updated 07:30 pm EDT, Thu October 13, 2011
Expansion plan still in some doubt, however
Foxconn has now confirmed that it will finally begin producing iPads in Brazil beginning in December, but is still negotiating a multi-billion-dollar expansion plan with the South American country. Reports have varied on the state of iPad production in Brazil, where Foxconn already has several production facilities, ever since the plan was initially announced by Brazilian President Dilma Rousseff back in April. The iPad facility will be in Jundiai in the state of San Paulo.
In order to attract Foxconn and other tablet makers, Brazil in May offered various incentives, including a special exemption from the 9.25 percent social security tax and a steep discount on the industrial production tax. Samsung, Motorola and Positivo among others have all also taken advantage of the incentives and invested in Brazil, mainly for tablet production. Should the expansion deal eventually go through, Foxconn expects to invest about $12 billion over the next few years.
Brazilian Science and Technology Minister Aloizo Mercadante says some iPhone production is already going on in the country, but iPad production was pushed back somewhat due to the lengthy negotiations between Foxconn and the Rousseff administration. Among the facilities Foxconn plans are two new factories dedicated to assembling touch screens. The deal will involve financing from the state-owned development bank BNDES as well as local investors.
It is the financing of the expansion plans that has been the sticking point in negotiations, resulting in reports that the entire deal could fall through. A shortage of local firms with sufficient investment funds appears to be the main issue, with the state-owned bank unprepared to carry the entire risk. Mercadante says the process is unfinished, but says the deal is "moving ahead" without naming a specific date for completion.
Apple products made in Brazil will be distributed internationally (with an emphasis on the Americas) but will also be sold in-country, making them significantly cheaper than the previous price for imported iPads, which were subject to high tariffs that made the price roughly 40 percent higher than the equivalent U.S. retail price.