|Hon Hai subsidiary Foxconn CMMSG Industria de Electronicos has bought 350 acres of land near Sao Paulo, Brazil with the intention of building a new factory to assemble smart phones, tablets and other electronics. The deal will create a fifth Foxconn factory in Latin America, and at least the second such facility in Brazil. Foxconn has paid $12.6 million for the land, and will spend more than $490 million building the new facility. The current factory in Brazil is said to be one of the primary assembly plants for the iPad mini. The future facility could be used for expanded production in the Americas.
In addition to creating products for Apple and other electronics manufacturers without the shipping costs incurred from China-based production, the Fox con facilities take advantage of tax breaks and incentives offered by the Brazilian government, avoid tariffs of imported goods, and create products that can be sold in the rapidly-expanding Brazilian market. For example, an iPad mini made in Brazil avoids a 40 percent price hike caused by tariffs.
Foxconn makes goods for a wide variety of electronic manufactures, though Apple is one of its most important customers. The new factory in Brazil is likely to attract a number of clients that can use the facility to produce goods sold in the Latin American region. Apple has placed a lot of emphasis on the Brazilian market in recent quarters, with CEO Tim Cook mentioning the country and its expanding middle-class as a strong market and growth opportunity.
The iPad maker opened its iTunes Store in the country at the end of last year, and brought the iBookstore to Brazil just last month. It may not be coincidental that Apple is planning its first official retail stores in Brazil for later this year.