Essentially, Foxconn thought that the Wisconsin deal would work more typically as its deals in China went. Glad-hand the government officials, get sweetheart deals on land and investment, and as long as you're not totally incompetent in making use of it, they won't care what you do with it, even if you fail to live up to the original promises. It's not clear to me that Foxconn actually seriously considered producing LCD screens here given this light; the announcement would have been more to make Walker and other government officials ecstatic about the deal than an actual commitment to follow through. The fact that outrage towards the deal would lead to Walker losing reelection and his successor keeping a much closer eye on performance (or lack thereof) seems to me to have caught Foxconn completely off-guard.
I think there's another level going here in relation to internal Foxconn politics, but my recollection is too hazy to make a coherent explanation, and I don't want to make any false accusations here, so I won't go into any more detail.