IPad-Maker Foxconn in Talks to Invest $12 Billion in Brazil
Brazilian President Dilma Rousseff said Foxconn Technology Group may spend $12 billion over five to six years to expand production in the country, in what would be the Taiwanese company’s biggest investment overseas.The Taipei-based maker of Apple Inc. (AAPL)’s iPhone and iPad is holding talks with the government on the investments, the Brazilian president told reporters in Beijing yesterday. The amount, exceeding any of the company’s past investments, is likely an exaggeration, according to Yuanta Securities Co. Foxconn wasn’t immediately available to comment.
“It makes sense to move to Brazil but that figure is too much,” said Vincent Chen, an analyst at Yuanta in Taipei. “The main reasons to go there are for tariff considerations and be closer to emerging markets.”
The expansion may help the Taiwanese company, which employs more than one million people in China, scale back the reliance on its manufacturing base in the southern Chinese city of Shenzhen, where wages are climbing. LG Electronics Inc. (066570) and Motorola Mobility Holdings Inc. have also announced plans to manufacture in South America’s largest economy.
China Approvals
Edmund Ding, a spokesman for Foxconn’s Taipei-based flagship Hon Hai Precision Industry Co., didn’t answer three calls to his Taiwan and China mobile phones today.
As of Sept. 30, Hon Hai and its affiliates had received approval from Taiwan authorities to invest NT$134 billion ($4.6 billion) in China since the company’s founding in 1974, according to filings to the Taiwan Stock Exchange.
Foxconn’s facility could create 100,000 jobs, Brazil’s Science and Technology Minister Aloizio Mercadante said in Beijing. Foxconn is seeking state infrastructure guarantees such as energy supply, broadband Internet and access to airports, he said. The factory would produce tablets, he said.
Foxconn already makes laptops for Hewlett-Packard Co. (HPQ) in Brazil, South America’s largest economy.
LG, the world’s third-biggest handset maker, plans to start production of its Optimus Pad in Taubate, Sao Paulo state, by the second half of this year, according to Mariana Geraldine, a spokesman for the company.
Motorola Mobility plans to take advantage of tax breaks in Brazil to produce its Xoom tablets at a factory in Jaguariuna, Sao Paulo state. It’s waiting for details on the incentives, Motorola said in an e-mailed statement yesterday.
Brazil plans to give tax incentives to manufacturers of tablets to make Latin America’s biggest economy a production center, according to Development Minister Fernando Pimentel. The government also plans to give tablets to students at public schools to modernize Brazil’s education system.
MXT, a Brazilian electronics producer based in Betim, Minas Gerais state, in February started to manufacture the first domestic tablet and plans to expand production after the tax incentives take effect, Etiene Guerra, the company’s CEO, said in an e-mailed interview.
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