied that the project was done to boost Trump’s reelection chances. 

“Anytime you put well over $50 million — along with paying for upkeep and property taxes — into innovation centers, they can get compared to Potemkin offices, used to help an incumbent get reelected. We do not do that; we actually work for our shareholders, and I would like to clarify that,” Yeung said. “We did have ourselves, our partners, and our clients in many of the buildings,” he later added.

Last August, Foxconn put two of its Wisconsin buildings up for sale.

“President Biden promised that unlike his predecessor, he wouldn’t leave communities like Racine behind,” the press release states. The announcement is part of Biden’s big manufacturing push ahead of the 2024 election. In February, the administration said it’s investing $5 billion in research to increase domestic semiconductor manufacturing as part of the 2022 CHIPS and Science Act. In March, Biden announced $20 billion in grants and loans under the CHIPS Act for Intel. The White House said the funds would help the company expand its semiconductor production in Arizona and create 10,000 new jobs in the state.