Foxconn's $12 Billion Plan for Brazilian iPad Production in Trouble
Reuters reports that Foxconn's previously-announced $12 billion plan to begin producing iPads in Brazil appears to be faltering as Foxconn and the Brazilian government have been unable to reach an agreement.
A much-hyped $12 billion plan for Taiwanese manufacturer Foxconn to produce iPads in Brazil is "in doubt" due to stagnant negotiations over tax breaks and Brazil's own deep structural problems such as a lack of skilled labor, government sources tell Reuters.Reports in the Brazilian media have indicated that the country's development bank is on the verge of withdrawing funding for the project, a move that would likely kill the plan as it currently stands.
"The talks have been very difficult, and the project for a Brazilian iPad is in doubt," one official said. "(Foxconn) is making crazy demands" for tax breaks and other special treatment, the official added.
One option could be for Foxconn or a Brazilian partner to simply assemble foreign-made parts to the iPad, rather than producing screens and other components locally. Other steps could also be taken to reduce the project's scale, which may simply have been too ambitious for all parties.High import tariffs and taxes push the entry-level iPad price to approximately $900 in Brazil, nearly double the model's $499 price tag in the United States. By moving production into Brazil, Apple would be able to address the country's market of 190 million consumers at lower price points.