Taiwan’s Foxconn Technology Group, makers of the iPhone, are considering making a bold $12 billion move into Brazil, according to Brazilian government sources.
Brazil’s president Dilma Rousseff told reporters in Beijing on Tuesday that government officials had met with Foxconn to discuss the possibilities of a massive direct investment over the next five to six years. Brazil’s official government press agency, Agencia Brasil, said the investment would go towards the production of equipment like third generation cellular and iPads. If the investment is realized, the plant will be the first of its kind in the Americas.
From Bloomberg Wednesday:
Foxconn is giving “serious consideration” to further invest in the South American country and has yet to decide on details, said Louis Woo, a spokesman for the Taipei-based company, declining to comment on the value. “It makes sense to move to Brazil but that figure is too much,” said Vincent Chen, an analyst at Yuanta Securities Co. in Taipei. “The main reasons to go there are for tariff considerations and be closer to emerging markets.” The amount is likely an exaggeration, Chen said.
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. Foxconn, whose Brazilian facilities include production of notebooks for Hewlett-Packard Co., would make the investments in order to follow customers and give it “market access,” Woo said. He declined to comment on what products the company would make there.
Foxconn’s English language website did not have any news release on the subject as of Wednesday morning.
Reuters reporters said they had seen an official statement and that it did not provide any details or confirmation of foreign direct investments of any magnitude into Brazil in the near future.
Foxconn is one of the world’s largest producers of mother boards and video boards for computer electronics. It is the well-known manufacturer of Apple’s mainline brands. Foxconn already has a Hewlett Packard and Sony manufacturing facility in São Paulo state. Any move to build Apple products in Brazil would surely be more costly than building them in Asia. iPhones and iPads for sale in the retail market go for at least three times the price of US retail, leading many Brazilians to smuggle unblocked handhelds in from Paraguay, duty-free.
Rumors that Foxconn was considering making an Apple assembly line in Brazil surfaced in March of this year from online news portal Rede BOM DIA. The site — based in the interior of São Paulo state — was back at it again on Wednesday, citing Science and Technology Minister Aloizio Mercadante saying Foxconn “will start making Apple tablets in November.”
Mercadante, a former senator and one of the founders of the ruling Workers’ Party, is known to exaggerate. In Agencia Brasil, Mercadante said the investment would generate 100,000 jobs and require the hiring of as many as 20,000 engineers. That would be a huge amount of labor. For example, in 2009, around 38,000 students graduated with engineering degrees in Brazil, according to Instituto Euvaldo Lodi, a business school in Brasilia, the nation’s capital.