iPad manufacturer Foxconn is reportedly planning to begin producing the device for Apple in plants operated in Brazil by the end of November. The information comes not from Foxconn, its parent company Hon Hai Precision Industry, or even Apple, but rather from Aloizio Mercadante, science and technology minister of Brazil.
In other words, don’t bank on this as being a done deal, and even Mr. Mercadante told Reuters that, “The negotiations are far from complete, but I’m confident.”
Brazil’s Science & Technology Minisiter, Aloizio Mercadante
Such a move would help Apple, in that it would allow the company to sidestep steep protectionist tariffs that currently more than double the price of the iPad in Brazil. Reuters noted that the original 16GB iPad that currently retails for US$399 in the U.S. is priced at $860 in Brazil due to those tariffs.
The Mac Observer spoke to Brazilian Mac and iOS fans at this year’s Macworld Conference & Expo who said much the same thing. They said that most Apple devices and Mac computers are simply priced out of the market in Brazil due to those tariffs.
Moving production of the iPad and/or other products to Brazil would sidestep those tariffs, making them more accessible to Brazil’s growing lower middle class, which Reuters said makes up about half of that country’s population of 190 million. Brazil is also the eighth largest economy in the world.
In other words, there are many and more reasons for Apple to want greater access to Brazil’s consumers, and the Reuters piece said that rising labor costs in China’s Shenzhen area where Foxconn holds most of its current operations are reason for that company to look outside China to expand. Put the two factors together, and there’s plenty of merit behind Minister Mercadante’s assertion.
However, at the very least it’s not a done deal. It’s also not clear whether Foxconn would move all of its iPad production to South America, or merely some of that production. Minister Mercadante said that unrelated to the iPad production deal, Foxconn is negotiating with the Brazilian government to invest as much as $12 billion in developing additional factories in the country.